As filed with the Securities and Exchange Commission on April 19, 2000
FILE NO. 333-93367
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF
1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. Exact name of trust:
JPF SEPARATE ACCOUNT A
B. Name of depositor:
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
C. Complete address of depositor's principal executive offices:
One Granite Place
Concord, NH 03301
D. Name and complete address of agent for service:
Ronald R. Angarella
President
Jefferson Pilot Securities Corporation
One Granite Place
Concord, NH 03301
Copies to:
Charlene Grant, Esq. Joan E. Boros, Esq.
Jefferson Pilot Financial 1025 Thomas Jefferson Street, N.W.
Company Suite 400 East
One Granite Place Washington, D.C. 20007-0805
Concord, NH 03301
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E. Title of securities being registered:
Units of Interest in the Separate Account under Individual Flexible Premium
Variable Life Insurance Policies.
F. Approximate date of proposed public offering:
As soon as practicable after the effective date.
The Registrant is registering an indefinite amount of securities pursuant to
Section 24(f) of the Investment Company Act of 1940.
Registrant hereby amends this Registration Statement under the Securities Act
of 1933 on such date or dates as may be necessary to delay its effective date
until Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
<PAGE>
May 1, 2000
ENSEMBLE III
JPF Separate Account A
Flexible Premium Variable Life Insurance Policy
Jefferson Pilot Financial Insurance Company
One Granite Place Concord, New Hampshire 03301 800-258-3648
This Prospectus describes the Ensemble III Variable Life Insurance Policy
("Ensemble III" or "the Policy"), a flexible premium variable life insurance
policy issued and underwritten by Jefferson Pilot Financial Insurance Company
("we" or "JP Financial" or "the Company"). The Policy provides life insurance
and pays a benefit, as described in this Prospectus, upon the Insured's death or
surrender of the Policy. The Policy allows flexible premium payments, Policy
Loans, Withdrawals, and a choice of Death Benefit Options. Your account values
may be invested on either a fixed or variable or combination of fixed and
variable basis. You may allocate your Net Premiums to JPF Separate Account A
("Separate Account A" or the "Separate Account"), and/or the General Account, or
both Accounts. The Divisions of Separate Account A support the benefits provided
by the variable portion of the Policy. The Accumulation Value allocated to each
Division is not guaranteed and will vary with the investment performance of the
associated Fund. Net Premiums allocated to the General Account will accumulate
at rates of interest we determine; such rates will not be less than 4% per year.
Your Policy may lapse if the Surrender Value is insufficient to pay a Monthly
Deduction. For the first five Policy Years, however, if you pay the Minimum
Annual Premium, your Policy will not lapse, regardless of changes in the
Surrender Value. We will send premium reminder notices for Planned Premiums
and for premiums required to continue the Policy in force. If the Policy lapses,
you may reinstate it.
The Policy has a free look period during which you may return the Policy. We
will refund your Premium (See "Right of Policy Examination").
This Prospectus also describes the Divisions used to fund the Policy through the
Separate Account. Each Division invests exclusively in one of the following
Portfolios:
JPVF International Equity Portfolio
JPVF World Growth Stock Portfolio
JPVF Global Hard Assets Portfolio
JPVF Emerging Growth Portfolio
JPVF Capital Growth Portfolio
JPVF Small Company Portfolio
JPVF Growth Portfolio
JPVF S&P 500 Index Portfolio
JPVF Value Portfolio
JPVF Balanced Portfolio
JPVF High Yield Bond Portfolio
JPVF Money Market Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP II Contrafund Portfolio
<PAGE>
MFS Research Series
MFS Utilities Series
Oppenheimer Strategic Bond Fund/VA
Oppenheimer Bond Fund/VA
Templeton International Securities Fund: Class 2
Not all Divisions may be available under all Policies or in all jurisdictions.
You may obtain the current Prospectus and Statement of Additional Information
("SAI") for any of the Portfolios by calling (800) 258-3648 x7719.
Replacing existing insurance or supplementing an existing flexible premium
variable life insurance policy with the Policy may not be to your advantage.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE FUNDS. BOTH THIS PROSPECTUS AND THE UNDERLYING FUND PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Ensemble III insurance policies and shares of the funds are not deposits or
obligations of or guaranteed by any bank. They are not federally insured by the
FDIC or any other government agency. Investing in the contracts involves certain
investment risks, including possible loss of principal invested.
THIS PROSPECTUS AND OTHER INFORMATION ABOUT JPF SEPARATE ACCOUNT A REQUIRED TO
BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CAN BE FOUND IN THE SEC'S
WEB SITE AT http://www.sec.gov.
<PAGE>
TABLE OF CONTENTS
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Page
----
Definitions ............................................................... 3
Policy Summary ............................................................ 4
The Separate Account ...................................................... 5
Charges & Fees ............................................................ 6
Charges & Fees Assessed Against Premium .................................. 6
Charges & Fees Assessed Against the Accumulation Value ................... 6
Charges & Fees Assessed Against the Separate Account ..................... 7
Charges Assessed Against the Underlying Funds ............................ 8
Charges Deducted Upon Surrender ........................................... 9
Allocation of Premiums .................................................... 10
The Portfolios ........................................................... 10
Investment Advisers for each of the Funds ................................ 11
Mixed and Shared Funding; Conflicts of Interest .......................... 12
Fund Additions, Deletions or Substitutions ............................... 12
General Account .......................................................... 13
Policy Choices ............................................................ 13
General .................................................................. 13
Premium Payments .......................................................... 13
Modified Endowment ....................................................... 14
Compliance with the Internal Revenue Code ................................ 14
Death Benefit Options .................................................... 15
Transfers and Allocations to Funding Options ............................. 15
Telephone Transfers, Loans and Reallocations ............................. 16
Automated Transfers (Dollar Cost Averaging and Portfolio Rebalancing) ..... 16
Policy Values ............................................................. 17
Accumulation Value ....................................................... 17
Unit Values .............................................................. 18
Net Investment Factor .................................................... 18
Surrender Value .......................................................... 18
Policy Rights ............................................................. 19
Surrenders ............................................................... 19
Withdrawals .............................................................. 19
Grace Period ............................................................. 19
Reinstatement of a Lapsed or Terminated Policy ........................... 19
Right to Defer Payment ................................................... 20
Policy Loans ............................................................. 20
Policy Changes ............................................................ 21
Right of Policy Examination .............................................. 22
Supplemental Benefits .................................................... 22
Death Benefit ............................................................. 22
Policy Settlement ......................................................... 22
Settlement Options ....................................................... 23
The Company ............................................................... 23
Directors & Officers ...................................................... 25
Additional Information .................................................... 26
Reports to Policyowners .................................................. 26
Right to Instruct Voting of Fund Shares .................................. 26
Disregard of Voting Instructions ......................................... 26
State Regulation ......................................................... 27
Legal Matters ............................................................ 27
The Registration Statement ............................................... 27
Financial Statements ..................................................... 27
Employment Benefit Plans ................................................. 27
Distribution of the Policy ............................................... 27
Independent Auditors ..................................................... 28
Group or Sponsored Arrangements .......................................... 29
Tax Matters ............................................................... 29
General .................................................................. 29
Federal Tax Status of the Company ........................................ 29
Life Insurance Qualification ............................................. 29
Charges for JP Financial Income Taxes ..................................... 32
Miscellaneous Policy Provisions ........................................... 33
The Policy ............................................................... 33
Payment of Benefits ...................................................... 33
Suicide and Incontestability ............................................. 33
Protection of Proceeds ................................................... 33
Nonparticipation ......................................................... 33
Changes in Owner and Beneficiary; Assignment ............................. 33
Misstatements ............................................................ 33
Illustrations of Accumulation Values, Cash Values and Death Benefits ...... A-1
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This prospectus does not constitute an offer in any jurisdiction in which such
offering may not be lawfully made. No dealer, salesman or other person is
authorized to give any information or make any representations in connection
with this offering other than those contained in this prospectus, and, if given
or made, such other information or representations must not be relied upon. The
purpose of this variable life insurance policy is to provide insurance
protection. Life insurance is a long-term investment. Policyowners should
consider their need for insurance coverage and the policy's long-term investment
potential. No claim is made that the policy is any way similar or comparable to
an investment in a mutual fund.
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2
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Definitions
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Accumulation Value: The total amount that a Policy provides for investment plus
the amount held as collateral for Policy Debt.
Age: The Insured's age at his/her nearest birthday.
Allocation Date: The date when the initial Net Premium is placed in the
Divisions and the General Account as instructed by the Policyowner in the
application. The Allocation Date is the later of 1) 25 days from the date we
mail the Policy to the agent for delivery to you; or 2) the date we receive all
administrative items needed to activate the Policy.
Attained Age: The Insured's age at the last Policy Anniversary.
Beneficiary: The person you designate in the application to receive the Death
Benefit proceeds. If changed, the Beneficiary is as shown in the latest change
filed with us. If no Beneficiary survives the Insured, you or your estate will
be the Beneficiary. The Beneficiary's interest may be subject to that of any
assignee.
Cash Value: The Accumulation Value less any Surrender Charge. This amount less
any Policy Debt is payable to the Policyowner on surrender of the Policy.
Code: The Internal Revenue Code of 1986, as amended.
Company: Jefferson Pilot Financial Insurance Company.
Cost of Insurance: A charge related to our expected mortality cost for your
basic insurance coverage under the Policy, not including any supplemental
benefit provision that you may elect through a Policy rider.
Cumulative Minimum Premium: An amount equal to the Minimum Annual Premium
divided by 12 and multiplied by the number of completed policy months.
Date of Receipt: Any Company business day, prior to 4:00 p.m. Eastern time, on
which a notice or premium payment is received at our home office.
Death Benefit: The amount which is payable on the Death of the Insured, adjusted
as provided in the Policy.
Death Benefit Options: The methods for determining the Death Benefit.
Division: A separate division of Separate Account A which invests only in the
shares of a specified Portfolio of a Fund.
Fund: An open-end management investment company whose shares are purchased by
the Separate Account to fund the benefits provided by the Policy.
General Account: A non-variable funding option available in the Policy that
guarantees a minimum interest rate of 4% per year.
Grace Period: The 61-day period beginning on the Monthly Anniversary Day on
which the Policy's Surrender Value less any Policy Debt is insufficient to cover
the current Monthly Deduction, unless the cumulative minimum premium requirement
has been met. The Policy will lapse without value at the end of the 61-day
period unless we receive a sufficient payment.
Insured: The person on whose life the Policy is issued.
Issue Age: The Age of the Insured on the Policy's Issue Date.
Issue Date: The effective date on which we issue the Policy.
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Load Basis Amount: An amount per $1,000 of Specified Amount which varies by sex,
Issue Age (or Attained Age for an increase in Specified Amount) and rating class
of the Insured. This amount is used to calculate the Acquisition Charge. The
maximum Load Basis Amount is $66.65, resulting in a maximum Acquisition Charge
of $1.33 per $1000 of Specified Amount in Year 1 and $0.67 per $1000 of
Specified Amount per month in Year 2.
Loan Value: Generally, 100% of the Policy's Cash Value on the date of a loan.
Minimum Annual Premium: The amount of premium that you must pay each year to
assure that the Policy remains in force for at least 5 Policy Years from the
Issue Date, even if the Surrender Value is insufficient to satisfy the current
Monthly Deduction.
Monthly Anniversary Date: The same day in each month as the Policy Date.
Net Premium: The gross premium less a 2.5% State Premium Tax Charge, a 1.25%
Federal DAC Tax Charge and a 3% Premium Load. We currently do not intend to
assess the Premium Load beginning in the 11th Policy Year.
Policy: The life insurance contract described in this Prospectus.
Policy Date: The date set forth in the Policy from which policy years, policy
months and policy anniversaries will be determined. If the Policy Date falls on
the 29th, 30th or 31st of a month, the Policy Date will be the 28th of such
month. You may request the Policy Date. If You do not request a date, it is the
date the Policy is issued.
Policy Debt: The sum of all unpaid policy loans and accrued interest thereon.
Portfolio: A separate investment series of one of the Funds.
Premium Load: A charge we assess against premium payments, which is quaranteed
not to exceed 3%.
Proof of Death: One or more of: 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; or d) any other proof satisfactory to us.
SEC: Securities and Exchange Commission.
Separate Account A or the Separate Account: JPF Separate Account A, a separate
investment account we established for the purpose of funding the Policy.
Service Office: Our principal executive offices at One Granite Place, Concord,
New Hampshire 03301.
Specified Amount: The amount you choose at application, which may subsequently
be increased or decreased, as provided in the Policy. The Specified Amount is
used in determining the Death Benefit.
State: Any State of the United States, the District of Columbia, Puerto Rico,
Guam, the Virgin Islands, the Commonwealth of the Northern Mariana Islands or
any other possession of the United States.
Surrender Charge: An amount we retain upon the Surrender of the Policy, a
Withdrawal or a decrease in Specified Amount.
Surrender Value: Cash Value less any Policy Debt.
Target Premium: The premium from which first year commissions will be determined
and which varies by sex, Issue Age, rating class of the Insured and Specified
Amount.
Valuation Date: The date and time at which the Accumulation Value of a variable
investment option is calculated. Currently, this calculation occurs after the
close of business of the New York Stock Exchange on any normal business day,
Monday through Friday, that the New York Stock Exchange and the Company are
open. In addition to being closed on all federal holidays, we will also be
closed on Good Friday, the Friday following Thanksgiving and the day before or
following Christmas.
Valuation Period: The period of time between two successive Valuation Dates,
beginning at the close of regular trading on the New York Stock Exchange
on each Valuation Date, and ending at the close of regular trading on the New
York Stock Exchange on the next succeeding Valuation Date.
4
<PAGE>
Policy Summary
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This Prospectus describes a flexible premium variable life insurance policy. The
Policy provides life insurance and pays a benefit (subject to adjustment under
the Policy's Age and/or Sex, Suicide and Incontestability, and Grace Period
provisions) upon surrender or Death of the Insured. The Policy allows flexible
premium payments, Policy Loans, Withdrawals and a choice of Death Benefit
Options. Account values may be either fixed or variable or a combination of
fixed and variable.
Charges and fees will be assessed against premium payments, Accumulation Value,
the Separate Account, the underlying Funds and upon surrender, partial
withdrawals or decreases in Specified Amount.
You must purchase your variable life insurance policy from a registered
representative. The Policy, the initial application on the Insured, any
subsequent applications, endorsements and any riders constitute the entire
contract.
At the time of application, you must choose a Death Benefit Option, decide on
the amount of planned premium and determine how to allocate Net Premiums. You
may elect to supplement the benefits afforded by the Policy through the addition
of riders we make available.
The proceeds payable upon the Death of the Insured depend on the Death Benefit
Option chosen. Under Option 1 the Death Benefit equals the current Specified
Amount. Under Option 2, the Death Benefit equals the current Specified Amount
plus the Accumulation Value on the date of death. Under Option 3, the Death
Benefit equals the Specified Amount plus total premiums paid, less any
withdrawals. We may make other options available. We will reduce the Death
Benefit proceeds by any outstanding Policy Debt.
Although the Policy is designed to allow flexible premiums, you must pay
sufficient premiums to continue the Policy in force. The initial premium must be
paid at issue. The initial premium must at least equal the minimum premium,
which is based on Issue Age, underwriting class and Specified Amount. No premium
payment may be less than $250 ($50 for electronic fund transfers). We will send
you premium reminder notices for Planned Premiums and for premiums required to
continue the Policy in force. Should your Policy lapse, you may reinstate it.
You may allocate your Net Premiums to the Separate Account, the General Account
or both Accounts. Net Premiums allocated to the Separate Account must be
allocated to one or more of the Divisions of the Separate Account and
allocations must be in whole percentages. The variable portion of the Policy is
supported by the Divisions you choose and will vary with the investment
performance of the associated Portfolios. Net Premiums allocated to the General
Account will accumulate at rates of interest we determine. The effective rate of
interest will not be less than 4% per year.
The Separate Account
- --------------------------------------------------------------------------------
The Separate Account underlying the Policy is JPF Separate Account A. Amounts
allocated to the Separate Account are invested in the Portfolios. Each Portfolio
is a series of an open-end management investment company whose shares are
purchased by the Separate Account to fund the benefits provided by the Policy.
The Portfolios, including
5
<PAGE>
their investment objectives and their investment advisers, are described in this
Prospectus. Complete descriptions of the Portfolios' investment objectives and
restrictions and other material information relating to the Portfolios are
contained in the Funds' prospectuses, which are delivered with this
Prospectus.
Separate Account A was established under New Hampshire law on August 20, 1984.
Under New Hampshire Insurance Law, the income, gains or losses of the Separate
Account are credited without regard to the other income, gains or losses of the
Company. These assets are held for our variable life insurance policies and
variable annuities. Any and all distributions made by the Portfolios with
respect to shares held by the Separate Account will be reinvested in additional
shares at net asset value. The assets maintained in the Separate Account will
not be charged with any liabilities arising out of any other business we
conduct. We are, however, responsible for meeting the obligations of the Policy
to the Policyowner.
No stock certificates are issued to the Separate Account for shares of the
Portfolios held in the Separate Account. Ownership of Portfolio shares is
documented on the books and records of the Portfolios and of the Company for the
Separate Account.
The Separate Account is registered with the SEC as a unit investment trust under
the Investment Company Act of 1940 and meets the definition of separate account
under the federal securities laws. Such registration does not involve any
approval or disapproval by the Commission of the Separate Account or our
management or investment practices or policies. We do not guarantee the Separate
Account's investment performance.
Divisions. The Policies presently offer twenty Divisions but may add or delete
Divisions. You may invest in a total of 17 Divisions over the life of the
Policy. Each Division will invest exclusively in shares of a single Portfolio.
Charges & Fees
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> CHARGES & FEES ASSESSED AGAINST PREMIUM
Premium Charges
Before a premium is allocated to any of the Divisions of Separate Account A and
the General Account, we will deduct the following fees and charges:
o a state premium tax charge of 2.5% unless otherwise required by state law
(2.0% in Oregon and 2.35% in California).
o a federal income tax charge of 1.25% ("Federal DAC Tax Charge") which
reimburses us for our increased federal tax liability under the federal tax
laws. Subject to state law, we reserve the right to increase these tax
charges due to changes in the state or federal tax laws that increase our tax
liability.
o a Premium Load, which is guaranteed not to exceed 3% of premium, and which we
currently do not intend to assess after the 10th Policy Year.
The state premium tax charge reimburses us for taxes we pay to states and
municipalities in which the Policy is sold. The amount of tax assessed by a
state or municipality may be more or less than the charge. We may impose the
premium tax charge in states which do not themselves impose a premium tax.
> CHARGES & FEES ASSESSED AGAINST ACCUMULATION VALUE
Charges and fees assessed against the Policy's Accumulation Value can be
deducted from any one of the Divisions, the General Account, or pro rata from
each of the Divisions and
6
<PAGE>
the General Account. If you do not designate one Division, we will deduct the
charges pro rata from each of the Divisions and the General Account.
Monthly Deduction
On each Monthly Anniversary Date and on the Policy Date, we will deduct from the
Policy's Accumulation Value an amount to cover certain expenses associated with
start-up and maintenance of the Policy, administrative expenses, the cost of
insurance for the Policy and any optional benefits added by rider.
The Monthly Deduction equals:
i) the Cost of Insurance for the Policy (as described below), plus
ii) a Monthly Administrative Fee of $10, plus
iii) a monthly Acquisition Charge during the first two Policy Years equal to 2%
of the Load Basis Amount per month in Policy Year 1 and 1% of Load Basis Amount
per month in Policy Year 2, plus
iv) the cost of optional benefits provided by rider.
v) a monthly acquisition charge during the first 24 months following any
increase in Specified Amount for the first two years following the increase.
Cost of Insurance. The Cost of Insurance charge is related to our expected
mortality cost for your basic insurance coverage under the Policy, not including
any supplemental benefit provisions that you may elect through a Policy rider.
The Cost of Insurance charge equals (i) multiplied by the result of (ii) minus
(iii) where:
i) is the current Cost of Insurance Rate as described in the Policy;
ii) is the death benefit at the beginning of the policy month divided by
1.0032737 (to arrive at the proper values for the beginning of the month
assuming the guaranteed interest rate of 4%); and
iii) is the Accumulation Value at the beginning of the policy month, prior to
the monthly deduction for the Cost of Insurance.
The current Cost of Insurance Rate is variable and is based on the Insured's
issue age, sex (where permitted by law), rating class, Policy Year and Specified
Amount. Because the Accumulation Value and the Death Benefit of the Policy may
vary from month to month, the Cost of Insurance charge may also vary on each day
a Monthly Deduction is taken. In addition, you should note that the Cost of
Insurance charge is related to the difference between the Death Benefit payable
under the Policy and the Accumulation Value of the Policy. An increase in the
Accumulation Value or a decrease in the Death Benefit may result in a smaller
Cost of Insurance charge while a decrease in the Accumulation Value or an
increase in the Death Benefit may result in a larger cost of insurance charge.
The Cost of Insurance rate for standard risks will not exceed those based on the
1980 Commissioners Standard Ordinary Mortality Tables Male or Female (1980
Tables). Substandard risks will have monthly deductions based on Cost of
Insurance rates which may be higher than those set forth in the 1980 Tables. A
table of guaranteed maximum Cost of Insurance rates per $1,000 of the Amount at
Risk will be included in each Policy. We may adjust the Monthly Cost of
Insurance rates from time to time. Adjustments will
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<PAGE>
be on a class basis and will be based on our estimates for future factors such
as mortality experience, investment earnings, expenses (including reinsurance
costs), taxes and the length of time Policies stay in force. Any adjustments
will be made on a nondiscriminatory basis. The current Cost of Insurance rate
will not exceed the applicable maximum Cost of Insurance rate shown in your
Policy.
Monthly Administrative Expense Charge. The Monthly Deduction amount also
includes a monthly administration fee of $10.00. This fee may not be increased.
Acquisition Charge. We will deduct from the Accumulation Value a monthly
acquisition charge of 2% of the Load Basis Amount in the first Policy Year and
1% of the Load Basis Amount in the second Policy Year. The Load Basis Amount is
an amount per $1000 of Specified Amount, which varies by sex, Issue Age and
rating class of the Insured. The maximum load Basis Amount is $66.65, resulting
in a maximum Acquisition Charge of $1.33 per $1000 of Specified Amount in year
1 and $0.67 per $1000 of Specified Amount in Year 2. This charge does not vary
with the amount of premium paid. We reserve the right to increase or decrease
this charge for policies not yet issued in order to correspond with changes in
distribution costs of the Policy. The charge compensates us for the cost of
selling the Policy, including, among other things, agents' commissions,
advertising and printing of prospectuses and sales literature. Normally this
charge plus the Surrender Charge, discussed below, compensate us for total sales
expenses for the year. To the extent sales expenses in any policy year are not
recovered by the Acquisition Charges and the Surrender Charges we collect, we
may recover sales expenses from other sources, including profits from the
Mortality Risk and Expense Risk Charges.
Charges for Optional Benefits. If you elect any optional benefits by adding
riders to the Policy, an optional benefits charge will be included in the
Monthly Deduction amount. The amount of the charge will vary depending upon the
actual optional benefits selected and is described on each applicable Policy
rider.
> CHARGES & FEES ASSESSED AGAINST THE SEPARATE ACCOUNT
Mortality and Expense Risk Charge
We will assess a charge on a daily basis against each Division at a current
annual rate of 0.60% in Policy Years 1 through 25 and 0.35% in Policy Years 26
and later of the value of the Divisions to compensate us for mortality and
expense risks we assume in connection with the Policy. We reserve the right to
increase this charge, but guarantee that it will not exceed 0.85% in Policy
Years 1 through 25 and 0.60% in Policy Years 26 and thereafter. The mortality
risk we assume is that Insureds, as a group, may live for a shorter period of
time than estimated and that we will, therefore, pay a Death Benefit before
collecting a sufficient Cost of Insurance charge. The expense risk assumed is
that expenses incurred in issuing and administering the Policies and operating
the Separate Account will be greater than the administrative charges assessed
for such expenses.
The Separate Account is not subject to any taxes. However, if taxes are assessed
against the Separate Account, we reserve the right to assess taxes against the
Separate Account Value.
Administrative Charge for Transfers or Withdrawal
We may impose an Administrative Fee of $50 for each transfer among the
Divisions of the Separate Account or the General Account, after the first 12
transfers in a Policy Year (up to a maximum of 20). We will also charge an
Administrative Fee on withdrawals equal to the lesser of 2% of the withdrawal
amount or $50.
> CHARGES ASSESSED AGAINST THE UNDERLYING FUNDS
Following are the investment advisory and sub-investment management fees, paid
by each of the Funds as a percentage of average net assets.
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Jefferson Pilot Variable Fund, Inc.
World Growth Stock,
Global Hard Assets,
Small Company, S&P
Average Daily Money Value, Capital 500
Net Assets Market and Balanced Growth Index
---------- ------ ------------ ------ -----
First $200 million .50% .75% 1.00% .24%
Next $1.1 billion .45% .70% .95% .24%
Over $1.3 billion .40% .65% .90% .24%
Average Daily Emerging High Yield International
Net Assets Growth Bond and Growth Equity
---------- ------ --------------- ------
First $200 million .80% .75% 1.00%
Next $1.1 billion .75% .75% 1.00%
Over $1.3 billion .70% .75% 1.00%
The compensation of the Sub-Investment Managers is paid directly from the
investment management fees of JP Investment Advisory and is set forth in the
table below as an annual percentage of the average daily net assets of the
Portfolio managed:
Sub-Investment Manager Fees
---------------------------
Templeton Van Eck Lord
Janus World Global Abbett
Average Daily Capital Growth Hard Small
Net Assets Growth Stock Assets Company
---------- ------ ----- ------ -------
First $200 million .70% .50% .50% .50%
Next $1.1 billion .65% .45% .45% .45%
Over $1.3 billion .60% .40% .40% .40%
<TABLE>
<CAPTION>
Credit MFS MFS MFS Barclays
Suisse Emerging Money High Janus S&P 500
Net Assets Value Growth Market Yield Balanced Index
---------- -------- ------ ------ ----- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
First $100 Million .50% .40% .30% .40% .55% .05%
Next $100 million .50% .40% .30% .40% .50% .05%
Next $300 million .50% .40% .25% .40% .50% .05%
Over $500 million .50% .40% .25% .40% .45% .025%
Over $1 billion .50% .40% .25% .40% .45% .01%
</TABLE>
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<PAGE>
Lombard Odier
Strong International
Net Assets Growth Equity
---------- ------ ------
First $25 million .60% .50%
Next $75 million .50% .50%
Next $50 million .40% .50%
Over $150 million .30% .50%
Templeton International Securities Fund: Class 2.
Average Daily
Net Assets
----------
First $200 million .75%
Next $1.1 billion .675%
Over $1.3 billion .60%
Class 2 of the Templeton International Securities Fund has a distribution plan
or "Rule 12b-1 Plan" under which it pays the Distributor 0.25% per year of
average net assets invested in the fund's Class 2 shares.
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<PAGE>
Fidelity VIP and VIP II
Total
Management Other Annual
Fidelity VIP Fee Expenses Expenses
------------ --- -------- --------
Equity-Income .49% .08% .57%
Growth .59% .07% .66%
Fidelity VIP II
- ---------------
Contrafund .59% .07% .66%
MFS Research Series and MFS Utilities Series: 0.75% of average daily net assets.
Oppenheimer Strategic Bond Fund/VA: 0.74% of average daily net assets.
Oppenheimer Bond Fund/VA: 0.80% of average daily net assets.
Certain of the unaffiliated Portfolio advisers reimburse us for administrative
costs incurred in connection with administering the Funds as variable funding
options under the Policy. These reimbursements are paid by the advisers and are
not charged to the Portfolios.
For further details on each Portfolio's expenses please refer to that
Portfolio's prospectus. Additional copies of each Portfolio's prospectus and the
Statement of Additional Information for each Portfolio may be obtained free of
charge by calling (800)-258-3648 x7719.
> CHARGES DEDUCTED UPON SURRENDER
If you surrender the Policy, reduce the Specified Amount, or the Policy lapses
during the first nine Policy Years, we will assess a contingent deferred sales
charge, which will be deducted from the Policy's Accumulation Value. This charge
is imposed in part to recover distribution expenses and in part to recover
certain first year administrative costs. The initial Surrender Charge is the
Surrender Charge we would assess if you surrendered the Policy on the Issue
Date, and is based on the Specified Amount, varying with the Issue Age, risk
classification and, in most states, sex of the Insured. It will be specified in
your Policy and will be in compliance with each state's nonforfeiture law. It
remains level for five years, decreasing to zero in the tenth Policy Year.
The Surrender Charge in any given Policy Year will equal a percentage of the
initial Surrender Charge as follows:
Surrender Charge
as Percentage of
Initial Surrender
Policy Year Charge*
- ----------- -------
0-5 100%
6 80%
7 60%
8 40%
9 20%
10+ 0%
* May be lower at some ages
We will not assess a Surrender Charge after the ninth Policy Year unless there
is an increase in Specified Amount. The maximum Surrender Charge that we will
assess is $47.04 per $1000 of specified amount. This is the Surrender Charge on
a surrender in the first Policy Year for a male smoker, age 68. A pro rata
portion of any Surrender Charge will be assessed upon withdrawal or reduction in
the Specified Amount. The Policy's Accumulation Value will be reduced by the
amount of any withdrawal or reduction in Specified Amount plus any applicable
pro rata Surrender Charge.
> SURRENDER CHARGES ON SURRENDERS AND WITHDRAWALS
All applicable Surrender Charges are imposed on Surrenders.
We will impose a partial Surrender Charge on Withdrawals. The pro rata
Surrender Charge will equal the amount of the Specified Amount reduction
associated with the withdrawal divided by the Specified Amount before the
reduction. We will reduce any applicable remaining Surrender Charges by the same
proportion. A transaction charge equal to the lesser of 2% of the Withdrawal
Amount or $50 will be deducted from the amount of each Withdrawal. (See
"Withdrawals") The Surrender Charge does not apply to Policy loans.
We will also impose a partial Surrender Charge on Decreases in Specified Amount.
It will equal the amount of the Decrease in Specified Amount divided by the
Specified Amount before the Decrease times the then-current Surrender Charge.
> SURRENDER CHARGES ON INCREASES IN SPECIFIED AMOUNT
Increases in Specified Amount will be subject to a new Surrender Charge. The
Surrender Charge on the increase will equal one-half the Surrender Charge we
would assess if you were purchasing a new Policy, rather than increasing the
Specified Amount of your existing Policy.
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<PAGE>
Other Charges
We reserve the right to charge the assets of each Division to provide for any
income taxes or other taxes payable by us on the assets attributable to that
Division. Although we currently make no charge, we reserve the right to charge
you an administrative fee, not to exceed $50, to cover the cost of preparing any
additional illustrations of current Cash Values and current mortality
assumptions which you may request after the Policy Date.
Allocation of Premiums
- --------------------------------------------------------------------------------
You may allocate all or a part of your Net Premiums to the Divisions currently
available under your Policy or you may allocate all or a part of your Net
Premiums to the General Account.
THE PORTFOLIOS
The Separate Account currently invests in shares of the Portfolios listed below.
Net Premiums applied to the Separate Account will be invested in the Portfolios
in accordance with your selection. Portfolios may be added or withdrawn as
permitted by applicable law. We reserve the right to limit the total number of
Portfolios you may elect to 17 over the lifetime of the Policy or to increase
the total number of Portfolios you may elect. Shares of the Portfolios are not
sold directly to the general public. Each of the Portfolios is available only
through the purchase of variable annuities or variable life insurance policies
(See Mixed and Shared Funding).
The investment results of the Portfolios, whose investment objectives are
described below, are likely to differ significantly. There is no assurance that
any of the Portfolios will achieve their respective investment objectives.
Investment in some of the Portfolios involves special risks, which are described
in their respective prospectuses. You should read the prospectuses for the
Portfolios and consider carefully, and on a continuing basis, which Portfolio or
combination of Portfolios is best suited to your long-term investment
objectives. Except where otherwise noted, all of the Portfolios are diversified,
as defined in the Investment Company Act of 1940.
o JPVF International Equity Portfolio seeks long-term capital appreciation
through investments in securities whose primary trading markets are
outside the United States.
o JPVF World Growth Stock Portfolio seeks 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 will be incidental.
o JPVF Global Hard Assets Portfolio seeks long-term capital appreciation by
investing globally, primarily in "Hard Asset Securities". Hard Asset
Securities include equity and debt securities of "Hard Asset Companies",
that are directly or indirectly engaged in the exploration, development,
production or distribution of one or more of the following: precious
metals; ferrous and non-ferrous metals; oil and gas, petroleum,
petrochemicals or other hydrocarbons; forest productions; real estate; and
other basic non-agricultural commodities. Income is a secondary
consideration.
o JPVF Emerging Growth Portfolio seeks to provide long-term growth of
capital. Dividend and interest income from portfolio securities, if any,
is incidental to the Portfolio's investment objective of long-term growth.
o JPVF Capital Growth Portfolio seeks capital growth. Realization of income
is not a significant investment consideration and any income realized will
be incidental.
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<PAGE>
o JPVF Small Company Portfolio seeks to achieve growth of capital. The
Portfolio pursues its objective by investing primarily in a diversified
portfolio of equity securities issued by small companies, which are
defined as companies with market capitalization equal to or less than the
largest company in the Russell 2000[RegTM] Index.
o JPVF Growth Portfolio seeks capital growth by investing primarily in
equity securities that the Sub-Investment Manager believes have above-
average growth prospects.
o JPVF S&P 500 Index Portfolio seeks investment results that correspond to
the total return of common stocks publicly traded in the United States, as
represented by the S&P 500.
o JPVF Value Portfolio (formerly JPVF Growth and Income Portfolio) seeks
long-term growth of capital by investing primarily in a wide range of
equity issues that may offer capital appreciation and, secondarily, seeks
a reasonable level of current income.
o JPVF Balanced Portfolio seeks reasonable current income and long-term
capital growth, consistent with conservation of capital, by investing
primarily in common stocks and fixed income securities.
o JPVF High Yield Bond Portfolio seeks a high level of current income by
investing primarily in corporate obligations with emphasis on higher
yielding, higher risk, lower-rated or unrated securities. These securities
may be considered speculative and involve greater risks, including risk of
default, than higher rated securities.
o JPVF Money Market Portfolio seeks to achieve as high a level of current
income as is consistent with preservation of capital and liquidity. An
investment in the Money Market Portfolio is neither insured nor guaranteed
by the U.S. Government.
o Fidelity Variable Insurance Products Fund--Growth Portfolio seeks capital
appreciation by investing primarily in common stocks.
o Fidelity Variable Insurance Products Fund--Equity-Income Portfolio seeks
reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Fund will also consider the
potential for capital appreciation.
o Fidelity Variable Insurance Products Fund II--Contrafund Portfolio seeks
maximum total return over the long term by investing its assets mainly in
equity securities of companies that are undervalued or out-of-favor.
o MFS Variable Insurance Trust--Research Series seeks to provide long-term
growth of capital and future income by investing a substantial proportion
of its assets in equity securities of companies believed to possess
better-than-average prospects for long-term growth.
o MFS Variable Insurance Trust--Utilities Series seeks capital growth and
current income (incomes above that available from a portfolio invested
entirely in equity securities) by investing, under normal circumstances,
at least 65% (but up to 100% at the discretion of the Adviser) of its
assets in equity and debt securities of both domestic and foreign
companies in the utilities industry.
o Oppenheimer Variable Account Funds--Strategic Bond Fund/VA seeks a high
level of current income principally derived from interest on debt
securities and seeks to enhance such income by writing covered call
options on debt securities. The Portfolio intends to invest principally
in: (i) foreign government and corporate debt securities, (ii) U.S.
Government securities, and (iii) lower-rated high yield domestic debt
securities, commonly known as "junk bonds", which are subject to a greater
risk of loss of principal and nonpayment of interest than higher-rated
securities. These securities may be considered to be speculative.
o Oppenheimer Variable Account Funds--Bond Fund/VA primarily seeks a high
level of current income from investment in high yield, fixed-income
securities rated "Baa" or better by Moody's or "BBB" or better by Standard
& Poor's. Secondarily, this Portfolio seeks capital growth when consistent
with its primary objective.
o Franklin Templeton Variable Insurance Products Trust--Templeton
International Securities Fund seeks 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.
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<PAGE>
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.
Some of the above Portfolios may use instruments known as derivatives as part
of their investment strategies, as described in their respective prospectuses.
The use of certain derivatives such as inverse floaters and principal on debt
instruments may involve higher risk of volatility to a Portfolio. The use of
leverage in connection with derivatives can also increase risk of losses. See
the prospectus for the Portfolio for a discussion of the risks associated with
an investment in those Portfolios. You should refer to the accompanying
prospectuses of the Portfolios for more complete information about their
investment policies and restrictions.
> INVESTMENT ADVISERS FOR EACH OF THE FUNDS:
Jefferson Pilot Variable Fund, Inc. ("JPVF") The investment manager to JPVF is
Jefferson Pilot Investment Advisory Corporation ("JP Investment Advisory"), an
affiliate of the Company. JP Investment Advisory and JPVF have contracted with
nine unaffiliated companies to act as sub-investment managers to the Funds.
They are:
o JPVF International Equity Portfolio: Lombard Odier International Portfolio
Management Limited ("Lombard Odier")
o JPVF World Growth Stock Portfolio: Templeton Global Advisors Limited
("Templeton")
o JPVF Global Hard Assets Portfolio: Van Eck Associates Corporation ("Van
Eck")
o JPVF Emerging Growth Portfolio: Massachusetts Financial Services Company
("MFS")
o JPVF Capital Growth Portfolio: Janus Capital Corporation ("Janus")
o JPVF Small Company Portfolio: Lord, Abbett & Co. ("Lord Abbett")
o JPVF Growth Portfolio: Strong Capital Management, Inc. ("Strong")
o JPVF S&P 500 Index Portfolio: Barclays Global Fund Advisors ("Barclays")
o JPVF Value Portfolio: Credit Suisse Asset Management, LLC ("Credit
Suisse")
o JPVF Balanced Portfolio: Janus
o JPVF High Yield Bond: MFS
o JPVF Money Market Portfolio: MFS
Fidelity Variable Insurance Products Fund - Fidelity Management and Research
Company ("FMR")
Fidelity Variable Insurance Products Fund II - FMR
MFS Variable Insurance Trust - Massachusetts Financial Services Company ("MFS")
Oppenheimer Variable Account Funds - OppenheimerFunds, Inc. ("Oppenheimer")
Franklin Templeton Variable Insurance Products Trust - Templeton Investment
Counsel, Inc. ("TICI")
> MIXED AND SHARED FUNDING; CONFLICTS OF INTEREST
Shares of the Funds are available to insurance company separate accounts which
fund variable annuity contracts and variable life insurance policies, including
the Policy described in this Prospectus. Because Fund shares are offered to
separate accounts of both affiliated and unaffiliated insurance companies, it is
conceivable that, in the future, it may
14
<PAGE>
not be advantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in these Funds simultaneously, since the
interests of such Policyowners or contractholders may differ. Although neither
the Company nor the Funds currently foresees any such disadvantages either to
variable life insurance or to variable annuity Policyowners, each Fund's Board
of Trustees/Directors has agreed to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken in response thereto. If such a conflict were to
occur, one of the separate accounts might withdraw its investment in a Fund.
This might force that Fund to sell portfolio securities at disadvantageous
prices.
> FUND ADDITIONS, DELETIONS OR SUBSTITUTIONS
We reserve the right, subject to compliance with appropriate state and federal
laws, to add, delete or substitute shares of another Portfolio or Fund for
Portfolio shares already purchased or to be purchased in the future for the
Division in connection with the Policy. We may substitute shares of one
Portfolio for shares of another Portfolio if, among other things, (a) it is
determined that a Portfolio no longer suits the purpose of the Policy due to a
change in its investment objectives or restrictions; (b) the shares of a
Portfolio are no longer available for investment; or (c) in our view, it has
become inappropriate to continue investing in the shares of the Portfolio.
Substitution may be made with respect to both existing investments and the
investment of any future premium payments. However, no substitution, addition or
deletion of securities will be made without prior notice to Policyowners, and
without such prior approval of the SEC or other regulatory authorities as may be
necessary, all to the extent required and permitted by the Investment Company
Act of 1940 or other applicable law.
We also reserve the right to make the following changes in the operation of the
Separate Account and the Divisions;
(a) to operate the Separate Account in any form permitted by law;
(b) to take any action necessary to comply with applicable law or obtain and
continue any exemption from applicable laws;
(c) to transfer assets from one Division to another, or from any Division to our
general account;
(d) to add, combine, or remove Divisions in the Separate Account;
(e) to assess a charge for taxes attributable to the operation of the Separate
Account or for other taxes, described in "Charges and Fees--Other Charges" on
page 10 above; and
(f) to change the way we assess other charges, as long as the total other
charges do not exceed the amount currently charged the Separate Account and the
Portfolios in connection with the Policies.
Portfolio shares are subject to certain investment restrictions which may not be
changed without the approval of the majority of the Portfolio's shareholders.
See accompanying Prospectus for the Portfolios.
> GENERAL ACCOUNT
Interests in the General Account have not been registered with the SEC in
reliance upon exemptions under the Securities Act of 1933, as amended and the
General Account has not been registered as an investment company under the 1940
Act. However, disclosure in this Prospectus regarding the General Account may be
subject to certain generally
15
<PAGE>
applicable provisions of the federal securities laws relating to the accuracy
and completeness of the statements. Disclosure in this Prospectus relating to
the Fixed Account has not been reviewed by the SEC.
The General Account is a fixed funding option available under the Policy. We
guarantee a minimum interest rate of 4.0% on amounts in the General Account and
assume the risk of investment gain or loss. The investment gain or loss of the
Separate Account or any of the Portfolios does not affect the General Account
Value.
