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REGISTRATION NO. 333-
REGISTRATION NO. 811-4235
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. [ ]
MONY AMERICA VARIABLE ACCOUNT L
(Exact Name of Trust)
MONY LIFE INSURANCE COMPANY OF AMERICA
(Name of Depositor)
1740 BROADWAY
NEW YORK, NEW YORK 10019
(Address of Principal Executive Office)
EDWARD P. BANK, ESQ.
VICE PRESIDENT AND DEPUTY GENERAL COUNSEL
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
1740 BROADWAY
NEW YORK, NEW YORK 10019
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as possible after the
effective date of this Registration Statement.
Pursuant to Rule 24-f-2 of the Investment Company Act of 1940, the
Registrant hereby declares that an indefinite amount of its securities is being
registered under the Securities Act of 1933.
Registrant hereby amends this Registration Statement 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 become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may determine.
- ---------------
STATEMENT PURSUANT TO RULE 24F-2
The Registrant registers an indefinite number or amount of its variable
life insurance contracts under the Securities Act of 1933 pursuant to Rule 24F-2
under the Investment Company Act of 1940. The Rule 24F-2 notice for Registrant's
fiscal year ending December 31, 1997 was filed on March 31, 1998.
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CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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1.......................................... Cover Page
2.......................................... Cover Page
3.......................................... Not Applicable
4.......................................... DISTRIBUTION OF THE POLICY
5.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
6.......................................... MONY America Variable Account L
7.......................................... Not required
8.......................................... Not required
9.......................................... Legal Proceedings
10.......................................... THE POLICY; INFORMATION ABOUT THE COMPANY AND THE
VARIABLE ACCOUNT; CHARGES AND DEDUCTIONS; OTHER
INFORMATION; VOTING OF FUND SHARES; MORE ABOUT THE
POLICY
11.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
THE FUNDS; PURCHASE OF PORTFOLIO SHARES BY THE
VARIABLE ACCOUNT
12.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
THE FUNDS; PURCHASE OF PORTFOLIO SHARES BY THE
VARIABLE ACCOUNT
13.......................................... THE POLICY; CHARGES AND DEDUCTIONS; THE FUNDS
14.......................................... THE POLICY
15.......................................... THE POLICY
16.......................................... THE FUNDS; THE POLICY; INFORMATION ABOUT THE COMPANY AND
THE VARIABLE ACCOUNT
17.......................................... THE POLICY
18.......................................... THE FUNDS; THE POLICY; INFORMATION ABOUT COMPANY AND THE
VARIABLE ACCOUNT
19.......................................... VOTING OF FUND SHARES; MORE ABOUT THE POLICY
20.......................................... Not applicable
21.......................................... THE POLICY
22.......................................... Not applicable
23.......................................... Not applicable
24.......................................... IMPORTANT TERMS; MORE ABOUT THE POLICY
25.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
26.......................................... Not applicable
</TABLE>
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<TABLE>
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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27.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
28.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
29.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
30.......................................... Not applicable
31.......................................... Not applicable
32.......................................... Not applicable
33.......................................... Not applicable
34.......................................... Not applicable
35.......................................... MORE ABOUT THE POLICY
36.......................................... Not applicable
37.......................................... Not applicable
38.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
MORE ABOUT THE POLICY
39.......................................... MORE ABOUT THE POLICY
40.......................................... Not applicable
41.......................................... MORE ABOUT THE POLICY
42.......................................... Not applicable
43.......................................... Not applicable
44.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
THE POLICY; MORE ABOUT THE POLICY
45.......................................... Not applicable
46.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
THE POLICY; MORE ABOUT THE POLICY
47.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT;
THE POLICY; MORE ABOUT THE POLICY
48.......................................... Not applicable
49.......................................... Not applicable
50.......................................... INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
51.......................................... Cover Page; INFORMATION ABOUT THE COMPANY AND THE
VARIABLE ACCOUNT; THE POLICY; MORE ABOUT THE POLICY
52.......................................... OTHER INFORMATION
53.......................................... OTHER INFORMATION
54.......................................... Not applicable
55.......................................... Not applicable
56.......................................... Not required
57.......................................... Not required
58.......................................... Not required
59.......................................... FINANCIAL STATEMENTS
</TABLE>
2
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PROSPECTUS
DATED SEPTEMBER 1, 1998
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY
ISSUED BY
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA VARIABLE ACCOUNT L
This prospectus describes a flexible premium variable universal life
insurance policy (individually, the "Policy," and collectively, the "Policies")
offered by MONY Life Insurance Company of America (the "Company"), a
wholly-owned subsidiary of The Mutual Life Insurance Company of New York
("Mutual of New York"). The Policy, for so long as it remains in force, provides
lifetime insurance protection on the Insured named in the Policy through the
Maturity Date. The Policy is designed to provide maximum flexibility in
connection with premium payments and death benefits by permitting, subject to
certain restrictions, the frequency and amount of premium payments to vary and
the death benefit payable under the Policy to increase or decrease. A Policy may
also be surrendered for its Cash Value.