The General Account is secured by our general assets. Our general assets include
all assets other than those held in separate accounts sponsored by us or our
affiliates. We will invest the assets of the General Account in those assets we
chose, as allowed by applicable law. We will allocate investment income of such
General Account assets between ourself and those policies participating in the
General Account.
We guarantee that, at any time, the General Account Value of your Policy will
not be less than the amount of the Net Premiums allocated to the General
Account, plus any monthly accumulation value adjustment, plus interest at an
annual rate of not less than 4.0%, less the amount of any Withdrawals, Policy
Loans or Monthly Deductions, plus interest at an annual rate of not less than
4.0%.
If you do not accept the Policy issued as applied for or you exercise your "free
look" option, no interest will be credited and we will retain any interest
earned on the initial Net Premium.
Policy Choices
- --------------------------------------------------------------------------------
> GENERAL
The Policy is designed to provide the Insured with lifetime insurance protection
and to provide you with flexibility in amount and frequency of premium payments
and level of life insurance proceeds payable under the Policy. It provides life
insurance coverage on the Insured with a Death Benefit payable on the Insured's
Death. You are not required to pay scheduled premiums to keep the Policy in
force and you may, subject to certain limitations, vary the frequency and amount
of premium payments.
To purchase a Policy, you must complete an application and submit it to us
through the agent selling the Policy. You must furnish satisfactory evidence of
insurability. The Insured under the Policy must generally be under age 85 at the
time the application for the Policy is submitted. For ages 15 and over, the
Insured's smoking status is reflected in the current cost of insurance rates.
Policies issued in certain States will not directly reflect the Insured's sex in
either the premium rates or the charges or values under the Policy. We may
reject an application for any reason.
The minimum Specified Amount at issue is $50,000. We reserve the right to revise
our rules to specify different minimum Specified Amounts at issue. We may
reinsure all or a portion of the Policy.
> PREMIUM PAYMENTS
The Policy is a flexible premium life insurance policy. This means that you may
decide when to make premium payments and in what amounts. You must pay your
premiums to us at our home office or through one of our authorized agents for
forwarding to us. There is no fixed schedule of premium payment on the Policy
either as to amount or frequency. You may determine, within certain limits, your
own premium payment schedule. We will not bill premium payments for less than
$250 ($50 for electronic fund transfers). The Policy has a minimum premium
period of 5 years.
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<PAGE>
If you pay the Minimum Annual Premium, we guarantee that the Policy will stay in
force throughout the minimum premium period, even if the Surrender Value is
insufficient to pay a Monthly Deduction. The minimum initial premium will equal
the Minimum Annual Premium, divided by 6.
We may require evidence of insurability if payment of a premium will result in
an immediate increase in the difference between the Death Benefit and the
Accumulation Value.
In order to help you obtain the insurance benefits you desire, we will state a
Planned Periodic Premium and Premium Frequency in the Policy. This premium will
generally be based on your insurance needs and financial abilities, the
Specified Amount of the Policy and the Insured's age, sex and risk class. You
are not required to pay Planned Periodic Premiums. If you do not pay a Planned
Periodic Premium, your Policy will not lapse, so long as the Policy's Surrender
Value is sufficient to pay the Monthly Deduction. Payment of the Planned
Periodic Premiums will not guarantee that your Policy will remain in force. (See
"Grace Period")
> MODIFIED ENDOWMENT CONTRACT
The Policy will be allowed to become a Modified Endowment contract under the
Internal Revenue Code only with your consent. Otherwise, if at any time the
premiums paid under the Policy exceed the limit for avoiding modified endowment
contract status, we will refund the excess premium to you with interest within
60 days after the end of the Policy Year in which the premium was received. If,
for any reason, we do not refund the excess premium within that 60-day period,
we will hold the excess premium in a separate deposit fund and credit it with
interest until refunded to you. The interest rate used on any refund, or
credited to the separate deposit fund created by this provision, will be the
excess premium's pro rata rate of return on the contract until the date we
notify you that the excess premium and the earnings on such excess premium have
been removed from the Policy. After the date of such notice, the interest rate
paid on the separate deposit fund will be such rate as we may declare from time
to time on advance premium deposit funds. We may also notify you of other
options available to you to keep the Policy in compliance.
> COMPLIANCE WITH THE INTERNAL REVENUE CODE
The Policy is intended to qualify as life insurance under the Internal Revenue
Code. The Death Benefit provided by the Policy is intended to qualify for the
federal income tax exclusion. If at any time the premium paid under the Policy
exceeds the amount allowable for such qualification, we will refund the excess
premium to you with interest within 60 days after the end of the Policy Year in
which it was received. If, for any reason, we do not refund the excess premium
within the 60-day period, such amount will be held in a separate deposit fund
and will be credited with interest until refunded to you. The interest rate used
on any refund, or credited to the separate deposit fund created by this
provision, will be the excess premium's pro rata rate of return on the contract
until the date we notify you that the excess premium and the earnings on such
excess premium have been removed from the Policy. After the date of such notice,
the interest rate paid on the separate deposit fund will be such rate as we may
declare from time to time on advance premium deposit funds.
We also reserve the right to refuse to make any change in the Specified Amount
or the Death Benefit Option or any other change if such change would cause the
policy to fail to qualify as life insurance under the Code.
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<PAGE>
Backdating
Under limited circumstances, we may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed but no
earlier than six months prior to state approval of the Policy. Backdating may be
desirable so that you can purchase a particular Policy Specified Amount for
lower Cost of Insurance Rate based on a younger insurance age. For a backdated
Policy, we will assess policy fees and charges from the Policy Date. Backdating
of your Policy will not affect the date on which your premium payments are
credited to the Separate Account.
Allocation of Premiums
We will allocate premium payments, net of the premium tax charge, Federal DAC
tax charge and Premium Load, plus interest earned prior to the Allocation Date,
among the General Account and the divisions of the Separate Account in
accordance with your directions to us. The minimum percentage of any net premium
payment allocated to any division or the General Account is 5% and allocation
percentages must be in whole numbers only. Your initial premium (including any
interest) will be allocated, as you instructed, on the Allocation Date. Your
subsequent premiums will be allocated as of the date they are received in our
Home Office. Prior to the Allocation Date, the initial net premium, and any
other premiums received, will be allocated to the General Account. (See "Right
of Policy Examination")
You may change your premium allocation instructions at any time. Your request
may be written or by telephone, so long as the proper telephone authorization is
on file with us. Allocations must be changed in whole percentages. The change
will be effective as of the date of the next premium payment after you notify
us. We will send you confirmation of the change. (See "Transfers and Allocations
to Funding Options")
> DEATH BENEFIT OPTIONS
At the time of purchase, you must choose between the available Death Benefit
Options. The amount payable upon the Death of the Insured depends upon which
Death Benefit Option you choose.
Option 1: The Death Benefit will be the greater of the current Specified
Amount or the Accumulation Value on the Death of the Insured multiplied by the
corridor percentage, as described below.
Option 2: The Death Benefit equals the greater of the current Specified
Amount plus the Accumulation Value on the Death of the Insured or the
Accumulation Value on the date of death multiplied by the corridor percentage,
as described below.
Option 3: The Death Benefit equals the current specified amount plus the
total premiums paid less any withdrawals to the date of death. If the total
of the withdrawals exceeds the premiums paid then the Death Benefit will be
less than the Specified Amount.
The corridor percentage is used to determine a minimum ratio of Death Benefit to
Accumulation Value. This is required to qualify the Policy as life insurance
under the federal tax laws.
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<PAGE>
Death Benefit Qualification Test
You will also choose between the two Death Benefit qualification tests, the cash
value accumulation test and the guideline premium test. Once you have made your
choice, the Death Benefit qualification test cannot be changed.
The guideline premium test limits the amount of premium payable for an Insured
of a particular age and sex. It also applies a prescribed corridor percentage to
determine a minimum ratio of Death Benefit to Accumulation Value.
Following are the Corridor Percentages under the Guideline Premium Test:
Corridor Percentages (Attained Age of the Insured at the Beginning of the
Contract Year)
Age % Age % Age % Age %
--- --- --- --- --- --- --- ---
0-40 250% 50 185% 60 130% 70 115%
41 243 51 178 61 128 71 113
42 236 52 171 62 126 72 111
43 229 53 164 63 124 73 109
44 222 54 157 64 122 74 107
45 215 55 150 65 120 75-90 105
46 209 56 146 66 119 91 104
47 203 57 142 67 118 92 103
48 197 58 138 68 117 93 102
49 191 59 134 69 116 94+ 101
The cash value accumulation test requires that the Death Benefit be sufficient
to prevent the Accumulation Value, as defined in Section 7702 of the Code, from
ever exceeding the net single premium required to fund the future benefits under
the Policy. If the Accumulation Value is ever greater than the net single
premium at the Insured's age and sex for the proposed Death Benefit, the Death
Benefit will be automatically increased by multiplying the Accumulation Value by
a corridor percentage that is defined as $1000 divided by the net single
premium.
The tests differ as follows:
(1) the guideline premium test limits the amount of premium that you can pay
into your Policy; the cash value accumulation test does not.
(2) the factors that determine the minimum Death Benefit relative to the
Policy's Accumulation Value are different. Required increases in the
minimum Death Benefit due to growth in Accumulation Value will generally
be greater under the cash value accumulation test.
(3) If you wish to pay premiums in excess of the guideline premium test
limitation, you should elect the cash value accumulation test. If you do
not wish to pay premiums in excess of the guideline premium test
limitations, you should consider the guideline premium test.
You should consult with a qualified tax adviser before choosing the Death
Benefit Qualification Test.
The following example demonstrates the Death Benefits under Options 1, 2 and 3
for the cash value accumulation test and the guideline premium test. The example
shows an Ensemble III Policy issued to a male, non-smoker, Age 45, at the time
of calculation of the Death Benefit. The Policy is in its 10th Policy Year and
there is no outstanding Policy Debt.
<TABLE>
<CAPTION>
Cash Value Accumulation Guideline Premium
Test Test
----------------------- -----------------
<S> <C> <C>
Specified Amount ....................... 100,000 100,000
Accumulation Value ..................... 52,500 52,500
Corridor Percentage .................... 294% 215%
Total Premiums less Withdrawals......... 15,000 15,000
Death Benefit Option 1 ................. 154,088 112,875
Death Benefit Option 2 ................. 154,088 152,500
Death Benefit Option 3 ................. 154,088 115,000
</TABLE>
Under any of the Death Benefit Options, the Death Benefit will be reduced by a
Withdrawal. (See "Withdrawals") The Death Benefit payable under any of the
Options will also be reduced by the amount necessary to repay the Policy Debt in
full and, if the Policy is within the Grace Period, any payment required to keep
the Policy in force.
The Death Benefit will be set at 101% of the Cash Value on the Policy
Anniversary Date nearest the Insured's Attained Age 100.
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<PAGE>
After we issue the Policy, you may, subject to certain restrictions, change the
Death Benefit selection by sending us a request in writing. If you change the
Death Benefit Option from Option 2 to Option 1, the Specified Amount will be
increased by the Policy's Accumulation Value on the effective date of the
change. If you change the Death Benefit option from Option 1 to Option 2, the
Specified Amount will be decreased by the Policy's Accumulation Value on the
effective date of the change. If you change the Death Benefit Option from Option
3 to Option 2, the Specified Amount will be increased by the Premiums paid to
the date of the change less any withdrawals and then will be decreased by the
Accumulation Value in the date of the change. If you change the Death Benefit
from Option 3 to Option 1, the Specified Amount will be increased by the
Premiums paid less any withdrawals, to the date of the change. You may not
change from Options 1 or 2 to Option 3. If a change would result in an immediate
change in the Death Benefit, such change will be subject to evidence of
insurability.
> TRANSFERS AND ALLOCATIONS TO FUNDING OPTIONS
You may transfer all or part of the Accumulation Value to any other Portfolio or
to the General Account at any time. Funds may be transferred between the
Portfolios or from the Portfolios to the General Account. We currently permit 12
transfers per year without imposing any transfer charge. For transfers over 12
in any Policy Year, we will impose a transfer charge of $50, which we will
deduct on a pro rata basis from the Division or Divisions or the General Account
into which the amount is transferred, unless you specify otherwise. We will not
impose a Transfer Charge on the transfer of any Net Premium payments received
prior to the Allocation Date, plus interest earned, from the General Account to
the Divisions on the Allocation Date, or on loan repayments. We will not impose
a Transfer Charge for transfers under the Dollar Cost Averaging or Portfolio
Rebalancing features. You may currently make up to 20 transfers per Policy Year.
We reserve the right to modify transfer privileges and charges.
You may at any time transfer 100% of the Policy's Accumulation Value to the
General Account and choose to have all future premium payments allocated to the
General Account. After you do this, 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, Attained Age and rating
class of the Insured at the time of transfer. The minimum period will decrease
if you choose to surrender the Policy or make a withdrawal. The minimum period
will increase if you choose to decrease the Specified Amount, make additional
premium payments, or we credit a higher interest rate or charge a lower cost of
insurance rate than those guaranteed for the General Account.
Except for transfers in connection with Dollar Cost Averaging, Automatic
Portfolio Rebalancing and loan repayments, we allow transfers out of the General
Account to the Divisions only once in every 180 days and limit their amount to
the lesser of (a) 25% of the Accumulation Value in the General Account not being
held as loan collateral, or (b) $100,000. Any other transfer rules, including
minimum transfer amounts, also apply. We reserve the right to modify these
restrictions.
We will not impose a transfer charge for a transfer of all Accumulation Value in
the Separate Account to the General Account. A transfer from the General Account
to the Divisions of the Separate Account will be subject to the transfer charge
unless it is one of the first 12 transfers in a Policy Year and except for the
transfer of any Net Premium payments received prior to the Allocation Date, plus
interest earned, from the General Account and loan repayments.
We reserve the right to refuse or restrict transfers made by third-party agents
on behalf of Policyowner or pursuant to market timing services when we determine
that such transfers will be detrimental to the Portfolios, Policyowner or you.
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> TELEPHONE TRANSFERS, LOANS AND REALLOCATIONS
You, your authorized representative, or a member of his/her administrative staff
may request a transfer of Accumulation Value or reallocation of premiums
(including allocation changes relating to existing Dollar Cost Averaging and
Automatic Portfolio Rebalancing programs) either in writing or by telephone. In
order to make telephone transfers, you must complete a written telephone
transfer authorization form and return it to us at our Home Office. All
transfers must be in accordance with the terms of the Policy. If the transfer
instructions are not in good order, we will not execute the transfer and you
will be notified.
We may also permit loans to be made by telephone, provided that your
authorization form is on file with us. Only you may request loans by telephone.
We will use reasonable procedures, such as requiring identifying information
from callers, recording telephone instructions, and providing written
confirmation of transactions, in order to confirm that telephone instructions
are genuine. Any telephone instructions which we reasonably believe to be
genuine will be your responsibility, including losses arising from any errors in
the communication of instructions. As a result of this procedure, you will bear
the risk of loss. If we do not use reasonable procedures, as described above, we
may be liable for losses due to unauthorized instructions.
> AUTOMATED TRANSFERS (DOLLAR COST AVERAGING AND PORTFOLIO REBALANCING)
Dollar Cost Averaging describes a system of investing a uniform sum of money at
regular intervals over an extended period of time. Dollar Cost Averaging is
based on the economic fact that buying a security with a constant sum of money
at fixed intervals results in acquiring more of the item when prices are low and
less of it when prices are high.
You may establish automated transfers of a specific dollar amount (the "Periodic
Transfer Amount") on a monthly, quarterly or semi-annual basis from the Money
Market Division or the General Account to any other Portfolio or to the General
Account. You must have a minimum of $3,000 allocated to either the Money Market
Division or the General Account in order to enroll in the Dollar Cost Averaging
program. The minimum Periodic Transfer Amount is $250. A minimum of 5% of the
Periodic Transfer Amount must be transferred to any specified Division. There is
no additional charge for the program. You may start or stop participation in the
Dollar Cost Averaging program at any time, but you must give us at least 30
days' notice to change any automated transfer instructions that are currently in
place. We reserve the right to suspend or modify automated transfer privileges
at any time.
You may elect an Automatic Portfolio Rebalancing feature which provides a method
for reestablishing fixed proportions between various types of investments on a
systematic basis. Under this feature, we will automatically readjust the
allocation between the Divisions and the General Account to the desired
allocation, subject to a minimum of 5% per Division or General Account, on a
quarterly, semi-annual or annual basis. There is no additional charge for the
program.
You may not elect Dollar Cost Averaging and Automatic Portfolio Rebalancing at
the same time. We will make transfers and adjustments pursuant to these features
on the Policy's Monthly Anniversary Date in the month when the transaction is to
take place, or
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the next succeeding business day if the Monthly Anniversary Date falls on a
holiday or weekend. We must have an authorization form on file before either
feature may begin. Transfers under these features are not subject to the
transfer fee and do not count toward the 12 free transfers or the 20 transfer
maximum currently allowed per year.
Before participating in the Dollar Cost Averaging or Automatic Portfolio
Rebalancing programs, you should consider the risks involved in switching
between investments available under the Policy. Dollar Cost Averaging requires
regular investments regardless of fluctuating price levels, and does not
guarantee profits or prevent losses. Automatic Portfolio Rebalancing is
consistent with maintaining your allocation of investments among market
segments, although it is accomplished by reducing your Accumulation Value
allocated to the better performing segments. Therefore, you should carefully
consider market conditions and each Fund's investment policies and related risks
before electing to participate in the Dollar Cost Averaging or Automatic
Portfolio Rebalancing programs.
Policy Values
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> ACCUMULATION VALUE
The Accumulation Value of Your Policy is determined on a daily basis.
Accumulation Value is the sum of the values in the Divisions plus the value in
the General Account. We calculate Your Policy's Accumulation Value in the
Divisions by units and unit values under the Policies. Your Policy's
Accumulation Value will reflect the investment experience of the Divisions
investing in the Portfolios, any additional net premiums paid, any withdrawals,
any policy loans, and any charges assessed in connection with the Policy. We do
not guarantee Accumulation Values in the Separate Account as to dollar amount.
On the Allocation Date, the Accumulation Value in the Separate Account (the
"Separate Account Value") equals the initial premium payments, less the premium
load and the State Premium Tax and Federal DAC Tax Charges, plus interest earned
prior to the Allocation Date, and less the Monthly Deduction for the first
policy month. We will establish the initial number of units credited to the
Separate Account for Your Policy on the Allocation Date. At the end of each
Valuation Period thereafter, the Accumulation Value in a Division is
(i) the Accumulation Value in the Division on the preceding Valuation Date
multiplied by the net investment factor, described below, for the current
Valuation Period, plus
(ii) any Net Premium we receive during the current Valuation Period which is
allocated to the Division, plus
(iii) all Accumulation Value transferred to the Division from another Division
or the General Account during the current Valuation Period, minus
(iv) the Accumulation Value transferred from the Division to another Division or
the General Account and Accumulation Value transferred to secure a Policy Debt
during the current Valuation Period, minus
(v) all withdrawals from the Division during the current Valuation Period.
Whenever a Valuation Period includes the Monthly Anniversary Date, the Separate
Account Value at the end of such period is reduced by the portion of the monthly
deduction and increased by any Accumulation Value Adjustment allocated to the
Divisions.
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We will calculate a guaranteed monthly Accumulation Value Adjustment at the
beginning of the second Policy Year and every Policy Year thereafter. The
adjustment will be allocated among the General Account and the Divisions in the
same proportion as premium payments. The adjustment is calculated as (i)
multiplied by the total of (ii) plus (iii) minus (iv), but not less than zero,
where:
(i) is the lesser of .0333% and the excess of the monthly mortality and expense
risk charge currently assessed over .01666% in Policy Years 2 through 25 and the
lesser of .02083% and the excess of the monthly mortality and expense risk
charge currently assessed over .008333% in Policy Years 26 and thereafter;
(ii) is the amount allocated to the Divisions at the beginning of the Policy
Year;
(iii) is the 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 Code,
adjusted for any increases in Specified Amount.
See "Policy Loans" for a description of Type B loans.
> Unit Values
We credit Units to you upon allocation of Net Premiums to a Division. Each Net
Premium payment you allocate to a Division will increase the number of units in
that Division. We credit both full and fractional units. We determine the number
of units and fractional units by dividing the Net Premium payment by the unit
value of the Division to which you have allocated the payment. We determine each
Division's unit value on each Valuation Date. The number of units credited to
your Policy will not change because of subsequent changes in unit value. The
number is increased by subsequent contributions or transfers allocated to a
Division, and decreased by charges and withdrawals from that Division. The
dollar value of each Division's units will vary depending on the investment
performance of the corresponding Portfolio, as well as any expenses charged
directly to the Separate Account.
The initial Unit Value of each Division's units was $10.00. Thereafter, the Unit
Value of a Division on any Valuation Date is calculated by multiplying the
Division's Unit Value on the previous Valuation Date by the Net Investment
Factor for the Valuation Period then ended.
> Net Investment Factor
The Net Investment Factor measures each Division's investment experience and is
used to determine changes in Unit Value from one Valuation Period to the next.
We calculate the Net Investment Factor by dividing (1) by (2) and subtracting
(3) from the result, where:
(1) is the sum of:
(a) the Net Asset Value of a Fund share held in the Separate Account for that
Division determined at the end of the current Valuation Period; plus
(b) the per share amount of any dividend or capital gain distributions made for
shares held in the Separate Account for that Division if the ex-dividend date
occurs during the Valuation Period;
(2) is the Net Asset Value of a Fund share held in the Separate Account for that
Division determined as of the end of the preceding Valuation Period; and
(3) is the daily charge representing the Mortality & Expense Risk Charge. This
charge is equal, on an annual basis, to a percentage of the average daily Net
Asset Value of Fund shares held in the Separate Account for that Division.
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Because the Net Investment Factor may be greater than, less than or equal to 1,
values in a Division may increase or decrease from Valuation Period to Valuation
Period.
The General Account Value reflects amounts allocated to the General Account
through payment of premiums or transfers from the Separate Account, plus
interest credited to those amounts. Amounts allocated to the General Account,
and interest thereon, are guaranteed; however there is no assurance that the
Separate Account Value of the Policy will equal or exceed the Net Premiums paid
and allocated to the Separate Account.
You will be advised at least annually as to the number of Units which remain
credited to the Policy, the current Unit Values, the Separate Account Value, the
General Account Value, and the Accumulation Value.
> SURRENDER VALUE
The Surrender Value of the Policy is the amount you can receive in cash by
surrendering the Policy. The Surrender Value will equal (a) the Accumulation
Value on the date of surrender; less (b) the Surrender Charge; less (c) the
Policy Debt. (See Charges Deducted Upon Surrender)
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<PAGE>
Policy Rights
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> SURRENDERS
By Written Request, you may surrender the Policy for its Surrender Value at any
time while the Insured is alive. All insurance coverage under the Policy will
end on the date of the Surrender. All or part of the Surrender Value may be
applied to one or more of the Settlement Options described in this Prospectus or
in any manner to which we agree and that we make available. (See Right to Defer
Payment, Policy Settlement and Payment of Benefits)
WITHDRAWALS
By Written Request, you may, at any time after the expiration of the Free Look
Period, make withdrawals from the Policy. A charge equal to the lesser of $50 or
2% of the Withdrawal will be deducted from the amount of the Cash Value which
you withdraw. We will also deduct a pro rata Surrender Charge. The minimum
amount of any withdrawal after the charge is applied is $500. The amount you
withdraw cannot exceed the Surrender Value.
Withdrawals will generally affect the Policy's Accumulation Value, Cash Value
and the life insurance proceeds payable under the Policy as follows.
o The Policy's Cash Value will be reduced by the amount of the withdrawal
plus the $50 charge;
o The Policy's Accumulation Value will be reduced by the amount of the
withdrawal the $50 charge plus any applicable pro rata Surrender Charge;
o The Death Benefit will be reduced by an amount equal to the reduction in
Accumulation Value.
The withdrawal will reduce the Policy's values as described in the "Charges
Deducted Upon Surrender" section.
If the Death Benefit Option for the Policy is Option 1, a withdrawal will reduce
the Specified Amount. However, we will not allow a withdrawal if the Specified
Amount will be reduced below $50,000.
If the Death Benefit Option for the Policy is Option 2, a withdrawal will reduce
the Accumulation Value, usually resulting in a dollar-for-dollar reduction in
the Death Benefit.
If the Death Benefit Option for the Policy is Option 3, a Withdrawal will result
in a dollar-for-dollar reduction in the Death Benefit.
You may allocate a withdrawal among the Divisions and the General Account. If
you do not make such an allocation, we will allocate the withdrawal among the
Divisions and the General Account in the same proportion that the Accumulation
Value in each Division and the General Account Value, less any Policy Debt,
bears to the total Accumulation Value of the Policy, less any Policy Debt. (See
Right to Defer Payment, Policy Changes and Payment of Benefits)
> GRACE PERIOD
Generally, on any Monthly Anniversary Date, if your Policy's Surrender Value is
insufficient to satisfy the Monthly Deduction, we will allow you 61 days of
grace for payment of an amount sufficient to continue coverage. We call this
"lapse pending status". During the first five policy years, however, if you have
paid the required cummulative minimum premiums, your Policy will not enter the
Grace Period regardless of declines in the Surrender Value.
Written notice will be mailed to your last known address, according to Our
records, not less than 61 days before termination of the Policy. This notice
will also be mailed to the last known address of any assignee of record.
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The Policy will stay in force during the Grace Period. If the Insured dies
during the Grace Period, we will reduce the Death Benefit by the amount of any
Monthly Deduction due and the amount of any outstanding Policy Debt.
If payment is not made within 61 days after the Monthly Anniversary Day, the
Policy will terminate without value at the end of the Grace Period.
> REINSTATEMENT OF A LAPSED OR TERMINATED POLICY
If the Policy terminates as provided in its Grace Period provision, you may
reinstate it. To reinstate the Policy, the following conditions must be met:
o The Policy has not been fully surrendered.
o You must apply for reinstatement within 5 years after the date of
termination and before the Insured's Attained Age 100.
o We must receive evidence of insurability satisfactory to us.
o We must receive a premium payment sufficient to keep the Policy in force
for the current month plus two additional months.
o If a loan was outstanding at the time of lapse, we will require that
either you repay or reinstate the loan.
o Supplemental Benefits will be reinstated only with our consent. (See Grace
Period and Premium Payments)
> COVERAGE BEYOND INSURED'S ATTAINED AGE 100
At the Insured's Attained Age 100, we will make several changes to your Policy.
At that point and thereafter, the Specified Amount will equal the current
Accumulation Value. The Death Benefit will be set to Option 1 and will equal
101% of the Specified Amount less Policy Debt. We will no longer deduct any Cost
of Insurance charges or monthly Administrative Charges, the Monthly Accumulation
Value Adjustment will cease and no new premiums will be accepted.
> RIGHT TO DEFER PAYMENT
Payments of any Separate Account Value will be made within 7 days after our
receipt of your Written Request. However, we reserve the right to suspend or
postpone the date of any payment of any benefit or values for any Valuation
Period (1) when the New York Stock Exchange is closed (except holidays or
weekends); (2) when trading on the Exchange is restricted; (3) when an emergency
exists as determined by the SEC so that disposal of the securities held in the
Funds is not reasonably practicable or it is not reasonably practicable to
determine the value of the Funds' net assets; or (4) during any other period
when the SEC, by order, so permits for the protection of security holders. For
payment from the Separate Account in such instances, we may defer payment of
Full Surrender and Withdrawal Values, any Death Benefit in excess of the current
Specified Amount, transfers and any portion of the Loan Value.
Payment of any General Account Value may be deferred for up to six months,
except when used to pay amounts due us.
> POLICY LOANS
We will grant loans at any time after the expiration of the Right of Policy
Examination. The amount of the loan will not be more than the Loan Value. Unless
otherwise required by state law, the Loan Value for this Policy is 100% of Cash
Value at the end of the Valuation Period during which the loan request is
received. The maximum amount you can borrow at any time is the Loan Value
reduced by any outstanding Policy Debt.
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<PAGE>
We will usually disburse loan proceeds within seven days from the Date of
Receipt of a loan request, although we reserve the right to postpone payments
under certain circumstances. See "OTHER MATTERS--Postponement of Payments". We
may, in our sole discretion, allow you to make loans by telephone if you have
filed a proper telephone authorization form with us. So long as your Policy is
in force and the Insured is living, you may repay your loan in whole or in part
at any time without penalty.
Accumulation Value equal to the loan amount will be maintained in the General
Account to secure the loan. You may allocate a policy loan among the Divisions
of the Separate Account and the existing General Account value that is not
already allocated to secure a Policy Loan, and we will transfer Separate Account
Value as you have indicated. If you do not make this allocation, the loan will
be allocated among the Divisions and the General Account in the same proportion
that the Accumulation Value in each Division and the Accumulation Value in the
General Account less Policy Debt bears to the total Accumulation Value of the
Policy, less Policy Debt, on the date of the loan. We will make a similar
allocation for unpaid loan interest due. A policy loan removes Accumulation
Value from the investment experience of the Separate Account, which will have a
permanent effect on the Accumulation Value and Death Benefit even if the loan is
repaid. General Account Value equal to Policy Debt will accrue interest daily at
an annual rate of 4%.
We will charge interest on any outstanding Policy Debt with the interest
compounded annually. 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 the
Accumulation Value held in the General Account to secure loans, which is an
effective annual rate of 4%. The amount available at any time for a Type A loan
is the maximum loan amount, less the Guideline Single Premium at issue, adjusted
on a pro rata basis for increases in Specified Amount, 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 an effective annual interest rate of 5%. One loan request can
result in both a Type A and a Type B loan. A loan request will first be granted
as a Type A loan, to the extent available, and then as a Type B loan. All loans
become Type A loans at attained age 100. Otherwise, once a loan is granted, it
remains a Type A or Type B loan until it is repaid. Interest is due and payable
at the end of each Policy Year and any unpaid interest due becomes loan
principal.
If Policy Debt exceeds Cash Value, we will notify you and any assignee of
record. You must make a payment within 61 days from the date Policy Debt exceeds
Cash Value or the Policy will lapse and terminate without value (See "Grace
Period"). If this happens, you may be taxed on the total appreciation under the
Policy. However, you may reinstate the Policy, subject to proof of insurability
and payment of a reinstatement premium. See "Reinstatement of a Lapsed Policy".
You may repay the Policy Debt, in whole or in part, at any time during the
Insured's life, so long as the Policy is in force. The amount necessary to repay
all Policy Debt in full will include any accrued interest. If there is any
Policy Debt, we will apply payments received from you as follows: we will apply
payments as premium in the amount of the Planned Periodic Premium, received at
the Premium Frequency, unless you specifically designate the payment as a loan
repayment. We will apply payments in excess of the Planned Periodic Premium or
payments received other than at the Premium Frequency, first as policy loan
repayments, then as premium when you have repaid the Policy Debt.
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If you have both a Type A and a Type B loan, we will apply repayments first to
the Type B loan and then to the Type A loan. Upon repayment of all or part of
the Policy Debt, we will transfer the Policy's Accumulation Value securing the
repaid portion of the debt in the General Account to the Divisions and the
General Account in the same proportion in which the loan was taken.
An outstanding loan amount will decrease the Surrender Value available under the
Policy. For example, if a Policy has a Surrender Value of $10,000, you may take
a loan of 100% or $10,000, leaving a new Surrender Value of $0. If a loan is not
repaid, the decrease in the Surrender Value could cause the Policy to lapse. In
addition, the Death Benefit will be decreased because of an outstanding Policy
Loan. Furthermore, even if you repay the loan, the amount of the Death Benefit
and the Policy's Surrender Value may be permanently affected since the Loan
Value is not credited with the investment experience of the Funds.
> POLICY CHANGES
You may make changes to your Policy, as described below, by submitting a Written
Request to our Home Office. Supplemental Policy Specification pages and/or a
notice confirming the change will be sent to you once the change is completed.
Increase or Decrease in Specified Amount
You may increase the Specified Amount of this Policy after the 1st Policy Year,
so long as you are under attained age 86 and you send us a written request and
the Policy to Our home office. However:
o Any increase or decrease must be at least $25,000
o Any increase or decrease will affect your cost of insurance charge
o Any increase or decrease may affect the monthly Accumulation Value
Adjustment
o We may require evidence of insurability for an increase
o Any increase will affect the amount available for a Type A loan, but a
decrease will not have any such effect
o Any increase will be effective on the Monthly Anniversary Date after the
Date of Receipt of the request
o We will assess a charge against the Accumulation Value on the Monthly
Anniversary Date that an increase takes effect. This charge is an amount
per $1000 of increase in Specified Amount, which varies by sex, attained
age, and rating class of the Insured at the time of the increase
o Any increase will result in a new Acquisition Charge for the 24 months
following the increase;
o Any increase will result in a new Surrender Charge
o We will assess a pro rata surrender charge on decreases
o Any decrease may result in federal tax implications (See "Federal Tax
Matters")
o No decrease may decrease the Specified Amount below $25,000.
o Any decrease will first apply to coverage provided by the most recent
increase, then to the next most recent, and so on, and finally to the
coverage under the original application
o We will allow increases in Specified Amount at any time, so long as the
Policy is issued as a 1035 exchange and the increase is needed to avoid
the Policy becoming a modified endowment contract because of additional
1035 exchange money we receive after the policy is issued
Change in Death Benefit Option
Any change in the Death Benefit Option is subject to the following conditions:
o The change will take effect on the Monthly Anniversary Date on or next
following the date on which your Written Request is received.
o There will be no change in the Surrender Charge.
o Evidence of insurability may be required if the change would result in an
increase in the difference between the Death Benefit and the Accumulation
Value.
o If you change from Option 1 to Option 2 the Specified Amount will be
decreased by the Accumulation Value.
o If you change from Option 2 to Option 1, the Specified Amount will be
increased by the Accumulation Value.
o If you change from Option 3 to Option 1, the Specified Amount will be
increased by the total premiums paid less any withdrawals.
o If you change from Option 3 to Option 2, the Specified Amount will be
increased by the total premiums paid less any withdrawals, and decreased
by the Accumulation Value.
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o Changes from Option 1 to 2 or from Option 3 to Option 1 or 2 will be
allowed at any time while this Policy is in force, We will not require
evidence of insurability for this change, so long as the Specified Amount
is adjusted to make the difference between the Death Benefit and the
Accumulation Value after the change in Death Benefit Option the same as it
was before the change.
If the change decreases the Specified Amount below the minimum of $50,000, we
will increase the Specified Amount to $50,000.
Changes from Option 2 to 1 will be allowed at any time while this Policy is in
force. The new Specified Amount will be increased to equal the Specified Amount
plus the Accumulation Value as of the date of the change. (See Surrender Charge
and Right of Policy Examination) Changes to Option 3 are not allowed.
> RIGHT OF POLICY EXAMINATION ("FREE LOOK PERIOD")
The Policy has a free look period during which you may examine the Policy. If
for any reason you are dissatisfied, you may return the Policy to us at our
Service Office or to our representative within 10 days of delivery of the Policy
to you (or within a different period if required by State law). Return the
Policy to Jefferson Pilot Financial Insurance Company at One Granite Place,
Concord, New Hampshire 03301. Upon its return, the Policy will be deemed void
from its beginning. We will return to you within seven days all payments we
received on the Policy. Prior to the Allocation Date, we will hold the initial
Net Premium, and any other premiums we receive, in our General Account. We will
retain any interest earned if the Free Look right is exercised, unless otherwise
required by State law.
> SUPPLEMENTAL BENEFITS
The supplemental benefits currently available as riders to the Policy include
the following:
o Accelerated Benefit Rider--pays a portion of the Death Benefit upon
occurrence of critical or terminal illness or nursing home confinement,
subject to the terms of the rider.
o Accidental Death Benefit Rider--provides a benefit in the event of
accidental death, subject to the terms of the rider.
o Automatic Increase Rider--allows for scheduled annual increases in
Specified Amount, subject to the terms of the rider.
o Children's Term Insurance Rider--provides increments of level term
insurance on the Insured's children, subject to the terms of the rider.
o Death Benefit Maintenance Rider--provides a death benefit
beyond the Insured's age 100, subject to the terms of the rider.
o Disability Waiver of Deductions--waives monthly deductions in the event of
disability before age 65, subject to the terms of the rider.
o Disability Waiver of Specified Premium--deposits a specified premium
monthly into the Policy if the Insured is disabled before age 65, subject
to the terms of the rider.
o Guaranteed Death Benefit Rider--guarantees that the Policy will stay in
force during the guarantee period with a Death Benefit equal to the
Specified Amount, subject to the terms of the rider.
o Guaranteed Insurability Rider--provides that the Insured can purchase
additional insurance at certain future dates without evidence of
insurability, subject to the terms of the rider.
o Spouse Term Rider--provides coverage on the spouse of the
insured, subject to the terms of the rider.
o Supplemental Coverage Rider--provides additional coverage to the Policy,
subject to the terms of the rider.
These riders may not be available in all states.
Other riders for supplemental benefits may become available under the Policy
from time to time. The charges for each of these riders are described in Your
Policy.
Death Benefit
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The Death Benefit under the Policy will be paid in a lump sum unless you or the
beneficiary have elected that they be paid under one or more of the available
Settlement Options.
Payment of the Death Benefit may be delayed if the Policy is being contested.
You may elect a Settlement Option for the beneficiary and deem it irrevocable.
You may revoke or change a prior election. The beneficiary may make or change an
election within 90 days of the Death of the Insured, unless you have made an
irrevocable election.
All or part of the Death Benefit may be applied under one of the Settlement
Options, or such options as we may choose to make available in the future.
If the Policy is assigned as collateral security, we will pay any amount due the
assignee in a lump sum. Any excess Death Benefit due will be paid as elected.
(See "Right to Defer Payment" and "Policy Settlement")
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Policy Settlement
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We will pay proceeds in whole or in part in the form of a lump sum or the
Settlement Options available under the Policy upon the death of the Insured or
upon Surrender.
A Written Request may be made to elect, change or revoke a Settlement Option
before payments begin under any Settlement Option. This request will take effect
upon its filing at our Home Office. If you have not elected a Settlement Option
when the Death Benefit becomes payable to the beneficiary, that beneficiary may
make the election.
> SETTLEMENT OPTIONS
The following Settlement Options are available under the Policy:
Option A--Installments of a specified amount. Payments of an agreed amount to be
made monthly until the proceeds and interest are exhausted.
Option B--Installments for a specified period. Payments to be made monthly for
an agreed number of years.
Option C--Life Income. Payments to be made each month for the lifetime of the
payee. We guarantee that payments will be made for a minimum of 10, 15 or 20
years, as agreed upon.
Option D--Interest. We will pay interest on the proceeds we hold, calculated at
the compound rate of 3% per year. We will make interest payments at 12, 6, 3 or
1 month intervals.
Option E--Interest: Retained Asset Account (Performance Plus Account). We will
pay interest on the proceeds we hold, based on the floating 13-week U.S.
Treasury Bill rate fixed quarterly. The payee can write checks against such
account at any time and in any amount up to the total in the account. The checks
must be for a minimum of $250.
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 2.5% per year. The interest
rate for Option E will not be less than 2% per year.
Unless otherwise stated in the election of any option, the payee of the policy
benefits shall have the right to receive the withdrawal value under that option.
For Options A, D and E, 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. We will calculate this withdrawal
value on the same basis as the original payments. For Option C, the withdrawal
value will be the commuted value of any remaining guaranteed payments. If the
payee is alive at the end of the guarantee period, we will resume the payment on
that date. The payment will then continue for the lifetime of the payee.
If the 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.
At least $25,000 of Policy proceeds must be applied to each settlement option
chosen. We reserve the right to change payment intervals to increase payments to
$250 each.
Calculation of Settlement Option Values
The value of the Settlement Options will be calculated as set forth in the
Policy.
The Company
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<PAGE>
Jefferson Pilot Financial Insurance Company ("JP Financial" or "the Company") is
a stock life insurance company chartered in 1903 in Tennessee and redomesticated
to New Hampshire in 1991. Prior to May 1, 1998, JP Financial was known as Chubb
Life Insurance Company of America. In April 30, 1997, Chubb Life, formerly a
wholly-owned subsidiary of The Chubb Corporation, became a wholly-owned
subsidiary of Jefferson-Pilot Corporation, a North Carolina corporation. The
principal offices of Jefferson-Pilot Corporation are located at 100 North Greene
Street, Greensboro, North Carolina 27401; its telephone number is 336-691-3000.
Chubb Life changed its name to Jefferson Pilot Financial Insurance Company
effective May 1, 1998. JP Financial's home office and service center are located
at One Granite Place, Concord, New Hampshire 03301; its telephone number is
800-258-3648.
We are licensed to do life insurance business in forty-nine states of the United
States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam and
the Commonwealth of the Northern Mariana Islands.
At December 31, 1999 the Company and its subsidiaries had total assets of
approximately $6.2 billion and had $68 billion of insurance in force, while
total assets of Jefferson-Pilot Corporation and its subsidiaries (including the
Company) were approximately $26.4 billion.
We write individual life insurance and annuities. It is subject to New Hampshire
law governing insurance.
We are currently rated AAA (Superior) by Duff & Phelps, AAA (Superior) by
Standard & Poor's Corporation and A+ (Superior) by A.M. Best and Company. These
ratings do not apply to JPF Separate Account A, but reflect the opinion of the
rating companies as to our relative financial strength and ability to meet its
contractual obligations to its policyowners.