The Company will pay the death proceeds when the Insured dies if the Policy
is still in force. The death proceeds will equal the death benefit, less any
Outstanding Debt and any charges due during the Grace Period. The Policy will
remain in force as long as the Cash Value remains positive. If at all times
during the first three Policy years, the sum of premiums paid less any
Outstanding Debt and Partial Surrenders taken (excluding their fees) is greater
than or equal to the Minimum Monthly Premium times the number of completed
months this Policy has been in force or its Cash Value is greater than zero, the
Policy and all Rider coverages will not lapse. If the Guaranteed Death Benefit
Rider is purchased, the Specified Amount of the Policy and most Rider coverages
will remain in force for the Guarantee Period if the required premiums (less
Partial Surrenders taken (and their fees)) less Outstanding Debt have been paid.
The Guaranteed Death Benefit Rider is not available in all states.
The Policy permits the choice of two death benefit Options: under Option 1,
the death benefit remains fixed at the Specified Amount chosen; under Option 2,
the death benefit equals the Specified Amount plus Fund Value (under certain
circumstances the death benefit under either Option may be greater). Under
Option 2, the death benefit will vary daily with the investment performance of
the Subaccounts for any Policy Owner who has allocated net premiums to the
Variable Account. Under either Option, for so long as the Policy remains in
force, the death benefit will never be less than the current Specified Amount.
The Policy also permits an owner of the Policy to obtain loans from the
Company in amounts up to 90% of the Cash Value of the Policy, and it permits an
Owner to surrender a part or all of the Policy and receive the Cash Value of the
Policy.
Net premiums may be allocated at the Policy Owner's discretion to one or
more of the Subaccounts that comprise a separate account of the Company called
the MONY America Variable Account L (the "Variable Account"), or to the
Guaranteed Interest Account of the Company. Any portion of a net premium
allocated to one or more of the Subaccounts is used to purchase shares of the
corresponding Portfolios of the MONY Series Fund, Inc. (the "MONY Series Fund")
or the Enterprise Accumulation Trust (the "Accumulation Trust"). The available
Portfolios of the MONY Series Fund currently are: the Money Market Portfolio,
the Government Securities Portfolio, the Intermediate Term Bond Portfolio, and
the Long Term Bond Portfolio. The available Portfolios of the Accumulation Trust
are: the Equity Income Portfolio, the Growth and Income Portfolio, the Growth
Portfolio, the Equity Portfolio, the Managed Portfolio, the Capital Appreciation
Portfolio, the Small Company Growth Portfolio, the Small Cap Portfolio, the
International Growth Portfolio, and the High Yield Bond Portfolio. The Loan
Account represents amounts set aside as collateral for any Policy Debt.
To the extent that all or a portion of net premiums are allocated to the
Variable Account, the Fund Value under the Policy will vary based upon the
investment performance of the Subaccounts to which the Fund Value is allocated.
Net premiums allocated to the Guaranteed Interest Account are assets of the
General Account of the Company. The Fund Value in the Guaranteed Interest
Account will accrue interest at an interest rate that is guaranteed by the
Company. No minimum amount of Fund Value is guaranteed, except to the extent
premiums are allocated to the Guaranteed Interest Account.
A Policy may be returned during the Right to Return Policy Period (see
"Right to Examine a Policy -- Right to Return Policy Period," page 17), during
which time net premium payments earn an interest rate guaranteed by the Company.
It may not be advantageous to replace existing insurance with the Policy.
This prospectus generally describes only the portion of the Policy involving
the Variable Account. For a brief summary of the Guaranteed Interest Account,
see "The Guaranteed Interest Account," page 10.
In pursuing its investment objective, the High Yield Bond Subaccount
purchases shares of the High Yield Bond Portfolio which may invest significantly
in lower rated bonds, commonly referred to as "Junk Bonds". Bonds of this type
are considered to be speculative with regard to the payment of interest and
return of principal. Investment in these types of securities have special risks
and, therefore, may not be suitable for all investors. Investors should
carefully assess the risks associated with allocating premium payments to this
subaccount.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS
PROSPECTUS IS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR MONY SERIES FUND, INC.
AND ENTERPRISE ACCUMULATION TRUST. THESE PROSPECTUSES SHOULD BE READ CAREFULLY
AND RETAINED FOR FUTURE REFERENCE.
---------------------
MONY LIFE INSURANCE COMPANY OF AMERICA
1740 BROADWAY
NEW YORK, NEW YORK 10019
1-800-487-6669
<PAGE> 5
TABLE OF CONTENTS
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PAGE
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TABLE OF CONTENTS..................... i
IMPORTANT TERMS....................... 1
SUMMARY OF THE POLICY................. 3
Purpose of the Policy............... 3
Policy Values....................... 3
The Death Benefit................... 3
Premium Features.................... 4
Allocation Options.................. 4
Transfer of Fund Value.............. 5
Policy Loans........................ 5
Full Surrender...................... 5
Partial Surrender................... 5
Right to Return Policy Period....... 6
Grace Period and Lapse.............. 6
Charges and Deductions.............. 6
Deductions from Premiums......... 6
Daily Deduction from the Variable
Account........................ 6
Deductions from Fund Value....... 7
Surrender Charge................. 7
Transaction and Other Charges.... 7
Tax Treatment of Increases in Fund
Value............................ 8
Tax Treatment of Death Benefit...... 8
The Guaranteed Interest Account..... 8
Contacting the Company.............. 8
INFORMATION ABOUT THE COMPANY AND THE
VARIABLE ACCOUNT.................... 8
MONY Life Insurance Company of
America.......................... 8
MONY America Variable Account L..... 9
The Funds........................... 9
Purchase of Portfolio Shares by the
Variable Account................. 11
The Money Market Portfolio....... 12
The Government Securities
Portfolio...................... 12
The Intermediate Bond
Portfolio...................... 12
The Long Term Bond Portfolio..... 12
The Equity Income Portfolio...... 12
The Growth and Income
Portfolio...................... 12
The Growth Portfolio............. 12
The Equity Portfolio............. 12
The Capital Appreciation
Portfolio...................... 13
The Managed Portfolio............ 13
The Small Company Growth
Portfolio...................... 13
The Small Company Value
Portfolio...................... 13
The International Growth
Portfolio...................... 13
The High Yield Bond Portfolio.... 13
THE POLICY............................ 14
Application for a Policy............ 14
Temporary Insurance Coverage..... 14
</TABLE>
<TABLE>
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PAGE
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Initial Premium Payment.......... 15
Policy Date...................... 15
Risk Classification.............. 15
Right to Examine a Policy -- Right
to Return Policy Period.......... 16
Premiums............................ 16
Premium Flexibility.............. 16
Scheduled Premium Payments
(Planned Premium Payments)..... 16
Guaranteed Death Benefit Rider... 17
Modified Endowment Contracts..... 17
Unscheduled Premium Payments..... 17
Premium Payments Affect the
Continuation of the Policy..... 18
Allocation of Net Premiums.......... 18
Death Benefits Under the Policy..... 18
Option 1. ....................... 19
Option 2. ....................... 19
Examples of Options 1 and 2...... 19
Changes in Death Benefit
Option......................... 20
Changes in Specified Amount......... 20