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
MANAGEMENT OF JP FINANCIAL
Executive Officers and Directors of JP Financial
Directors
Principal Occupation and
Name Business Address
- --------------------------------------------------------------------------------
Dennis R. Glass ............. Executive Vice President (also serves
as Executive Vice President, Chief
Financial Officer of Jefferson-Pilot
Corporation and Jefferson-Pilot Life
Insurance Company) 100 North Greene
Street Greensboro, North Carolina 27401
Kenneth C. Mlekush .......... President (also serves as Executive
Vice President of Jefferson-Pilot Life
Insurance Company) 100 North Greene
Street Greensboro, North Carolina 27401
David A. Stonecipher ........ Chairman and Chief Executive Officer
(also serves as President and Chief
Executive Officer of Jefferson-Pilot
Life Insurance Company) 100 North
Greene Street Greensboro, North
Carolina 27401
Executive Officers (Other Than Directors)
Name Position
- ---- --------
Charles C. Cornelio ......... Executive Vice President
Leslie L. Durland ........... Executive Vice President
John D. Hopkins ............. Executive Vice President, General Counsel
John C. Ingram .............. Executive Vice President
Reggie D. Adamson ........... Senior Vice President
Ronald R. Angarella ......... Senior Vice President
Charles P. Elam II........... Senior Vice President, Annuity Actuary
Hal B. Phillips, Jr. ........ Senior Vice President, Chief Life Actuary
Richard T. Stange ........... Senior Vice President, Deputy General Counsel
John W. Wells ............... Senior Vice President
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<PAGE>
Name Position
- ---- --------
James R. Abernathy .......... Vice President
David K. Booth............... Vice President
H. Lusby Brown............... Vice President
Margaret O. Cain ............ Vice President
John A. Cindia............... Vice President
Rebecca M. Clark ............ Vice President
Richard C. Dielensnyder ..... Vice President
Kenneth S. Dwyer ............ Vice President
Peter N. Ellinwood .......... Vice President
Ronald H. Emery ............. Vice President
Randal J. Freitage........... Vice President
Carol. A. Hardiman........... Vice President
James A. Hoffman, II......... Vice President and Associate General Counsel
Donald M. Kane .............. Vice President
Patrick A. Lang ............. Vice President
Shari J. Lease .............. Vice President
James. E. MacDonald, Jr...... Vice President
Donna L. Metcalf ............ Vice President
W. Hardea Mills, Jr.......... Vice President
Thomas E. Murphy, Jr. M.D. .. Vice President and Medical Director
Robert A. Reed .............. Vice President, Secretary
James M. Sandelli ........... Vice President
Russell C. Simpson .......... Vice President and Treasurer
Francis A. Sutherland, Jr. .. Vice President
John A. Thomas .............. Vice President
John A. Weston .............. Vice President
Robert H. Whalen............. Vice President
The officers and employees of JP Financial who have access to the assets of
Separate Account A are covered by a fidelity bond issued by American
International Group in the amount of $20,000,000.
Additional Information
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> REPORTS TO POLICYOWNERS
We will maintain all records relating to the Separate Account. At least once in
each Policy Year, we will send you an Annual Summary containing the following
information:
1. A statement of the current Accumulation Value and Cash Value since the prior
report or since the Issue Date, if there has been no prior report;
2. A statement of all premiums paid and all charges incurred;
3. The balance of outstanding Policy Loans for the previous calendar year;
4. Any reports required by the 1940 Act.
We will promptly mail confirmation notices 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 Death Benefit Options;
7. increases or decreases in Specified Amount;
8. withdrawals, surrenders or loans;
9. receipt of loan repayments;
10. reinstatements; and
11. redemptions due to insufficient funds.
> RIGHT TO INSTRUCT VOTING OF FUND SHARES
In accordance with our view of present applicable law, we will vote the shares
of the Funds held in the Separate Account in accordance with instructions
received from Policyowners having a voting interest in the Funds. Policyowners
having such an interest will receive periodic reports relating to the Fund,
proxy material and a form for giving voting instructions. The number of shares
you have a right to vote will be determined as of a record date established by
the Fund. The number of votes that you are entitled to direct with respect to a
Fund will be determined by dividing your Policy's Accumulation Value in a
Division by the net asset value per share of the corresponding Portfolio in
which the Division invests. We will solicit your voting instructions by mail at
least 14 days before any shareholders meeting.
We will cast the votes at meetings of the shareholders of the Fund and our votes
will be based on instructions received from Policyowners. However, if the
Investment Company Act of
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<PAGE>
1940 or any regulations thereunder should be amended or if the present
interpretation should change, and as a result we determine that we are permitted
to vote the shares of the Fund in our right, we may elect to do so.
We will vote Fund shares for which we do not receive timely instructions and
Fund shares which are not otherwise attributable to Policyowners in the same
proportion as the voting instruction which we receive for all Policies
participating in each Fund through the Separate Account.
> DISREGARD OF VOTING INSTRUCTIONS
When required by state insurance regulatory authorities, we may disregard voting
instructions if the instructions require that the shares be voted so as to cause
a change in the sub-classification or investment objectives of a Fund or to
approve or disapprove an investment advisory contract for a Fund. We may also
disregard voting instructions initiated by a Policyowner in favor of changes in
the investment policy or the investment adviser of the Fund if we reasonably
disapprove of such changes.
We only disapprove a change if the proposed change is contrary to state law or
prohibited by state regulatory authorities or if we determine that the change
would have an adverse effect on the Separate Account if the proposed investment
policy for a fund would result in overly speculative or unsound investments. In
the event that we do disregard voting instructions, a summary of that action and
the reasons for such action will be included in the next annual report to
Policyowners.
> STATE REGULATION
The Policy will be offered for sale in all jurisdictions where we are authorized
to do business and where the Policy has been approved by the appropriate
Insurance Department or regulatory authorities.
> LEGAL MATTERS
We know of no pending material legal proceedings pending to which either the
Separate Account or the Company is a party or which would materially affect the
Separate Account. The legal validity of the securities described in the
prospectus has been passed on by our Counsel. The law firm of Jorden Burt Boros
Cicchetti Berenson & Johnson, 1025 Thomas Jefferson Street, Suite 400, East
Lobby, Washington, DC 20007-5201, serves as our Special Counsel with regard to
the federal securities laws.
> THE REGISTRATION STATEMENT
We have filed a Registration Statement under the Securities Act of 1933 relating
to the offering described in this Prospectus. This Prospectus does not include
all of the information set forth in the Registration Statement, certain portions
of which have been omitted pursuant to SEC rules and regulations. You should
refer to the instrument as filed to obtain any omitted information.
> FINANCIAL STATEMENTS
Our financial statements which are included in the Prospectus should be
considered only as bearing on our ability to meet our obligations under the
Policy. They should not be considered as bearing on the investment experience of
the assets held in the Separate Account. Our most current audited financial
statements are those as of the end of the most recent fiscal year.
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<PAGE>
> EMPLOYMENT BENEFIT PLANS
Employers and employee organizations should consider, in connection with
counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase
of policy in connection with an employment-related insurance or benefit plan.
The U.S. 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.
> DISTRIBUTION OF THE POLICY
Jefferson Pilot Variable Corporation (JPVC), a North Carolina Corporation
incorporated on January 13, 1970, will serve as principal underwriter of the
securities offered under the Policy as defined by the federal securities laws.
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for us, are also registered representatives of
broker-dealers who have entered into written sales agreements with JPVC. Any
such broker-dealers will be registered with the SEC and will be members of the
National Association of Securities Dealers, Inc. We may also offer and sell
policies directly.
We will pay commissions under various schedules and accordingly commissions will
vary with the form of schedule selected. In any event, commissions to registered
representatives are not expected to exceed 95% of first year target premium and
5% of first year excess premium, and 5% of target premium for the second through
fifteenth policy years for both renewals and excess premium. Compensation
arrangements vary among broker-dealers. Override payments, expense allowances
and bonuses based on specific production levels may be paid. Alternative
Commission Schedules will reflect differences in up-front commissions versus
ongoing compensation. Except as previously described in this prospectus, no
separate deductions from premiums are made to pay sales commissions or sales
expenses.
> INDEPENDENT AUDITORS
Ernst & Young, LLP, 200 Clarendon Street, Boston, Massachusetts are the
independent auditors for the Separate Account and Ernst & Young, LLP, 300 North
Greene Street, Greensboro, North Carolina, are the independent auditors for the
Company. The services provided to the Separate Account include primarily the
audits of the Separate Account's financial statements.
Group or Sponsored Arrangements
- --------------------------------------------------------------------------------
Policies may be purchased under group or sponsored arrangements. A group
arrangement includes a program under which a trustee, employer or similar entity
purchases individual Policies covering a group of individuals on a group basis.
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.
We may modify the following types of charges for Policies issued in connection
with group or sponsored arrangement: the cost of insurance charge, surrender or
withdrawal charges, administrative charges, charges for withdrawal or transfer
and charges for optional rider benefits. We may also issue Policies in
connection with group or sponsored
34
<PAGE>
arrangements on a "non-medical" or 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. We may also
specify different minimum Specified Amounts at issue for Policies issued in
connection with group or sponsored arrangements.
We may also modify or eliminate certain charges or underwriting requirements for
Policies issued in connection with an exchange of another JP Financial policy or
a policy of any JP Financial affiliate.
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. Reductions and
modifications will not be made where prohibited by law and will not be unfairly
discriminatory.
Tax Matters
- --------------------------------------------------------------------------------
> GENERAL
Following is a discussion of the federal income tax considerations relating to
the Policy. This discussion is based on our understanding of federal income tax
laws as they now exist and are currently interpreted by the Internal Revenue
Service. These laws are complex and tax results may vary among individuals.
Anyone contemplating the purchase of or the exercise of elections under the
Policy should seek competent tax advice.
> FEDERAL TAX STATUS OF THE COMPANY
We are taxed as a life insurance company in accordance with the Internal Revenue
Code of 1986 as amended ("Code"). For federal income tax purposes, the
operations of each Separate Account form a part of our total operations and are
not taxed separately, although operations of each Separate Account are treated
separately for accounting and financial statement purposes.
Both investment income and realized capital gains of the Separate Account are
reinvested without tax since the Code does not impose a tax on the Separate
Account for these amounts. However, we reserve the right to make a deduction for
such tax should it be imposed in the future.
> LIFE INSURANCE QUALIFICATION
The Policy contains provisions not found in traditional life insurance policies.
However, we believe that it should qualify under the Code as a life insurance
contract for federal income tax purposes, with the result that all Death
Benefits paid under the Policy will generally be excludable from the gross
income of the Policy's Beneficiary.
Section 7702 of the Code includes a definition of life insurance for tax
purposes. The definition provides limitations on the relationship between the
death benefit and the account value. If necessary, we will increase your death
benefit to maintain compliance with Section 7702.
The Policy is intended to qualify as life insurance under the Code. The Death
Benefit provided by the Policy is intended to qualify for the federal income tax
exclusion. If at any time the premium paid under the Policy exceeds the amount
allowable for such qualification, we will refund the premium to you with
interest within 60 days after the
35
<PAGE>
end of the Policy Year in which the premium was received. If, for any reason, we
do not refund the excess premium within such 60-day period, the excess premium
will be held in a separate deposit fund and credited with interest until
refunded to you. The interest rate used on any refund, or credited to the
separate deposit fund created by this provision will be the excess premiums. We
may notify you of other options available to you to keep your policy in
compliance. You may also choose to have the Policy become a modified endowment
contract.
A modified endowment contract is a life insurance policy which fails to meet a
"seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the first
seven policy years exceeds a calculated premium level. The calculated seven-pay
premium level is based on a hypothetical policy issued on the same insured and
for the same initial death benefit which, under specified conditions (which
include the absence of expense and administrative charges), would be fully paid
for after seven years. Your policy will be treated as a modified endowment
unless the cumulative premiums paid under your policy, at all times during the
first seven policy years, are less than or equal to the cumulative seven-pay
premiums which would have been paid under the hypothetical policy on or before
such times.
Whenever there is a "material change" under a Policy, it will generally be
treated as a new contract for purposes of determining whether the Policy is a
modified endowment contract, and subject to a new seven-pay premium period and a
new seven-pay limit. The new seven-pay limit would be determined taking into
account, under a prospective adjustment formula, the Policy Account Value of the
policy at the time of such change. A materially changed Policy would be
considered a modified endowment if it failed to satisfy the new seven-pay limit.
A material change could occur as a result of a change in death benefit option,
the selection of additional benefits, the restoration of a terminated policy and
certain other changes.
If the benefits under your Policy are reduced, for example, by requesting a
decrease in Face Amount, or in some cases by making partial withdrawals,
terminating additional benefits under a rider, changing the death benefit
option, or as a result of policy termination, the calculated seven-pay premium
level will be redetermined based on the reduced level of benefits and applied
retroactively for purposes of the seven-pay test. If the premiums previously
paid are greater than the recalculated seven-pay premium level limit, the policy
will become a modified endowment unless you request a refund of the excess
premium, as outlined above. Generally, a life insurance policy which is received
in exchange for a modified endowment or a modified endowment which terminates
and is restored, will also be considered a modified endowment.
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, pledge, assignment or partial withdrawal. Any such distributions will be
considered taxable income to the extent Accumulation 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)
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<PAGE>
received as part of a series of substantially equal periodic 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,
as defined above, which occurs in the policy year it becomes a modified
endowment contract and in any year thereafter, will be taxable income to you.
Also, any distributions within two years before a Policy becomes a modified
endowment contract will also be income taxable to you to the extent that
accumulation value exceeds investment in the Policy, as described above. 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 contracts 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.
If the Insured reaches age 100, the Death Benefit will be set at 101% of the
Cash Value of the Policy. We believe the Policy will continue to qualify as life
insurance under the Code, however, there is some uncertainty regarding this
treatment. It is possible, therefore, that you would be viewed as constructively
receiving the Surrender Value in the year in which the Insured attains age 100
and would realize taxable income at that time, even if the Policy proceeds were
not distributed at that time.
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, 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, you are advised to consult
a tax adviser for more complete tax information, specifically regarding the
applicability of the Code provisions to your situation.
Under normal circumstances, if the Policy is not a modified endowment contract,
loans received under the Policy will be construed as your indebtedness. You 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 you. 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, and will only
be subject to federal income tax to the extent such proceeds exceed the total
amount of premiums you have paid that have not been previously withdrawn.
If you make a partial withdrawal, surrender, loan or exchange of the Policy, we
may be required to withhold federal income tax from the portion of the money you
receive that is includible in your 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 we
37
<PAGE>
make the payment. In addition, if you fail to provide us with a correct taxpayer
identification number (usually a social security number) or if the Treasury
notifies Us 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, you are 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 you elect not to have federal income tax withheld, or if
the amount withheld is insufficient, then you may be responsible for payment of
estimated tax. You may also incur penalties under the estimated tax rules if the
withholding and estimated tax payments are insufficient. We suggest that you
consult with a tax adviser 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, 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. We believe we presently are and intend
to remain in compliance with the diversification requirements as set forth in
the regulations. If the diversification requirements are not satisfied, the
Policy would not be treated as a life insurance contract. As a consequence to
you, income earned on a Policy would be taxable to you in the 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 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, investment selection, 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
38
<PAGE>
year earned. However, we have reserved certain rights to alter the Policy and
investment alternatives so as to comply with such regulation or ruling. We
believe 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.
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.
> CHARGES FOR JP FINANCIAL INCOME TAXES
We are 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 we will include flexible premium life insurance operations in our
tax return in accordance with these rules.
Currently no charge is made against the Separate Account for our federal income
taxes, or provisions for such taxes, that may be attributable to the Separate
Account. We may charge each Division for its portion of any income tax charged
to us on the Division or its assets. Under present laws, we may incur state and
local taxes (in addition to premium taxes) in several states. At present these
taxes are not significant. However, if they increase, we may decide to make
charges for such taxes or provisions for such taxes against the Separate
Account. We would retain any investment earnings on any tax charges accumulated
in a Division. Any such charges against the Separate Account or its Divisions
could have an adverse effect on the investment experience of such Division.
MISCELLANEOUS POLICY PROVISIONS
- --------------------------------------------------------------------------------
> THE POLICY
The Policy which you receive, the application you make when you purchase the
Policy, any applications for any changes approved by us and any riders
constitute the whole contract. Copies of all applications are attached to and
made a part of the Policy.
Application forms are completed by the applicants and forwarded to us for
acceptance. Upon acceptance, the Policy is prepared, executed by our duly
authorized officers and forwarded to you.
We reserve the right to make a change in the Policy; however, we will not change
any terms of the Policy beneficial to you.
> PAYMENT OF BENEFITS
All benefits are payable at our Home Office. We may require submission of the
Policy before we grant Policy Loans, make changes or pay benefits.
> SUICIDE AND INCONTESTABILITY
Suicide Exclusion--In most states, if the Insured dies by suicide,
while sane or insane, within 2 years from the Issue Date of this
Policy, this Policy will end and we will refund premiums paid, without
interest, less any Policy Debt and less any withdrawal. If the Insured
commits suicide within 2 years of the effective date of any Increase
in Specified Amount, our only liability with regard to the Increase
will be for the sum of the Monthly Deductions for such Increase in
Specified Amount.
Incontestability--We will not contest or revoke the insurance coverage provided
under the Policy after the Policy has been in force during the lifetime of the
Insured for two years from the date of issue or reinstatement.
> PROTECTION OF PROCEEDS
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To the extent provided by law, the proceeds of the Policy are not subject to
claims by a Beneficiary's creditors or to any legal process against any
Beneficiary.
> NONPARTICIPATION
The Policy is not entitled to share in our divisible surplus. No dividends are
payable.
> CHANGES IN OWNER AND BENEFICIARY; ASSIGNMENT
Unless otherwise stated in the Policy, you may change the Policyowner and the
Beneficiary, or both, at any time while the Policy is in force. A request for
such change must be made in writing and sent to us at our Home Office. After we
have agreed, in writing, to the change, it will take effect as of the date on
which your Written Request was signed.
The Policy may also be assigned. No assignment of Policy will be binding on us
unless made in writing and sent to us at our Home Office. We will use reasonable
procedures to confirm that the assignment is authentic. Otherwise, we are not
responsible for the validity of any assignment. Your rights and the
Beneficiary's interest will be subject to the rights of any assignee of record.
> MISSTATEMENTS
If the age or sex of the Insured has been misstated in an application, including
a reinstatement application, we will adjust the benefits payable to reflect the
correct age or sex.
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appendix a
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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 annual rate of 0%, 6%, and 12%. The tables on
pages A-3 through A-13 illustrate a Policy issued to a male, age 45, 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%, 6%, 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
nine policy years due to the surrender charge. For policy years ten 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, and that the
mortality and expense risk charge and Premium Load are charged at
current rates. The current cost of insurance rates are based on the
sex, issue age, policy year, and 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, and upon the
maximum mortality and expense risk charges and premium load provided
in the Policy, as described below. The current cost of insurance rates
are different for Specified Amounts below $100,000 and above $100,000.
The fifth and eighth columns illustrate the Death Benefit of a Policy
over the designated period on a current and guaranteed basis,
respectively. 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, Option II or Option III 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 dividends 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 .70% of the aggregate arithmetic
average daily net assets of the Portfolios, plus a charge of .16% of the
aggregate arithmetic average daily net assets to cover expenses incurred by the
Portfolios for the twelve months ended December 31, 1999. The .70% investment
advisory fee is an average of the individual investment advisory fees of the
twenty Portfolios. The .16% expense figure is an average of the annual expenses
of the Jefferson Pilot Variable Fund Portfolios, the Templeton International
Securities Fund, the Fidelity VIP and VIP II Portfolios, the Oppenheimer
Portfolios and the MFS Portfolios. Expenses for the Templeton International
Securities Fund: Class 2, the Fidelity Equity Income, Growth, and Contrafund
Portfolios, the MFS Research and Utilities Series, and the Oppenheimer Bond and
Strategic Bond Portfolios were provided by the investment managers for these
portfolios and JP Financial has not independently verified such information. 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 0.60% (0.85% guaranteed) of the average daily net
assets of the divisions of Separate Account A in Policy Years 1 through 25 and
0.35% (0.60% guaranteed) thereafter. After deduction of these amounts, the
illustrated gross investment rates of 0%, 6%, and 12% correspond to approximate
net annual rates of -1.46%, 4.54% and 10.53%, respectively, on a current basis,
and -1.71%, 4.29% and 10.29% on a guaranteed basis.
The assumed annual premium used in calculating Accumulation Value,
Cash Value, and Death Benefits is net of the 2.5% state premium tax
charge, the 1.25% federal DAC tax charge and the Premium Load, which
is 3% in Policy Years 1 through 10 only on a current basis and 3% in
all years on a guaranteed basis. It also reflects deduction of the
Monthly Deduction and addition of the Monthly Accumulation Value
Adjustment. As part of the Monthly Deduction, the Monthly Acquisition
Charge of 2% of the Load Basis Amount is per month in Policy Years 1
and 1% of the Load Basis Amount per month in Policy Year 2 has been
deducted. The Load Basis Amount varies by Sex, Issue Age and rating
class of the Insured.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes or other taxes against Separate Account A since JP
Financial
A-1
<PAGE>
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, we will provide 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. We
reserve the right to charge an administrative fee of up to $25 for
such illustrations.
A-2
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 0.00% -1.46% -1.21%
Guaranteed 0.00% -1.71% -1.46%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2)(3) VALUE(2) VALUE(2) BENEFIT(2)(3)
---- -------- -------- -------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,073 100,000 916 100,000
2 4,305 2,291 800 100,000 1,961 470 100,000
3 6,620 3,652 2,161 100,000 3,134 1,643 100,000
4 9,051 4,985 3,494 100,000 4,252 2,761 100,000
5 11,604 6,292 4,801 100,000 5,314 3,823 100,000
6 14,284 7,579 6,386 100,000 6,317 5,124 100,000
7 17,098 8,843 7,949 100,000 7,256 6,362 100,000
8 20,053 10,083 9,487 100,000 8,125 7,529 100,000
9 23,156 11,302 11,004 100,000 8,919 8,621 100,000
10 26,414 12,490 12,490 100,000 9,629 9,629 100,000
11 29,834 13,700 13,700 100,000 10,253 10,253 100,000
12 33,426 14,869 14,869 100,000 10,784 10,784 100,000
13 37,197 15,986 15,986 100,000 11,221 11,221 100,000
14 41,157 17,054 17,054 100,000 11,560 11,560 100,000
15 45,315 18,069 18,069 100,000 11,793 11,793 100,000
16 49,681 18,964 18,964 100,000 11,910 11,910 100,000
17 54,265 19,809 19,809 100,000 11,898 11,898 100,000
18 59,078 20,588 20,588 100,000 11,740 11,740 100,000
19 64,132 21,303 21,303 100,000 11,416 11,416 100,000
20 69,439 21,960 21,960 100,000 10,903 10,903 100,000
21 75,010 22,536 22,536 100,000 10,181 10,181 100,000
22 80,861 23,032 23,032 100,000 9,230 9,230 100,000
23 87,004 23,431 23,431 100,000 8,026 8,026 100,000
24 93,454 23,746 23,746 100,000 6,545 6,545 100,000
25 100,227 23,940 23,940 100,000 4,750 4,750 100,000
26 107,338 24,096 24,096 100,000 2,597 2,597 100,000
27 114,805 24,104 24,104 100,000
28 122,645 23,986 23,986 100,000
29 130,878 23,693 23,693 100,000
30 139,522 23,224 23,224 100,000
31 148,598 22,556 22,556 100,000
32 158,128 21,633 21,633 100,000
33 168,134 20,445 20,445 100,000
34 178,641 18,921 18,921 100,000
35 189,673 17,083 17,083 100,000
36 201,256 14,803 14,803 100,000
37 213,419 12,057 12,057 100,000
38 226,190 8,776 8,776 100,000
39 239,600 4,812 4,812 100,000
40 253,680 90 90 100,000
41 268,464
42 283,987
43 300,286
44 317,400
45 335,370
46 354,239
47 374,051
48 394,853
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 premium is paid at the be ginning 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-3
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 6.00% 4.54% 4.79%
Guaranteed 6.00% 4.29% 4.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE(2) VALUE(2) BENEFIT(2)(3) VALUE(2) VALUE(2) BENEFIT(2)(3)
---- -------- -------- -------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,160 100,000 998 100,000
2 4,305 2,539 1,048 100,000 2,189 698 100,000
3 6,620 4,148 2,657 100,000 3,582 2,091 100,000
4 9,051 5,822 4,331 100,000 5,002 3,511 100,000
5 11,604 7,567 6,076 100,000 6,446 4,955 100,000
6 14,284 9,392 8,199 100,000 7,914 6,721 100,000
7 17,098 11,298 10,404 100,000 9,400 8,506 100,000
8 20,053 13,288 12,692 100,000 10,901 10,305 100,000
9 23,156 15,369 15,071 100,000 12,411 12,113 100,000
10 26,414 17,536 17,536 100,000 13,925 13,925 100,000
11 29,834 19,849 19,849 100,000 15,439 15,439 100,000
12 33,426 22,250 22,250 100,000 16,950 16,950 100,000
13 37,197 24,736 24,736 100,000 18,457 18,457 100,000
14 41,157 27,313 27,313 100,000 19,957 19,957 100,000
15 45,315 29,988 29,988 100,000 21,447 21,447 100,000
16 49,681 32,716 32,716 100,000 22,918 22,918 100,000
17 54,265 35,565 35,565 100,000 24,363 24,363 100,000
18 59,078 38,530 38,530 100,000 25,769 25,769 100,000
19 64,132 41,624 41,624 100,000 27,122 27,122 100,000
20 69,439 44,863 44,863 100,000 28,409 28,409 100,000
21 75,010 48,242 48,242 100,000 29,620 29,620 100,000
22 80,861 51,779 51,779 100,000 30,744 30,744 100,000
23 87,004 55,478 55,478 100,000 31,767 31,767 100,000
24 93,454 59,367 59,367 100,000 32,675 32,675 100,000
25 100,227 63,449 63,449 100,000 33,447 33,447 100,000
26 107,338 67,863 67,863 100,000 34,125 34,125 100,000
27 114,805 72,525 72,525 100,000 34,599 34,599 100,000
28 122,645 77,480 77,480 100,000 34,813 34,813 100,000
29 130,878 82,753 82,753 100,000 34,694 34,694 100,000
30 139,522 88,396 88,396 100,000 34,165 34,165 100,000
31 148,598 94,461 94,461 100,000 33,137 33,137 100,000
32 158,128 100,904 100,904 105,949 31,507 31,507 100,000
33 168,134 107,646 107,646 113,029 29,152 29,152 100,000
34 178,641 114,696 114,696 120,431 25,919 25,919 100,000
35 189,673 122,070 122,070 128,173 21,594 21,594 100,000
36 201,256 129,772 129,772 136,261 15,880 15,880 100,000
37 213,419 137,817 137,817 144,708 8,352 8,352 100,000
38 226,190 146,215 146,215 153,526
39 239,600 154,973 154,973 162,722
40 253,680 164,103 164,103 172,308
41 268,464 173,613 173,613 182,294
42 283,987 183,511 183,511 192,686
43 300,286 193,793 193,793 203,483
44 317,400 204,473 204,473 214,696
45 335,370 215,555 215,555 226,332
46 354,239 227,030 227,030 238,382
47 374,051 239,214 239,214 248,783
48 394,853 252,203 252,203 259,769
49 416,696 266,111 266,111 271,433
50 439,631 281,073 281,073 283,884
51 463,712 296,747 296,747 299,715
52 488,998 313,170 313,170 316,301
53 515,548 330,373 330,373 333,677
54 543,425 348,393 348,393 351,876
55 572,696 367,263 367,263 370,936
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-4
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 12.00% 10.54% 10.79%
Guaranteed 12.00% 10.29% 10.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,248 100,000 1,080 100,000
2 4,305 2,799 1,308 100,000 2,428 937 100,000
3 6,620 4,686 3,195 100,000 4,071 2,580 100,000
4 9,051 6,766 5,275 100,000 5,851 4,360 100,000
5 11,604 9,062 7,571 100,000 7,779 6,288 100,000
6 14,284 11,603 10,410 100,000 9,871 8,678 100,000
7 17,098 14,413 13,519 100,000 12,138 11,244 100,000
8 20,053 17,522 16,926 100,000 14,597 14,001 100,000
9 23,156 20,964 20,666 100,000 17,264 16,966 100,000
10 26,414 24,768 24,768 100,000 20,159 20,159 100,000
11 29,834 29,034 29,034 100,000 23,307 23,307 100,000
12 33,426 33,759 33,759 100,000 26,738 26,738 100,000
13 37,197 38,995 38,995 100,000 30,489 30,489 100,000
14 41,157 44,807 44,807 100,000 34,616 34,616 100,000
15 45,315 51,265 51,265 100,000 39,169 39,169 100,000
16 49,681 58,411 58,411 100,000 44,204 44,204 100,000
17 54,265 66,381 66,381 100,000 49,787 49,787 100,000
18 59,078 75,275 75,275 100,000 55,996 55,996 100,000
19 64,132 85,206 85,206 105,655 62,924 62,924 100,000
20 69,439 96,216 96,216 117,383 70,684 70,684 100,000
21 75,010 108,406 108,406 130,087 79,419 79,419 100,000
22 80,861 121,892 121,892 145,052 89,252 89,252 106,210
23 87,004 136,808 136,808 161,434 100,085 100,085 118,100
24 93,454 153,312 153,312 179,375 111,995 111,995 131,034
25 100,227 171,562 171,562 199,012 125,088 125,088 145,102
26 107,338 191,957 191,957 220,750 139,641 139,641 160,587
27 114,805 214,569 214,569 242,463 155,719 155,719 175,962
28 122,645 239,671 239,671 266,035 173,503 173,503 192,588
29 130,878 267,545 267,545 291,624 193,206 193,206 210,595
30 139,522 298,534 298,534 319,432 215,085 215,085 230,141
31 148,598 333,024 333,024 349,675 239,445 239,445 251,418
32 158,128 371,221 371,221 389,782 266,270 266,270 279,583
33 168,134 413,516 413,516 434,192 295,792 295,792 310,582
34 178,641 460,327 460,327 483,343 328,269 328,269 344,682
35 189,673 512,138 512,138 537,745 363,973 363,973 382,172
36 201,256 569,442 569,442 597,914 403,196 403,196 423,356
37 213,419 632,809 632,809 664,450 446,244 446,244 468,556
38 226,190 702,858 702,858 738,001 493,434 493,434 518,106
39 239,600 780,239 780,239 819,251 545,097 545,097 572,352
40 253,680 865,698 865,698 908,983 601,583 601,583 631,662
41 268,464 960,028 960,028 1,008,030 663,264 663,264 696,427
42 283,987 1,064,090 1,064,090 1,117,294 730,540 730,540 767,067
43 300,286 1,178,761 1,178,761 1,237,699 803,834 803,834 844,026
44 317,400 1,305,091 1,305,091 1,370,346 883,590 883,590 927,769
45 335,370 1,444,177 1,444,177 1,516,385 970,268 970,268 1,018,782
46 354,239 1,597,117 1,597,117 1,676,973 1,064,336 1,064,336 1,117,553
47 374,051 1,767,481 1,767,481 1,838,181 1,169,433 1,169,433 1,216,211
48 394,853 1,957,745 1,957,745 2,016,477 1,287,466 1,287,466 1,326,090
49 416,696 2,170,834 2,170,834 2,214,250 1,420,793 1,420,793 1,449,209
50 439,631 2,410,222 2,410,222 2,434,324 1,572,408 1,572,408 1,588,132
51 463,712 2,675,563 2,675,563 2,702,319 1,739,407 1,739,407 1,756,802
52 488,998 2,969,671 2,969,671 2,999,368 1,922,810 1,922,810 1,942,038
53 515,548 3,295,630 3,295,630 3,328,586 2,122,834 2,122,834 2,144,062
54 543,425 3,656,847 3,656,847 3,693,415 2,338,337 2,338,337 2,361,720
55 572,696 4,057,088 4,057,088 4,097,659 2,575,528 2,575,528 2,601,284
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-5
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 0.00% -1.46% -1.21%
Guaranteed 0.00% -1.71% -1.46%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,073 100,000 916 100,000
2 4,305 2,291 800 100,000 1,961 470 100,000
3 6,620 3,652 2,161 100,000 3,134 1,643 100,000
4 9,051 4,985 3,494 100,000 4,252 2,761 100,000
5 11,604 6,292 4,801 100,000 5,314 3,823 100,000
6 14,284 7,579 6,386 100,000 6,317 5,124 100,000
7 17,098 8,843 7,949 100,000 7,256 6,362 100,000
8 20,053 10,083 9,487 100,000 8,125 7,529 100,000
9 23,156 11,302 11,004 100,000 8,919 8,621 100,000
10 26,414 12,490 12,490 100,000 9,629 9,629 100,000
11 29,834 13,700 13,700 100,000 10,253 10,253 100,000
12 33,426 14,869 14,869 100,000 10,784 10,784 100,000
13 37,197 15,986 15,986 100,000 11,221 11,221 100,000
14 41,157 17,054 17,054 100,000 11,560 11,560 100,000
15 45,315 18,069 18,069 100,000 11,793 11,793 100,000
16 49,681 18,964 18,964 100,000 11,910 11,910 100,000
17 54,265 19,809 19,809 100,000 11,898 11,898 100,000
18 59,078 20,588 20,588 100,000 11,740 11,740 100,000
19 64,132 21,303 21,303 100,000 11,416 11,416 100,000
20 69,439 21,960 21,960 100,000 10,903 10,903 100,000
21 75,010 22,536 22,536 100,000 10,181 10,181 100,000
22 80,861 23,032 23,032 100,000 9,230 9,230 100,000
23 87,004 23,431 23,431 100,000 8,026 8,026 100,000
24 93,454 23,746 23,746 100,000 6,545 6,545 100,000