Increases........................ 21
Decreases........................ 21
Guaranteed Death Benefit............ 21
Other Optional Insurance Benefits... 22
Primary Insured Term Rider....... 22
Waiver of Monthly Deductions
Rider.......................... 22
Waiver of Specified Premium
Rider.......................... 23
Accidental Death Benefit Rider... 23
Purchase Option Rider............ 23
Spouse's Term Rider.............. 23
Children's Term Insurance
Rider.......................... 23
Benefits at Maturity............. 23
Policy Values....................... 24
Fund Value....................... 24
Cash Value....................... 24
Determination of Fund Value......... 24
Calculating Unit Values for Each
Subaccount....................... 25
Transfer of Fund Value.............. 25
Right to Exchange Policy............ 25
Policy Loans........................ 26
Full Surrender...................... 27
Partial Surrender................... 27
Grace Period and Lapse.............. 28
Special Rule for First Three
Policy Years................... 28
If Guaranteed Death Benefit Rider
Is Not in Effect............... 28
If Guaranteed Death Benefit Rider
Is in Effect................... 29
Reinstatement.................... 29
</TABLE>
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<TABLE>
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PAGE
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CHARGES AND DEDUCTIONS................ 30
Deductions from Premiums............ 30
Sales Charge..................... 30
Tax Charges...................... 30
Daily Deductions from the Variable
Account.......................... 30
Mortality and Expense Risk
Charge......................... 30
Monthly Deductions from Fund
Value............................ 31
Cost of Insurance................ 31
Administrative Charge............ 31
Per $1,000 Specified Amount
Charge......................... 32
Guaranteed Death Benefit
Charge......................... 32
Other Optional Insurance Benefits
Charges........................ 32
Surrender Charge.................... 32
Effect of Changes in Specified
Amount on Charges.............. 33
Corporate Purchasers................ 33
Transaction and Other Charges....... 33
Fees and Expenses of the Fund....... 33
Guarantee of Certain Charges........ 34
OTHER INFORMATION..................... 34
Federal Income Tax Considerations... 34
Definition of Life Insurance..... 35
Diversification Requirements..... 35
Tax Treatment of Policies........ 35
Conventional Life Insurance
Policies....................... 36
Modified Endowment Contracts..... 36
Reasonableness Requirement for
Charges........................ 37
Pension and Profit-Sharing
Plans.......................... 37
Other Employee Benefit
Programs....................... 38
Other............................ 38
Charge for Company Income Taxes..... 38
Voting of Fund Shares............... 38
Disregard of Voting Instructions.... 39
Report to Policy Owners............. 39
Substitution of Investment and Right
to Change Operations............. 39
</TABLE>
<TABLE>
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PAGE
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Changes to Comply with Law.......... 40
PERFORMANCE INFORMATION............... 40
THE GUARANTEED INTEREST ACCOUNT....... 41
General Description................. 41
Death Benefit....................... 41
Policy Charges...................... 42
Transfers........................... 42
Surrenders and Policy Loans......... 42
MORE ABOUT THE POLICY................. 43
Ownership........................... 43
Joint Owners..................... 43
Beneficiary......................... 43
The Policy.......................... 43
Notification and Claims
Procedures....................... 43
Payments............................ 43
Payment Plan/Settlement
Provisions....................... 44
Payment in Case of Suicide.......... 44
Assignment.......................... 44
Errors on The Application........... 44
Incontestability.................... 44
Policy Illustrations................ 45
Distribution of The Policy.......... 45
MORE ABOUT THE COMPANY................ 46
Management.......................... 46
State Regulation.................... 46
Telephone Transfer Privileges.......
Legal Proceedings...................
Legal Matters.......................
Experts.............................
Registration Statement..............
Independent Accountants.............
Financial Statements................
Index to Financial Statements.........