25 100,227 23,940 23,940 100,000 4,750 4,750 100,000
26 107,338 24,096 24,096 100,000 2,597 2,597 100,000
27 114,805 24,104 24,104 100,000
28 122,645 23,986 23,986 100,000
29 130,878 23,693 23,693 100,000
30 139,522 23,224 23,224 100,000
31 148,598 22,556 22,556 100,000
32 158,128 21,633 21,633 100,000
33 168,134 20,445 20,445 100,000
34 178,641 18,921 18,921 100,000
35 189,673 17,083 17,083 100,000
36 201,256 14,803 14,803 100,000
37 213,419 12,057 12,057 100,000
38 226,190 8,776 8,776 100,000
39 239,600 4,812 4,812 100,000
40 253,680 90 90 100,000
41 268,464
42 283,987
43 300,286
44 317,400
45 335,370
46 354,239
47 374,051
48 394,853
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-6
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 6.00% 4.54% 4.79%
Guaranteed 6.00% 4.29% 4.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,160 100,000 998 100,000
2 4,305 2,539 1,048 100,000 2,189 698 100,000
3 6,620 4,148 2,657 100,000 3,582 2,091 100,000
4 9,051 5,822 4,331 100,000 5,002 3,511 100,000
5 11,604 7,567 6,076 100,000 6,446 4,955 100,000
6 14,284 9,392 8,199 100,000 7,914 6,721 100,000
7 17,098 11,298 10,404 100,000 9,400 8,506 100,000
8 20,053 13,288 12,692 100,000 10,901 10,305 100,000
9 23,156 15,369 15,071 100,000 12,411 12,113 100,000
10 26,414 17,536 17,536 100,000 13,925 13,925 100,000
11 29,834 19,849 19,849 100,000 15,439 15,439 100,000
12 33,426 22,250 22,250 100,000 16,950 16,950 100,000
13 37,197 24,736 24,736 100,000 18,457 18,457 100,000
14 41,157 27,313 27,313 100,000 19,957 19,957 100,000
15 45,315 29,988 29,988 100,000 21,447 21,447 100,000
16 49,681 32,716 32,716 100,000 22,918 22,918 100,000
17 54,265 35,565 35,565 100,000 24,363 24,363 100,000
18 59,078 38,530 38,530 100,000 25,769 25,769 100,000
19 64,132 41,624 41,624 100,000 27,122 27,122 100,000
20 69,439 44,863 44,863 100,000 28,409 28,409 100,000
21 75,010 48,242 48,242 100,000 29,620 29,620 100,000
22 80,861 51,779 51,779 100,000 30,744 30,744 100,000
23 87,004 55,478 55,478 100,000 31,767 31,767 100,000
24 93,454 59,367 59,367 100,000 32,675 32,675 100,000
25 100,227 63,449 63,449 100,000 33,447 33,447 100,000
26 107,338 67,844 67,844 102,955 34,125 34,125 100,000
27 114,805 72,391 72,391 107,664 34,599 34,599 100,000
28 122,645 77,108 77,108 112,456 34,813 34,813 100,000
29 130,878 81,981 81,981 117,327 34,694 34,694 100,000
30 139,522 87,021 87,021 122,306 34,165 34,165 100,000
31 148,598 92,231 92,231 127,409 33,137 33,137 100,000
32 158,128 97,598 97,598 132,624 31,507 31,507 100,000
33 168,134 103,134 103,134 137,967 29,152 29,152 100,000
34 178,641 108,824 108,824 143,411 25,919 25,919 100,000
35 189,673 114,701 114,701 148,987 21,594 21,594 100,000
36 201,256 120,736 120,736 154,650 15,880 15,880 100,000
37 213,419 126,948 126,948 160,429 8,352 8,352 100,000
38 226,190 133,344 133,344 166,341
39 239,600 139,909 139,909 172,385
40 253,680 146,660 146,660 178,607
41 268,464 153,595 153,595 185,019
42 283,987 160,712 160,712 191,623
43 300,286 167,980 167,980 198,372
44 317,400 175,426 175,426 205,285
45 335,370 183,058 183,058 212,345
46 354,239 190,856 190,856 219,499
47 374,051 198,881 198,881 226,771
48 394,853 207,170 207,170 234,145
49 416,696 215,779 215,779 241,610
50 439,631 224,790 224,790 249,157
51 463,712 234,270 234,270 256,775
52 488,998 244,402 244,402 264,601
53 515,548 255,349 255,349 272,811
54 543,425 267,282 267,282 281,678
55 572,696 280,348 280,348 291,562
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-7
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION I
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 12.00% 10.54% 10.79%
Guaranteed 12.00% 10.29% 10.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,248 100,000 1,080 100,000
2 4,305 2,799 1,308 100,000 2,428 937 100,000
3 6,620 4,686 3,195 100,000 4,071 2,580 100,000
4 9,051 6,766 5,275 100,000 5,851 4,360 100,000
5 11,604 9,062 7,571 100,000 7,779 6,288 100,000
6 14,284 11,603 10,410 100,000 9,871 8,678 100,000
7 17,098 14,413 13,519 100,000 12,138 11,244 100,000
8 20,053 17,522 16,926 100,000 14,597 14,001 100,000
9 23,156 20,964 20,666 100,000 17,264 16,966 100,000
10 26,414 24,768 24,768 100,000 20,159 20,159 100,000
11 29,834 29,034 29,034 100,000 23,307 23,307 100,000
12 33,426 33,759 33,759 100,000 26,738 26,738 100,000
13 37,197 38,995 38,995 100,000 30,489 30,489 100,000
14 41,157 44,807 44,807 100,000 34,616 34,616 100,000
15 45,315 51,265 51,265 100,541 39,169 39,169 100,000
16 49,681 58,362 58,362 111,538 44,204 44,204 100,000
17 54,265 66,175 66,175 123,293 49,787 49,787 100,000
18 59,078 74,764 74,764 135,858 55,994 55,994 101,750
19 64,132 84,209 84,209 149,319 62,776 62,776 111,313
20 69,439 94,600 94,600 163,776 70,116 70,116 121,389
21 75,010 106,012 106,012 179,297 78,054 78,054 132,012
22 80,861 118,548 118,548 195,990 86,632 86,632 143,224
23 87,004 132,301 132,301 213,929 95,898 95,898 155,065
24 93,454 147,410 147,410 233,254 105,903 105,903 167,576
25 100,227 163,967 163,967 254,023 116,700 116,700 180,794
26 107,338 182,336 182,336 276,700 128,485 128,485 194,980
27 114,805 202,463 202,463 301,114 141,178 141,178 209,968
28 122,645 224,559 224,559 327,505 154,821 154,821 225,796
29 130,878 248,758 248,758 356,010 169,450 169,450 242,508
30 139,522 275,275 275,275 386,893 185,107 185,107 260,164
31 148,598 304,316 304,316 420,387 201,845 201,845 278,832
32 158,128 336,060 336,060 456,667 219,727 219,727 298,584
33 168,134 370,777 370,777 496,005 238,832 238,832 319,497
34 178,641 408,670 408,670 538,554 259,251 259,251 341,646
35 189,673 450,128 450,128 584,678 281,072 281,072 365,089
36 201,256 495,344 495,344 634,485 304,370 304,370 389,867
37 213,419 544,715 544,715 688,378 329,207 329,207 416,032
38 226,190 598,626 598,626 746,758 355,619 355,619 443,618
39 239,600 657,387 657,387 809,979 383,629 383,629 472,677
40 253,680 721,491 721,491 878,653 413,277 413,277 503,301
41 268,464 791,378 791,378 953,286 444,622 444,622 535,587
42 283,987 867,520 867,520 1,034,372 477,755 477,755 569,642
43 300,286 950,263 950,263 1,122,190 512,787 512,787 605,563
44 317,400 1,040,306 1,040,306 1,217,372 549,859 549,859 643,448
45 335,370 1,138,298 1,138,298 1,320,416 589,136 589,136 683,392
46 354,239 1,244,776 1,244,776 1,431,585 630,816 630,816 725,485
47 374,051 1,360,832 1,360,832 1,551,663 675,137 675,137 769,812
48 394,853 1,487,546 1,487,546 1,681,234 722,379 722,379 816,437
49 416,696 1,626,255 1,626,255 1,820,932 772,865 772,865 865,383
50 439,631 1,778,656 1,778,656 1,971,463 826,793 826,793 916,417
51 463,712 1,946,560 1,946,560 2,133,555 884,045 884,045 968,970
52 488,998 2,132,990 2,132,990 2,309,279 943,688 943,688 1,021,683
53 515,548 2,341,267 2,341,267 2,501,372 1,002,750 1,002,750 1,071,322
54 543,425 2,575,240 2,575,240 2,713,950 1,058,176 1,058,176 1,115,173
55 572,696 2,839,091 2,839,091 2,952,654 1,132,142 1,132,142 1,177,428
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-8
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 0.00% -1.46% -1.21%
Guaranteed 0.00% -1.71% -1.46%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,069 101,069 909 100,909
2 4,305 2,279 788 102,279 1,944 453 101,944
3 6,620 3,627 2,136 103,627 3,098 1,607 103,098
4 9,051 4,942 3,451 104,942 4,191 2,700 104,191
5 11,604 6,225 4,734 106,225 5,218 3,727 105,218
6 14,284 7,484 6,291 107,484 6,178 4,985 106,178
7 17,098 8,714 7,820 108,714 7,063 6,169 107,063
8 20,053 9,916 9,320 109,916 7,867 7,271 107,867
9 23,156 11,090 10,792 111,090 8,583 8,285 108,583
10 26,414 12,228 12,228 112,228 9,202 9,202 109,202
11 29,834 13,378 13,378 113,378 9,719 9,719 109,719
12 33,426 14,478 14,478 114,478 10,129 10,129 110,129
13 37,197 15,514 15,514 115,514 10,429 10,429 110,429
14 41,157 16,488 16,488 116,488 10,613 10,613 110,613
15 45,315 17,394 17,394 117,394 10,676 10,676 110,676
16 49,681 18,148 18,148 118,148 10,607 10,607 110,607
17 54,265 18,838 18,838 118,838 10,391 10,391 110,391
18 59,078 19,439 19,439 119,439 10,014 10,014 110,014
19 64,132 19,957 19,957 119,957 9,454 9,454 109,454
20 69,439 20,396 20,396 120,396 8,693 8,693 108,693
21 75,010 20,727 20,727 120,727 7,714 7,714 107,714
22 80,861 20,953 20,953 120,953 6,504 6,504 106,504
23 87,004 21,047 21,047 121,047 5,052 5,052 105,052
24 93,454 21,031 21,031 121,031 3,342 3,342 103,342
25 100,227 20,855 20,855 120,855 1,356 1,356 101,356
26 107,338 20,601 20,601 120,601
27 114,805 20,152 20,152 120,152
28 122,645 19,543 19,543 119,543
29 130,878 18,711 18,711 118,711
30 139,522 17,663 17,663 117,663
31 148,598 16,378 16,378 116,378
32 158,128 14,795 14,795 114,795
33 168,134 12,919 12,919 112,919
34 178,641 10,681 10,681 110,681
35 189,673 8,140 8,140 108,140
36 201,256 5,172 5,172 105,172
37 213,419 1,797 1,797 101,797
38 226,190
39 239,600
40 253,680
41 268,464
42 283,987
43 300,286
44 317,400
45 335,370
46 354,239
47 374,051
48 394,853
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-9
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 6.00% 4.54% 4.79%
Guaranteed 6.00% 4.29% 4.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,155 101,155 991 100,991
2 4,305 2,526 1,035 102,526 2,170 679 102,170
3 6,620 4,119 2,628 104,119 3,541 2,050 103,541
4 9,051 5,770 4,279 105,770 4,928 3,437 104,928
5 11,604 7,484 5,993 107,484 6,326 4,835 106,326
6 14,284 9,269 8,076 109,269 7,734 6,541 107,734
7 17,098 11,125 10,231 111,125 9,140 8,246 109,140
8 20,053 13,055 12,459 113,055 10,540 9,944 110,540
9 23,156 15,062 14,764 115,062 11,922 11,624 111,922
10 26,414 17,140 17,140 117,140 13,276 13,276 113,276
11 29,834 19,343 19,343 119,343 14,595 14,595 114,595
12 33,426 21,613 21,613 121,613 15,868 15,868 115,868
13 37,197 23,936 23,936 123,936 17,089 17,089 117,089
14 41,157 26,316 26,316 126,316 18,249 18,249 118,249
15 45,315 28,748 28,748 128,748 19,337 19,337 119,337
16 49,681 31,158 31,158 131,158 20,336 20,336 120,336
17 54,265 33,632 33,632 133,632 21,226 21,226 121,226
18 59,078 36,148 36,148 136,148 21,983 21,983 121,983
19 64,132 38,711 38,711 138,711 22,577 22,577 122,577
20 69,439 41,328 41,328 141,328 22,980 22,980 122,980
21 75,010 43,969 43,969 143,969 23,162 23,162 123,162
22 80,861 46,637 46,637 146,637 23,096 23,096 123,096
23 87,004 49,306 49,306 149,306 22,755 22,755 122,755
24 93,454 51,993 51,993 151,993 22,109 22,109 122,109
25 100,227 54,650 54,650 154,650 21,120 21,120 121,120
26 107,338 57,394 57,394 157,394 19,786 19,786 119,786
27 114,805 60,073 60,073 160,073 17,986 17,986 117,986
28 122,645 62,716 62,716 162,716 15,637 15,637 115,637
29 130,878 65,256 65,256 165,256 12,642 12,642 112,642
30 139,522 67,691 67,691 167,691 8,908 8,908 108,908
31 148,598 69,991 69,991 169,991 4,348 4,348 104,348
32 158,128 72,085 72,085 172,085
33 168,134 73,964 73,964 173,964
34 178,641 75,541 75,541 175,541
35 189,673 76,858 76,858 176,858
36 201,256 77,771 77,771 177,771
37 213,419 78,275 78,275 178,275
38 226,190 78,320 78,320 178,320
39 239,600 77,782 77,782 177,782
40 253,680 76,639 76,639 176,639
41 268,464 74,803 74,803 174,803
42 283,987 72,180 72,180 172,180
43 300,286 68,568 68,568 168,568
44 317,400 63,946 63,946 163,946
45 335,370 58,213 58,213 158,213
46 354,239 51,144 51,144 151,144
47 374,051 42,751 42,751 142,751
48 394,853 32,928 32,928 132,928
49 416,696 21,562 21,562 121,562
50 439,631 8,542 8,542 108,542
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-10
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 12.00% 10.54% 10.79%
Guaranteed 12.00% 10.29% 10.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,243 101,243 1,073 101,073
2 4,305 2,784 1,293 102,784 2,407 916 102,407
3 6,620 4,653 3,162 104,653 4,024 2,533 104,024
4 9,051 6,704 5,213 106,704 5,763 4,272 105,763
5 11,604 8,959 7,468 108,959 7,631 6,140 107,631
6 14,284 11,445 10,252 111,445 9,639 8,446 109,639
7 17,098 14,183 13,289 114,183 11,790 10,896 111,790
8 20,053 17,198 16,602 117,198 14,094 13,498 114,094
9 23,156 20,520 20,222 120,520 16,555 16,257 116,555
10 26,414 24,172 24,172 124,172 19,179 19,179 119,179
11 29,834 28,243 28,243 128,243 21,976 21,976 121,976
12 33,426 32,715 32,715 132,715 24,956 24,956 124,956
13 37,197 37,626 37,626 137,626 28,133 28,133 128,133
14 41,157 43,026 43,026 143,026 31,528 31,528 131,528
15 45,315 48,962 48,962 148,962 35,160 35,160 135,160
16 49,681 55,400 55,400 155,400 39,042 39,042 139,042
17 54,265 62,488 62,488 162,488 43,184 43,184 143,184
18 59,078 70,269 70,269 170,269 47,593 47,593 147,593
19 64,132 78,825 78,825 178,825 52,274 52,274 152,274
20 69,439 88,243 88,243 188,243 57,232 57,232 157,232
21 75,010 98,586 98,586 198,586 62,477 62,477 162,477
22 80,861 109,956 109,956 209,956 68,022 68,022 168,022
23 87,004 122,437 122,437 222,437 73,880 73,880 173,880
24 93,454 136,171 136,171 236,171 80,068 80,068 180,068
25 100,227 151,243 151,243 251,243 86,595 86,595 186,595
26 107,338 168,007 168,007 268,007 93,578 93,578 193,578
27 114,805 186,416 186,416 286,416 100,899 100,899 200,899
28 122,645 206,686 206,686 306,686 108,533 108,533 208,533
29 130,878 228,955 228,955 328,955 116,439 116,439 216,439
30 139,522 253,449 253,449 353,449 124,582 124,582 224,582
31 148,598 280,389 280,389 380,389 132,933 132,933 232,933
32 158,128 309,979 309,979 409,979 141,472 141,472 241,472
33 168,134 342,515 342,515 442,515 150,185 150,185 250,185
34 178,641 378,247 378,247 478,247 159,064 159,064 259,064
35 189,673 417,587 417,587 517,587 168,078 168,078 268,078
36 201,256 460,803 460,803 560,803 177,161 177,161 277,161
37 213,419 508,339 508,339 608,339 186,211 186,211 286,211
38 226,190 560,649 560,649 660,649 195,079 195,079 295,079
39 239,600 618,157 618,157 718,157 203,582 203,582 303,582
40 253,680 681,451 681,451 781,451 211,542 211,542 311,542
41 268,464 751,116 751,116 851,116 218,790 218,790 318,790
42 283,987 827,802 827,802 927,802 225,167 225,167 325,167
43 300,286 912,128 912,128 1,012,128 230,509 230,509 330,509
44 317,400 1,004,976 1,004,976 1,104,976 234,639 234,639 334,639
45 335,370 1,107,247 1,107,247 1,207,247 237,352 237,352 337,352
46 354,239 1,219,822 1,219,822 1,319,822 238,395 238,395 338,395
47 374,051 1,343,937 1,343,937 1,443,937 237,445 237,445 337,445
48 394,853 1,480,840 1,480,840 1,580,840 234,055 234,055 334,055
49 416,696 1,631,922 1,631,922 1,731,922 227,583 227,583 327,583
50 439,631 1,798,726 1,798,726 1,898,726 216,831 216,831 316,831
51 463,712 1,982,780 1,982,780 2,082,780 199,551 199,551 299,551
52 488,998 2,186,151 2,186,151 2,286,151 171,148 171,148 271,148
53 515,548 2,410,956 2,410,956 2,510,956 121,055 121,055 221,055
54 543,425 2,659,555 2,659,555 2,759,555 31,005 31,005 131,005
55 572,696 2,934,570 2,934,570 3,034,570
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-11
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 0.00% -1.46% -1.21%
Guaranteed 0.00% -1.71% -1.46%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,069 101,069 909 100,909
2 4,305 2,279 788 102,279 1,944 453 101,944
3 6,620 3,627 2,136 103,627 3,098 1,607 103,098
4 9,051 4,942 3,451 104,942 4,191 2,700 104,191
5 11,604 6,225 4,734 106,225 5,218 3,727 105,218
6 14,284 7,484 6,291 107,484 6,178 4,985 106,178
7 17,098 8,714 7,820 108,714 7,063 6,169 107,063
8 20,053 9,916 9,320 109,916 7,867 7,271 107,867
9 23,156 11,090 10,792 111,090 8,583 8,285 108,583
10 26,414 12,228 12,228 112,228 9,202 9,202 109,202
11 29,834 13,378 13,378 113,378 9,719 9,719 109,719
12 33,426 14,478 14,478 114,478 10,129 10,129 110,129
13 37,197 15,514 15,514 115,514 10,429 10,429 110,429
14 41,157 16,488 16,488 116,488 10,613 10,613 110,613
15 45,315 17,394 17,394 117,394 10,676 10,676 110,676
16 49,681 18,148 18,148 118,148 10,607 10,607 110,607
17 54,265 18,838 18,838 118,838 10,391 10,391 110,391
18 59,078 19,439 19,439 119,439 10,014 10,014 110,014
19 64,132 19,957 19,957 119,957 9,454 9,454 109,454
20 69,439 20,396 20,396 120,396 8,693 8,693 108,693
21 75,010 20,727 20,727 120,727 7,714 7,714 107,714
22 80,861 20,953 20,953 120,953 6,504 6,504 106,504
23 87,004 21,047 21,047 121,047 5,052 5,052 105,052
24 93,454 21,031 21,031 121,031 3,342 3,342 103,342
25 100,227 20,855 20,855 120,855 1,356 1,356 101,356
26 107,338 20,601 20,601 120,601
27 114,805 20,152 20,152 120,152
28 122,645 19,543 19,543 119,543
29 130,878 18,711 18,711 118,711
30 139,522 17,663 17,663 117,663
31 148,598 16,378 16,378 116,378
32 158,128 14,795 14,795 114,795
33 168,134 12,919 12,919 112,919
34 178,641 10,681 10,681 110,681
35 189,673 8,140 8,140 108,140
36 201,256 5,172 5,172 105,172
37 213,419 1,797 1,797 101,797
38 226,190
39 239,600
40 253,680
41 268,464
42 283,987
43 300,286
44 317,400
45 335,370
46 354,239
47 374,051
48 394,853
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-12
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 6.00% 4.54% 4.79%
Guaranteed 6.00% 4.29% 4.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,155 101,155 991 100,991
2 4,305 2,526 1,035 102,526 2,170 679 102,170
3 6,620 4,119 2,628 104,119 3,541 2,050 103,541
4 9,051 5,770 4,279 105,770 4,928 3,437 104,928
5 11,604 7,484 5,993 107,484 6,326 4,835 106,326
6 14,284 9,269 8,076 109,269 7,734 6,541 107,734
7 17,098 11,125 10,231 111,125 9,140 8,246 109,140
8 20,053 13,055 12,459 113,055 10,540 9,944 110,540
9 23,156 15,062 14,764 115,062 11,922 11,624 111,922
10 26,414 17,140 17,140 117,140 13,276 13,276 113,276
11 29,834 19,343 19,343 119,343 14,595 14,595 114,595
12 33,426 21,613 21,613 121,613 15,868 15,868 115,868
13 37,197 23,936 23,936 123,936 17,089 17,089 117,089
14 41,157 26,316 26,316 126,316 18,249 18,249 118,249
15 45,315 28,748 28,748 128,748 19,337 19,337 119,337
16 49,681 31,158 31,158 131,158 20,336 20,336 120,336
17 54,265 33,632 33,632 133,632 21,226 21,226 121,226
18 59,078 36,148 36,148 136,148 21,983 21,983 121,983
19 64,132 38,711 38,711 138,711 22,577 22,577 122,577
20 69,439 41,328 41,328 141,328 22,980 22,980 122,980
21 75,010 43,969 43,969 143,969 23,162 23,162 123,162
22 80,861 46,637 46,637 146,637 23,096 23,096 123,096
23 87,004 49,306 49,306 149,306 22,755 22,755 122,755
24 93,454 51,993 51,993 151,993 22,109 22,109 122,109
25 100,227 54,650 54,650 154,650 21,120 21,120 121,120
26 107,338 57,394 57,394 157,394 19,786 19,786 119,786
27 114,805 60,073 60,073 160,073 17,986 17,986 117,986
28 122,645 62,716 62,716 162,716 15,637 15,637 115,637
29 130,878 65,256 65,256 165,256 12,642 12,642 112,642
30 139,522 67,691 67,691 167,691 8,908 8,908 108,908
31 148,598 69,991 69,991 169,991 4,348 4,348 104,348
32 158,128 72,085 72,085 172,085
33 168,134 73,964 73,964 173,964
34 178,641 75,541 75,541 175,541
35 189,673 76,858 76,858 176,858
36 201,256 77,771 77,771 177,771
37 213,419 78,275 78,275 178,275
38 226,190 78,320 78,320 178,320
39 239,600 77,782 77,782 177,782
40 253,680 76,639 76,639 176,639
41 268,464 74,803 74,803 174,803
42 283,987 72,180 72,180 172,180
43 300,286 68,568 68,568 168,568
44 317,400 63,946 63,946 163,946
45 335,370 58,213 58,213 158,213
46 354,239 51,144 51,144 151,144
47 374,051 42,751 42,751 142,751
48 394,853 32,928 32,928 132,928
49 416,696 21,562 21,562 121,562
50 439,631 8,542 8,542 108,542
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-13
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION II
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 12.00% 10.54% 10.79%
Guaranteed 12.00% 10.29% 10.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,243 101,243 1,073 101,073
2 4,305 2,784 1,293 102,784 2,407 916 102,407
3 6,620 4,653 3,162 104,653 4,024 2,533 104,024
4 9,051 6,704 5,213 106,704 5,763 4,272 105,763
5 11,604 8,959 7,468 108,959 7,631 6,140 107,631
6 14,284 11,445 10,252 111,445 9,639 8,446 109,639
7 17,098 14,183 13,289 114,183 11,790 10,896 111,790
8 20,053 17,198 16,602 117,198 14,094 13,498 114,094
9 23,156 20,520 20,222 120,520 16,555 16,257 116,555
10 26,414 24,172 24,172 124,172 19,179 19,179 119,179
11 29,834 28,243 28,243 128,243 21,976 21,976 121,976
12 33,426 32,715 32,715 132,715 24,956 24,956 124,956
13 37,197 37,626 37,626 137,626 28,133 28,133 128,133
14 41,157 43,026 43,026 143,026 31,528 31,528 131,528
15 45,315 48,962 48,962 148,962 35,160 35,160 135,160
16 49,681 55,400 55,400 155,400 39,042 39,042 139,042
17 54,265 62,488 62,488 162,488 43,184 43,184 143,184
18 59,078 70,269 70,269 170,269 47,593 47,593 147,593
19 64,132 78,825 78,825 178,825 52,274 52,274 152,274
20 69,439 88,243 88,243 188,243 57,232 57,232 157,232
21 75,010 98,586 98,586 198,586 62,477 62,477 162,477
22 80,861 109,956 109,956 209,956 68,022 68,022 168,022
23 87,004 122,437 122,437 222,437 73,880 73,880 173,880
24 93,454 136,171 136,171 236,171 80,068 80,068 180,068
25 100,227 151,243 151,243 251,243 86,595 86,595 186,595
26 107,338 168,007 168,007 268,007 93,578 93,578 193,578
27 114,805 186,416 186,416 286,416 100,899 100,899 200,899
28 122,645 206,686 206,686 306,686 108,533 108,533 208,533
29 130,878 228,955 228,955 328,955 116,439 116,439 216,439
30 139,522 253,441 253,441 356,207 124,582 124,582 224,582
31 148,598 280,316 280,316 387,233 132,933 132,933 232,933
32 158,128 309,707 309,707 420,857 141,472 141,472 241,472
33 168,134 341,852 341,852 457,311 150,185 150,185 250,185
34 178,641 376,938 376,938 496,737 159,064 159,064 259,064
35 189,673 415,326 415,326 539,473 168,078 168,078 268,078
36 201,256 457,193 457,193 585,618 177,161 177,161 277,161
37 213,419 502,909 502,909 635,546 186,211 186,211 286,211
38 226,190 552,829 552,829 689,628 195,079 195,079 295,079
39 239,600 607,240 607,240 748,192 203,582 203,582 303,582
40 253,680 666,600 666,600 811,805 211,542 211,542 311,542
41 268,464 731,314 731,314 880,934 218,790 218,790 318,790
42 283,987 801,822 801,822 956,038 225,167 225,167 325,167
43 300,286 878,443 878,443 1,037,376 230,509 230,509 330,509
44 317,400 961,824 961,824 1,125,533 234,639 234,639 334,639
45 335,370 1,052,568 1,052,568 1,220,969 237,352 237,352 337,352
46 354,239 1,151,169 1,151,169 1,323,930 238,395 238,395 338,395
47 374,051 1,258,641 1,258,641 1,435,141 237,445 237,445 337,445
48 394,853 1,375,983 1,375,983 1,555,144 234,055 234,055 334,055
49 416,696 1,504,431 1,504,431 1,684,524 227,583 227,583 327,583
50 439,631 1,645,558 1,645,558 1,823,937 216,831 216,831 316,831
51 463,712 1,801,040 1,801,040 1,974,056 199,551 199,551 299,551
52 488,998 1,973,676 1,973,676 2,136,798 171,148 171,148 271,148
53 515,548 2,166,539 2,166,539 2,314,695 121,055 121,055 221,055
54 543,425 2,383,194 2,383,194 2,511,560 31,005 31,005 131,005
55 572,696 2,627,199 2,627,199 2,732,287
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-14
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION III
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 0.00% -1.46% -1.21%
Guaranteed 0.00% -1.71% -1.46%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,067 102,000 907 102,000
2 4,305 2,273 782 104,000 1,933 442 104,000
3 6,620 3,614 2,123 106,000 3,074 1,583 106,000
4 9,051 4,919 3,428 108,000 4,147 2,656 108,000
5 11,604 6,190 4,699 110,000 5,149 3,658 110,000
6 14,284 7,434 6,241 112,000 6,074 4,881 112,000
7 17,098 8,646 7,752 114,000 6,913 6,019 114,000
8 20,053 9,826 9,230 116,000 7,659 7,063 116,000
9 23,156 10,975 10,677 118,000 8,300 8,002 118,000
10 26,414 12,083 12,083 120,000 8,824 8,824 120,000
11 29,834 13,198 13,198 122,000 9,223 9,223 122,000
12 33,426 14,255 14,255 124,000 9,486 9,486 124,000
13 37,197 15,240 15,240 126,000 9,605 9,605 126,000
14 41,157 16,152 16,152 128,000 9,568 9,568 128,000
15 45,315 16,985 16,985 130,000 9,361 9,361 130,000
16 49,681 17,640 17,640 132,000 8,965 8,965 132,000
17 54,265 18,212 18,212 134,000 8,352 8,352 134,000
18 59,078 18,674 18,674 136,000 7,491 7,491 136,000
19 64,132 19,026 19,026 138,000 6,342 6,342 138,000
20 69,439 19,270 19,270 140,000 4,863 4,863 140,000
21 75,010 19,369 19,369 142,000 3,008 3,008 142,000
22 80,861 19,319 19,319 144,000 732 732 144,000
23 87,004 19,082 19,082 146,000
24 93,454 18,676 18,676 148,000
25 100,227 18,031 18,031 150,000
26 107,338 17,216 17,216 152,000
27 114,805 16,088 16,088 154,000
28 122,645 14,678 14,678 156,000
29 130,878 12,879 12,879 158,000
30 139,522 10,675 10,675 160,000
31 148,598 8,001 8,001 162,000
32 158,128 4,729 4,729 164,000
33 168,134 815 815 166,000
34 178,641
35 189,673
36 201,256
37 213,419
38 226,190
39 239,600
40 253,680
41 268,464
42 283,987
43 300,286
44 317,400
45 335,370
46 354,239
47 374,051
48 394,853
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-15
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION III
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 6.00% 4.54% 4.79%
Guaranteed 6.00% 4.29% 4.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,154 102,000 988 102,000
2 4,305 2,520 1,029 104,000 2,159 668 104,000
3 6,620 4,107 2,616 106,000 3,518 2,027 106,000
4 9,051 5,750 4,259 108,000 4,888 3,397 108,000
5 11,604 7,453 5,962 110,000 6,262 4,771 110,000
6 14,284 9,227 8,034 112,000 7,638 6,445 112,000
7 17,098 11,070 10,176 114,000 9,006 8,112 114,000
8 20,053 12,984 12,388 116,000 10,356 9,760 116,000
9 23,156 14,975 14,677 118,000 11,676 11,378 118,000
10 26,414 17,036 17,036 120,000 12,954 12,954 120,000
11 29,834 19,221 19,221 122,000 14,178 14,178 122,000
12 33,426 21,472 21,472 124,000 15,336 15,336 124,000
13 37,197 23,775 23,775 126,000 16,417 16,417 126,000
14 41,157 26,135 26,135 128,000 17,407 17,407 128,000
15 45,315 28,548 28,548 130,000 18,289 18,289 130,000
16 49,681 30,938 30,938 132,000 19,038 19,038 132,000
17 54,265 33,393 33,393 134,000 19,625 19,625 134,000
18 59,078 35,892 35,892 136,000 20,013 20,013 136,000
19 64,132 38,444 38,444 138,000 20,155 20,155 138,000
20 69,439 41,054 41,054 140,000 20,002 20,002 140,000
21 75,010 43,698 43,698 142,000 19,499 19,499 142,000
22 80,861 46,378 46,378 144,000 18,587 18,587 144,000
23 87,004 49,071 49,071 146,000 17,199 17,199 146,000
24 93,454 51,798 51,798 148,000 15,258 15,258 148,000
25 100,227 54,515 54,515 150,000 12,661 12,661 150,000
26 107,338 57,341 57,341 152,000 9,299 9,299 152,000
27 114,805 60,133 60,133 154,000 4,955 4,955 154,000
28 122,645 62,922 62,922 156,000
29 130,878 65,649 65,649 158,000
30 139,522 68,316 68,316 160,000
31 148,598 70,900 70,900 162,000
32 158,128 73,335 73,335 164,000
33 168,134 75,616 75,616 166,000
34 178,641 77,659 77,659 168,000
35 189,673 79,496 79,496 170,000
36 201,256 80,986 80,986 172,000
37 213,419 82,101 82,101 174,000
38 226,190 82,769 82,769 176,000
39 239,600 82,827 82,827 178,000
40 253,680 82,188 82,188 180,000
41 268,464 80,677 80,677 182,000
42 283,987 78,070 78,070 184,000
43 300,286 73,966 73,966 186,000
44 317,400 68,072 68,072 188,000
45 335,370 59,903 59,903 190,000
46 354,239 48,651 48,651 192,000
47 374,051 33,604 33,604 194,000
48 394,853 13,622 13,622 196,000
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-16
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION III
GUIDELINE PREMIUM TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 12.00% 10.54% 10.79%
Guaranteed 12.00% 10.29% 10.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,241 102,000 1,071 102,000
2 4,305 2,778 1,287 104,000 2,397 906 104,000
3 6,620 4,642 3,151 106,000 4,003 2,512 106,000
4 9,051 6,687 5,196 108,000 5,726 4,235 108,000
5 11,604 8,935 7,444 110,000 7,575 6,084 110,000
6 14,284 11,415 10,222 112,000 9,559 8,366 112,000
7 17,098 14,149 13,255 114,000 11,683 10,789 114,000
8 20,053 17,162 16,566 116,000 13,956 13,360 116,000
9 23,156 20,487 20,189 118,000 16,385 16,087 118,000
10 26,414 24,150 24,150 120,000 18,977 18,977 120,000
11 29,834 28,242 28,242 122,000 21,746 21,746 122,000
12 33,426 32,752 32,752 124,000 24,703 24,703 124,000
13 37,197 37,724 37,724 126,000 27,869 27,869 126,000
14 41,157 43,216 43,216 128,000 31,270 31,270 128,000
15 45,315 49,286 49,286 130,000 34,936 34,936 130,000
16 49,681 55,934 55,934 132,000 38,891 38,891 132,000
17 54,265 63,311 63,311 134,000 43,162 43,162 134,000
18 59,078 71,490 71,490 136,000 47,777 47,777 136,000
19 64,132 80,580 80,580 138,000 52,769 52,769 138,000
20 69,439 90,705 90,705 140,000 58,180 58,180 140,000
21 75,010 101,989 101,989 142,000 64,063 64,063 142,000
22 80,861 114,592 114,592 144,000 70,489 70,489 144,000
23 87,004 128,683 128,683 151,846 77,543 77,543 146,000
24 93,454 144,318 144,318 168,853 85,333 85,333 148,000
25 100,227 161,608 161,608 187,466 93,983 93,983 150,000
26 107,338 180,932 180,932 208,071 103,776 103,776 152,000
27 114,805 202,356 202,356 228,663 114,799 114,799 154,000
28 122,645 226,139 226,139 251,014 127,301 127,301 156,000
29 130,878 252,549 252,549 275,278 141,609 141,609 158,000
30 139,522 281,909 281,909 301,643 158,030 158,030 169,092
31 148,598 314,586 314,586 330,315 176,422 176,422 185,243
32 158,128 350,775 350,775 368,313 196,675 196,675 206,509
33 168,134 390,847 390,847 410,389 218,967 218,967 229,915
34 178,641 435,197 435,197 456,957 243,490 243,490 255,665
35 189,673 484,286 484,286 508,500 270,453 270,453 283,976
36 201,256 538,578 538,578 565,507 300,075 300,075 315,079
37 213,419 598,616 598,616 628,546 332,587 332,587 349,217
38 226,190 664,984 664,984 698,233 368,231 368,231 386,642
39 239,600 738,299 738,299 775,214 407,255 407,255 427,618
40 253,680 819,268 819,268 860,231 449,925 449,925 472,421
41 268,464 908,642 908,642 954,074 496,522 496,522 521,349
42 283,987 1,007,237 1,007,237 1,057,599 547,350 547,350 574,718
43 300,286 1,115,885 1,115,885 1,171,679 602,728 602,728 632,864
44 317,400 1,235,579 1,235,579 1,297,358 662,992 662,992 696,141
45 335,370 1,367,359 1,367,359 1,435,727 728,491 728,491 764,915
46 354,239 1,512,267 1,512,267 1,587,880 799,577 799,577 839,556
47 374,051 1,673,682 1,673,682 1,740,630 878,990 878,990 914,150
48 394,853 1,853,951 1,853,951 1,909,570 968,167 968,167 997,212
49 416,696 2,055,845 2,055,845 2,096,962 1,068,888 1,068,888 1,090,266
50 439,631 2,282,655 2,282,655 2,305,482 1,183,412 1,183,412 1,195,246
51 463,712 2,534,055 2,534,055 2,559,396 1,309,558 1,309,558 1,322,653
52 488,998 2,812,711 2,812,711 2,840,838 1,448,096 1,448,096 1,462,577
53 515,548 3,121,543 3,121,543 3,152,758 1,599,195 1,599,195 1,615,187
54 543,425 3,463,781 3,463,781 3,498,419 1,761,997 1,761,997 1,779,617
55 572,696 3,842,994 3,842,994 3,881,424 1,941,184 1,941,184 1,960,595
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-17
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION III
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 0.00% -1.46% -1.21%
Guaranteed 0.00% -1.71% -1.46%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,067 102,000 907 102,000
2 4,305 2,273 782 104,000 1,933 442 104,000
3 6,620 3,614 2,123 106,000 3,074 1,583 106,000
4 9,051 4,919 3,428 108,000 4,147 2,656 108,000
5 11,604 6,190 4,699 110,000 5,149 3,658 110,000
6 14,284 7,434 6,241 112,000 6,074 4,881 112,000
7 17,098 8,646 7,752 114,000 6,913 6,019 114,000
8 20,053 9,826 9,230 116,000 7,659 7,063 116,000
9 23,156 10,975 10,677 118,000 8,300 8,002 118,000
10 26,414 12,083 12,083 120,000 8,824 8,824 120,000
11 29,834 13,198 13,198 122,000 9,223 9,223 122,000
12 33,426 14,255 14,255 124,000 9,486 9,486 124,000
13 37,197 15,240 15,240 126,000 9,605 9,605 126,000
14 41,157 16,152 16,152 128,000 9,568 9,568 128,000
15 45,315 16,985 16,985 130,000 9,361 9,361 130,000
16 49,681 17,640 17,640 132,000 8,965 8,965 132,000
17 54,265 18,212 18,212 134,000 8,352 8,352 134,000
18 59,078 18,674 18,674 136,000 7,491 7,491 136,000
19 64,132 19,026 19,026 138,000 6,342 6,342 138,000
20 69,439 19,270 19,270 140,000 4,863 4,863 140,000
21 75,010 19,369 19,369 142,000 3,008 3,008 142,000
22 80,861 19,319 19,319 144,000 732 732 144,000
23 87,004 19,082 19,082 146,000
24 93,454 18,676 18,676 148,000
25 100,227 18,031 18,031 150,000
26 107,338 17,216 17,216 152,000
27 114,805 16,088 16,088 154,000
28 122,645 14,678 14,678 156,000
29 130,878 12,879 12,879 158,000
30 139,522 10,675 10,675 160,000
31 148,598 8,001 8,001 162,000
32 158,128 4,729 4,729 164,000
33 168,134 815 815 166,000
34 178,641
35 189,673
36 201,256
37 213,419
38 226,190
39 239,600
40 253,680
41 268,464
42 283,987
43 300,286
44 317,400
45 335,370
46 354,239
47 374,051
48 394,853
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-18
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION III
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 6.00% 4.54% 4.79%
Guaranteed 6.00% 4.29% 4.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,154 102,000 988 102,000
2 4,305 2,520 1,029 104,000 2,159 668 104,000
3 6,620 4,107 2,616 106,000 3,518 2,027 106,000
4 9,051 5,750 4,259 108,000 4,888 3,397 108,000
5 11,604 7,453 5,962 110,000 6,262 4,771 110,000
6 14,284 9,227 8,034 112,000 7,638 6,445 112,000
7 17,098 11,070 10,176 114,000 9,006 8,112 114,000
8 20,053 12,984 12,388 116,000 10,356 9,760 116,000
9 23,156 14,975 14,677 118,000 11,676 11,378 118,000
10 26,414 17,036 17,036 120,000 12,954 12,954 120,000
11 29,834 19,221 19,221 122,000 14,178 14,178 122,000
12 33,426 21,472 21,472 124,000 15,336 15,336 124,000
13 37,197 23,775 23,775 126,000 16,417 16,417 126,000
14 41,157 26,135 26,135 128,000 17,407 17,407 128,000
15 45,315 28,548 28,548 130,000 18,289 18,289 130,000
16 49,681 30,938 30,938 132,000 19,038 19,038 132,000
17 54,265 33,393 33,393 134,000 19,625 19,625 134,000
18 59,078 35,892 35,892 136,000 20,013 20,013 136,000
19 64,132 38,444 38,444 138,000 20,155 20,155 138,000
20 69,439 41,054 41,054 140,000 20,002 20,002 140,000
21 75,010 43,698 43,698 142,000 19,499 19,499 142,000
22 80,861 46,378 46,378 144,000 18,587 18,587 144,000
23 87,004 49,071 49,071 146,000 17,199 17,199 146,000
24 93,454 51,798 51,798 148,000 15,258 15,258 148,000
25 100,227 54,515 54,515 150,000 12,661 12,661 150,000
26 107,338 57,341 57,341 152,000 9,299 9,299 152,000
27 114,805 60,133 60,133 154,000 4,955 4,955 154,000
28 122,645 62,922 62,922 156,000
29 130,878 65,649 65,649 158,000
30 139,522 68,316 68,316 160,000
31 148,598 70,900 70,900 162,000
32 158,128 73,335 73,335 164,000
33 168,134 75,616 75,616 166,000
34 178,641 77,659 77,659 168,000
35 189,673 79,496 79,496 170,000
36 201,256 80,986 80,986 172,000
37 213,419 82,101 82,101 174,000
38 226,190 82,769 82,769 176,000
39 239,600 82,827 82,827 178,000
40 253,680 82,188 82,188 180,000
41 268,464 80,677 80,677 182,000
42 283,987 78,070 78,070 184,000
43 300,286 73,966 73,966 186,000
44 317,400 68,072 68,072 188,000
45 335,370 59,903 59,903 190,000
46 354,239 48,651 48,651 192,000
47 374,051 33,604 33,604 194,000
48 394,853 13,622 13,622 196,000
49 416,696
50 439,631
51 463,712
52 488,998
53 515,548
54 543,425
55 572,696
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-19
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH BENEFIT OPTION III
CASH VALUE ACCUMULATION TEST
MALE NON-SMOKER STANDARD ISSUE AGE 45
$100,000 INITIAL SPECIFIED AMOUNT
ASSUMED HYPOTHETICAL GROSS ANNUAL Net 1-25 Net 26+
RATE OF RETURN : Current 12.00% 10.54% 10.79%
Guaranteed 12.00% 10.29% 10.54%
ASSUMED ANNUAL PREMIUM(1) : $ 2,000
<TABLE>
<CAPTION>
PREMIUMS
END ACCUMULATED ASSUMING CURRENT COSTS ASSUMING GUARANTEED COSTS
OF AT 5% INTEREST ACCUMULATION CASH DEATH ACCUMULATION CASH DEATH
YEAR PER YEAR VALUE (2) VALUE (2) BENEFIT (2)(3) VALUE (2) VALUE (2) BENEFIT (2)(3)
---- -------- --------- --------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,100 1,241 102,000 1,071 102,000
2 4,305 2,778 1,287 104,000 2,397 906 104,000
3 6,620 4,642 3,151 106,000 4,003 2,512 106,000
4 9,051 6,687 5,196 108,000 5,726 4,235 108,000
5 11,604 8,935 7,444 110,000 7,575 6,084 110,000
6 14,284 11,415 10,222 112,000 9,559 8,366 112,000
7 17,098 14,149 13,255 114,000 11,683 10,789 114,000
8 20,053 17,162 16,566 116,000 13,956 13,360 116,000
9 23,156 20,487 20,189 118,000 16,385 16,087 118,000
10 26,414 24,150 24,150 120,000 18,977 18,977 120,000
11 29,834 28,242 28,242 122,000 21,746 21,746 122,000
12 33,426 32,752 32,752 124,000 24,703 24,703 124,000
13 37,197 37,724 37,724 126,000 27,869 27,869 126,000
14 41,157 43,216 43,216 128,000 31,270 31,270 128,000
15 45,315 49,286 49,286 130,000 34,936 34,936 130,000
16 49,681 55,934 55,934 132,000 38,891 38,891 132,000
17 54,265 63,311 63,311 134,000 43,162 43,162 134,000
18 59,078 71,490 71,490 136,000 47,777 47,777 136,000
19 64,132 80,573 80,573 142,873 52,769 52,769 138,000
20 69,439 90,597 90,597 156,846 58,180 58,180 140,000
21 75,010 101,605 101,605 171,844 64,063 64,063 142,000
22 80,861 113,698 113,698 187,972 70,489 70,489 144,000
23 87,004 126,965 126,965 205,300 77,543 77,543 146,000
24 93,454 141,540 141,540 223,966 85,333 85,333 148,000
25 100,227 157,513 157,513 244,023 93,983 93,983 150,000
26 107,338 175,234 175,234 265,922 103,736 103,736 157,423
27 114,805 194,651 194,651 289,495 114,336 114,336 170,046
28 122,645 215,969 215,969 314,976 125,731 125,731 183,370
29 130,878 239,315 239,315 342,496 137,953 137,953 197,432
30 139,522 264,898 264,898 372,308 151,038 151,038 212,281
31 148,598 292,916 292,916 404,640 165,030 165,030 227,975
32 158,128 323,543 323,543 439,658 179,982 179,982 244,574
33 168,134 357,038 357,038 477,626 195,958 195,958 262,142
34 178,641 393,598 393,598 518,692 213,037 213,037 280,745
35 189,673 433,598 433,598 563,207 231,291 231,291 300,427
36 201,256 477,223 477,223 611,275 250,783 250,783 321,228
37 213,419 524,858 524,858 663,284 271,565 271,565 343,188
38 226,190 576,873 576,873 719,622 293,669 293,669 366,339
39 239,600 633,568 633,568 780,632 317,115 317,115 390,723
40 253,680 695,419 695,419 846,902 341,934 341,934 416,418
41 268,464 762,849 762,849 918,920 368,179 368,179 443,505
42 283,987 836,315 836,315 997,165 395,925 395,925 472,074
43 300,286 916,151 916,151 1,081,905 425,265 425,265 502,206
44 317,400 1,003,029 1,003,029 1,173,751 456,315 456,315 533,983
45 335,370 1,097,578 1,097,578 1,273,181 489,216 489,216 567,486
46 354,239 1,200,315 1,200,315 1,380,451 524,131 524,131 602,790
47 374,051 1,312,293 1,312,293 1,496,318 561,260 561,260 639,966
48 394,853 1,434,556 1,434,556 1,621,344 600,835 600,835 679,068
49 416,696 1,568,392 1,568,392 1,756,141 643,128 643,128 720,116
50 439,631 1,715,438 1,715,438 1,901,391 688,305 688,305 762,917
51 463,712 1,877,441 1,877,441 2,057,796 736,268 736,268 806,997
52 488,998 2,057,320 2,057,320 2,227,355 786,240 786,240 851,222
53 515,548 2,258,275 2,258,275 2,412,705 835,745 835,745 892,897
54 543,425 2,484,022 2,484,022 2,617,820 882,235 882,235 929,755
55 572,696 2,738,596 2,738,596 2,848,139 944,201 944,201 981,969
</TABLE>
(1) Assumes a $2,000 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 additional premium payment.
(3) Increase due to adjustment by the corridor percentage.
A-20
<PAGE>
Jefferson Pilot Financial Insurance Company and Subsidiary
Audited Consolidated Financial Statements
As of December 31, 1999 and for the year then ended
Contents
<TABLE>
<S> <C>
Report of Independent Auditors ............................................ F-1
Consolidated Balance Sheet ................................................ F-2
Consolidated Statement of Income .......................................... F-3
Consolidated Statement of Stockholder's Equity ............................ F-4
Consolidated Statement of Cash Flows ...................................... F-5
Notes to Consolidated Financial Statements ................................ F-6
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Jefferson Pilot Financial Insurance Company and Subsidiary
We have audited the accompanying consolidated balance sheet of Jefferson Pilot
Financial Insurance Company (a wholly-owned subsidiary of Jefferson Pilot
Corporation) and subsidiary as of December 31, 1999, and the related
consolidated statements of income, stockholder'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 auditing standards generally accepted
in the United States. 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 Jefferson Pilot
Financial Insurance Company and subsidiary at December 31, 1999, and the
consolidated results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
February 4, 2000
F-1
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 1999
(In Thousands, except for Share Amounts)
<TABLE>
<S> <C>
Assets
Invested assets
Debt securities available-for-sale, at fair value (amortized cost--$3,043,854)........... $2,920,793
Equity securities available-for-sale, at fair value (cost--$8,333)....................... 9,686
Policy loans ............................................................................ 267,335
Mortgage loans on real estate ........................................................... 441,836
----------
Total investments ........................................................................ 3,639,650
Cash and cash equivalents ................................................................ 49,158
Accrued investment income ................................................................ 59,876
Due from reinsurers ...................................................................... 275,991
Deferred policy acquisition costs ........................................................ 208,209
Value of business acquired ............................................................... 510,825
Cost in excess of net assets acquired, net of accumulated amortization of $12,119......... 150,664
Property and equipment, net of accumulated depreciation of $9,184......................... 9,611
Deferred federal income taxes ............................................................ 22,688
Assets held in separate accounts ......................................................... 1,274,866
Other assets ............................................................................. 9,818
----------
$6,211,356
==========
Liabilities
Policy liabilities:
Policyholder contract deposits .......................................................... $2,841,387
Future policy benefits .................................................................. 649,691
Policy and contract claims .............................................................. 42,427
Premiums paid in advance ................................................................ 2,148
Other policyholders' funds .............................................................. 95,855
----------
Total policy liabilities ................................................................. 3,631,508
Payable to affiliates .................................................................... 37,726
Liabilities related to separate accounts ................................................. 1,274,866
Securities sold under repurchase agreements .............................................. 166,570
Accrued expenses and other liabilities ................................................... 141,941
----------
5,252,611
Commitments and contingent liabilities ................................................... --
Stockholder's equity
Common stock, par value $5 per share, 600,000 shares authorized, issued and outstanding.. 3,000
Paid in capital ......................................................................... 756,066
Retained earnings ....................................................................... 236,305
Accumulated other comprehensive income--net unrealized losses on securities ............. (36,626)
----------
958,745
----------
$6,211,356
==========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARY
Consolidated Statement of Income
Year ended December 31, 1999
(In Thousands)
<TABLE>
<S> <C>
Revenues
Premiums and policy charges .................................. $317,215
Net investment income ........................................ 261,344
Realized investment losses ................................... (720)
Other income (expense) ....................................... (239)
--------
Total revenues ............................................... 577,600
Benefits and expenses
Policy benefits and claims ................................... 283,773
Commissions and operating expenses, net of deferrals ......... 48,062
Amortization of intangibles .................................. 67,744
Taxes, licenses and fees ..................................... 20,311
--------
Total benefits and expenses .................................. 419,890
--------
Income before federal income tax ............................. 157,710
--------
Federal income tax expense:
Current ..................................................... 28,387
Deferred .................................................... 27,025
--------
55,412
--------
Net income ................................................... $102,298
========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARY
Consolidated Statement of Stockholder's Equity
(In Thousands)
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive Income-- Total
Common Paid in Retained Net Unrealized Gains Stockholder's
Stock Capital Earnings (Losses) on Securities Equity
---------- ------------ ------------ ------------------------ --------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 ......... $ 3,000 $ 756,066 $ 134,007 $ 42,103 $ 935,176
Net income ......................... -- -- 102,298 -- 102,298
Other comprehensive income ......... -- -- -- (78,729) (78,729)
---------
Comprehensive income .............. -- -- -- -- 23,569
------- --------- --------- -------- ---------
Balance, December 31, 1999 ......... $ 3,000 $ 756,066 $ 236,305 $(36,626) $ 958,745
======= ========= ========= ======== =========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY AND SUBSIDIARY
Consolidated Statement of Cash Flows
Year ended December 31, 1999
(In Thousands)
<TABLE>
<S> <C>
Operating activities
Net income ............................................................................... $ 102,298
Adjustments to reconcile net income to net cash provided by operating activities:
Change in future policy benefits, policy and contract claims and premiums paid in 7,242
advance, net
Credits to policyholder accounts, net ................................................... (124,370)
Policy acquisition costs deferred, net of amortization .................................. (95,250)
Net amortization of value of business acquired .......................................... 31,325
Change in accrued investment income ..................................................... (6,250)
Realized investment losses .............................................................. 720
Amortization of investment premiums ..................................................... 4,201
Provision for depreciation .............................................................. 6,417
Provision for deferred income tax ....................................................... 27,025
Change in receivables and asset accruals ................................................ (14,323)
Change in payables and expense accruals ................................................. 78,929
Other operating activities, net ......................................................... (10,533)
----------
Net cash provided by operating activities ................................................ 7,431
Investing activities
Proceeds from sales of debt securities ................................................... 239,384
Proceeds from maturities of debt securities .............................................. 302,338
Proceeds from sales of equity securities ................................................. 2,616
Purchases of debt securities ............................................................. (627,847)
Purchases of equity securities ........................................................... (2,600)
Mortgage loans originated ................................................................ (167,280)
Repayments of mortgage loans ............................................................. 6,936
Policy loans issued, net of repayments ................................................... (21,045)
----------
Net cash used in investing activities .................................................... (267,498)
Financing activities
Deposits credited to policyholders' funds ................................................ 440,343
Withdrawals from policyholders' funds .................................................... (200,888)
Proceeds from securities sold under repurchase agreements ................................ 64,440
Decrease in loans payable ................................................................ (1,184)
----------
Net cash provided by financing activities ................................................ 302,711
----------
Net increase in cash and cash equivalents ................................................ 42,644
Cash and cash equivalents, beginning of period ........................................... 6,514
----------
Cash and cash equivalents, end of period ................................................. $ 49,158
==========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
Notes to Consolidated Financial Statements
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
1. Basis of Presentation
Nature of Operations
Jefferson Pilot Financial Insurance Company is a wholly-owned subsidiary of
Jefferson-Pilot Corporation (Parent) and is principally engaged in the sale of
individual life insurance and investment products. These products are marketed
primarily through personal producing general agents throughout the United
States.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP) and include the
accounts of Jefferson Pilot Financial Insurance Company (the Company) and its
subsidiary, Jefferson Pilot LifeAmerica Insurance Company. Significant
intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements requires management to make estimates
and assumptions affecting the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities as of the date of the
financial statements, and the reported amounts of revenues and expenses for the
reporting period. Those estimates are inherently subject to change and actual
results could differ from those estimates. Included among the material (or
potentially material) reported amounts and disclosures that require extensive
use of estimates are asset valuation allowances, policy liabilities, deferred
policy acquisition costs, value of business acquired and the potential effects
of resolving litigated matters.
Cash and Cash Equivalents
The Company includes with cash and cash equivalents its holdings of short-term
investments which are highly liquid investments that mature within three months
of the date of acquisition.
Invested Assets
Debt and equity securities are classified as securities available-for-sale,
stated at fair value with net unrealized gains and losses included in
accumulated other comprehensive income, net of deferred income taxes and
adjustments to deferred policy acquisition costs and value of business
acquired.
Policy loans are carried at the unpaid balances.
Mortgage loans on real estate are stated at the unpaid balances, net of
allowances for unrecoverable amounts. The Company's mortgage loan portfolio is
comprised of conventional real estate mortgages collateralized by retail (27%),
apartment (20%), industrial (22%), hotel (20%) and office (11%) properties.
Mortgage loan underwriting standards emphasize the credit status of a
prospective borrower, quality of the underlying collateral and conservative
loan-to-value relationships. Of stated mortgage loan balances as of December
31, 1999, 29% are due from borrowers in South Atlantic states, 21% are due from
borrowers in West South Central states, 14% are due from borrowers in West
North Central states, 11% are due from borrowers in East North Central states
and 11% are due from borrowers in Pacific states. No other geographic region
represents as much as 10% of December 31, 1999 mortgage loans.
Amortization of premiums and accrual of discounts on investments in debt
securities are reflected in earnings over the contractual terms of the
investments in a manner that produces a constant effective yield. Realized
gains and losses on dispositions of securities are determined by the specific
identification method.
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
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
2. Summary of Significant Accounting Policies--Continued
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 different 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 statement 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 4.35% to 6.60% in 1999.
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 policy charges assessed
against the contract holders. Interest crediting rates generally ranged from 4%
to 9.5% in 1999.
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 are computed by the net level premium method based on estimated
future investment yield, mortality and withdrawal experience. Interest rate
assumptions ranged from 2% to 6% at December 31, 1999. Mortality is calculated
principally on an experience multiple applied to select and ultimate tables in
common usage in the industry. Estimated withdrawals are determined principally
based on industry tables. Policy benefits and claims are charged to expense as
incurred.
Policy and Contract Claims
The liability for policy and contract claims consists of the estimated amount
payable for claims reported but not yet settled, and an estimate of claims
incurred but not reported, which is based on historical experience, adjusted
for trends and circumstances. Management believes that the recorded liability
is sufficient to provide for the associated claims adjustment expenses.
Reinsurance
Reinsurance receivables include amounts recoverable from reinsurers related to
paid benefits and estimated amounts related to unpaid policy and contract
claims, future policy benefits and policyholder contract deposits. The cost of
reinsurance is accounted for over the terms of the underlying reinsured
policies using assumptions consistent with those used to account for the
policies.
Deferred Policy Acquisition Costs and Value of Business Acquired
Costs related to obtaining new business, including commissions, certain costs
of underwriting and issuing policies and certain agency office expenses, all of
which vary with and are primarily related to the production of new business,
have been deferred.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
2. Summary of Significant Accounting Policies--Continued
Deferred Policy Acquisition Costs and Value of Business Acquired (continued)
Deferred policy acquisition costs for traditional life insurance polices are
amortized over the premium paying periods of the related contracts using the
same assumptions for anticipated premium revenue that are used to compute
liabilities for future policy benefits. For universal life and investment
products, these costs are amortized at a constant rate based on the present
value of the estimated future gross profits to be realized over the terms of
the contracts, not to exceed 25 years.
Value of business acquired represents the actuarially determined present value
of anticipated profits to be realized from life insurance and annuity business
purchased, using the same assumptions used to value the related liabilities.
Amortization of the value of business acquired occurs over the related contract
periods, using current crediting rates to accrete interest and a constant
amortization rate based on the present value of expected future profits.
The carrying amounts of deferred policy acquisition costs and value of business
acquired related to universal life and investment contracts is 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
accumulated other comprehensive income, net of applicable deferred income tax.
The carrying amounts of deferred policy acquisition costs and value of business
acquired is also adjusted for the effect of realized gains and losses.
The carrying amounts of deferred policy acquisition costs and value of buisness
acquired are reviewed periodically to determine that the unamortized portion
does not exceed expected recoverable amounts. No impairment adjustments have
been reflected in earnings in 1999.
Cost in Excess of Assets Acquired
The excess of Jefferson-Pilot's purchase price over the fair value of assets
acquired, which has been "pushed down" to the Company level for financial
reporting purposes, is being amortized on a straight-line basis over 35 years.
Carrying amounts are regularly reviewed for indications of value impairment,
with consideration given to financial performance and other relevant factors.
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 remaining useful lives of the assets.
Federal Income Taxes
The Company is not included in the Parent's consolidated tax return, but instead
files its own return with its wholly-owned subsidiary.
Deferred income tax assets and liabilities are recorded on the differences
between the tax bases of assets and liabilities and the amounts at which they
are reported in the financial statements. Recorded amounts are adjusted to
reflect changes in income tax rates and other tax law provisions as they become
enacted.
New Accounting Pronouncement
Effective January 1, 2001, the Company will adopt SFAS 133, "Accounting for
Derivative Instruments and for Hedging Activities". SFAS 133 requires companies
to recognize all derivatives on the balance sheet at fair value and establishes
special accounting rules for hedging activities. The effect of the hedge
accounting rules is to permit a company to offset changes in fair value or cash
flows of both the hedged item and hedging instrument in earnings in the same
period. Changes in the fair value of derivatives that do not qualify for hedge
accounting are reported in earnings in the period of the change. Based on the
limited nature of the Company's use of derivatives and hedging activities,
adoption of this pronouncement is not expected to have a material impact on the
Company's financial position or results of operations.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
3. Invested Assets
Aggregate amortized cost, aggregate fair value and gross unrealized gains and
losses of debt securities available-for-sale at December 31, 1999 were as
follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
U.S. Treasury obligations and direct obligations of
U.S. government agencies ................................ $ 78,201 $ 409 $ 238 $ 78,372
Corporate bonds .......................................... 2,106,958 4,379 92,674 2,018,663
Obligations of states and political subdivisions ......... 482 -- 127 355
Mortgage-backed securities ............................... 858,096 2,028 36,848 823,276
Redeemable preferred stocks .............................. 117 10 -- 127
---------- ------ -------- ----------
Total debt securities .................................... $3,043,854 $6,826 $129,887 $2,920,793
========== ====== ======== ==========
</TABLE>
Aggregate amortized cost and aggregate fair value of debt securities at
December 31, 1999 by contractual maturity were as follows (in thousands):
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
------------- -------------
<S> <C> <C>
Due in one year or less ................................................................ $ 37,886 $ 37,876
Due after one year through five years .................................................. 242,222 240,843
Due after five years through ten years ................................................. 727,821 694,374
Due after ten years .................................................................... 559,453 541,688
Amounts not due at a single maturity date .............................................. 1,476,472 1,406,012
---------- ----------
$3,043,854 $2,920,793
========== ==========
</TABLE>
Actual future maturities will differ from the contractual maturities shown
because the issuers of certain debt securities have the right to call or prepay
the amounts due to the Company, with or without penalty.
The sources of net investment income for the year ended December 31, 1999 were
as follows (in thousands):
<TABLE>
<S> <C>
Debt securities ........................................................................................ $226,627
Equity securities ...................................................................................... 853
Policy loans ........................................................................................... 18,936
Mortgage loans ......................................................................................... 28,010
Other .................................................................................................. 1,012
--------
Gross investment income ................................................................................ 275,438
Investment expenses .................................................................................... 14,094
--------
Net investment income .................................................................................. $261,344
========
</TABLE>
Realized investment gains and (losses) for the year ended December 31, 1999
were as follows (in thousands):
<TABLE>
<S> <C>
Debt securities ........................................................................................ $ 2
Equity securities ...................................................................................... (95)
Real estate ............................................................................................ 222
Increase in mortgage loan valuation allowance .......................................................... (863)
Amortization of value of business acquired ............................................................. 14
------
Realized investment losses ............................................................................. $ (720)
======
</TABLE>
Gross realized gains and (losses) on available-for-sale securities were $2,725
thousand and $(2,818) thousand, for the year ended December 31, 1999.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
3. Invested Assets--Continued
The changes in unrealized gains (losses) on securities classified as
available-for-sale for the Company for the year ended December 31, 1999 were as
follows (in thousands):
<TABLE>
<S> <C>
Change in equity securities .................................... $ (966)
Change in debt securities ...................................... (260,130)
Change in value of business acquired adjustment ................ 139,974
----------
(121,122)
Deferred income taxes .......................................... 42,393
----------
Change in net unrealized gains (losses) ........................ $ (78,729)
==========
</TABLE>
The Company participates in a securities lending program. The Company generally
receives cash collateral in an amount that is in excess of the market value of
the securities loaned. Market values of securities loaned and collateral are
monitored daily, and additional collateral is obtained as necessary. At
December 31, 1999, the market value of securities loaned and collateral
received amounted to $25.6 million and $26.2 million, respectively.
The allowance for credit losses on mortgage loans increased from $3.6 at
December 31, 1998 to $4.5 million at December 31, 1999.
4. Derivatives
Use of Derivatives
The Company's investment policy permits the use of derivative financial
instruments such as interest rate swaps in certain circumstances. At December
31, 1999, such interest rate swaps are held to modify specific floating-rate
direct investments. The notional amount is $60 million, with the Company
receiving an average fixed rate of 7.45% and paying an average floating rate of
5.39% based primarily on the 3 month and 6 month LIBOR rates.
The interest rate swaps are used to reduce the impact of interest rate
fluctuations on specific floating-rate direct investments. Interest is
exchanged periodically on the notional value, with the Company receiving a
fixed rate and paying a short-term LIBOR rate on a net exchange basis. The net
amount received or paid under swaps is reflected as an adjustment to investment
income. All of the hedges are of investments classified as available-for-sale,
and net unrealized gains and losses, net of the effects of income taxes and the
impact on deferred policy acquisition costs and the value of business acquired,
are not significant and are included in accumulated other comprehensive income
in stockholder's equity as of December 31, 1999.
Credit and Market Risk
The Company is exposed to credit risk in the event of non-performance by
counterparties to swap agreements. The Company limits this exposure by entering
into swap agreements with counterparties having high credit ratings and by
regularly monitoring the ratings.
The Company's credit exposure on swaps is limited to the fair value of swap
agreements that are favorable to the Company. The Company does not expect any
counterparty to fail to meet its obligation; however, non-performance would not
have a material adverse effect on the Company's financial position or results
of operations.
The Company's exposure to market risk is mitigated by the offsetting effects of
changes in the value of swap agreements and the related direct investments. The
Company routinely monitors correlation between hedged items and hedging
instruments. In the event a hedge relationship is terminated or loses
correlation, any related hedging instrument that remained would be
marked-to-market through income. If the hedging instrument is terminated, any
gain or loss is deferred and amortized over the remaining life of the hedged
asset.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
5. Deferred Policy Acquisition Costs and Value of Business Acquired
Policy acquisition costs deferred and the related amortization charged to
income for the year ended December 31, 1999 were as follows (in thousands):
<TABLE>
<S> <C>
Beginning balance ...................................................... $ 112,959
Deferral:
Commissions ........................................................... 85,032
Other ................................................................. 24,964
---------
109,996
Amortization ........................................................... (14,746)
---------
Ending balance ......................................................... $ 208,209
=========
</TABLE>
Changes in the value of business acquired for the year ended December 31, 1999
were as follows (in thousands):
<TABLE>
<S> <C>
Beginning balance ...................................................... $ 402,176
Deferral of commissions and accretion of interest ...................... 17,030
Amortization ........................................................... (48,369)
Adjustment related to realized gains on debt securities ................ 14
Adjustment related to unrealized gains on securities available-for-sale 139,974
---------
Ending balance ......................................................... $ 510,825
=========
</TABLE>
Expected approximate amortization percentages of the value of business acquired
as of December 31, 1999 over the next five years were as follows:
<TABLE>
<S> <C>
Year ending December 31:
2000 .......................................................... 10.3%
2001 .......................................................... 9.0%
2002 .......................................................... 8.1%
2003 .......................................................... 7.2%
2004 .......................................................... 6.4%
</TABLE>
6. Federal Income Taxes
The tax effects of temporary differences that gave rise to deferred income tax
liabilities and assets at December 31, 1999 are as follows (in thousands):
<TABLE>
<S> <C>
Deferred income tax assets:
Future policy benefits and policy fund balances ................... $123,034
Net unrealized losses on securities ............................... 19,721
Other ............................................................. 31,259
--------
Total .............................................................. 174,014
Deferred income tax liabilities:
Value of business acquired ........................................ 124,918
Deferred policy acquisition costs ................................. 448
Other ............................................................. 25,960
--------
Total .............................................................. 151,326
--------
Net deferred income tax asset ...................................... $ 22,688
========
</TABLE>
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
6. Federal Income Taxes--Continued
Under prior federal income tax law, one-half of the excess of a life insurance
company's income from operations over its taxable investment income was not
taxed, but was set aside in a special tax account designated as "Policyholders'
Surplus". The Company has approximately $13.5 million of untaxed
"Policyholders' Surplus" on which no payment of federal income taxes will be
required unless it is distributed as a dividend, or under other specified
conditions. The Clinton administration is proposing to tax, as part of its 2001
budget initiative, the "Policyholders' Surplus" over a five-year period. No
related deferred tax liability has been recognized for the potential tax which
would approximate $4.7 million under current proposed rates.
Federal income taxes paid in 1999 were $19.3 million.
7. Pensions
The Company's employees participate in the Parent's defined benefit pension
plans covering substantially all employees. The plans are noncontributory and
are funded through group annuity contracts issued by Jefferson-Pilot Life
Insurance Company, an affiliate. The assets of the plan are those of the
related contracts, and are primarily held in the separate accounts of
Jefferson-Pilot Life Insurance Company. The plans provide benefits based on
annual compensation and years of service. The funding policy is to contribute
annually no more than the maximum amount deductible for federal income tax
purposes. The plans are administered by the Parent.
Pension costs allocated to the Company for the year ended December 31, 1999,
were $1.5 million.
8. Other Postretirement Benefits
The Company provides certain other postretirement benefits, principally health
care and life insurance, to retired employees and their beneficiaries and
covered dependents. Postretirement costs of the Company that were allocated
from the Parent amounted to approximately $116 thousand for the year ended
December 31, 1999.
9. Commitments and Contingent Liabilities
The Company leases electronic data processing equipment and field office space
under noncancelable operating lease agreements. The lease terms generally range
from three to five years. Neither annual rent nor future rental commitments are
significant.
The Company routinely enters into commitments to extend credit in the form of
mortgage loans and to purchase certain debt securities for its investment
portfolio in private placement transactions. The fair value of outstanding
commitments to fund mortgage loans and to acquire debt securities in private
placement transactions, which are not reflected in the consolidated balance
sheet, approximates $1.6 million as of December 31, 1999.
In the normal course of business, the Company and its subsidiary are parties to
various lawsuits. Because of the considerable uncertainties that exist, the
Company cannot predict the outcome of pending or future litigation. However,
management believes that the resolution of pending legal proceedings will not
have a material adverse effect on the Company's financial position or results of
operations.
10. Reinsurance
The Company attempts to reduce its exposure to significant individual claims by
reinsuring portions of certain life insurance contracts written. The maximum
amount of individual life insurance retained on any one life, including
accidental death benefits, is $1.5 million.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
10. Reinsurance--Continued
The effect of reinsurance on the premiums and policy charges in the
consolidated statement of income for the year ended December 31, 1999 was as
follows (in thousands):
<TABLE>
<CAPTION>
Ceded to
Direct Other Net
Amount Companies Amount
----------- ----------- ----------
<S> <C> <C> <C>
Total premiums and policy charges ..... $382,529 $65,314 $317,215
======== ======= ========
</TABLE>
Reinsurance recoveries which have been deducted from benefits, claims and
expenses in the consolidated statement of income for the Company were $53,398.
Reinsurance contracts do not relieve the Company from its primary obligation to
policyholders. Therefore, the failure of a reinsurer to discharge its
reinsurance obligations could result in a loss to the Company. The Company
regularly evaluates the financial condition of its reinsurers and monitors
concentrations of credit risk related to reinsurance activities. No significant
credit losses resulted from the Company's reinsurance activities during the
year ended December 31, 1999.
As of December 31, 1999, the Company had a reinsurance recoverable of $87
million from a single reinsurer, pursuant to a 50% coinsurance agreement. The
Company and the reinsurer are joint and equal owners in $191 million of
securities and short-term investments as of December 31, 1999, 50% of which is
included in investments in the accompanying consolidated balance sheet.
11. Statutory Financial Information
The Company prepares financial statements on the basis of statutory accounting
practices (SAP) prescribed or permitted by the New Hampshire Department of
Insurance. Prescribed SAP include a variety of publications of the National
Association of Insurance Commissioners (NAIC) as well as state laws,
regulations and administrative rules. Permitted SAP encompass all accounting
practices not so prescribed. The impact of permitted accounting practices on
statutory capital and surplus is not significant for the Company.
The principal differences between SAP and generally accepted accounting
principles (GAAP) as they relate to the financial statements of the Company are
(1) policy acquisition costs are expensed as incurred under SAP, whereas they
are deferred and amortized under GAAP, (2) amounts collected from holders of
universal life-type and investment products are recognized as premiums when
collected under SAP, but are initially recorded as contract deposits under
GAAP, with cost of insurance recognized as revenue when assessed and other
contract charges recognized over the periods for which services are provided,
(3) the classification and carrying amounts of investments in certain
securities are different under SAP than under GAAP, (4) the criteria for
providing asset valuation allowances, and the methodologies used to determine
the amounts thereof, are different under SAP than under GAAP, (5) the timing of
establishing certain reserves, and the methodologies used to determine the
amounts thereof, are different under SAP than under GAAP, (6) no provision is
made for deferred income taxes under SAP, and (7) certain assets are not
admitted for purposes of determining surplus under SAP.
Reported capital and surplus on a statutory basis at December 31, 1999 was
$307.8 million. Reported statutory net income for the year ended December 31,
1999 was $73.5 million.
The amount of GAAP equity in excess of statutory surplus is unavailable for
distribution. In addition, various state insurance laws restrict the Company
and its insurance subsidiary 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 surplus as determined in accordance with statutory accounting
practices. Dividends in excess of such thresholds are considered
"extraordinary" and require prior regulatory approval.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
11. Statutory Financial Information--Continued
Risk-Based Capital ("RBC") requirements promulgated by the NAIC require life
insurers to maintain minimum capitalization levels that are determined based on
formulas incorporating credit risk, insurance risk, interest rate risk and
general business risk. As of December 31, 1999, the Company's adjusted capital
and surplus exceeded its authorized control level RBC.
The NAIC Codification of Statutory Accounting Principles (Codification) has
been completed. The purpose of Codification is to create uniformity in
statutory financial reporting across states. Codification must be adopted by
individual states before it will have any bearing on the statutory reporting
requirements of their domiciliary companies. The NAIC is encouraging the states
to adopt Codification as soon as possible, with an implementation date of
January 1, 2001. The Company does not expect implementation to have a material
impact on its statutory surplus; however, implementation is expected to result
in a net reduction of statutory surplus and RBC throughout the insurance
industry.
12. Transactions with Affiliated Companies
The Company has entered into service agreements with the Parent and other
subsidiaries of the Parent for personnel and facilities usage, general
management services and investment management services. The Company expensed $62
million for general management and investment services provided by
Jefferson-Pilot Life Insurance Company, another wholly-owned subsidiary of the
Parent of which $35.5 million remained payable at December 31, 1999. The
remainder of the payable to affiliates at year end was due to other affiliates.
13. 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.
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:
o Fair values of debt securities with active markets are based on quoted market
prices. For debt securities that trade in less active markets, fair values
are obtained from independent pricing services. Fair values of debt
securities are principally a function of current interest rates.
o Fair values of equity securities are based on quoted market prices.
o The carrying value of cash and cash equivalents approximates fair value due
to the short maturities of these assets.
o Fair values of policy loans and mortgage loans are estimated using discounted
cash flow analyses.
o Fair values of separate account assets and liabilities are reflected in the
consolidated balance sheet.
o Fair values of securities sold under repurchase agreements approximate
carrying values, which include accrued interest.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Jefferson Pilot Financial Insurance Company and Subsidiary
December 31, 1999
13. Fair Values of Financial Instruments--Continued
The carrying value and fair value of financial instruments at December 31, 1999
were as follows (in thousands):
<TABLE>
<CAPTION>
Carrying Fair
Value Value
------------- ------------
<S> <C> <C>
Financial Assets
Debt securities available-for-sale .............. $2,920,793 $2,920,793
Equity securities available-for-sale ............ 9,686 9,686
Cash and cash equivalents ....................... 49,158 49,158
Policy loans .................................... 267,335 327,025
Mortgage loans on real estate ................... 441,836 411,008
Financial Liabilities
Securities sold under repurchase agreements ..... 166,570 166,570
</TABLE>
Securities sold under repurchase agreements with a single counterparty, Credit
Suisse First Boston Corporation, totalled $101.5 million at December 31, 1999,
and had an average maturity date of March 8, 2000.
14. Other Comprehensive Income
Comprehensive income and its components are displayed in the accompanying
statement of stockholder's equity. Currently, the only element of other
comprehensive income applicable to the Company is changes in unrealized gains
and losses on securities classified as available-for-sale, which are displayed
in the following table, along with related tax effects. See Note 3 for further
detail of changes in unrealized gains on securities available-for-sale for the
year ended December 31, 1999 (in thousands):
<TABLE>
<S> <C>
Unrealized holding losses arising during period, before taxes ... $ (121,200)
Income taxes .................................................... 42,420
----------
Unrealized holding losses arising during period, net of taxes ... (78,780)
Less reclassification adjustment:
Losses realized in net income, before taxes .................... (79)
Income taxes ................................................... 28
----------
Reclassification adjustment for gains realized in net income ... (51)
----------
Other comprehensive income--net unrealized gains ................ $ (78,729)
==========
</TABLE>
15. Impact of Year 2000 (Unaudited)
The Company's administrative and financial reporting systems are shared among
numerous insurance affiliates within the consolidated Jefferson-Pilot
Corporation group. In prior years, the Parent discussed the nature and progress
of its plans to become Year 2000 ready. In late 1999, the Parent completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the Parent experienced no significant disruptions in
critical information technology systems and believes those systems successfully
responded to the Year 2000 date change. The Parent expensed approximately $20.6
million to date in connection with remediating its systems. The Parent is not
aware of any material problems resulting from Year 2000 issues, either with its
products, its internal systems, or the products and services of third parties.
The Parent will continue to monitor its critical computer applications and
those of its vendors throughout the Year 2000 to ensure that any latent Year
2000 matters that arise are addressed promptly.
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Contractholders of JPF Separate Account A
JPF Separate Account A
The Board of Directors, JPF Separate Account A
We have audited the accompanying statements of assets and liabilities of the JPF
Separate Account A as of December 31, 1999, and the related statements of
operations and changes in net assets for each of the periods indicated therein.
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 audits.
We conducted our audits in accordance with the auditing standards generally
accepted in the United States. 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 securities owned as of
December 31, 1999, by correspondence with the fund managers. 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 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 JPF Separate Account A at
December 31, 1999, and the results of its operations and the changes in its net
assets for the periods indicated therein in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 23, 2000
F-16
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JPF SEPARATE ACCOUNT A
December 31, 1999
<TABLE>
<CAPTION>
JPVF JPVF JPVF
International World Global
Equity Growth Stock Hard Assets
Division Division Division
--------------- ---------------- -------------
<S> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 16,851,415 $102,201,447 $6,226,361
============ ============ ==========
Investments at market value ............... $ 21,417,249 $127,656,364 $5,498,877
Net premiums receivable (payable) ......... 4,149 (98,543) (3,488)
------------ ------------ ----------
TOTAL NET ASSETS ...................... $ 21,421,398 $127,557,821 $5,495,389
============ ============ ==========
NET ASSET DISTRIBUTION
Ensemble ................................ $ 1,998,819 $ 79,803
Ensemble II ............................. $ 21,421,398 125,559,002 5,415,586
------------ ------------ ----------
TOTAL NET ASSETS ...................... $ 21,421,398 $127,557,821 $5,495,389
============ ============ ==========
UNITS OUTSTANDING
Ensemble ................................ 38,941 8,506
Ensemble II ............................. 1,324,511 2,539,786 599,530
NET ASSET VALUE PER UNIT
Ensemble ................................ $ 51.331 $ 9.382
Ensemble II ............................. $ 16.174 $ 49.441 $ 9.034
<CAPTION>
JPVF JPVF JPVF
Emerging Capital Small JPVF
Growth Growth Company Growth
Division Division Division Division
----------------- ----------------- -------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 68,466,574 $ 163,241,350 $86,427,896 $ 14,656,170
============= ============= =========== ============
Investments at market value ............... $ 150,071,069 $ 313,132,843 $90,708,885 $ 21,821,774
Net premiums receivable (payable) ......... 111,456 186,518 (32,214) 82,843
------------- ------------- ----------- ------------
TOTAL NET ASSETS ...................... $ 150,182,525 $ 313,319,361 $90,676,671 $ 21,904,617
============= ============= =========== ============
NET ASSET DISTRIBUTION
Ensemble ................................ $ 606,977
Ensemble II ............................. $ 150,182,525 $ 313,319,361 90,069,694 $ 21,904,617
------------- ------------- ----------- ------------
TOTAL NET ASSETS ...................... $ 150,182,525 $ 313,319,361 $90,676,671 $ 21,904,617
============= ============= =========== ============
UNITS OUTSTANDING
Ensemble ................................ 13,010
Ensemble II ............................. 3,524,253 5,025,427 2,005,820 940,853
NET ASSET VALUE PER UNIT
Ensemble ................................ $ 46.658
Ensemble II ............................. $ 42.617 $ 62.351 $ 44.908 $ 23.283
</TABLE>
See notes to financial statements.
F-17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES--(Continued)
JPF SEPARATE ACCOUNT A
December 31, 1999
<TABLE>
<CAPTION>
JPVF
Growth & JPVF JPVF
Income Balanced High Yield
Division Division Division
-------------- ---------------- --------------
<S> <C> <C> <C>
ASSETS
Investments at cost ................. $51,407,209 $ 33,635,926 $5,701,471
=========== ============ ==========
Investments at market value ......... $59,159,239 $ 42,340,461 $5,289,222
Accrued investment income ........... -- -- 434,055
Net premiums receivable ............. (30,855) 10,802 (5,770)
----------- ------------ ----------
TOTAL NET ASSETS ................ $59,128,384 $ 42,351,263 $5,717,507
=========== ============ ==========
NET ASSET DISTRIBUTION
Ensemble .......................... --
Ensemble II ....................... $59,128,384 $ 42,351,263 $5,717,507
----------- ------------ ----------
TOTAL NET ASSETS ................ $59,128,384 $ 42,351,263 $5,717,507
=========== ============ ==========
UNITS OUTSTANDING
Ensemble ..........................
Ensemble II ....................... 2,051,583 1,696,392 552,664
NET ASSET VALUE PER UNIT
Ensemble ..........................
Ensemble II ....................... $ 28.823 $ 24.967 $ 10.346
<CAPTION>
JPVF Fidelity Fidelity
Money VIP II VIP Fidelity
Market Contrafund Equity Income VIP Growth
Division Division Division Division
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost ................. $ 23,308,344 $ 47,379,961 $ 9,295,439 $ 35,954,839
============ ============ =========== ============
Investments at market value ......... $ 23,799,898 $ 64,970,351 $ 9,348,655 $ 45,268,975
Accrued investment income ........... -- -- -- --
Net premiums receivable ............. 111,369 30,150 258,023 179,000
------------ ------------ ----------- ------------
TOTAL NET ASSETS ................ $ 23,911,267 $ 65,000,501 $ 9,606,678 $ 45,447,975
============ ============ =========== ============
NET ASSET DISTRIBUTION
Ensemble .......................... $ 30,774
Ensemble II ....................... 23,880,493 $ 65,000,501 $ 9,606,678 $ 45,447,975
------------ ------------ ----------- ------------
TOTAL NET ASSETS ................ $ 23,911,267 $ 65,000,501 $ 9,606,678 $ 45,447,975
============ ============ =========== ============
UNITS OUTSTANDING
Ensemble .......................... 1,652
Ensemble II ....................... 1,331,669 2,985,507 809,036 2,383,455
NET ASSET VALUE PER UNIT
Ensemble .......................... $ 18.632
Ensemble II ....................... $ 17.934 $ 21.774 $ 11.875 $ 19.070
</TABLE>
See notes to financial statements.
F-18
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES--(Continued)
JPF SEPARATE ACCOUNT A
December 31, 1999
<TABLE>
<CAPTION>
Fidelity Fidelity
VIP VIP II MFS
High Income Index 500 Research
Division Division Division
------------- ----------------- ----------------
<S> <C> <C> <C>
ASSETS
Investments at cost ....................... $1,920,397 $ 88,763,029 $ 8,640,649
========== ============= ============
Investments at market value ............... $1,757,092 $ 118,016,279 $ 10,681,214
Net premiums receivable (payable) ......... (1,234) 34,569 23,798
---------- ------------- ------------
TOTAL NET ASSETS ...................... $1,755,858 $ 118,050,848 $ 10,705,012
========== ============= ============
NET ASSET DISTRIBUTION
Ensemble ................................
Ensemble II ............................. $1,755,858 $ 118,050,848 $ 10,705,012
---------- ------------- ------------
TOTAL NET ASSETS ...................... $1,755,858 $ 118,050,848 $ 10,705,012
========== ============= ============
UNITS OUTSTANDING
Ensemble ................................
Ensemble II ............................. 137,722 5,182,440 703,899
NET ASSET VALUE PER UNIT
Ensemble ................................
Ensemble II ............................. $ 12.750 $ 22.781 $ 15.209
<CAPTION>
MFS Oppenheimer Oppenheimer Templeton
Utilities Bond Strategic Bond International
Division Division Division Division
---------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost ....................... $ 10,400,906 $ 20,267,178 $3,031,062 $57,221,420
============ ============ ========== ===========
Investments at market value ............... $ 12,769,955 $ 19,430,460 $3,033,798 $68,583,089
Net premiums receivable (payable) ......... 3,857 1,630 (77,951) (38,659)
------------ ------------ ---------- -----------
TOTAL NET ASSETS ...................... $ 12,773,812 $ 19,432,090 $2,955,847 $68,544,430
============ ============ ========== ===========
NET ASSET DISTRIBUTION
Ensemble ................................ $ 26,936
Ensemble II ............................. $ 12,773,812 19,405,154 $2,955,847 $68,544,430
------------ ------------ ---------- -----------
TOTAL NET ASSETS ...................... $ 12,773,812 $ 19,432,090 $2,955,847 $68,544,430
============ ============ ========== ===========
UNITS OUTSTANDING
Ensemble ................................ 1,217
Ensemble II ............................. 814,809 910,153 288,268 3,342,285
NET ASSET VALUE PER UNIT
Ensemble ................................ $ 22.139
Ensemble II ............................. $ 15.678 $ 21.322 $ 10.255 $ 20.510
</TABLE>
See notes to financial statements.