Appendix A............................ A-1
Appendix B............................ B-1
Appendix C............................ C-1
</TABLE>
ii
<PAGE> 7
IMPORTANT TERMS
Administrative Office -- The Company's administrative office at 1740
Broadway, New York, New York, 10019. "Administrative Office" also includes the
Company's Syracuse Operations Center at 1 MONY Plaza, Syracuse, N.Y. 13202.
Age -- The Insured's age as of his or her last birthday on the Policy Date,
increased by the number of complete Policy Years elapsed.
Beneficiary -- The person or persons named by the Policy Owner in the
application or by proper later designation to receive the death benefit proceeds
upon the death of the Insured.
Business Day -- Each date on which the Variable Account is valued, which
currently includes each day that the New York Stock Exchange is open for trading
or any other day on which there is sufficient trading in the securities of a
Portfolio of the Funds to affect materially the unit value of the corresponding
Subaccount of the Variable Account.
Cash Value -- The Fund Value for the Policy less the Surrender Charge and
less any Outstanding Debt.
Company, the -- MONY Life Insurance Company of America.
Funds -- MONY Series Fund, Inc. and Enterprise Accumulation Trust.
Fund Value -- The Fund Value is the sum of the amounts under the Policy
held in each Subaccount of the Variable Account and the Guaranteed Interest
Account, as well as any amount set aside in the Company's Loan Account, and any
interest thereon, to secure Outstanding Debt.
General Account -- All assets of the Company other than those allocated to
the Variable Account or to any other segregated separate account of the Company.
Guaranteed Interest Account -- An account that is part of Company's General
Account to which all or a portion of net premium payments may be allocated for
accumulation at a fixed rate of interest (which may not be less than 4.5%)
declared by Company.
Guarantee Period -- The period during which the Specified Amount is
guaranteed under the Guaranteed Death Benefit Rider. The Guaranteed Death
Benefit Rider is not available in all states. See "Guaranteed Death Benefits",
page 23.
Insured -- The person upon whose life the Policy is issued and whose death
is the contingency upon which the death benefit proceeds are payable.
Loan Account -- An account to which amounts are transferred from the
Subaccounts and the Guaranteed Interest Account as collateral for any
Outstanding Debt. The Loan Account is part of the Company's General Account, and
it accumulates interest at a rate not less than 4.5%.
Maturity Date -- The Policy Anniversary on which the Insured is Age 100.
Minimum Monthly Premium -- The amount determined by the Company which is
necessary to keep the Policy in force for the first three Policy Years and in
certain circumstances, for the first three Policy Years following an increase in
Specified Amount.
Monthly Anniversary Day -- The day each month on which the monthly
deduction is due against the Fund Value. The first Monthly Anniversary Day is
the Policy Date.
Outstanding Debt -- The unpaid loan balance including accrued loan interest
due and unpaid.
Partial Surrender -- The surrender of a portion of the Policy. At least
$500 of Cash Value must remain after a Partial Surrender, or a full surrender of
the Policy will be required.
Planned Premium Payments -- The premium amount specified on the application
as the amount the Policy Owner intends to pay at selected intervals over a
specified period of time. Within specified limits, premiums in excess of Planned
Premium Payments may be paid. Planned Premium Payments may be
1
<PAGE> 8
changed at any time. For policies offered or issued for delivery outside the
Commonwealth of Massachusetts, see the term "Scheduled Premium Payments".
Policy Date -- The date set forth on page 1 of the Policy that is used to
determine the Monthly Anniversary Day, Policy months, and Policy years. Policy
monthly, quarterly, semiannual and annual Anniversaries are measured from the
Policy Date. Each Policy month starts on the same date in each calendar month as
that specified as the Policy Date. Where the Policy Date is the 29th, 30th, or
31st of a month, and there is no such date in a calendar month, the Policy month
for such month will start on the last day of that calendar month.
Policy Owner or Owner -- The person who owns the Policy. The Policy Owner
will be the Insured unless otherwise stated in the application. If the Policy
has been absolutely assigned, the assignee becomes the Policy Owner. A
collateral assignee is not the Owner.