F-19
<PAGE>
STATEMENT OF OPERATIONS
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
International
Equity
Division
-----------------------------------
Period from JPVF World Growth Stock Division
January 15, 1998(a) -------------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, -------------------------------------------
1999 1998 1999 1998 1997
-------------- -------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income ................................ $ -- $ -- $ 359,571 $2,325,200 $ 2,476,350
Distributions of realized gains ................ -- 27,704 1,324,887 7,901,423 13,293,185
---------- -------- ----------- ---------- -----------
-- 27,704 1,684,458 10,226,623 15,769,535
Expenses:
Mortality and expense risk charge .............. 129,696 29,866 1,061,262 1,080,424 1,001,394
---------- -------- ----------- ---------- -----------
Net investment income (loss) ................. (129,696) (2,162) 623,196 9,146,199 14,768,141
---------- -------- ----------- ---------- -----------
Gain (loss) on investments:
Net realized gain (loss) on investments ........ 720,386 (1,410) 1,558,287 1,498,732 1,393,920
Change in net unrealized gain (loss)
on investments ................................ 4,015,470 550,363 19,480,089 (8,293,399) (2,140,961)
---------- -------- ----------- ---------- -----------
Net gain (loss) on investments ................. 4,735,856 548,953 21,038,376 (6,794,667) (747,041)
---------- -------- ----------- ---------- -----------
Increase (decrease) in
net assets from operations .................... $4,606,160 $546,791 $21,661,572 $2,351,532 $14,021,100
========== ======== =========== ========== ===========
<CAPTION>
JPVF Global Hard Assets Division
----------------------------------------------
Year Ended December 31,
----------------------------------------------
1999 1998 1997
--------------- ------------- ---------------
<S> <C> <C> <C>
Investment Income:
Dividend income ................................. $ 5,738 $ 72,099 $ 52,180
Distributions of realized gains ................. -- -- 154,999
---------- ---------- -----------
5,738 72,099 207,179
Expenses:
Mortality and expense risk charge ............... 51,987 43,859 60,762
---------- ---------- -----------
Net investment income (loss) .................. (46,249) 28,240 146,417
---------- ---------- -----------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... (1,083,450) (826,362) (1,020,911)
Change in net unrealized gain (loss)
on investments ................................. 1,807,479 121,013 (2,862,423)
---------- ---------- -----------
Net gain (loss) on investments .................. 724,029 (705,349) (3,883,334)
---------- ---------- -----------
Increase (decrease) in
net assets from operations ..................... $ 677,780 $ (677,109) $(3,736,917)
========== ========== ===========
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-20
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Emerging Growth Division
-------------------------------------------
Year Ended December 31,
-------------------------------------------
1999 1998 1997
--------------- -------------- ------------
<S> <C> <C> <C>
Investment Income:
Dividend income ................................ $ -- $ -- $ --
Distributions of realized gains ................ -- 562,053 2,355,925
----------- ----------- ----------
-- 562,053 2,355,925
Expenses:
Mortality and expense risk charge .............. 821,544 549,991 341,819
----------- ----------- ----------
Net investment income (loss) ................. (821,544) 12,062 2,014,106
----------- ----------- ----------
Gain on investments:
Net realized gain on investments ............... 3,161,020 1,477,889 528,900
Change in net unrealized gain on investments ... 59,901,442 16,294,927 3,845,746
----------- ----------- ----------
Net gain on investments ........................ 63,062,462 17,772,816 4,374,646
----------- ----------- ----------
Increase in net assets from operations ....... $62,240,918 $17,784,878 $6,388,752
=========== =========== ==========
<CAPTION>
JPVF Capital Growth Division
--------------------------------------------
Year Ended December 31,
--------------------------------------------
1999 1998 1997
-------------- -------------- --------------
Investment Income:
<S> <C> <C> <C>
Dividend income ................................ $ -- $ -- $ 21,278
Distributions of realized gains ................ 5,837,977 9,631,854 5,556,589
----------- ----------- -----------
5,837,977 9,631,854 5,577,867
Expenses:
Mortality and expense risk charge .............. 2,091,275 1,396,476 962,680
----------- ----------- -----------
Net investment income (loss) ................. 3,746,702 8,235,378 4,615,187
----------- ----------- -----------
Gain on investments:
Net realized gain on investments ............... 1,944,106 2,650,023 827,249
Change in net unrealized gain on investments ... 85,575,214 38,211,343 19,770,192
----------- ----------- -----------
Net gain on investments ........................ 87,519,320 40,861,366 20,597,441
----------- ----------- -----------
Increase in net assets from operations ....... $91,266,022 $49,096,744 $25,212,628
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-21
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
Growth
Division
-----------------------------------
JPVF Small Company Division Period from
----------------------------------------------- January 20, 1998(a)
Year Ended December 31, Year Ended to
----------------------------------------------- December 31, December 31,
1999 1998 1997 1999 1998
--------------- ---------------- -------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income .......................... $ 102,370 $ 888,637 $ 377,561 $ -- $ --
Distributions of realized gains .......... 1,905,734 7,682,840 7,681,445 36,111 --
------------ ------------- ----------- ---------- ---------
2,008,104 8,571,477 8,059,006 36,111 --
Expenses:
Mortality and expense risk charge ........ 698,842 791,529 717,430 63,641 6,809
------------ ------------- ----------- ---------- ---------
Net investment income (loss) ........... 1,309,262 7,779,948 7,341,576 (27,530) (6,809)
------------ ------------- ----------- ---------- ---------
Gain (loss) on investments:
Net realized gain (loss) on investments .. (1,289,759) 939,643 1,112,075 101,362 (46,655)
Change in net unrealized gain (loss)
on investments .......................... 10,478,964 (20,294,880) 7,517,633 6,934,317 231,287
------------ ------------- ----------- ---------- ---------
Net gain (loss) on investments ........... 9,189,205 (19,355,237) 8,629,708 7,035,679 184,632
------------ ------------- ----------- ---------- ---------
Increase (decrease) in
net assets from operations ............ $ 10,498,467 $ (11,575,289) $15,971,284 $7,008,149 $ 177,823
============ ============= =========== ========== =========
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-22
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Growth & Income Division JPVF Balanced Division
------------------------------------------- ----------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ------------- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income ......................... $ -- $ 404,228 $ 294,059 $ 6,369 $ 554,007 $ 547,519
Distributions of realized gains ......... 408,080 -- 8,675,134 589,559 2,074,977 3,433,962
---------- ---------- ------------- ---------- ---------- ----------
408,080 404,228 8,969,193 595,928 2,628,984 3,981,481
Expenses:
Mortality and expense risk charge ....... 513,429 435,459 298,852 322,184 256,295 199,545
---------- ---------- ------------- ---------- ---------- ----------
Net investment income (loss) .......... (105,349) (31,231) 8,670,341 273,744 2,372,689 3,781,936
---------- ---------- ------------- ---------- ---------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments . 1,036,064 781,929 763,718 250,283 111,626 125,127
Change in net unrealized gain (loss)
on investments ......................... 1,596,857 4,120,409 (1,791,862) 6,776,884 1,976,202 (829,904)
---------- ---------- ------------- ---------- ---------- ----------
Net gain (loss) on investments .......... 2,632,921 4,902,338 (1,028,144) 7,027,167 2,087,828 (704,777)
---------- ---------- ------------- ---------- ---------- ----------
Increase (decrease) in
net assets from operations ........... $2,527,572 $4,871,107 $ 7,642,197 $7,300,911 $4,460,517 $3,077,159
========== ========== ============= ========== ========== ==========
<CAPTION>
JPVF High Yield
Division
----------------------------------
Period from
January 8, 1998(a)
Year Ended to
December 31, December 31,
1999 1998
-------------- -------------------
<S> <C> <C>
Investment Income:
Dividend income ......................... $ 434,055 $ 296,661
Distributions of realized gains ......... -- --
----------- ----------
434,055 296,661
Expenses:
Mortality and expense risk charge ....... 55,669 32,443
----------- ----------
Net investment income (loss) .......... 378,386 264,218
----------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments . (40,844) (77,480)
Change in net unrealized gain (loss)
on investments ......................... (124,383) (287,866)
----------- ----------
Net gain (loss) on investments .......... (165,227) (365,346)
----------- ----------
Increase (decrease) in
net assets from operations ........... $ 213,159 $ (101,128)
=========== ==========
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-23
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Money Market Division Fidelity VIP II Contrafund Division
------------------------------------- ----------------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
------------- ----------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividend income ............................ $ -- $507,941 $ 425,055 $ 215,838 $ 141,812 $ 53,570
Distributions of realized gains ............ -- -- -- 1,582,814 1,043,329 141,577
----------- -------- --------- ----------- ---------- ----------
-- 507,941 425,055 1,798,652 1,185,141 195,147
Expenses:
Mortality and expense risk charge .......... 177,261 111,692 90,263 461,629 246,378 112,772
----------- -------- --------- ----------- ---------- ----------
Net investment income (loss) ............. (177,261) 396,249 334,792 1,337,023 938,763 82,375
----------- -------- --------- ----------- ---------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments..... 142,086 53,452 61,042 1,161,891 381,646 143,362
Change in net unrealized gain (loss)
on investments ............................ 740,327 20,157 (11,529) 9,007,322 6,265,813 1,928,296
----------- -------- --------- ----------- ---------- ----------
Net gain (loss) on investments ............. 882,413 73,609 49,513 10,169,213 6,647,459 2,071,658
----------- -------- --------- ----------- ---------- ----------
Increase in net assets
from operations ......................... $ 705,152 $469,858 $ 384,305 $11,506,236 $7,586,222 $2,154,033
=========== ======== ========= =========== ========== ==========
<CAPTION>
Fidelity
VIP Equity Income
Division
----------------------------------
Period from
January 8, 1998(a)
Year Ended to
December 31, December 31,
1999 1998
-------------- -------------------
<S> <C> <C>
Investment Income:
Dividend income ............................ $ 69,348 $ 8,570
Distributions of realized gains ............ 153,295 30,500
----------- -----------
222,643 39,070
Expenses:
Mortality and expense risk charge .......... 67,673 38,308
----------- -----------
Net investment income (loss) ............. 154,970 762
----------- -----------
Gain (loss) on investments:
Net realized gain (loss) on investments..... 85,743 (114,816)
Change in net unrealized gain (loss)
on investments ............................ (139,539) 192,755
----------- -----------
Net gain (loss) on investments ............. (53,796) 77,939
----------- -----------
Increase in net assets
from operations ......................... $ 101,174 $ 78,701
=========== ===========
</TABLE>
(a) Commencement of operations.
See notes to financial statements.
F-24
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Fidelity
VIP Growth
Division
----------------------------------
Period from Fidelity VIP High Income Division
January 8, 1998(a) ---------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, ---------------------------------------
1999 1998 1999 1998 1997
-------------- ------------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income ........................ $ 17,820 $ 141 $ 224,955 $ 398,490 $248,474
Distributions of realized gains ........ 1,120,427 3,709 8,409 253,207 30,711
---------- ---------- ----------- ---------- --------
1,138,247 3,850 233,364 651,697 279,185
Expenses:
Mortality and expense risk charge ...... 233,111 18,771 19,003 35,359 45,794
---------- ---------- ----------- ---------- --------
Net investment income (loss) ......... 905,136 (14,921) 214,361 616,338 233,391
---------- ---------- ----------- ---------- --------
Gain (loss) on investments:
Net realized gain (loss) on investments. 59,375 (10,197) (120,010) 97,475 71,464
Change in net unrealized gain (loss)
on investments ........................ 8,178,073 1,136,063 63,150 (784,352) 451,237
---------- ---------- ----------- ---------- --------
Net gain (loss) on investments ......... 8,237,448 1,125,866 (56,860) (686,877) 522,701
---------- ---------- ----------- ---------- --------
Increase (decrease) in net assets
from operations ..................... $9,142,584 $1,110,945 $ 157,501 $ (70,539) $756,092
========== ========== =========== ========== ========
<CAPTION>
Fidelity VIP II Index 500 Division
------------------------------------------
Year Ended December 31,
------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Investment Income:
Dividend income ........................ $ 781,774 $ 371,052 $ 101,288
Distributions of realized gains ........ 530,490 859,422 205,527
----------- ----------- ----------
1,312,264 1,230,474 306,815
Expenses:
Mortality and expense risk charge ...... 887,561 431,588 164,470
----------- ----------- ----------
Net investment income (loss) ......... 424,703 798,886 142,345
----------- ----------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments. 3,073,138 551,714 435,364
Change in net unrealized gain (loss)
on investments ........................ 14,391,208 10,456,961 3,844,079
----------- ----------- ----------
Net gain (loss) on investments ......... 17,464,346 11,008,675 4,279,443
----------- ----------- ----------
Increase (decrease) in net assets
from operations ..................... $17,889,049 $11,807,561 $4,421,788
=========== =========== ==========
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-25
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
MFS Research MFS Utilities
Division Division
----------------------------------- -----------------------------------
Period from Period from
January 8, 1998(a) January 12, 1998(a)
Year Ended to Year Ended to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------------- -------------- --------------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income ................................. $ 13,020 $ 3,768 $ 60,485 $ 13,390
Distributions of realized gains ................. 68,803 49,416 304,120 60,878
---------- ----------- ---------- --------
81,823 53,184 364,605 74,268
Expenses:
Mortality and expense risk charge ............... 65,517 22,916 68,471 17,630
---------- ----------- ---------- --------
Net investment income ......................... 16,306 30,268 296,134 56,638
---------- ----------- ---------- --------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... 107,800 (192,250) 154,941 38,000
Change in net unrealized gain (loss)
on investments ................................. 1,704,948 335,616 2,096,308 272,742
---------- ----------- ---------- --------
Net gain (loss) on investments .................. 1,812,748 143,366 2,251,249 310,742
---------- ----------- ---------- --------
Increase (decrease) in net assets
from Operations .............................. $1,829,054 $ 173,634 $2,547,383 $367,380
========== =========== ========== ========
<CAPTION>
Oppenheimer Bond Division
----------------------------------------
Year Ended December 31,
----------------------------------------
1999 1998 1997
--------------- ----------- -----------
<S> <C> <C> <C>
Investment Income:
Dividend income ................................. $ 861,797 $229,399 $754,014
Distributions of realized gains ................. 82,763 207,606 12,303
------------- -------- --------
944,560 437,005 766,317
Expenses:
Mortality and expense risk charge ............... 173,390 145,903 114,725
------------- -------- --------
Net investment income ......................... 771,170 291,102 651,592
------------- -------- --------
Gain (loss) on investments:
Net realized gain (loss) on investments ......... (134,605) 296,390 31,843
Change in net unrealized gain (loss)
on investments ................................. (1,114,314) 247,987 235,133
------------- -------- --------
Net gain (loss) on investments .................. (1,248,919) 544,377 266,976
------------- -------- --------
Increase (decrease) in net assets
from Operations .............................. $ (477,749) $835,479 $918,568
============= ======== ========
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-26
<PAGE>
STATEMENT OF OPERATIONS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Oppenheimer
Strategic Bond
Division
-----------------------------------
Period from Templeton International Division
January 12, 1998(a) ------------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, ------------------------------------------
1999 1998 1999 1998 1997
-------------- -------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividend income ............................. $ 109,302 $ 5,696 $ 1,540,020 $1,024,661 $ 678,464
Distributions of realized gains ............. -- 3,670 5,349,542 1,831,974 272,716
--------- -------- ----------- ---------- ----------
109,302 9,366 6,889,562 2,856,635 951,180
Expenses:
Mortality and expense risk charge ........... 20,608 8,104 529,156 429,430 301,799
--------- -------- ----------- ---------- ----------
Net investment income ..................... 88,694 1,262 6,360,406 2,427,205 649,381
--------- -------- ----------- ---------- ----------
Gain (loss) on investments:
Net realized gain (loss) on investments ..... (19,086) (2,048) 338,691 776,195 828,887
Change in net unrealized gain (loss)
on investments ............................ (22,018) 24,753 5,803,054 295,855 2,126,633
--------- -------- ----------- ---------- ----------
Net gain (loss) on investments .............. (41,104) 22,705 6,141,745 1,072,050 2,955,520
--------- -------- ----------- ---------- ----------
Increase in net assets
from operations .......................... $ 47,590 $ 23,967 $12,502,151 $3,499,255 $3,604,901
========= ======== =========== ========== ==========
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
International
Equity
Division
----------------------------------- JPVF World Growth Stock Division
Period from -------------------------------------------------
Year Ended January 15, 1998(a) Year Ended December 31,
December 31, to -------------------------------------------------
1999 December 31, 1998 1999 1998 1997
-------------- -------------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .............. $ (129,696) $ (2,162) $ 623,196 $ 9,146,199 $ 14,768,141
Net realized gain (loss) on investments ... 720,386 (1,410) 1,558,287 1,498,732 1,393,920
Change in net unrealized gain (loss)
on investments ........................... 4,015,470 550,363 19,480,089 (8,293,399) (2,140,961)
------------ ---------- ------------- ------------ ------------
Increase (decrease) in net assets from
operations ................................ 4,606,160 546,791 21,661,572 2,351,532 14,021,100
Contractholder transactions--Note F:
Transfers of net premiums ................. 3,996,999 1,201,519 16,845,423 19,624,937 20,387,148
Transfers from/to General Account
and within Separate Account, net ......... 5,710,860 6,623,800 (19,163,711) (12,458,969) (4,647,630)
Transfers of cost of insurance ............ (1,006,092) (238,990) (7,185,745) (7,802,232) (7,901,778)
Transfers on account of death ............. (1,803) (12,068) (284,192) (329,223) (143,565)
Transfers on account of other --
terminations ............................. (22,117) 16,339 (1,514,073) (2,164,208) (2,830,872)
------------ ---------- ------------- ------------ ------------
Net increase (decrease) in net assets
derived from contractholder transactions .. 8,677,847 7,590,600 (11,302,298) (3,129,695) 4,863,303
Net increase (decrease) in net assets ...... 13,284,007 8,137,391 10,359,274 (778,163) 18,884,403
------------ ---------- ------------- ------------ ------------
Balance at beginning of year ............... 8,137,391 -- 117,198,547 117,976,710 99,092,307
------------ ---------- ------------- ------------ ------------
Balance at end of year ..................... $ 21,421,398 $8,137,391 $ 127,557,821 $117,198,547 $117,976,710
============ ========== ============= ============ ============
<CAPTION>
JPVF Global Hard Assets Division
----------------------------------------------
Year Ended December 31,
---------------- ------------- ---------------
1999 1998 1997
--------------- ------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ..................... $ (46,249) $ 28,240 $ 146,417
Net realized gain (loss) on investments .......... (1,083,450) (826,362) (1,020,911)
Change in net unrealized gain (loss)
on investments .................................. 1,807,479 121,013 (2,862,423)
------------- ---------- -------------
Increase (decrease) in net assets from
operations ....................................... 677,780 (677,109) (3,736,917)
Contractholder transactions--Note F:
Transfers of net premiums ........................ 1,235,187 1,192,112 1,487,487
Transfers from/to General Account
and within Separate Account, net ................ (275,408) (854,463) 594,080
Transfers of cost of insurance ................... (460,243) (412,766) (522,160)
Transfers on account of death .................... (5,186) (4,158) (5,118)
Transfers on account of other
terminations .................................... (80,350) (113,411) (297,357)
------------- ---------- -------------
Net increase (decrease) in net assets
derived from contractholder transactions ......... 414,000 (192,686) 1,256,932
Net increase (decrease) in net assets ............. 1,091,780 (869,795) (2,479,985)
------------- ---------- -------------
Balance at beginning of year ...................... 4,403,609 5,273,404 7,753,389
------------- ---------- -------------
Balance at end of year ............................ $ 5,495,389 $4,403,609 $ 5,273,404
============= ========== =============
</TABLE>
(a) Commencement of operations
See notes to financial statements.
F-28
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF Emerging Growth Division JPVF Capital Growth Division
----------------------------------------- -------------------------------------------
Year Ended December 31, Year Ended December 31,
----------------------------------------- -------------------------------------------
1999 1998 1997 1999 1998 1997
------------ ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .............. $ (821,544) $ 12,062 $ 2,014,106 $ 3,746,702 $ 8,235,378 $ 4,615,187
Net realized gain (loss)
on investments ........................... 3,161,020 1,477,889 528,900 1,944,106 2,650,023 827,249
Change in net unrealized gain (loss)
on investments ........................... 59,901,442 16,294,927 3,845,746 85,575,214 38,211,343 19,770,192
------------ ----------- ----------- ------------ ------------ ------------
Increase (decrease) in net assets from
operations ................................ 62,240,918 17,784,878 6,388,752 91,266,022 49,096,744 25,212,628
Contractholder transactions--Note F:
Transfers of net premiums ................. 17,827,633 15,940,085 12,081,437 36,826,017 29,497,989 23,605,444
Transfers from/to General Account
and within Separate Account, net ......... (2,063,189) 893,513 7,761,806 11,080,254 358,425 2,703,509
Transfers of cost of insurance ............ (5,826,562) (4,518,851) (3,150,610) (13,445,085) (10,254,190) (7,961,359)
Transfers on account of death ............. (165,890) (55,398) (29,914) (341,019) (314,463) (104,089)
Transfers on account of other
terminations ............................. (732,498) (634,670) (617,379) (2,211,653) (2,015,250) (2,348,433)
------------ ----------- ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
derived from contractholder transactions .. 9,039,494 11,624,679 16,045,340 31,908,514 17,272,511 15,895,072
Net increase (decrease) in net assets ...... 71,280,412 29,409,557 22,434,092 123,174,536 66,369,255 41,107,700
------------ ----------- ----------- ------------ ------------ ------------
Balance at beginning of year ............... 78,902,113 49,492,556 27,058,464 190,144,825 123,775,570 82,667,870
------------ ----------- ----------- ------------ ------------ ------------
Balance at end of year ..................... $150,182,525 $78,902,113 $49,492,556 $313,319,361 $190,144,825 $123,775,570
============ =========== =========== ============ ============ ============
<CAPTION>
JPVF Small Company Division
------------------------------------------------
Year Ended December 31,
------------------------------------------------
1999 1998 1997
-------------------------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .............. $ 1,309,262 $ 7,779,948 $ 7,341,576
Net realized gain (loss)
on investments ........................... (1,289,759) 939,643 1,112,075
Change in net unrealized gain (loss)
on investments ........................... 10,478,964 (20,294,880) 7,517,633
-------------- -------------- ------------
Increase (decrease) in net assets from
operations ................................ 10,498,467 (11,575,289) 15,971,284
Contractholder transactions--Note F:
Transfers of net premiums ................. 13,211,682 15,832,378 15,002,595
Transfers from/to General Account
and within Separate Account, net ......... (11,233,252) (1,321,696) (3,643,068)
Transfers of cost of insurance ............ (5,181,027) (6,129,383) (5,977,445)
Transfers on account of death ............. (207,494) (182,629) (138,279)
Transfers on account of other
terminations ............................. (940,537) (1,303,312) (2,043,613)
-------------- -------------- ------------
Net increase (decrease) in net assets
derived from contractholder transactions .. (4,350,628) 6,895,358 3,200,190
Net increase (decrease) in net assets ...... 6,147,839 (4,679,931) 19,171,474
-------------- -------------- ------------
Balance at beginning of year ............... 84,528,832 89,208,763 70,037,289
-------------- -------------- ------------
Balance at end of year ..................... $ 90,676,671 $ 84,528,832 $ 89,208,763
============== ============== ============
</TABLE>
(a) Commencement of operations.
See notes to financial statements.
F-29
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
Growth
Division
-----------------------------------
Period from JPVF World Growth & Income Division
January 20, 1998(a) ----------------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, ----------------------------------------------
1999 1998 1999 1998 1997
-------------- -------------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) .............. $ (27,530) $ (6,809) $ (105,349) $ (31,231) $ 8,670,341
Net realized gain (loss) on investments ... 101,362 (46,655) 1,036,064 781,929 763,718
Change in net unrealized gain (loss)
on investments ........................... 6,934,317 231,287 1,596,857 4,120,409 (1,791,862)
----------- ---------- ------------ ------------ ------------
Increase in net assets from operations ..... 7,008,149 177,823 2,527,572 4,871,107 7,642,197
Contractholder transactions--Note F:
Transfers of net premiums ................. 2,139,922 509,810
Transfers from/to General Account 10,779,535 10,756,077 8,132,090
and within Separate Account, net ......... 11,691,084 1,036,375
Transfers of cost of insurance ............ (554,122) (70,647) (2,106,086) (1,037,359) 5,643,742
Transfers on account of death ............. (857) -- (3,899,334) (3,696,570) (2,745,042)
Transfers on account of other (104,919) (92,605) (45,431)
terminations.............................. (35,596) 2,676
----------- ---------- (534,017) (591,078) (658,736)
Net increase in net assets derived ------------ ------------ ------------
from contractholder transactions .......... 13,240,431 1,478,214
Net increase in net assets ................. 20,248,580 1,656,037 4,135,179 5,338,465 10,326,623
----------- ---------- 6,662,751 10,209,572 17,968,820
Balance at beginning of year ............... 1,656,037 -- ------------ ------------ ------------
----------- ---------- 52,465,633 42,256,061 24,287,241
Balance at end of year ..................... $21,904,617 $1,656,037 ------------ ------------ ------------
=========== ========== $ 59,128,384 $ 52,465,633 $ 42,256,061
============ ============ ============
<CAPTION>
JPVF Balanced Division
----------------------------------------------
Year Ended December 31,
----------------------------------------------
1999 1998 1997
--------------- --------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss) ............. $ 273,744 $ 2,372,689 $ 3,781,936
Net realized gain (loss) on investments .. 250,283 111,626 125,127
Change in net unrealized gain (loss)
on investments .......................... 6,776,884 1,976,202 (829,904)
------------ ------------ ------------
Increase in net assets from operations .... 7,300,911 4,460,517 3,077,159
Contractholder transactions--Note F:
Transfers of net premiums ................ 5,826,918 5,092,290 4,506,381
Transfers from/to General Account
and within Separate Account, net ........ (749,285) 631,049 (154,536)
Transfers of cost of insurance ........... (2,143,582) (1,897,240) (1,580,912)
Transfers on account of death ............ (33,556) (107,286) (32,682)
Transfers on account of other
terminations............................. (372,514) (477,084) (480,806)
------------ ------------ ------------
Net increase in net assets derived
from contractholder transactions ......... 2,527,981 3,241,729 2,257,445
Net increase in net assets ................ 9,828,892 7,702,246 5,334,604
------------ ------------ ------------
Balance at beginning of year .............. 32,522,371 24,820,125 19,485,521
------------ ------------ ------------
Balance at end of year .................... $ 42,351,263 $ 32,522,371 $ 24,820,125
============ ============ ============
</TABLE>
See notes to financial statements.
F-30
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
JPVF
High Yield Bond
Division
---------------------------------- JPVF
Period from Money Market Division
January 8, 1998(a) ----------------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, ----------------------------------------------
1999 1998 1999 1998 1997
-------------- ------------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .................. $ 378,386 $ 264,218 $ (177,261) $ 396,249 $ 334,792
Net realized gain (loss) on investments ....... (40,844) (77,480) 142,086 53,452 61,042
Change in net unrealized gain (loss)
on investments ............................... (124,383) (287,866) 740,327 20,157 (11,529)
---------- ---------- ------------ ----------- -------------
Increase (decrease) in net assets from
operations .................................... 213,159 (101,128) 705,152 469,858 384,305
Contractholder transactions--Note F:
Transfers of net premiums ..................... 1,611,508 599,541 7,019,291 4,544,085 4,688,133
Transfers from/to General Account
and within Separate Account, net ............. (711,546) 4,764,419 2,287,638 2,798,249 (2,751,900)
Transfers of cost of insurance ................ (376,460) (255,751) (1,446,885) (915,629) (782,134)
Transfers on account of death ................. (342) -- (7,579) (578) (6,947)
Transfers on account of other
terminations ................................. (2,318) (23,575) (190,803) (302,128) (592,016)
---------- ---------- ------------ ----------- -------------
Net increase in net assets derived
from contractholder transactions .............. 520,842 5,084,634 7,661,662 6,123,999 555,136
Net increase in net assets ..................... 734,001 4,983,506 8,366,814 6,593,857 939,441
---------- ---------- ------------ ----------- -------------
Balance at beginning of year ................... 4,983,506 -- 15,544,453 8,950,596 8,011,155
---------- ---------- ------------ ----------- -------------
Balance at end of year ......................... $5,717,507 $4,983,506 $ 23,911,267 $15,544,453 $ 8,950,596
========== ========== ============ =========== =============
<CAPTION>
Fidelity VIP II Contrafund Division
----------------------------------------------
Year Ended December 31,
-----------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .................. $ 1,337,023 $ 938,763 $ 82,375
Net realized gain (loss) on investments ....... 1,161,891 381,646 143,362
Change in net unrealized gain (loss)
on investments ............................... 9,007,322 6,265,813 1,928,296
------------ ------------ ------------
Increase (decrease) in net assets from
operations .................................... 11,506,236 7,586,222 2,154,033
Contractholder transactions--Note F:
Transfers of net premiums ..................... 12,582,864 9,182,744 4,532,969
Transfers from/to General Account
and within Separate Account, net ............. 3,316,146 8,458,498 8,789,832
Transfers of cost of insurance ................ (3,837,642) (2,365,397) (1,101,248)
Transfers on account of death ................. (52,782) (42,331) (1,382)
Transfers on account of other
terminations ................................. (255,359) (262,093) (153,334)
------------ ------------ ------------
Net increase in net assets derived
from contractholder transactions .............. 11,753,227 14,971,421 12,066,837
Net increase in net assets ..................... 23,259,463 22,557,643 14,220,870
------------ ------------ ------------
Balance at beginning of year ................... 41,741,038 19,183,395 4,962,525
------------ ------------ ------------
Balance at end of year ......................... $ 65,000,501 $ 41,741,038 $ 19,183,395
============ ============ ============
</TABLE>
(a) Commencement of operations.
See notes to financial statements.
F-31
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Fidelity Fidelity
VIP Equity Income VIP Growth
Division Division
----------------------------------- ----------------------------------
Period from Period from
January 8, 1998(a) January 8, 1998(a)
Year Ended to Year Ended to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------------- -------------- -------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................... $ 154,970 $ 762 $ 905,136 $ (14,921)
Net realized gain (loss) on investments ........ 85,743 (114,816) 59,375 (10,197)
Change in net unrealized gain
on investments ................................ (139,539) 192,755 8,178,073 1,136,063
---------- ---------- ------------ ----------
Increase (decrease) in net assets from
operations ..................................... 101,174 78,701 9,142,584 1,110,945
Contractholder transactions--Note F:
Transfers of net premiums ...................... 3,054,942 1,459,008 7,194,482 925,584
Transfers from/to General Account
and within Separate Account, net .............. 3,139,659 2,814,317 23,690,440 5,643,806
Transfers of cost of insurance ................. (699,983) (305,514) (1,881,297) (177,953)
Transfers on account of death .................. -- -- (4,024) --
Transfers on account of other
terminations .................................. (34,625) (1,001) (161,248) (35,344)
Net increase (decrease) in net assets derived
from contractholder transactions ............... 5,459,993 3,966,810 28,838,353 6,356,093
Net increase (decrease) in net assets ........... 5,561,167 4,045,511 37,980,937 7,467,038
---------- ---------- ------------ ----------
Balance at beginning of year .................... 4,045,511 -- 7,467,038 --
---------- ---------- ------------ ----------
Balance at end of year .......................... $9,606,678 $4,045,511 $ 45,447,975 $7,467,038
========== ========== ============ ==========
<CAPTION>
Fidelity VIP High Income Division
--------------------------------------------
Year Ended December 31,
--------------------------------------------
1999 1998 1997
------------- --------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ................... $ 214,361 $ 616,338 $ 233,391
Net realized gain (loss) on investments ........ (120,010) 97,475 71,464
Change in net unrealized gain
on investments ................................ 63,150 (784,352) 451,237
---------- ------------- ----------
Increase (decrease) in net assets from
operations ..................................... 157,501 (70,539) 756,092
Contractholder transactions--Note F:
Transfers of net premiums ...................... 4,917 82,028 1,344,308
Transfers from/to General Account
and within Separate Account, net .............. (837,892) (4,577,188) 3,119,835
Transfers of cost of insurance ................. (102,685) (264,842) (362,364)
Transfers on account of death .................. (11) (219) (3,474)
Transfers on account of other
terminations .................................. (8,950) (126,841) (173,019)
Net increase (decrease) in net assets derived
from contractholder transactions ............... (944,621) (4,887,062) 3,925,286
Net increase (decrease) in net assets ........... (787,120) (4,957,601) 4,681,378
---------- ------------- ----------
Balance at beginning of year .................... 2,542,978 7,500,579 2,819,201
---------- ------------- ----------
Balance at end of year .......................... $1,755,858 $ 2,542,978 $7,500,579
========== ============= ==========
</TABLE>
(a) Commencement of operations.
See notes to financial statements.
F-32
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
MFS Research
Division
-----------------------------------
Fidelity VIP II Index 500 Division Period from
----------------------------------------------- January 8, 1998(a)
Year Ended December 31, Year Ended to
----------------------------------------------- December 31, December 31,
1999 1998 1997 1999 1998
--------------- --------------- --------------- -------------- --------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income ..................... $ 424,703 $ 798,886 $ 142,345 $ 16,306 $ 30,268
Net realized gain (loss)
on investments ........................... 3,073,138 551,714 435,364 107,800 (192,250)
Change in net unrealized gain
on investments ........................... 14,391,208 10,456,961 3,844,079 1,704,948 335,616
------------ ----------- ----------- ----------- ----------
Increase (decrease) in net assets from
operations ................................ 17,889,049 11,807,561 4,421,788 1,829,054 173,634
Contractholder transactions--Note F:
Transfers of net premiums ................. 26,012,390 14,424,002 5,355,400 2,385,029 1,035,071
Transfers from/to General Account
and within Separate Account, net ......... 9,053,639 22,523,380 13,090,735 2,897,902 3,239,091
Transfers of cost of insurance ............ (7,515,597) (3,847,370) (1,230,424) (629,066) (193,228)
Transfers on account of death ............. (157,655) (63,585) (41,017) (1,372) (12,135)
Transfers on account of other
terminations ............................. (668,878) (380,850) (149,305) (19,098) 130
Net increase in net assets derived from
contractholder transactions ............... 26,723,899 32,655,577 17,025,389 4,633,395 4,068,929
Net increase in net assets ................. 44,612,948 44,463,138 21,447,177 6,462,449 4,242,563
------------ ----------- ----------- ----------- ----------
Balance at beginning of year ............... 73,437,900 28,974,762 7,527,585 4,242,563 --
------------ ----------- ----------- ----------- ----------
Balance at end of year ..................... $118,050,848 $73,437,900 $28,974,762 $10,705,012 $4,242,563
============ =========== =========== =========== ==========
<CAPTION>
MFS Utilities
Division
-----------------------------------
Period from Oppenheimer Bond Division
January 12, 1998(a) -----------------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, -----------------------------------------------
1999 1998 1999 1998 1997
-------------- -------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income ..................... $ 296,134 $ 56,638 $ 771,170 $ 291,102 $ 651,592
Net realized gain (loss)
on investments ........................... 154,941 38,000 (134,605) 296,390 31,843
Change in net unrealized gain
on investments ........................... 2,096,308 272,742 (1,114,314) 247,987 235,133
----------- ---------- ----------- ----------- -----------
Increase (decrease) in net assets from
operations ................................ 2,547,383 367,380 (477,749) 835,479 918,568
Contractholder transactions--Note F:
Transfers of net premiums ................. 1,869,430 730,856 3,187,323 3,736,503 2,691,506
Transfers from/to General Account
and within Separate Account, net ......... 4,892,184 3,166,986 146,154 595,445 (394,592)
Transfers of cost of insurance ............ (641,737) (145,371) (1,282,193) (1,076,884) (918,928)
Transfers on account of death ............. (6,552) -- (54,423) (43,142) (65,768)
Transfers on account of other
terminations ............................. (37,493) 30,746 (143,229) (227,487) (384,107)
Net increase in net assets derived from
contractholder transactions ............... 6,075,832 3,783,217 1,853,632 2,984,435 928,111
Net increase in net assets ................. 8,623,215 4,150,597 1,375,883 3,819,914 1,846,679
----------- ---------- ----------- ----------- -----------
Balance at beginning of year ............... 4,150,597 -- 18,056,207 14,236,293 12,389,614
----------- ---------- ----------- ----------- -----------
Balance at end of year ..................... $12,773,812 $4,150,597 $19,432,090 $18,056,207 $14,236,293
=========== ========== =========== =========== ===========
</TABLE>
(a) Commencement of operations.
F-33
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--(Continued)
JPF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
Oppenheimer
Strategic Bond
Division
-----------------------------------
Period from ) Templeton International I Division
January 12, 1998(a) -----------------------------------------------
Year Ended to Year Ended December 31,
December 31, December 31, -----------------------------------------------
1999 1998 1999 1998 1997
-------------- -------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income ..................... $ 88,694 $ 1,262 $ 6,360,406 $ 2,427,205 $ 649,381
Net realized gain
on investments ........................... (19,086) (2,048) 338,691 776,195 828,887
Change in net unrealized gain
on investments ........................... (22,018) 24,753 5,803,054 295,855 2,126,633
---------- ---------- ----------- ----------- -----------
Increase in net assets from operations ..... 47,590 23,967 12,502,151 3,499,255 3,604,901
Contractholder transactions--Note F:
Transfers of net premiums ................. 636,974 452,931 11,137,465 11,772,271 9,182,098
Transfers from/to General Account
and within Separate Account, net ......... 781,202 1,307,674 (5,910,457) 2,942,895 7,333,435
Transfers of cost of insurance ............ (196,836) (74,702) (3,422,189) (3,185,143) (2,324,520)
Transfers on account of death ............. -- -- (128,201) (31,916) (64,977)
Transfers on account of other
terminations ............................. (16,951) (6,002) (391,045) (356,684) (437,273)
---------- ---------- ----------- ----------- -----------
Net increase in net assets derived
from contractholder transactions ......... 1,204,389 1,679,901 1,285,573 11,141,423 13,688,763
Net increase in net assets ................. 1,251,979 1,703,868 13,787,724 14,640,678 17,293,664
---------- ---------- ----------- ----------- -----------
Balance at beginning of year ............... 1,703,868 -- 54,756,706 40,116,028 22,822,364
---------- ---------- ----------- ----------- -----------
Balance at end of year ..................... $2,955,847 $1,703,868 $68,544,430 $54,756,706 $40,116,028
========== ========== =========== =========== ===========
</TABLE>
(a) Commencement of operations.
See notes to consolidated financial statements.
F-34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE A--ORGANIZATION OF ACCOUNT
Jefferson Pilot Financial Separate Account A (the "Separate Account") is a
separate account of Jefferson Pilot Financial Insurance Company ("JP
Financial"). The Separate Account is organized as a unit investment trust
registered under the Investment Act of 1940 as amended. It was established for
the purpose of funding flexible premium variable life insurance policies issued
by JP Financial. As of December 31, 1999, the Separate Account is comprised of
twenty-one investment divisions, eleven of which invest exclusively in the
corresponding portfolios of the Jefferson-Pilot Variable Fund, Inc., one of
which invests in the Templeton International Fund, five of which invest in
certain Fidelity Portfolios, two of which invest in certain Oppenheimer Funds,
and two of which invest in certain MFS Funds, all diversified Series Investment
Companies. Companies.
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 JP Financial 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 JP Financial 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.
Use of Estimates: The accompanying financial statements of the Separate
Account have been prepared in accordance with generally accepted accounting
principles. The preparation of financial statements requires management to make
estimates that affect amounts reported in the financial statements and
accompanying notes. Such estimates could change in the future as more
information becomes known, which could impact the amounts reported and
disclosed herein.
NOTE C--AFFILIATED COMPANY TRANSACTIONS
Administrative services necessary for the operation of the Separate Account are
provided by Jefferson Pilot Life Insurance Company, an affiliate of JP
Financial. JP Financial is the principal underwriter of the variable insurance
contracts that utilize the Separate Account. Jefferson Pilot Variable
Corporation, an affiliate of the Company, is the distributor.
NOTE D--DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code, a variable
life insurance contract will be subject to federal income taxes on the income
earned for any period for which the investments of the segregated assets
account, on which the contract is based, are not adequately diversified. The
Code provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary
of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h) of the
Code. The Company believes that the segregated asset account satisfies the
current requirements of the regulations, and it intends that the segregated
asset account will continue to meet such requirements.
F-35
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(Continued)
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE E--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, 1999 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, 1999.
<TABLE>
<CAPTION>
Net Asset
Value
Shares Per Share
----------- ----------------
<S> <C> <C>
JPVF International Equity Division 1,332,798 $ 16.069385
JPVF World Growth Stock Division 4,895,518 26.076172
JPVF Global Hard Assets Division 611,602 8.990947
JPVF Emerging Growth Division 3,689,566 40.674453
JPVF Capital Growth Division 7,974,859 39.265001
JPVF Small Company Division 5,024,169 18.054505
JPVF Growth Division 933,447 23.377614
JPVF Growth & Income Division 2,948,651 20.063152
JPVF Balanced Division 2,772,661 15.270695
JPVF High Yield Division 575,664 9.188039
JPVF Money Market Division 2,194,261 10.846432
Fidelity VIP II Contrafund Division 2,228,829 29.150000
Fidelity VIP Equity Income Division 363,619 25.710000
Fidelity VIP Growth Division 824,121 54.930000
Fidelity VIP High Income Division 155,357 11.310000
Fidelity VIP II Index 500 Division 704,954 167.410000
MFS Research Division 457,636 23.340000
MFS Utilities Division 528,558 24.160000
Oppenheimer Bond Division 1,686,672 11.520000
Oppenheimer Strategic Division 610,422 4.970000
Templeton International I Division 3,082,386 22.250000
</TABLE>
F-36
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(Continued)
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE F--CONTRACTHOLDER TRANSACTIONS
<TABLE>
<CAPTION>
For the period
January 15, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
-------------------------- -------------------------
Units Amount Units Amount
----------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
JPVF International Equity Division
Issuance of units 1,586,816 $21,345,389 806,326 $ 9,244,760
Redemptions of units 923,203 12,667,542 145,428 1,654,160
--------- ----------- -------- -----------
Net Increase 663,613 $ 8,677,847 660,898 $ 7,590,600
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF World Growth Stock Division
Issuance of units 710,815 $31,376,896 943,836 $39,051,743 1,011,924 $39,798,520
Redemptions of units 970,125 42,679,194 1,018,017 42,181,438 895,063 34,935,217
--------- ------------ --------- ----------- --------- -----------
Net Increase (decrease) (259,310) $(11,302,298) (74,181) $(3,129,695) 116,861 $ 4,863,303
========= ============ ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Global Hard Assets Division
Issuance of units 806,194 $ 7,003,824 437,515 $ 3,764,642 589,273 $ 6,878,213
Redemptions of units 773,498 6,589,824 450,418 3,957,328 475,559 5,621,281
--------- ----------- --------- ----------- --------- -----------
Net Increase 32,696 $ 414,000 (12,903) $ (192,686) 113,714 $ 1,256,932
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Emerging Growth Division
Issuance of units 1,754,220 $49,040,558 2,202,083 $45,173,868 2,187,207 $37,160,174
Redemptions of units 1,468,922 40,001,064 1,639,619 33,549,189 1,257,679 21,114,834
--------- ----------- --------- ----------- --------- -----------
Net Increase 285,298 $ 9,039,494 562,464 $11,624,679 929,528 $16,045,340
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Capital Growth Division
Issuance of units 1,885,588 $92,037,794 1,791,255 $66,165,409 1,727,504 $49,693,896
Redemptions of units 1,232,624 60,129,280 1,324,641 48,892,898 1,166,517 33,798,824
--------- ----------- --------- ----------- --------- -----------
Net Increase 652,964 $31,908,514 466,614 $17,272,511 560,987 $15,895,072
========= =========== ========= =========== ========= ===========
</TABLE>
(a) Commencement of operations
F-37
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(Continued)
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Small Company Division
Issuance of units 730,490 $27,595,578 916,453 $39,034,264 783,149 $32,220,885
Redemptions of units 845,859 31,946,206 747,736 32,138,906 707,768 29,020,695
--------- ----------- --------- ----------- --------- -----------
Net Increase (decrease) (115,369) $(4,350,628) 168,717 $ 6,895,358 75,381 $ 3,200,190
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 20, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
-------------------------- -------------------------
Units Amount Units Amount
----------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
JPVF Growth Division
Issuance of units 1,109,124 $17,796,382 289,470 $ 3,260,004
Redemptions of units 295,421 4,555,951 162,322 1,781,790
--------- ----------- -------- -----------
Net Increase 813,703 $13,240,431 127,148 $ 1,478,214
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Growth & Income Division
Issuance of units 1,018,584 $29,500,940 1,240,410 $32,593,480 1,110,245 $24,846,023
Redemptions of units 874,919 25,365,761 1,047,665 27,255,015 659,777 14,619,400
--------- ----------- --------- ----------- --------- -----------
Net Increase 143,665 $ 4,135,179 192,745 $ 5,338,465 450,468 $10,226,623
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Balanced Division
Issuance of units 578,685 $12,521,166 622,617 $11,686,604 557,010 $ 9,238,539
Redemptions of units 460,757 9,993,185 449,737 8,444,875 423,594 6,981,094
--------- ----------- --------- ----------- --------- -----------
Net Increase 117,928 $ 2,527,981 172,880 $ 3,241,729 133,416 $ 2,257,445
========= =========== ========= =========== ========= ===========
</TABLE>
(a) Commencement of operations
F-38
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(Continued)
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
------------------------- ---------------------------
Units Amount Units Amount
---------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
JPVF High Yield Division
Issuance of units 825,411 $ 8,463,868 1,187,107 $ 11,940,568
Redemptions of units 773,012 7,943,026 686,842 6,855,934
-------- ----------- --------- ------------
Net Increase 52,399 $ 520,842 500,265 $ 5,084,634
======== =========== ========= ============
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JPVF Money Market
Issuance of units 3,240,917 $57,033,996 3,082,919 $52,304,400 2,230,904 $36,446,460
Redemptions of units 2,805,821 49,372,334 2,722,078 46,180,401 2,193,315 35,891,324
--------- ----------- --------- ----------- --------- -----------
Net Increase 435,096 $ 7,661,662 360,841 $ 6,123,999 37,589 $ 555,136
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity VIP II Contrafund Division
Issuance of units 1,754,276 $33,244,625 2,028,731 $31,008,560 1,533,238 $19,271,804
Redemptions of units 1,129,685 21,491,398 1,065,432 16,037,139 580,340 7,204,967
--------- ----------- --------- ----------- --------- -----------
Net Increase 624,591 $11,753,227 963,299 $14,971,421 952,898 $12,066,837
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity VIP II Index 500 Division
Issuance of units 3,771,476 $77,313,900 3,405,171 $57,232,632 2,094,648 $28,323,380
Redemptions of units 2,439,500 50,590,001 1,486,670 24,577,055 822,768 11,297,991
--------- ----------- --------- ----------- --------- -----------
Net Increase 1,331,976 $26,723,899 1,918,501 $32,655,577 1,271,880 $17,025,389
========= =========== ========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity VIP High Income Division
Issuance of units 23,042 $ 283,589 71,621 $ 908,088 797,876 $ 9,316,213
Redemptions of units 99,119 1,228,210 455,698 5,795,150 462,054 5,390,927
--------- ----------- --------- ----------- --------- -----------
Net Increase (decrease) (76,077) $ (944,621) (384,077) $(4,887,062) 335,822 $ 3,925,286
========= =========== ========= =========== ========= ===========
</TABLE>
(a) Commencement of operations
F-39
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
----------------------------- --------------------------
Units Amount Units Amount
----------- --------------- --------- --------------
<S> <C> <C> <C> <C>
Fidelity VIP Growth Division
Issuance of units 2,522,313 $39,479,910 655,774 $ 7,806,648
Redemptions of units 672,246 10,641,557 122,386 1,450,555
--------- ----------- ------- -----------
Net Increase 1,850,067 $28,838,353 533,388 $ 6,356,093
========= =========== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
----------------------------- --------------------------
Units Amount Units Amount
----------- --------------- --------- --------------
<S> <C> <C> <C> <C>
Fidelity VIP Equity Income Division
Issuance of units 1,131,302 $13,584,576 982,482 $10,549,873
Redemptions of units 681,291 8,124,583 623,457 6,583,063
--------- ----------- ------- -----------
Net Increase 450,011 $ 5,459,993 359,025 $ 3,966,810
========= =========== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 8, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
--------------------------- --------------------------
Units Amount Units Amount
---------- -------------- --------- --------------
<S> <C> <C> <C> <C>
MFS Reseach Division
Issuance of units 672,625 $ 8,701,356 631,245 $ 7,154,159
Redemptions of units 311,684 4,067,961 288,287 3,085,230
------- ----------- ------- -----------
Net Increase 360,941 $ 4,633,395 342,958 $ 4,068,929
======== =========== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 12, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
---------------------------- --------------------------
Units Amount Units Amount
---------- --------------- --------- --------------
<S> <C> <C> <C> <C>
MFS Utilities Division
Issuance of units 930,122 $11,856,880 667,553 $ 7,474,706
Redemptions of units 458,547 5,781,048 324,319 3,691,489
------- ----------- ------- -----------
Net Increase 471,575 $ 6,075,832 343,234 $ 3,783,217
======= =========== ======= ===========
</TABLE>
(a) Commencement of operations
F-40
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
JPF SEPARATE ACCOUNT A
DECEMBER 31, 1999
NOTE F--CONTRACTHOLDER TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Oppenheimer Bond Division
Issuance of units 646,006 $13,940,162 1,052,232 $22,601,035 396,342 $7,858,820
Redemptions of units 561,178 12,086,530 913,765 19,616,600 350,970 6,930,709
--------- ----------- --------- ----------- ------- ----------
Net Increase 84,828 $ 1,853,632 138,467 $ 2,984,435 45,372 $ 928,111
========= =========== ========= =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
For the period
January 12, 1998(a)
Year Ended December 31, through
1999 December 31, 1998
------------------------ -------------------------
Units Amount Units Amount
---------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
Oppenheimer Strategic Division
Issuance of units 369,193 $ 3,720,887 374,307 $ 3,726,685
Redemptions of units 250,262 2,516,498 204,970 2,046,784
--------- ----------- ------- -----------
Net Increase 118,931 $ 1,204,389 169,337 $ 1,679,901
========= =========== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- ---------------------------
Units Amount Units Amount Units Amount
----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Templeton International Division
Issuance of units 1,586,916 $28,116,196 2,289,338 $37,928,398 2,174,212 $32,480,846
Redemptions of units 1,515,331 26,830,623 1,615,048 26,786,975 1,245,865 18,792,083
--------- ----------- --------- ----------- --------- -----------
Net Increase 71,585 $ 1,285,573 674,290 $11,141,423 928,347 $13,688,763
========= =========== ========= =========== ========= ===========
</TABLE>
(a) Commencement of operations
F-41
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKINGS REGARDING INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer of controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
REPRESENTATIONS REGARDING FEES AND CHARGES
The fees and charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred and the risks assumed by Jefferson Pilot Financial Insurance Company.
REPRESENTATION REGARDING RULE 6e-3(T)
This filing is made in reliance on Rule 6e-3(T) of the Investment Company Act
of 1940.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The cover sheet.
The Prospectus consisting of 78 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484(b) (1) under the Securities
Act of 1933.
The Representations Regarding Fees and Charges.
The Representation Regarding Rule 6e-3(T).
The signatures.
Written consents of the following persons:
Ernst & Young LLP, contained in Exhibit 7 below.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
(a) Certified copy of Resolution of Board of Directors of The Volunteer
State Life Insurance Company, adopted at a meeting held on August 20, 1984 (in
lieu of indenture or trust creating unit investment trust) (Incorporated by
reference to Exhibit 1(a) of Post-Effective Amendment No. 12 to the Registration
Statement on Form S-6 dated April 17, 1996).
(b) Not applicable.
(c) (i) Underwriting Agreement between The Volunteer State Life Insurance
Company and Chubb Securities Corporation. (Incorporated by reference to
Exhibit 1(c)(i) of Post-Effective Amendment No. 12 to the Registration
Statement on Form S-6 dated April 17, 1996).
(ii) Amendment to Underwriting Agreement between The Volunteer State
Life Insurance Company and Chubb Securities Corporation. (Incorporated by
reference to Exhibit 1(c)(ii) of Post-Effective Amendment No. 12 to the
Registration Statement on Form S-6 dated April 17, 1996).
(iii) Specimen District Manager's Agreement of Chubb Securities
Corporation. (Incorporated by reference to Exhibit 1(c)(iii) of Post-
Effective Amendment No. 12 to the Registration Statement on Form S-6 dated
April 17, 1996).
(iv) Specimen Sales Representative's Agreement of Chubb Securities
Corporation. (Incorporated by reference to Exhibit 1(c) (iv) of Post-
Effective Amendment No. 12 to the Registration Statement on Form 2-6 dated
April 17, 1996).
(v) Schedule of Commissions. (to be filed by Amendment).
(d) Not applicable
(e) (i) Specimen Policy
(e) (ii) Form of Riders (Incorporated by reference to Exhibit 1(e)(ii) of
Registration Statement on Form S-6 (33-77496) dated March 22, 1994.
(f) (i) Amended and Restated Charter (with all amendments) of Chubb Life
Insurance Company of America. (Incorporated by Reference to Exhibit 1(f)
(i) of Post-Effective Amendment No. 2 on
<PAGE>
Form S-6 of Chubb Separate Account C, to the Registration Statement filed
December 10, 1993, File No. 33-72830).
(ii) By-Laws of Chubb Life Insurance Company of America. (Incorporated
by Reference to Exibit 1(f) (ii) of Post-Effective Amendment No. 2 on Form
S-6 of Chubb Separate Account C, to the Registration Statement filed
December 10, 1993, File No. 33- 72830).
(g) Not applicable.
(h)(i) Fund Distribution Agreement between Chubb America Fund, Inc., and
Chubb Securities Corporation (incorporated by reference to Exhibit 6(b) of
Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(ii) Amendment to Fund Distribution Agreement between Chubb America
Fund, Inc. and Chubb Securities Corporation (incorporated by reference to
Exhibit 6(a) of Post-Effective Amendment No. 7 to Form N-1A of Chubb
America Fund, Inc., filed on April 11, 1990, Registration No. 2-94479).
(iii) Amended and Restated Investment Management Agreement between
Chubb America Fund, Inc., and Chubb Investment Advisory Corporation
(incorporated by reference to Exhibit 5(a) of Post-Effective Amendment No.
7 to Form N-1A of Chubb America fund, Inc., filed on April 11, 1990,
Registration No. 2-94479).
(iv) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Templeton,
Galbraith & Hansberger Ltd. (incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 11 to Form N-1A of Chubb America Fund, Inc.,
filed April 14, 1993, Registration No. 2-94479).
(vii) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Van Eck
Associates Corporation (incorporated by reference to Exhibit 5(f) of
Post-Effective Amendment No. 7 to Form N-1A of Chubb America Fund, Inc.,
filed on April 11, 1990, Registration No. 2-94479).
(viii) Sub-Investment Management Agreement among Chubb America Fund,
Inc., Chubb Investment Advisory Corporation and Pioneering Management
Corporation (incorporated by reference to Exhibit 5(g) of Post-Effective
Amendment No. 7 of Form N-1A of Chubb America
<PAGE>
Fund, Inc., filed on April 11, 1990, Registration No. 2-94479).
(ix) Custodian Agreement between Chubb America Fund, Inc., and
Citibank, N.A. (incorporated by reference to Exhibit 8 of Post-Effective
Amendment No. 8 to Form N-1A of Chubb America Fund, Inc., filed on February
21, 1991, Registration No. 2-94479).
(x) Amendment to the Custodial Services Agreement between Chubb
America Fund, Inc., and Citibank, N.A. (incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 11 to Form N-1A of Chubb
America Fund, Inc. filed on April 14, 1993, Registration No. 2-94479).
(xi) Amendment No. 2 to Custodial Services Agreement between Chubb
America Fund, Inc. and Citibank, N.A. (incorporated by reference to Exhibit
8(c) of Post-Effective Amendment No. 11 of Form N-1A of Chubb America Fund,
Inc. filed on April 14, 1993, Registration No. 2-94479).
(xii) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Growth and Income
Portfolio (incorporated by reference to Exhibit 5(i) of Post-Effective
Amendment No. 9 of Form N-1A of Chubb America Fund, Inc. filed on February
28, 1992, Registration No. 2-94479).
(xiii) Investment Management Agreement between Chubb America Fund, Inc.
and Chubb Investment Advisory Corporation for the Capital Growth Portfolio
(incorporated by reference to Exhibit 5(j) of Post-Effective Amendment No.
9 to Form N-1A of Chubb America Fund, Inc. filed on February 28, 1992,
Registration No. 2-94479).
(xiv) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Janus Capital
Corporation (incorporated by reference to Exhibit 5(m) of Post-Effective
Amendment No. 11 to Form N-1A of Chubb America Fund, Inc. filed on April
14, 1993, Registration No. 2-94479).
<PAGE>
(xv) Sub-Investment Management Agreement by, between and among Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Phoenix
Investment Counsel, Inc. (incorporated by reference to Exhibit 5(n) of
Post-Amendment No. 11 to Form N-1A of Chubb America Fund, Inc. filed on
April 14, 1993, Registration No. 2-94479).
(xvi) Form of Investment Management Agreement between Chubb America
Fund, Inc. and Chubb Investment Advisory Corporation with respect to the
Emerging Growth Portfolio (incorporated by reference to Exhibit 5(p) of
Post-Effective Amendment No. 12 to Form of Chubb America Fund, Inc. filed
on February 14, 1995 Registration No. 2-94479).
(xvii) Form of Investment Management Agreement between Chubb America
Fund, Inc. and Chubb Investment Advisory Corporation with respect to the
Emerging Growth Portfolio (incorporated by reference to Exhibit 5(p) of
Post-Effective Amendment No. 12 to Form 12 to Form N-1A of Chubb America
Fund, Inc. filed on February 14, 1995 Registration No. 2-94479).
(xviii) Form of Sub-Investment Management Agreement between Chubb
America Fund, Inc., Chubb Investment Advisory Corporation and Massachusetts
Financial Services Company with respect to the Emerging Growth Portfolio
(incorporated by reference to Exhibit 5(q) of Post-Effective Amendment No.
12 to Form N-1A of Chubb America Fund, Inc., filed on February 14, 1995,
Registration No. 2-94479).
(i) Not Applicable.
(j) Application.
2. Specimen Policy. (Same as 1(e)).
3. Opinion of counsel.
4. Not Applicable.
5. Not Applicable.
6. Actuarial opinion and consent of Richard Dielensnyder, FSA, MAAA.
7. Consent of Ernst & Young LLP.
8. Procedures Memorandum (to be filed by Amendment).
9. Specimen Notice of Right of Withdrawal, pursuant to Rule 6e3 (T) (b) (13)
(viii). (Incorporated by reference to Exhibit 9 of Post-Effective Amendment
No. 13 to the Registration Statement on Form S-6 dated April 17, 1996).
<PAGE>
11. (a) Not Applicable.
(b) Not Applicable.
12. (Incorporated by reference to Exhibit 12 of Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 of Chubb Separate Account C,
filed December 10, 1993, File No. 33-72830).
13. (Incorporated by reference to Exhibit 13 of Post-Effective Amendment No. 2
to the Registration Statement on Form S-6 of Chubb Separate Account C,
filed December 10, 1993, File No. 33-72830).
14. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
JPF Separate Account A, certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Pre-Effective Amendment No. 1 to the
Registration Statement and, has duly caused this Pre-Effective Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to the hereunto affixed and attested,
all in Concord, New Hampshire on the 18th day of April, 1999.
(SEAL) JPF SEPARATE ACCOUNT A
(Registrant)
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
AMERICA (Depositor)
By: /s/ Russell C. Simpson
-------------------------------------------
Russell C. Simpson
Title: Treasurer
-------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Jefferson Pilot
Financial Insurance Company certifies that it meets the requirements of the
Securities Act Rule 485(b) for effectiveness of this Pre-Effective Amendment
No. 1 to the Registration Statement and has duly caused this Pre-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in Concord, New Hampshire on the 18th day of April, 1999.
[SEAL APPEARS HERE] JEFFERSON PILOT FINANCIAL INSURANCE COMPANY
By: /s/ Charles C. Cornelio
--------------------------------------
Charles C. Cornelio
Title: Executive Vice President
------------------------------------
ATTEST:
/s/ Ronald R. Angarella
- --------------------------------
Ronald R. Angarella
Senior Vice President
Pursuant to the requirements of the Securities act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Dennis R. Glass
- ----------------------------------- Director April 18, 2000
Dennis R. Glass
/s/ Kenneth C. Mlekush
- ----------------------------------- Director April 18, 2000
Kenneth C. Mlekush
/s/ David A. Stonecipher
- ----------------------------------- Director April 18, 2000
David A. Stonecipher
</TABLE>
<PAGE>
EXHIBIT INDEX
1(e)(i). Specimen Policy
3. Opinion of Counsel
6. Actuarial Opinion and Consent of Richard Dielensnyder, FSA, MAAA
7. Consent of Ernst & Young LLP
Independent Auditors ...............................................
ABCDE
Jefferson Pilot Financial Insurance Company
Service Office: One Granite Place, P. O. Box 515, Concord, New Hampshire 03302
Jefferson Pilot Financial Insurance Company, a Stock company, will pay the Death
Benefit described on Page 11 to the Beneficiary upon receipt of due proof that
the death of the Insured occurred while the policy was in force.
This is a legal contract between the Owner and Jefferson Pilot Financial
Insurance Company. All payments and benefits will be payable subject to its
terms.
This is a Flexible Premium Variable Life Insurance Policy. The Specified Amount
may be increased or decreased by the Owner. Net Premiums will be allocated to
the General Account or to one or more divisions of the Separate Account as
defined on Page 3 and determined by the Owner.
THE POLICY'S ACCUMULATION VALUE IN EACH DIVISION OF THE SEPARATE ACCOUNT IS
BASED ON THE INVESTMENT EXPERIENCE OF THAT DIVISION AND MAY INCREASE OR DECREASE
DAILY. THE ACCUMULATION VALUE IS NOT GUARANTEED AS TO DOLLAR AMOUNT. THE
SEPARATE ACCOUNT IS DESCRIBED ON PAGE 17.
The policy's Accumulation Value in the General Account will earn interest daily
at a minimum guaranteed effective annual rate as shown on Page 3. Interest in
excess of the guaranteed rate may be applied in the calculation of the
Accumulation Value at such increased rates as the Company may determine.
THE AMOUNT OF DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY INCREASE OR
DECREASE UNDER THE CONDITIONS DESCRIBED HEREIN.
This policy is a legal contract between the Owner and Jefferson Pilot Financial
Insurance Company.
READ YOUR POLICY CAREFULLY
RIGHT TO CANCEL - Please examine this policy carefully. You may cancel this
policy by returning it to Our Service Office or to the agent through whom it was
purchased within 10 days after You receive it. This policy will then be deemed
void from the beginning and We will refund the premiums paid within 7 days.
DEF ABC
Chief Executive Secretary
Officer
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Insured: [OBJECT OMITTED]
Policy Number: [OBJECT OMITTED]
Adjustable Death Benefit Payable Only On The Death Of The Insured
Premium Payments May Be Made Until The Earlier Of The Death Of The Insured
Or The Insured's Attained Age 100
The Specified Amount May Be Increased or Decreased
Additional Benefits, If Any, As Indicated On Page 3
Some Benefits Reflect Investment Results
Non-Participating - No Dividends.
Form VUL D500 Page 1
<PAGE>
TABLE OF CONTENTS
POLICY SPECIFICATIONS PAGE..............3
DEFINITIONS...........................5-6
GENERAL PROVISIONS
The Contract............................7
Policy Changes..........................7
Incontestability........................7
Suicide.................................7
Misstatement of Age or Sex..............7
Assignment..............................7
Change of Owner or Beneficiary..........7
Death of Owner or Beneficiary...........8
Proceeds................................8
Payment of Proceeds.....................8
Postponement of Payment.................8
Compliance with Internal Revenue Code...8
Modified Endowment......................9
Non-Participating.......................9
Annual Summary..........................9
Illustration of Benefits and Values.....9
Other Taxes.............................9
Termination.............................9
PREMIUM PROVISIONS
Premium Payments........................9
Minimum Premium.........................9
Planned Periodic Premium and Premium
Frequency...........................10
Allocation of Net Premiums.............10
Unscheduled Premiums...................10
Premium Limitation.....................10
Grace Period...........................10
Reinstatement..........................11
DEATH BENEFIT PROVISIONS
Death Benefit..........................11
Death Benefit Qualification Test.......11
Death Benefit Options..................11
Changes in Insurance Coverage..........12
POLICY VALUE PROVISIONS
General Account Accumulation Value.....13
General Account Interest Rate..........13
Separate Account Accumulation Values...13
Net Investment Factor..................14
Monthly Deduction......................14
Cost of Insurance......................14
Cost of Insurance Rates................14
Changes in Interest and Cost of
Insurance Rates.................... 15
Monthly Accumulation Value Adjustment..15
Continuation of Insurance..............15
Basis of Computation...................15
SURRENDER AND WITHDRAWAL PROVISIONS
Surrender..............................15
Surrender Charge.......................15
Withdrawals............................16
SEPARATE ACCOUNT PROVISIONS
Separate Account.......................17
Divisions..............................17
Transfers..............................18
Optional Features......................18
Dollar Cost Averaging..................18
Automatic Portfolio Rebalancing........19
Addition, Deletion or Substitution
of Investments......................19
POLICY LOAN PROVISIONS
Policy Loans...........................20
Types of Policy Loans
(Type A and Type B).................20
Policy Loan Interest...................20
Policy Loan Repayment..................20
PAYMENT OPTIONS
Election of an Option..................21
Supplementary Contract.................21
Interest...............................21
Withdrawal Value.......................21
Death of Payee.........................21
Limitation on Rights of Payee and
Claims of Creditors.................21
SETTLEMENT OPTIONS TABLES..............22
D5000 Page 2
<PAGE>
Insured: [JOHN DOE] Policy Number: [12345678]
Owner: [JOHN DOE] Premium Frequency: [ANNUAL]
Issue Date: [11/01/1999] Death Benefit: [OPTION I]
Policy Date: [11/01/1999]
Age/Sex at Issue: [35 MALE]
Rating Class: [STANDARD - NON-SMOKER]
Beneficiary: AS STATED IN APPLICATION UNLESS LATER CHANGED
Flexible Premium Variable Life Insurance
Initial Planned Minimum Load Type A Loan
Specified Periodic Annual Basis Threshold
Amount: Premium: Premium: Amount: Amount:
$[100,000] $ [800.00] $ [547.44] $ [790.00] $ [17,582.72 ]
No premium payment may be less than: $[250.00] or $[50.00] if paid by
electronic funds transfer.
Minimum Premium Period: The Minimum Premium Period begins on the Policy Date and
terminates on the policy anniversary at the end of policy year [5].
Timely payment of the Planned Periodic Premiums may not be adequate to guarantee
that the policy will remain in force. If the policy does not remain in force
there will be no Death Benefit or no Cash Surrender Value.
Interest Rates:
The policy's Accumulation Value in the General Account will earn interest daily
at a minimum guaranteed effective annual rate of: [4.00]% The policy
Accumulation Value held in the General Account for policy loan collateral will
earn interest daily at an effective rate of [4.00]%.
Policy Loan Interest Rates
- -Prior to the Insured's Attained Age 100:
(i)Interest Rate Charged to Type A Policy Loans: [4.00]%
(ii)Interest Rate Charged to Type B Policy Loans: [5.00]%
- -On or After the Insured's Attained Age 100:
Interest Rate Charged to Type A or B Policy Loans: [4.00]%
VUL 5000 Page 3 SMD
<PAGE>
Policy Expense Charges:
(1) Premium Load: Is a charge not to exceed [3.00]% of each premium paid.
(2) State Premium Tax Charge: [2.5]% of each premium paid.
(3) Federal Deferred Acquisition Cost (DAC Tax) Charge: [1.25]% of each premium
paid.
(4) Monthly Administrative Charge: $[10.00].
(5) Cost of Insurance Charges: See Page 14.
(6) Surrender Charge on Withdrawal, surrender or decrease in Specified Amount:
See Page 15.
(7) Monthly Acquisition Charge:
(a) in policy year one and in the first twelve months following the
effective date of an increase in Specified Amount: [2.0]% of the
Load Basis Amount.
(b) in policy year two and in the 13th through 24th month following the
effective date of an increase in Specified Amount: [1.0]% of the
Load Basis Amount.
The Load Basis Amount shown on Page 3 is based on the initial Specified
Amount. The revised Load Basis Amount applicable to any increase will be
shown on a supplemental policy specifications page. A decrease in Specified
Amount will have no effect on the Monthly Acquisition Charge.
(8) Mortality & Expense Risk Charge:
(a) for policy years one through twenty-five, is a charge not to exceed
[.0023287]% daily on the assets in each division; this equals an
annual rate of [0.85]%; and
(b) for policy years twenty-six and thereafter, is a charge not to
exceed [.0016438]% daily on the assets in each division; this equals
an annual rate of [.60]%.
Basis of Computation:
Minimum Cash Values and Reserves in the General Account are based on the 1980
CSO Male or Female Mortality Tables with interest at [4]% per year.
The method used in computing Cash Values and Reserves in the Separate Account is
in accordance with actuarial procedures that recognize the variable nature of
the Separate Account. The method used is such that if the Net Investment Factor,
less one, for all divisions of the Separate Account, at all times from the
Policy Date, is equal to an effective annual interest rate of [4]%, then the
Cash Values and Reserves in the Separate Account will be at least equal to the
minimum Cash Values and Reserves, which would have been required by the law of
the state in which this policy is delivered, of an equivalent policy in which
all Net Premiums have been allocated to the General Account.
Table of Surrender Charges Per 1,000 of Initial Specified Amount
Charge For
Policy Year Full Surrender
[1 - 5] [7.90]
[6] [6.32]
[7] [4.74]
[8] [3.16]
[9] [1.58]
[10] and thereafter [0.00]
The Surrender Charges above are based on the initial Specified Amount shown on
Page 3. Additional Surrender Charges related to any increase in Specified Amount
will begin from the effective date of the increase in coverage. These additional
Surrender Charges will be shown on a supplemental policy specifications page.
VUL 5000 Page 3 Continued SMD
<PAGE>
Separate Account: [JPF Separate Account A ].
Funds:[Jefferson Pilot Variable Fund, Inc.],[Fidelity Variable Insurance
Products Fund],[Fidelity Variable Insurance Products Fund II], [MFS
Variable Insurance Trust],[Oppenheimer Variable Account Funds],
[Templeton Variable Products Series Fund]
Net Premiums received prior to the twenty-fifth day from the Issue Date (herein
referred to as the "Allocation Date") will be allocated to the General Account.
On the Allocation Date the Accumulation Value in the General Account will be
allocated to the divisions of the Separate Account if You have so specified.
This transaction will be free of charge and will not be considered a transfer.
Allocation of Net Premium:
[Jefferson Pilot Variable Fund, Inc.] [Fidelity Variable Insurance Products
Fund II]
20 % [JPVF INTERNATIONAL] 0.0%[FIDELITY CONTRAFUND]
0.0% [JPVF WORLD GROWTH]
0.0% [JPVF EMERGING
GROWTH]
0.0% [JPVF GROWTH] [MFS Variable Insurance Trust]
0.0% [JPVF CAPITAL GROWTH] 20% [MFS RESEARCH]
0.0% [JPVF SMALL COMPANY] 0.0%[MFS UTILITIES]
0.0% [JPVF GROWTH &
INCOME]
0.0% [JPVF GLOBAL HARD ASSETS] [Oppenheimer Variable Account Funds]
0.0% [JPVF BALANCED] 20% [OPPENHEIMER STRATGBD/VA]
0.0% [JPVF HIGH YIELD] 0.0%[OPPENHEIMER BOND/VA]
0.0% [JPVF MONEY MARKET]
0.0% [JPVF S&P 500 INDEX] [Templeton Variable Products Series Fund]
20% [TEMPLETON INTL.]
[Fidelity Variable Insurance Products
Fund]
20% [FIDELITY GROWTH] 0.0% GENERAL ACCOUNT
0.0% [FIDELITY EQUITY-INC.]
Withdrawal and Transfer Minimums and Charges:
Minimum amount for a withdrawal: $[500.00]
Minimum amount for a transfer: $[250.00]
Charge for each transfer $[50.00] However charge does not apply to the first
[12] transfers in any policy year.
Charge for each withdrawal: Lesser of [2%] of the Withdrawal or [50.00]
Minimum Specified Amount after a withdrawal: $[25,000.00]
Minimum Division value or General Account value after a transfer: $[250.00]
Limitations on transfers from the General Account: Permitted once every 180 days
and limited to the lesser of:
(1) 25% of the Accumulation Value in the General Account not being held as loan
collateral; or
(2) $100,000.00
Policy Changes
Minimum increase or decrease in the Specified Amount: $[25,000.00]
Maximum Attained Age of Insured for increases: [85]
Minimum Specified Amount after a Change in Insurance Coverage: $[25,000.00]
VUL 5000 Page 3 Continued SMD
<PAGE>
Death Benefit Qualification Test: [Guideline Premium Test]
Table of Corridor Factors
Attained Corridor Attained Corridor
Age Factors Age Factors
0-40 250% 70 115%
41 243 71 113
42 236 72 111
43 229 73 109
44 222 74 107
45 215 75 105
46 209 76 105
47 203 77 105
48 197 78 105
49 191 79 105
50 185 80 105
51 178 81 105
52 171 82 105
53 164 83 105
54 157 84 105
55 150 85 105
56 146 86 105
57 142 87 105
58 138 88 105
59 134 89 105
60 130 90 105
61 128 91 104
62 126 92 103
63 124 93 102
64 122 94 and over 101
65 120
66 119
67 118
68 117
69 116
Monthly Accumulation Value Adjustment Calculation Factors - See Page 15
- -Monthly Accumulation Value Adjustment Factor:
For Policy Years [2 - 25] is the lesser of: [0.0003333] and the excess of the
monthly mortality and expense risk charge currently assessed over [0.0001666];
For Policy Year [26] and thereafter is the lesser of: [0.0002083] and the excess
of the monthly mortality and expense risk charge currently assessed over
[0.00008333]
- -Monthly Accumulation Value Adjustment Threshold: Is the Guideline Single
Premium for this policy at issue and is the same as is shown on Page 3 in the
Type A Loan Threshold Amount, as defined in Section 7702 of the Internal Revenue
Code of 1986 entitled Insurance Contracts Defined. If the Specified Amount
decreases, the threshold will not change. If the Specified Amount increases the
threshold will be increased to the threshold at issue times the ratio of the
largest Specified Amount ever existing on the policy to the initial Specified
Amount.
VUL 5000 Page 3 Continued SMD
<PAGE>
Table of Monthly Guaranteed Cost of Insurance Rates Per $1,000
Policy Number [12345678]
If the Rating Class description shown on page 3 is shown as RATED then the
mortality rates have been adjusted to include an additional amount for the
rating.
Policy Monthly Policy Monthly Policy Monthly
Year Rate Year Rate Year Rate
1 0.17603 26 1.35180 51 13.92908
2 0.18689 27 1.47573 52 15.25094
3 0.20026 28 1.61601 53 16.62860
4 0.21530 29 1.77532 54 18.05830
5 0.23285 30 1.95290 55 19.54674
6 0.25208 31 2.14803 56 21.11425
7 0.27466 32 2.35654 57 22.79518
8 0.29724 33 2.57940 58 24.65680
9 0.32318 34 2.81673 59 26.82048
10 0.34996 35 3.07475 60 29.66782
11 0.38010 36 3.36496 61 33.93112
12 0.41110 37 3.69560 62 41.27938
13 0.44462 38 4.07684 63 56.03986
14 0.47983 39 4.51651 64 83.33333
15 0.51925 40 5.00848 65 83.33333
16 0.56121 41 5.54388
17 0.61075 42 6.11368
18 0.66621 43 6.71042
19 0.72928 44 7.32921
20 0.80082 45 7.98716
21 0.87748 46 8.71042
22 0.96098 47 9.52056
23 1.04794 48 10.44696
24 1.14092 49 11.50434
25 1.24078 50 12.67243
D5100 Page 5
<PAGE>
DEFINITIONS
Terms or Definitions We identify or define here are some of the terms used
throughout the contract. There are other terms which are explained or defined in
other parts of the text.
Accumulation Value - The Accumulation Value of the policy is equal to the total
of the policy's Accumulation Value in the General Account and the policy's
Accumulation Value in the divisions of the Separate Account.
Attained Age - Refers to the age nearest birthday of the Insured on the Policy
Date, plus the number of completed Policy Years.
Beneficiary - The person or persons named by You to receive the Death Benefit
proceeds upon the death of the Insured. The Beneficiary is as shown in the
application unless later changed.
Cash Value - The Accumulation Value less any applicable Surrender Charge.
Death Benefit - The amount payable on the death of the Insured while the policy
is in force. It is explained fully in the Death Benefit section.
Debt - The principal of any loan outstanding against the policy, plus any
accrued loan interest which has not been paid.
General Account - All of the assets of Ours other than those held in separate
investment accounts.
Service Office - Our principal place of business.
Insured - The person named as the Insured on Page 3. The Insured may be other
than the Owner.
Irrevocable Beneficiary - A Beneficiary, named by You as irrevocable, whose
written consent is required for You to exercise any right specified in the
policy.
Issue Date - This is the date the policy is issued at Our Service Office and is
stated on Page 3.
Monthly Anniversary Day - The same day in each month as the Policy Date.
Net Premium - Equals premiums paid less the Premium Load, State Premium Tax
Charge and the Federal Deferred Acquisition Cost (DAC Tax) Charge as shown on
Page 3.
Notice, Election, Request - Writings satisfactory to Us that have been received
at Our Service Office. We will not be held responsible for any payment or other
action We have taken before Your writings are recorded at Our Service Office.
Policy Date - The date as shown on Page 3 which is the date requested by the
Owner. If no date is requested, it shall be the Issue Date. The Policy Date is
the date from which Policy Years, policy months, policy anniversaries and
Monthly Anniversary Days will be determined. If the Policy Date should fall on
the 29th, 30th or 31st of a month, the Policy Date will be the 28th of such
month.
Policy Year - The first Policy Year is the twelve month period following the
Policy Date. Each twelve month period thereafter makes up the next Policy Year.
Specified Amount - The face amount of the policy as selected by You. This amount
may be increased or decreased subject to the terms of the policy. The Death
Benefit is based on the Specified Amount as described in the Death Benefit
section.
Surrender Charge - A charge to the Accumulation Value in the event of surrender,
Withdrawal or a decrease in Specified Amount.
Surrender Value - The Cash Value less any Debt.
Valuation Date - A day on which the net asset value of the shares of any of the
portfolios and unit values of the divisions are determined. Valuation Dates
currently occur on each day on which the New York Stock Exchange is open for
trading and We and the investment advisor of the Funds are open for business.
D5100 Page 5
<PAGE>
DEFINITIONS (CONTINUED)
Valuation Period - The interval between two consecutive Valuation Dates,
commencing after the close of regular trading on the New York Stock Exchange on
each Valuation Date and ending at the close of regular trading on the New York
Stock Exchange on the next succeeding Valuation Date.
We, Us, Our - Jefferson Pilot Financial Insurance Company.
Withdrawal - A payment to You of some portion of the Cash Value, it is fully
explained in the Withdrawals provision.
You, Your - The Owner of the policy as shown in the application. While the
Insured is alive, the Owner may exercise every right and option and receive
every benefit provided by the policy. These rights, however, are subject to the
written consent of any Irrevocable Beneficiary.
Insured's Attained Age 100 - The policy anniversary nearest the Insured's
Attained Age 100.
D5100 Page 6
<PAGE>
GENERAL PROVISIONS
The Contract - The policy is issued in consideration of the application and
payment of the initial premium. The policy, the attached copy of the application
and/or endorsements, and any attached supplemental applications and riders form
the entire contract. Statements contained in the application are, in the absence
of fraud, considered representations and not warranties. No statement will be
used to contest the policy or to deny a claim unless it is contained in the
application.
Policy Changes - Only one of Our authorized Officers can change the terms of the
policy. A change must be in writing.
Incontestability - We will not contest the policy after it has been in force
during the lifetime of the Insured for a period of two years from the Issue
Date, the effective date of any increase in Specified Amount or the effective
date of Reinstatement.
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 such increase. Any increase will be contestable, within the
two year period, only with regard to statements concerning the increase.
If the policy is reinstated, the contestable period will start over again
beginning on the Reinstatement date, but only with regard to statements made in
the application for Reinstatement.
Suicide - If the Insured commits suicide, while sane or insane, within two years
from the Issue Date, Our only liability will be a refund of premiums paid
without interest less any Debt and Withdrawals.
If the Insured commits suicide, while sane or insane, within two years of the
effective date of any increase in Specified Amount, Our only liability with
respect to such increase in Specified Amount will be the sum of the monthly
deductions for such increase. The amount payable under this provision will be
paid to the Beneficiary. Any amount payable will first be used to pay the
interest of anyone to whom the policy has been assigned.
Misstatement of Age or Sex - If the age or sex of the Insured has been misstated
in the application, We will adjust the proceeds to reflect the correct age or
sex. In such event, the Death Benefit We will pay will be equal to:
(1) The Accumulation Value on the date of death of the Insured less any
outstanding Debt; plus
(2) The Death Benefit, less the Accumulation Value on the date of death of the
Insured, multiplied by the ratio of (a) the cost of insurance actually
deducted at the beginning of the policy month in which death occurs, to (b)
the cost of insurance that should have been deducted based on the correct
age and sex.
If the Insured's age or sex has been misstated in the application the amount
payable under any rider by reason of death of the Insured shall be the amount of
insurance which the rider cost, for the policy month during which such death
occurred, would have purchased had the cost of the benefits provided under the
rider been calculated using the correct age or sex.
Assignment - You may assign the policy. We are not bound by an assignment unless
We receive notice of it at Our Service Office prior to the payment of any
benefits by Us. Policy rights and benefits are subject to any assignment. We are
not obliged to see that an assignment is valid or sufficient.
Change of Owner or Beneficiary - While the Insured is alive, the Owner or
Beneficiary may be changed. Any change will take effect as of the date the
request is signed. The Insured does not need to be alive when the requested
change is recorded at Our Service Office.
D5150 Page 7
<PAGE>
GENERAL PROVISIONS (CONTINUED)
Death of Owner or Beneficiary - If an Owner, other than the Insured, dies while
the Insured is living, unless otherwise provided, all rights and options of the
Owner belong to the Owner's executors and administrators. Unless otherwise
provided, the interest of any Beneficiary, including any Irrevocable
Beneficiary, who dies before the Insured will belong to the Owner.
Proceeds - Is the amount payable on surrender or on the death of the Insured.
Proceeds payable on the date of surrender will be the Surrender Value. Proceeds
payable on the death of the Insured will be in accordance with the Death Benefit
provisions. Proceeds are subject to any adjustments provided in the
Incontestability, Suicide and Misstatement of Age or Sex provisions and the
restrictions below.
Payment of Proceeds - Death Benefit proceeds or Surrender Value proceeds may be
paid in one sum or under Our payment options. Before proceeds are paid they will
be used to pay the interest of anyone to whom the policy has been assigned.
Loans and assignments will be paid in one sum.
If there is no Beneficiary designated or alive at the time of the death of the
Insured, We will pay the proceeds to You or to Your estate.
If Death Benefit proceeds are not applied under a payment option, but are paid
in one sum, We will pay interest according to the rules and rate declared by Us
in effect on the date of payment. If state law requires payment of a greater
amount, We will pay that amount.
To the extent allowed by law, all payments under the policy will be free from
creditor claims or legal process.
Postponement of Payment - We will usually pay any amounts payable on surrender,
Withdrawal or policy loan allocated to the Separate Account within 7 days after
written notice is received. We will usually pay any Death Benefit proceeds
within seven days after We receive due proof of the death of the Insured.
Payment of any amount payable on surrender, Withdrawal, policy loan or death may
be postponed whenever: (1) 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 Securities and Exchange Commission;
(2) The Securities and Exchange Commission, by order, permits postponement for
the protection of policyowners; or (3) An emergency exists as determined by the
Securities and Exchange Commission, as a result of which disposal of securities
is not reasonably practicable or it is not reasonably practicable to determine
the value of the net assets of the Separate Account.
Transfers may also be postponed under the above circumstances.
We may defer the portion of any transfer, amount payable on surrender,
Withdrawal or policy loan from the General Account for not more than 6 months.
However, no payment from the General Account to pay premiums on policies with Us
will be deferred.
Compliance with the Internal Revenue Code - The policy is intended to qualify as
life insurance under the Internal Revenue Code. The Death Benefit provided by
the policy is intended to qualify for the Federal income tax exclusion. If at
any time the premium paid under the policy exceeds the amount allowable for such
qualification, We will refund the premium to You with interest within 60 days
after the end of the Policy Year in which the premium was received. If, for any
reason We do not refund the excess premium within 60 days after the end of such
Policy Year, the excess premiums will be held in a separate deposit fund and
credited with interest until refunded to You. The interest rate used on any
refund, or credited to the separate deposit fund created by this provision, will
be the excess premium's pro rata rate of return on the contract until the date
We notify You that the excess premium and the earnings on such excess premium
have been removed from the policy. After the date of such notice, the interest
rate paid on the separate deposit fund will be such rate as We may declare from
time to time on advance premium deposit funds.
We also reserve the right to refuse to make any change in the Specified Amount
or the Death Benefit Option or any other change if such change would cause the
policy to fail to qualify as life insurance under the Internal Revenue Code.
GENERAL PROVISIONS (CONTINUED)
D5150 Page 8
<PAGE>
Modified Endowment - The policy will be allowed to become a Modified Endowment
contract under the Internal Revenue Code only with Your consent. Otherwise, if
at any time the premiums paid under the policy exceed the limit for avoiding
modified contract status, We will refund the excess premium to You with interest
within 60 days after the end of the Policy Year in which the premium was
received. If, for any reason We do not refund the excess premium within 60 days
after the end of such Policy Year, the excess premium will be held in a separate
deposit fund and credited with interest until refunded to You. The interest rate
used on any refund, or credited to the separate deposit fund created by this
provision, will be the excess premium's pro rata rate of return on the contract
until the date We notify You that the excess premium and the earnings on such
excess premium have been removed from the policy. After the date of such notice,
the interest rate paid on the separate deposit fund will be such rate as We may
declare from time to time on advance premium deposit funds.
Non-Participating - The policy is non-participating meaning it does not share in
Our profits. You will not receive dividends.
Annual Summary - At least once each Policy Year, without charge, We will send
You a report showing at least the current Cash Value, the value of the General
Account and each division of the Separate Account applicable to the policy,
premiums paid, incurred charges, and any outstanding policy loans for the period
covered by the report. We will also furnish any other reports and information
required by applicable law, rules and regulations.
Illustration of Benefits and Values - We will provide illustrations of Death
Benefits and Cash Values at any time after the Policy Date upon Your written
request. This illustration will be based on the existing Cash Value at the time
of request and maximum cost of insurance rates. Additional illustrations may be
made based on the existing Cash Value and current mortality assumptions. For
these additional reports, We may charge a fee not to exceed $50.00.
Other Taxes - We reserve the right to make a charge for Federal, state or local
taxes that may be attributable to the Separate Account or to Our operations with
respect to this policy if We incur any increase in such taxes.
Termination - All coverage under the policy will end on the date any one of the
following events occurs:
(1) You request in writing that coverage end;
(2) The Insured dies; or
(3) The Grace Period ends without payment of a sufficient premium.
PREMIUM PROVISIONS
Premium Payments - The initial premium is due and payable on the Policy Date and
is payable on or before the delivery of the policy. The initial premium may not
be less than the minimum initial premium. The minimum initial premium is equal
to the Minimum Annual Premium, as shown on Page 3, divided by 6. No premium
payment may be less than as shown on Page 3. After the initial premium is paid
any subsequent premiums can be paid at any time. All premiums are payable in
advance at Our Service Office or to Our authorized agent. A receipt signed by
one of Our Officers will be provided upon request.
Minimum Premium - The Minimum Annual Premium and the period for which it applies
are shown on Page 3. The policy may terminate in accordance with the
Continuation of Insurance provision during the period shown if the cumulative
premium paid is less than the cumulative Minimum Premium due. The cumulative
premium paid is equal to the sum of all premiums paid under the policy since the
Policy Date, less any Debt and Withdrawals. The cumulative Minimum Premium due
is equal to the Minimum Annual Premium shown on Page 3, divided by twelve, and
multiplied by the number of completed policy months. During the first 2 policy
months the cumulative Minimum Premium requirement is met through payment of the
minimum initial premium on the Policy Date.
D5230 Page 9
<PAGE>
PREMIUM PROVISIONS (CONTINUED)
Increases in the Specified Amount or the addition of riders may increase the
amount of the Minimum Annual Premium. Decreases in the Specified Amount or the
deletion of riders will have no effect on the amount of Minimum Annual Premium.
If the policy terminates in accordance with the Grace Period provision and is
subsequently reinstated, this provision will no longer apply.
Planned Periodic Premium and Premium Frequency - The Planned Periodic Premium
and Premium Frequency, as shown on Page 3, are selected by You. The Planned
Periodic Premium is the amount of premium You intend to pay. The Premium
Frequency is how often You intend to pay the Planned Periodic Premium. Payment
of the Planned Periodic Premium is Your option.
We will send You Planned Periodic Premium payment reminder notices. If the mode
of premium payment is preauthorized check, government allotment or payroll
deduction, notice of any Planned Periodic Premium due will not be sent.
Changes in Premium Frequency and increases or decreases in the Planned Periodic
Premium may be made by You by providing Us with written notification. No premium
payment may be less than as shown on Page 3.
Payment of a Planned Periodic Premium may not prevent the policy from
terminating. Failure to pay a Planned Periodic Premium will not, in itself,
cause the policy to terminate. The policy will terminate only if the conditions
occur as described in the Grace Period provision.
Planned Periodic Premium payments may be made until the earlier of the death of
the Insured or the Insured's Attained Age 100.
Allocation of Net Premiums - You will determine the allocation of the Net
Premiums among the General Account and the divisions of the Separate Account.
The minimum percentage that may be allocated to any of these accounts is 5%.
Unscheduled Premiums - Premium payments in addition to the Planned Periodic
Premium may be made until the earlier of the death of the Insured or the
Insured's Attained Age 100.
If there is an existing policy loan, 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 Debt is repaid.
Premium Limitation - We reserve the right to limit the amount of premiums paid
in accordance with the Compliance with the Internal Revenue Code and Modified
Endowment provisions. We also reserve the right to require evidence of
insurability satisfactory to Us for any premium payment that would result in an
immediate increase in the difference between the Death Benefit and the
Accumulation Value. If satisfactory evidence of insurability is not received,
the premium or portion thereof may be returned.
Grace Period - If on a Monthly Anniversary Day, the conditions described in the
Continuation of Insurance provision have not been met, a Grace Period of 61 days
will be permitted for payment of the minimum amount needed to continue the
policy. We will send a notice at the start of the Grace Period to You at Your
last known address and to any assignee of record. The Grace Period will end 61
days after We mail the notice.
If the policy enters the Grace Period during the Minimum Premium period because
the conditions described in paragraph (1) of the Continuation of Insurance
Provision have not been met on a Monthly Anniversary Day, then We will require
payment of at least the cumulative Minimum Premium amount needed to continue the
policy.
If the policy enters the Grace Period at any time after the Minimum Premium
period then We will require payment of any overdue monthly deductions due and
unpaid during the Grace Period and any additional amount required to restore the
Surrender Value to an amount sufficient to cover the cost of a monthly deduction
for the month following the end of the Grace Period.
D5230 Page 10
<PAGE>
PREMIUM PROVISIONS (CONTINUED)
If the minimum amount needed is not provided, the policy will terminate at the
end of such period. If the Insured dies during the Grace Period, We will deduct
any amount due and unpaid during the Grace Period from the proceeds of the
policy.
Reinstatement - You may apply to reinstate the policy after it has terminated.
We will reinstate the policy if We receive:
(1) Your written request for reinstatement within five years after the end of
the Grace Period and prior to the Insured's Attained Age 100;
(2) evidence of insurability satisfactory to Us;
(3) payment of a premium large enough, after deduction of any policy expense
charges, to restore the Cash Value to an amount sufficient to cover the cost
of monthly deductions to keep the policy in force for at least 3 policy
months following the effective date of reinstatement; and
(4) payment or reinstatement of any Debt against the policy which existed on the
date of termination.
The effective date of a reinstated policy or the Reinstatement Date is the date
We approve the application for reinstatement. The Accumulation Value of the
policy on the Reinstatement Date shall be the Accumulation Value on the date of
termination plus the premium received to reinstate the policy. Any Surrender
Charges in effect on reinstatement shall be as defined in the Surrender Charge
provision based on the original Policy Date. If a policy terminates and is
subsequently reinstated the Minimum Premium provision will no longer apply.
DEATH BENEFIT PROVISIONS
Death Benefit - The policy provides a death benefit payable on the death of the
Insured. The death benefit, Death Benefit Options and the two Death Benefit
Qualification Tests are described in this provision. On the date of death, the
death benefit is calculated as the greater of:
(a) the Accumulation Value on the date of death multiplied by the corridor
factor shown in the Table of Corridor Factors on Page 3;
(b) the death benefit as calculated under the Death Benefit Option in effect.
Death Benefit Qualification Test - This policy is intended to qualify as life
insurance under the Internal Revenue Code. The Death Benefit provided by this
policy is intended to qualify for the Federal income tax exclusion. Two methods
of qualifying as life insurance are the Cash Value Accumulation Test and the
Guideline Premium Test, as defined in Internal Revenue Code Section 7702. The
Death Benefit Qualification Test for this policy is shown on Page 3 and cannot
be changed. Unless You elected otherwise, the Death Benefit Qualification Test
is the Guideline Premium Test.
Death Benefit Options - There are three Death Benefit Options as described in
this provision. The Death Benefit Option for the policy is shown on Page 3.
Option I - Under Option I, the Death Benefit equals the Specified Amount. The
Death Benefit is never less than the Specified Amount.
Option II - Under Option II, the Death Benefit equals the Specified Amount plus
the Accumulation Value on the date of death. The Death Benefit is never less
than the Specified Amount.
Option III - The Death Benefit equals the Specified Amount plus the total of the
premiums paid less the total of any Withdrawals taken to the date of death. If
the total of the Withdrawals is greater than the total of premiums paid, then
the Death Benefit will be less than the Specified Amount.
The Death Benefit payable on the death of the Insured will be reduced by any
Debt on the date of death. The Accumulation Value at the beginning of the month
of death used in calculating the Death Benefit is after subtracting all parts of
the monthly deduction for the month except for the cost of insurance.
If the policy is in force at the Insured's Attained Age 100, the Specified
Amount and Death Benefit Option are subject to change automatically as described
in the Changes in Insurance Coverage provision.
D5300 Page 11
<PAGE>
DEATH BENEFIT PROVISIONS (CONT'D)
Changes in Insurance Coverage - The initial Specified Amount is shown on Page 3.
Upon written request, the insurance coverage may be changed at any time after
the first policy anniversary. The changes which can be made are:
(1) an increase or decrease in the Specified Amount;
(2) a change in the existing Death Benefit Option.
Any change is subject to the following conditions:
(1) Any decrease will become effective on the Monthly Anniversary Day that
coincides with or next follows Our receipt of the request. At least twelve
months must elapse between decreases. Any such decrease will be deducted in
the following order: (a) from the most recent Specified Amount increase, if
any; (b) successively from the next most recent Specified Amount increase,
if any; (c) from the initial Specified Amount.
(2) Any request for an increase must be applied for on a supplemental
application and shall be subject to evidence satisfactory to Us that the
Insured is living and insurable. At least twelve months must elapse between
requested increases. An increase cannot be requested after the Insured
reaches the maximum attained age for increases as shown on Page 3. Any
increase will be subject to the Monthly Acquisition Charge described in the
Monthly Deduction provision.
(3) Any change approved by Us will become effective on the effective date shown
in the supplemental policy specifications page.
(4) The minimum Specified Amount which must be in effect at any time is as shown
on Page 3.
(5) Any increase or decrease in the Specified Amount must be for an amount not
less than as shown on Page 3.
You may request in writing to change the Death Benefit Option to Option I or
Option II. Changes to Option III are not permitted. If a change would result in
an increase in the amount payable at death, such change will be subject to
evidence of insurability satisfactory to Us. Any resulting decrease in Specified
Amount may be subject to a partial Surrender Charge as described in the
Surrender Charge provision.
If the policy is in force at the Insured's Attained Age 100, the following will
occur:
(1) the Specified Amount will be set equal to the Accumulation Value and the
Death Benefit Option will be set to Option I and will equal 101% of the
Specified Amount, less any Debt. The Death Benefit may not be changed after
that date;
(2) items (1) and (2) of the Monthly Deduction provision and the Monthly
Accumulation Value Adjustment provision will no longer apply;
(3) no further premiums will be accepted.
D5300 Page 12
<PAGE>
POLICY VALUE PROVISIONS
General Account Accumulation Value - The Accumulation Value in the General
Account on the Policy Date is equal to the portion of the Net Premium which has
been paid and allocated to the General Account, less the portion of the first
monthly deduction allocated to the General Account.
On each Monthly Anniversary Day, the Accumulation Value in the General Account
is equal to (1) plus (2) plus (3) plus (4) plus (5) minus (6) minus (7) minus
(8) where:
(1) is the Accumulation Value in the General Account on the preceding Monthly
Anniversary Day;
(2) is one month's interest on item (1);
(3) is the portion of any Net Premium received and allocated to the General
Account since the preceding Monthly Anniversary Day plus interest from the
date the Net Premium is received to the Monthly Anniversary Day;
(4) is the portion of any Monthly Accumulation Value Adjustment allocated to the
Accumulation Value in the General Account plus one month's interest;
(5) is the sum of all Accumulation Values transferred to the General Account
from a division of the Separate Account since the preceding Monthly
Anniversary Day plus interest from the date the Accumulation Value is
transferred to the Monthly Anniversary Day;
(6) is the sum of all Accumulation Values transferred from the General Account
to a division of the Separate Account since the preceding Monthly
Anniversary Day and interest from the date the Accumulation Value is
transferred to the Monthly Anniversary Day;
(7) is all Withdrawals from the General Account since the preceding Monthly
Anniversary Day plus interest from the date of Withdrawal to the Monthly
Anniversary Day; and
(8) is the portion of the monthly deduction allocated to the Accumulation Value
in the General Account to cover the policy month following the Monthly
Anniversary Day.
On any date other than a Monthly Anniversary Day, the Accumulation Value will be
calculated on a consistent basis.
General Account Interest Rate - The Accumulation Value in the General Account
will earn interest daily at the guaranteed minimum effective annual rate as
shown on Page 3. Interest in excess of the guaranteed minimum rate may be
applied in the calculation of the Accumulation Value at such increased rates as
We may determine. The policy's Accumulation Value held in the General Account
for policy loan collateral will earn interest daily at the effective annual rate
as shown on Page 3.
Separate Account Accumulation Values - The Accumulation Value in each division
on the Policy Date is equal to the portion of the Net Premium which has 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.
At the end of each Valuation Period after the Policy Date, the policy's
Accumulation Value in a division is equal to (1) plus (2) plus (3) minus (4)
minus (5) minus (6) where:
(1) is the Accumulation Value in the division on the preceding Valuation Date
multiplied by the Net Investment Factor for the current Valuation Period;
(2) is any Net Premium received during the current Valuation Period which is
allocated to the division;
(3) is all Accumulation Values transferred to the division from another division
or the General Account during the current Valuation Period;
(4) is all 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
(5) is all Withdrawals from the division during the current Valuation Period;
and
(6) is charges, if any, that may be assessed by Us for taxes attributable to the
operation of the Separate Account.
In addition, whenever a Valuation Period includes the Monthly Anniversary Day,
the Accumulation Value at the end of such period is reduced by the portion of
the monthly deduction allocated to the division and increased by the portion of
any Monthly Accumulation Value Adjustment allocated to the Accumulation Value in
the Separate Account.
D5400 Page 13
<PAGE>
POLICY VALUE PROVISIONS (CONTINUED)
Net Investment Factor - We calculate the Net Investment Factor for a Valuation
Period for each division by dividing (1) by (2) and subtracting (3) from the
result, where:
(1) is the sum of:
(a) the net asset value of a Fund share held in the Separate Account for
that division determined at the end of the current Valuation Period;
plus
(b) the per share amount of any dividend or capital gain distributions made
for shares held in the Separate Account for that division if the
ex-dividend date occurs during the Valuation Period;
(2) is the net asset value of a Fund share held in the Separate Account for that
division determined as of the end of the preceding Valuation Period; and
(3) is the daily charge representing the Mortality & Expense Risk Charge as
shown on Page 3. This charge is equal, on an annual basis, to the percentage
shown on Page 3 of the daily net asset value of Fund shares held in the
Separate Account for that division.
The Net Investment Factor may be greater than, less than, or equal to 1. This
being the case, values in a division may increase or decrease from Valuation
Period to Valuation Period.
Monthly Deduction - The monthly deduction for a policy month shall be calculated
as (1) plus (2) plus (3) where:
(1) is the Monthly Administrative Charge shown on Page 3.
(2) is the cost of insurance described herein and the cost of additional
benefits provided by rider for the policy month;
(3) is the Monthly Acquisition Charge shown on Page 3.
You may specify how the monthly deduction for a policy month will be allocated
among the General Account or a division of the Separate Account. If not
specified, the monthly deduction for a policy month will be allocated among the
General Account and the divisions of the Separate Account in the same proportion
that the Accumulation Value in the General Account less any Debt and in each
division bears to the total Accumulation Value of the policy, less any Debt at
the beginning of the policy month.
If there is an increase in the Specified Amount the Monthly Acquisition Charge
as shown on Page 3 will be applied in the 24 month period immediately following
the effective date of the increase. This charge will be shown on a supplemental
policy specifications page.
Cost of Insurance - The cost of insurance is determined on a monthly basis. The
cost of insurance is determined separately for the initial Specified Amount and
each subsequent increase in Specified Amount. The cost of insurance is
calculated as (1), multiplied by the result of (2) minus (3), where:
(1) is the cost of insurance rate as described in the Cost of Insurance Rates
provision;
(2) is the Death Benefit at the beginning of the policy month, divided by
1.0032737;
(3) is the Accumulation Value at the beginning of the policy month, prior to the
monthly deduction for the cost of insurance.
Cost of Insurance Rates - The monthly cost of insurance rate is based on the
Policy Year and the sex and rating class of the Insured. Monthly cost of
insurance rates will be determined by Us based upon future expectations as to
investment earnings, mortality experience, persistency, a provision for
amortization of sales charges, expenses (including reinsurance costs) and taxes.
D5400 Page 14
<PAGE>
POLICY VALUE PROVISIONS (CONTINUED)
Changes in Interest and Cost of Insurance Rates - Changes in the interest rate
in excess of the rate guaranteed to be credited to the General Account and
monthly cost of insurance rates will be based upon changes in future
expectations as to investment earnings, mortality experience, persistency, a
provision for amortization of sales charges, expenses (including reinsurance
costs) and taxes.
Any change in cost of insurance rates will apply to all Insureds of the same
age, class and duration. However, the cost of insurance rates can never be
greater than those shown in the Table of Monthly Guaranteed Cost of Insurance
Rates on Page 4.
Such guaranteed maximum rates are based on the 1980 CSO Male or Female Mortality
Tables with appropriate increases for rated risks.
Monthly Accumulation Value Adjustment - A Monthly Accumulation Value Adjustment
will be calculated at the beginning of the second Policy Year and in each
succeeding Policy Year. The adjustment will be a monthly amount that is
allocated among the General Account and the divisions of the Separate Account
proportionately to the allocation of Net Premiums. The adjustment is calculated
as (1) multiplied by the result of (2) plus (3) minus (4), but not less than
zero, where:
(1) is the Monthly Accumulation Value Adjustment Factor as shown on Page 3. This
factor varies by Policy Year;
(2) is the Accumulation Value in the Separate Account at the beginning of the
Policy Year;
(3) is the outstanding Type B Loan balance at the beginning of the Policy Year;
and
(4) is the Monthly Accumulation Value Adjustment Threshold as specified on Page
3.
Continuation of Insurance - The policy and all its riders will continue in force
according to the terms of coverage as long as the Surrender Value is sufficient
to cover the monthly deduction. If, during the Minimum Premium period, the
Surrender Value is not sufficient, then the policy and all riders will continue
in force as long as:
(1) the cumulative Minimum Premium requirement has been met.
Otherwise the policy will terminate according to the Grace Period provision. If
premiums are discontinued on any date, the value on that date will be used to
provide insurance under this provision.
Basis of Computation - The basis of computation for minimum cash values and
reserves are fully explained on Page 3.
Such guaranteed maximum rates are based on the 1980 CSO Male or Female Mortality
Tables with appropriate increases for rated risks.
SURRENDER AND WITHDRAWAL PROVISIONS
Surrender - Upon written request and while the Insured is living, You may
surrender the policy for the Surrender Value.
The amount payable will be the Surrender Value as of the date We receive Your
written request. Should the death of the Insured occur after the date of written
request but prior to the date We receive the written request, the surrender
request will be considered void and the terms of the Death Benefit provisions
will apply.
Surrender Charge - The charge for surrender of the policy is the amount shown on
Page 3 for the initial Specified Amount and the applicable Policy Year.
Additional surrender charges related to any increases in the Specified Amount
will apply from the effective date of the increase. There will be a partial
charge if there is a decrease in the Specified Amount, or a Withdrawal that
results in a decrease in the Specified Amount, while such charges are in effect.
Surrender charges are computed based on the number of thousands of Specified
Amount. The partial charge for a decrease in Specified Amount will be based on
the per thousand charge for the number of thousands of the decrease. The partial
charge for a Withdrawal will be as stipulated in the Withdrawals provision.
D5450 Page 15
<PAGE>
SURRENDER AND WITHDRAWAL PROVISIONS (CONTINUED)
Withdrawals - Upon written request You may make a Withdrawal from the policy.
Any Withdrawal is subject to the following conditions:
(1) The amount of the Withdrawal plus the charge for the Withdrawal as shown on
Page 3 may not exceed the Surrender Value;
(2) The minimum amount that may be withdrawn is shown on Page 3;
(3) A charge as shown on Page 3 will apply to each Withdrawal;
(4) We will deduct the amount of the Withdrawal, plus the charge for the
Withdrawal as shown on Page 3 as well as a proportionate surrender charge if
applicable, from the Accumulation Value. Such proportionate surrender charge
will be applicable to a Withdrawal that results in a decrease in Specified
Amount during the applicable surrender charge period.
(5) The Death Benefit will be reduced by an amount equal to the reduction in the
Accumulation Value. The Specified Amount will be reduced if the Death
Benefit is Option I by an amount equal to the reduction in the Accumulation
Value. If Death Benefit Option III is in effect and the total of the
Withdrawals is greater than the premiums paid, then the Death Benefit will
be less than the Specified Amount. The minimum Specified Amount remaining in
force after any Withdrawal must be as shown on Page 3.
You may allocate the Withdrawal among the General Account and the divisions of
the Separate Account.
If You do not specify the allocation, then the Withdrawal will be allocated
among the General Account and the divisions of the Separate Account in the same
proportion that the Accumulation Value in the General Account, less any Debt,
and the Accumulation Value in each division bears to the total Accumulation
Value of the policy, less any Debt, on the date of Withdrawal.
D5450 Page 16
<PAGE>
SEPARATE ACCOUNT PROVISIONS
Separate Account - The variable benefits under the policy are provided through
investments in the Separate Account, as shown on Page 3. We established the
Separate Account as a separate investment account to support variable life
insurance contracts. We will not allocate assets to the Separate Account to
support the operation of any contracts or policies that are not variable life
insurance.
The assets of the Separate Account are owned by Us. However, these assets are
not part of Our General Account. Income, gains and losses, whether or not
realized, from assets allocated to the Separate Account will be credited to or
charged against the account without regard to Our other income, gains or losses.
Assets equal to the reserves and other liabilities of the Separate Account will
not be charged with liabilities that arise from any other business We may
conduct. Such assets shall not be available to general creditors of Ours in the
event of Our insolvency to the full extent permitted by applicable law. We shall
have the right to transfer to Our General Account any assets of the Separate
Account which are in excess of such reserves and other policy liabilities.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to the laws of Our state of domicile.
The investment policy of the Separate Account will not be changed without the
approval of the Insurance Commissioner of Our state of domicile. The approval
process in on file with the Insurance Commissioner of the state in which the
policy was delivered.
Divisions - The Separate Account has several divisions. Each division will buy
shares of a separate series of the Funds as defined on Page 3. Each series
represents a separate investment portfolio of the Funds. All divisions of the
Separate Account are shown on Page 3. You will determine the percentage of Net
Premiums which will be allocated to each division. No less than 5% of the Net
Premium may be allocated to any one account. Allocation percentages must be zero
or a whole number not greater than 100. The sum of the Net Premium allocation
percentages must equal 100.
Income, gains and losses, whether or not realized, from the assets of the
Separate Account are credited to or charged against that division without regard
to income, gains or losses in other divisions of the Separate Account or in the
General Account.
We will value the assets of each division of the Separate Account at the end of
each Valuation Period.
D5480 Page 17
<PAGE>
SEPARATE ACCOUNT PROVISIONS (CONT'D)
Transfers - You may transfer amounts between the General Account and the
divisions of the Separate Account in a form and manner acceptable to Us. The
amount available for transfer from the General Account or a division is the
value of the General Account or the division as of the end of the Valuation
Period during which We receive all the requirements for the transaction. The
minimum amount that may be transferred and the minimum amount that must remain
in the General Account and in each division after the transfer is specified on
Page 3. No amounts under this minimum amount may be transferred out of any
division of the Separate Account unless such lesser amount constitutes the
entire balance. A transfer charge as specified on Page 3 will be imposed each
time amounts are transferred, except with respect to policy loans and the first
12 transfers of each Policy Year. The transfer charge will be deducted from the
amount that is transferred. We will make transfers so that the Accumulation
Value on the date of transfer will not be affected by the transfer except to the
extent of the transfer charge. You may make up to 20 transfers per Policy Year.
We may revoke or modify the transfer privilege at any time.
As long as any portion of the policy's Accumulation Value is allocated to a
division of the Separate Account, the policy's Accumulation Value and Cash Value
will reflect the investment performance of the chosen division(s) of the
Separate Account. The Death Benefit may also reflect the performance of the
chosen division(s) of the Separate Account.
At any time, You may transfer 100% of the policy's Accumulation Value to the
General Account.
No transfer charge will be imposed for a transfer of the total Accumulation
Value in the Separate Account to the General Account. However, any transfer from
the General Account to the division(s) of the Separate Account will be subject
to the transfer charge.
Optional Features - Dollar Cost Averaging and Automatic Portfolio Rebalancing
are two optional features available under the policy. You may not elect to have
Dollar Cost Averaging and Automatic Portfolio Rebalancing at the same time.
Transfers and/or adjustments pursuant to either of these features will occur on
the Monthly Anniversary Day in the month in which the transaction is to take
place or the next succeeding business day if the Monthly Anniversary Day falls
on a holiday or a weekend. The applicable authorization form must be on file
with Us before either feature may begin. Neither feature guarantees profits nor
protects against losses. These features are currently available at no charge,
however, We reserve the right to assess a charge to either or both of these
features, no greater than cost and with 30 days advance notice to You. We
reserve the right to modify the terms and conditions of these features upon 30
days advance notice to You.
Dollar Cost Averaging - Under this feature, You deposit a "Designated Amount",
subject to a minimum of $3,000, into a "Repository Account" (Money Market
Division of the Separate Account or the General Account) and elect to have a
specified "Periodic Transfer Amount" automatically transferred to one or more
divisions of the Separate Account on a monthly, quarterly or semi-annual basis.
This feature allows You to systematically allocate Net Premiums to divisions of
the Separate Account at various prices which may be higher or lower than the
price You would pay if You allocated the entire amount at one time and at one
price. Each Periodic Transfer Amount is subject to a minimum of $250. A minimum
of 5% of the Periodic Transfer Amount must be transferred to any specified
division. We reserve the right to change these minimum amounts at Our
discretion. If a transfer would reduce Accumulation Value in the Repository
Account to less than the Periodic Transfer Amount, We reserve the right to
include such remaining Accumulation Value in the amount transferred.
The feature will continue until You give notification of cancellation of the
feature.
D5480 Page 18
<PAGE>
SEPARATE ACCOUNT PROVISIONS (CONT'D)
Automatic Portfolio Rebalancing - This feature provides a method for
establishing fixed proportions between various types of allocations on a
systematic basis. Under this feature, Your allocation between divisions of the
Separate Account 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. Automatic readjustments
will continue until You provide Us with notification of a change in allocation
or cancellation of the feature.
Addition, Deletion, or Substitution of Investments - We reserve the right,
subject to compliance with applicable law, to make additions to, deletions from,
or substitutions for the shares of a series that are held by the Separate
Account or that the Separate Account may purchase. We reserve the right to
eliminate the shares of any series of the Funds and to substitute shares of
another series of the Funds or of another open-ended, registered investment
company, if the shares or series are no longer available for investment or if in
our judgment, further investment in any eligible series should become
inappropriate in view of the purposes of the policy. We will not substitute any
shares attributable to Your interest in a division of the Separate Account
without notice to You and prior approval of the Securities and Exchange
Commission, to the extent required by the Investment Company Act of 1940. This
shall not prevent the Separate Account from purchasing other securities for
other series or classes of policies, or from permitting conversion between
series or classes of policies or contracts on the basis of requests made by
policyowners.
We reserve the right to establish additional divisions of the Separate Account,
each of which would invest in a new series of the Funds or in shares of another
open-end, registered investment company. We reserve the right to eliminate
existing divisions of the Separate Account. We also reserve the right to
transfer assets of the Separate Account to another Separate Account of Ours or
of an affiliated life insurance company.
If We consider it to be in the best interest of persons having voting privileges
under the policies, the Separate Account may be operated as a management company
under the Investment Company Act of 1940; or it may be reregistered under that
Act in the event registration is no longer required or it may be combined with
other separate accounts.
D5500 Page 19
<PAGE>
POLICY LOAN PROVISIONS
Policy Loans - A loan will be granted at any time, upon the sole security of the
portion of the Cash Value required to repay the loan. Any prior Debt to Us
against the policy will be deducted from the amount available for loan.
You may allocate the policy loan among the General Account and the divisions of
the Separate Account. If You do not specify the allocation, then the policy loan
will be allocated among the General Account and the divisions of the Separate
Account in the same proportion that the Accumulation Value in the General
Account, less any Debt, and the Accumulation Value in each division bears to the
total Accumulation Value of the policy, less any Debt, on the date of the policy
loan. Accumulation Value in each division equal to the policy loan allocated to
each division will be transferred to the General Account and reduce the
Accumulation Value in that division. If loan interest is not paid when due, an
amount of Accumulation Value equal to the loan interest will also be
transferred.
If the Debt exceeds the policy's Accumulation Value in the General Account, We
will transfer Accumulation Value equal to the excess Debt from the divisions of
the Separate Account to the General Account as security for the excess Debt. The
amount transferred will be allocated among the divisions in the same proportion
that the Accumulation Value in each division bears to the policy's total
Accumulation Value in all divisions of the Separate Account.
Types of Policy Loans - There are two (2) types of policy loans which We will
grant to You - Type A and Type B. The type of loan which We will grant depends
upon the amount of unloaned Type A balance available at the time the loan is
taken. The unloaned Type A balance is the Cash Value, less the threshold, and
less the sum of any outstanding Type A loans as defined below. The threshold is
as shown on Page 3 and is the Guideline Single Premium for the policy at issue
as defined in Section 7702 of the Internal Revenue Code of 1986 entitled "Life
Insurance Contract Defined." If the Specified Amount increases, the threshold
will be increased to the threshold at issue times the ratio of the largest
Specified Amount ever existing on the policy to the initial Specified Amount. If
the Specified Amount decreases, the threshold will not change.
A Type A loan is a policy loan granted by Us when the unloaned Type A balance
before the loan is taken exceeds the loan requested. A Type B loan is a policy
loan granted by Us when the unloaned Type A balance before the loan is taken is
less than or equal to zero.
When the unloaned Type A balance before the loan is taken exceeds zero, but is
less than the loan requested, a Type A loan equal to the unloaned Type A balance
will be granted by Us. The remainder of the requested loan will be a Type B
loan.
We will grant a Type A loan first before a Type B loan. Once a policy loan is
granted, it remains a Type A or a Type B until it is repaid.
Policy Loan Interest - The interest charged by Us on a policy loan depends upon
the type of loan granted and the Attained Age of the Insured. The policy loan
interest rates are as shown on Page 3.
Interest accrues on a daily basis from the date of the loan and is compounded
annually. Interest is payable at the end of each Policy Year. Interest unpaid on
a policy anniversary is added to and becomes part of the loan principal and
bears interest at the same rate.
Policy Loan Repayment - Any Debt may be repaid, in whole or in part, at any time
while the policy is in force. Repayments will be used to reduce policy loans
until fully paid in the following order:
(1) Any or all Type B Loans: then
(2) Any or all Type A Loans.
When a loan repayment is made, Accumulation Value securing the Debt in the
General Account equal to the loan repayment will be allocated among the General
Account and divisions of the Separate Account using the same percentages used to
allocate Net Premiums.
If the total Debt equals or exceeds the Cash Value at any time, the policy will
terminate. The policy will not terminate until 61 days after notice has been
mailed to You and to the assignee, if any, at the address last reported to Us.
D5500 Page 20
<PAGE>
PAYMENT OPTIONS
Election of an Option - Any proceeds to be paid under the policy may be paid as
a lump sum or as an income under any one of the options stated below. The
election of an option or change of prior election must be made in writing to Us
at Our Service Office. If an option is not chosen by You prior to the death of
the Insured, the primary Beneficiary may make such election.
Unless We agree otherwise, any such payments will be made only to a natural
person taking in his own right. An option may be elected only if the amount of
the proceeds is $25,000 or more. We may change the interval of payments to 3, 6,
or 12 months, if necessary to increase the guaranteed payments to at least
$250.00 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. Calculations are based on the 1937 Standard table with
a one year setback for males and a six year setback for females. The interest
rate used is 2.5%.
Option D - Interest - Payment of interest on the proceeds held by Us. The amount
of interest payment is calculated at the compound rate of 3% per year. Interest
payments will be made in 12-, 6-, 3- or 1-month intervals as agreed upon.
Supplementary Contract - When the proceeds of the policy become payable, a
supplementary contract setting forth the terms of the option chosen will be
issued to the Payee. The first payment under Option A, B, or C shall be payable
on the effective date of such option. The first payment under Option D shall be
payable at the end of the first agreed payment interval.
Interest - 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 .5% per year.
Interest in addition to that stated may be paid or credited from time to time
under any option but only at Our sole discretion.
Withdrawal Value - Unless otherwise stated in the election of an option, the
Payee 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 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 shall be the commuted value of any remaining
guaranteed payments. In this event the payments will be resumed at the end of
the guaranteed period if the Payee should be alive on that date. The payments
will then continue for the lifetime of the Payee.
Under any of these options, the Payee shall have the right to receive the
Withdrawal Value in partial amounts. However, the partial amounts shall not be
less than the smaller of the Withdrawal Value or $100.
Death of Payee - If the Payee 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.
Limitations on Rights of Payee and Claims of Creditors - Neither the amount
retained under an option nor any payment made under an option can be assigned or
pledged. To the extent permitted by law such amounts or payments shall not be
subject to claims of creditors or legal process.
D5590 Page 21
<PAGE>
SETTLEMENT OPTIONS
TABLES OF MONTHLY INSTALLMENTS UNDER OPTION B OR C
Monthly installments are shown for each $1,000 of net proceeds applied. The ages
shown are ages nearest birthday when the first monthly installment is payable.
OPTION B TABLE
INSTALLMENTS FOR A SPECIFIED PERIOD
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Years Monthly Years Monthly Years Monthly Years Monthly Years Monthly
Installment Installment Installment Installment Installment
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $84.47 7 $13.16 13 $7.71 19 $5.73 25 $4.71
2 42.86 8 11.68 14 7.26 20 5.51 26 4.59
3 28.99 9 10.53 15 6.87 21 5.32 27 4.48
4 22.06 10 9.61 16 6.53 22 5.15 28 4.37
5 17.91 11 8.86 17 6.23 23 4.99 29 4.27
6 15.14 12 8.24 18 5.96 24 4.84 30 4.18
</TABLE>
Multiply the monthly installment by 11.84 for annual, by 5.96 for semi-annual or
by 2.99 for quarterly installments.
- --------------------------------------------------------------------------------
OPTION C TABLE
LIFE INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Attained Attained
Age of Payee MONTHLY INSTALLMENTS Age of Payee MONTHLY INSTALLMENTS
- -----------------------------------------------------------------------------------------------------
GUARANTEED GUARANTEED
------------------------------ -------------------------------
Male Female 10 Years 15 Years 20 Years Male Female 10 Years 15 Years 20 Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16 or 21 or
Under Under $2.83 $2.82 $2.81 51 56 $4.60 $4.44 $4.24
17 22 2.85 2.84 2.84 52 57 4.69 4.52 4.30
18 23 2.88 2.87 2.86 53 58 4.79 4.60 4.36
19 24 2.90 2.89 2.88 54 59 4.90 4.69 4.41
20 25 2.93 2.92 2.91 55 60 5.01 4.77 4.47
21 26 2.95 2.95 2.93 56 61 5.12 4.86 4.53
22 27 2.98 2.97 2.96 57 62 5.23 4.94 4.59
23 28 3.01 3.00 2.99 58 63 5.35 5.03 4.64
24 29 3.04 3.03 3.02 59 64 5.48 5.12 4.70
25 30 3.08 3.07 3.05 60 65 5.61 5.21 4.75
26 31 3.11 3.10 3.08 61 66 5.74 5.30 4.80
27 32 3.14 3.13 3.11 62 67 5.87 5.39 4.85
28 33 3.18 3.17 3.15 63 68 6.01 5.48 4.90
29 34 3.22 3.20 3.18 64 69 6.16 5.56 4.94
30 35 3.26 3.24 3.22 65 70 6.30 5.65 4.98
31 36 3.30 3.28 3.25 66 71 6.45 5.73 5.02
32 37 3.34 3.32 3.29 67 72 6.60 5.82 5.05
33 38 3.39 3.36 3.33 68 73 6.76 5.90 5.09
34 39 3.43 3.41 3.37 69 74 6.91 5.97 5.12
35 40 3.48 3.45 3.41 70 75 7.07 6.05 5.14
36 41 3.53 3.50 3.45 71 76 7.23 6.12 5.17
37 42 3.59 3.55 3.50 72 77 7.38 6.18 5.19
38 43 3.64 3.60 3.54 73 78 7.54 6.24 5.20
39 44 3.70 3.65 3.59 74 79 7.69 6.30 5.22
40 45 3.76 3.71 3.64 75 80 7.84 6.35 5.23
41 46 3.82 3.77 3.69 76 81 7.98 6.39 5.24
42 47 3.88 3.82 3.74 77 82 8.13 6.43 5.25
43 48 3.95 3.88 3.79 78 83 8.26 6.47 5.26
44 49 4.02 3.95 3.84 79 84 8.39 6.50 5.26
45 50 4.09 4.01 3.90 80 or 85 or 8.51 6.53 5.27
46 51 4.17 4.08 3.95 Over Over
47 52 4.25 4.15 4.01
48 53 4.33 4.22 4.07
49 54 4.42 4.29 4.12
50 55 4.50 4.37 4.18
</TABLE>
Multiply the monthly installment by 11.80 for annual, 5.93 for semi-annual or by
2.98 for quarterly installments.
ENDORSEMENTS:
D5590 Page 22
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
Adjustable Death Benefit Payable Only On The Death Of The Insured
Premium Payments May Be Made Until The Earlier Of The Death Of The Insured
Or The Insured's Attained Age 100
The Specified Amount May Be Increased or Decreased
Additional Benefits, if Any, As Indicated On Page 3
Some Benefits Reflect Investment Results
Non-Participating - No Dividends
April 12, 2000
Jefferson Pilot Financial Insurance Company
One Granite Place
Post Office Box 515
Concord, New Hampshire 03301
RE: JPF Separate Account A - Registration Statement on Form S-6 Ensemble III
Flexible Premium Variable Universal Life Insurance Policy
Gentlepersons:
I am an attorney licensed to practice law in the State of New Hampshire and am
Associate Counsel to Jefferson Pilot Financial Insurance Company ("JP
Financial"), a New Hampshire corporation. This opinion is furnished in
connection with the filing by JP Financial of the above-described Registration
Statement by JPF Separate Account A (the "Separate Account") of an indefinite
number of units of interest ("Units") of the Ensemble III individual flexible
premium variable life insurance policy (the "Policy").
I have examined or am familiar with the corporate charter, by-laws, and other
corporate records of JP Financial as I considered appropriate.
On the basis of the foregoing and such examination of law as I have deemed
necessary, it is my opinion that:
1. JP Financial is a corporation duly organized and validly existing under
the laws of the State of New Hampshire.
2. The Separate Account was duly created pursuant to the provisions of New
Hampshire RSA 408:23-26 and the regulations thereunder.
3. The assets of the Separate Account will be owned by JP Financial; JP
Financial is not a trustee with respect thereto. Under New Hampshire law, the
income, gains and losses, whether realized or unrealized, from assets allocated
to the Separate Account must be credited to or charged against such account,
without regard to the other income, gains or losses of JP Financial. Contractual
obligations with respect ot the
<PAGE>
Jefferson Pilot Financial Insurance Company
Page Two
April 12, 2000
Separate Account constitute corporate obligations of JP Financial. The specific
amounts payable from accumulations in the Separate Account in accordance with
the Policy will depend upon the investment experience of the Separate Account.
4. The Policy will provide that the portion of the assets of the Separate
Account equal to the reserves and other liabilities of the Separate Account
shall not be chargeable with liabilities arising out of any other business JP
Financial may conduct and that JP Financial reserves the right to transfer
assets of the Separate Account in excess of such reserves and policy liabilities
to the general account of JP Financial.
5. When executed, the Policy (including any Units when duly credited
thereunder) will have been duly authorized and the Policy (including any such
Units) will constitute a validly issued and binding obligation of JP Financial
in accordance with its terms. The Policy described in the prospectus contained
with the Registration Statement will be subject only to the deductions, charges
and fees set forth in the prospectus.
I hereby consent to the use of this opinion as an Exhibit to the Registration
Statement.
Sincerely yours,
/s/ Charlene Grant
Charlene Grant
Assistant Vice President and
Associate Counsel
Exhibit 99.B6
April 12, 2000
Jefferson Pilot Financial Insurance Company
One Granite Place
Post Office Box 515
Concord, New Hampshire 03301
Gentlemen:
This opinion is furnished in connection with the registration by Jefferson Pilot
Financial Insurance Company ("JP Financial") on Form S-6 ("Registration
Statement") of interests in JPF Separate Account A ("Separate Account A") under
its Ensemble III flexible premium variable life insurance policy (the "Policy").
I am familiar with the terms of the Policy, the Registration Statement and the
Exhibits thereto. In my opinion:
1. The illustrations of death benefits, accumulation value and surrender value
for the Policy in Appendix A of the prospectus, based on the assumptions
stated in the illustrations, are consistent with the provisions of the
Policy.
The Policy has not been designed so as to make the relationship between
premiums and benefits, as shown in the illustrations, appear
disproportionately more favorable to prospective purchasers of the Policy for
non-smoker standard risk males age 40 than to prospective purchasers of the
Policy for males at other ages or in other underwriting classes or for
females. The particular illustrations shown were not selected for the purpose
of making this relationship appear more favorable. Generally, the rates for
non-smokers are lower than for smokers and the rates for females are lower
than for males.
2. The illustrations of death benefits, accumulation value and surrender value
for the Policy, based on the net return of the twenty divisions of the Separate
Account and the assumptions stated within the examples, are consistent with the
provisions of the Policy.
The illustrations in appendix A have not been designed so as to make the
relationship between premiums and benefits appear disproportionately more
favorable to prospective
<PAGE>
purchasers of the Policy for non-smoker standard risk males age 40 than to
prospective purchasers of the Policy males at other ages or in other
underwriting classes or for females. Generally, the rates for non-smokers are
lower than for smokers and the rates for females are lower than for males.
3. The illustrations set forth in appendix A of the prospectus contain both the
current and guaranteed rates of cost of insurance charges to be used for those
Policies for non-smoker standard risk males of illustrated ages.
These rates have not been designed so as to make the relationship between
current and guaranteed rates appear disproportionately more favorable to
prospective purchasers of Policies for the ages illustrated than for males of
other ages of underwriting classes or for females. The particular rates shown
were not selected because they were more favorable than for males of other ages
or underwriting classes or for females. The particular illustrations shown were
not selected for the purpose of making this relationship appear more favorable.
Generally, the rates for non-smokers are lower than for smokers and the rates
for females are lower than for males.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Sincerely,
/s/ Richard C. Dielensnyder
Richard C. Dielensnyder, FSA, MAAA
Vice President
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our reports dated February 4, 2000 with respect to
the financial statements of Jefferson Pilot Financial Insurance Company and
subsidiary and March 23, 2000 with respect to the financial statements of JPF
Separate Account A in Pre-Effective Amendment No. 1 to the Registration
Statement (Form S-6 No. 333-93367) and related Prospectus for the registration
of units of interest in the JPF Separate Account A under individual flexible
premium variable life insurance policies offered by Jefferson Pilot Financial
Insurance Company.
/s/ ERNST & YOUNG LLP
Greensboro, North Carolina
April 18, 2000