Portfolio(s) -- The separate investment portfolios of the Funds.
Rider -- The addendum to a Policy which adds an optional insurance benefit
to the Policy.
Right to Return Policy Period -- The Period which follows the application
for the Policy and its issuance to the Policy Owner. During the Right to Return
Policy Period which follows the issuance of the Policy, the Policy Owner may
cancel the Policy and receive a refund.
Scheduled Premium Payments -- The premium amount specified on the
application as the amount the Policy Owner intends to pay at fixed intervals
over a specified period of time. Within specified limits, premiums in excess of
the Scheduled Premium Payments may be paid. Scheduled Premium Payments may be
changed at any time. For policies offered or issued for delivery in the
Commonwealth of Massachusetts, see the term "Planned Premium Payments".
Specified Amount -- The minimum death benefit for so long as the Policy
remains in force. The Specified Amount may be increased or decreased under
certain circumstances.
Subaccounts -- The subdivisions of the Variable Account. Each Subaccount
invests exclusively in the shares of a corresponding Portfolio of one of the
Funds.
Surrender Charge -- A contingent deferred charge. The Surrender Charge is
determined for the initial Specified Amount of the Policy and for each increase
in Specified Amount.
Transaction Date -- The date the Company receives a premium or acceptable
written or telephone request at the Administrative Office. If the premium or
request reaches the Administrative Office on a day which is not a Business Day
or after the close of business on a Business Day (i.e., after 4:00 p.m. Eastern
Time or such other time as determined by the Company), the Transaction Date will
be the next Business Day.
Unit -- The bookkeeping measure used to value the amounts allocated to the
Subaccounts of the Variable Account.
Unit Value -- The value of the Units of each Subaccount of the Variable
Account. Unit Values are calculated for each Subaccount on each Business Day.
Valuation Period -- The period that starts at the close of a Business Day
and ends at the close of the next succeeding Business Day.
Variable Account -- The Company's Variable Account L, a separate investment
account established by the Company to receive and invest the net premiums paid
under the Policy.
2
<PAGE> 9
SUMMARY OF THE POLICY
This summary is intended to provide a brief overview of the more
significant aspects of the Policy. Further detail is provided in this prospectus
and in the Policy. Unless the context indicates otherwise, the discussion in
this summary and the remainder of the prospectus relates to the portion of the
Policy involving the Variable Account. The Guaranteed Interest Account is
briefly described under "The Guaranteed Interest Account," on page 43 and in the
Policy.
PURPOSE OF THE POLICY
The Policy offers a Policy Owner insurance protection on the life of the
Insured through the Maturity Date for so long as the Policy is in force. A
maturity benefit will be paid in lieu of a death benefit when the Policy reaches
the Maturity Date during the Insured's lifetime. Like traditional fixed life
insurance, the Policy provides for a death benefit equal to its Specified
Amount, accumulation of cash value, and surrender and loan privileges. Unlike
traditional fixed life insurance, the Policy offers a choice of investment
alternatives and an opportunity for the Policy's Fund Value and its death
benefit, to grow based on investment results. The Policy is a flexible premium
policy, so that, unlike many other insurance policies, a Policy Owner may choose
the amount and frequency of premium payments, within certain limits.
POLICY VALUES
A Policy Owner may allocate net premium payments among the various
Subaccounts that comprise the Variable Account and that invest in corresponding
Portfolios of the MONY Series Fund and the Accumulation Trust. A Policy Owner
may also allocate net premium payments to the Guaranteed Interest Account. The
Loan Account represents amounts set aside in the General Account of the Company
as collateral for Outstanding Debt.
The Fund Value of the Policy is the sum of amounts allocated to the
Subaccounts of the Variable Account, the Guaranteed Interest Account and the
Loan Account. The Cash Value of the Policy is the Fund Value less the Surrender
Charge less any Outstanding Debt.
Depending on the investment experience of the selected Subaccounts, the
Fund Value may increase or decrease on any day. The death benefit may or may not
increase or decrease depending upon several factors, including the death benefit
Option selected by the Policy Owner, although the death benefit will never
decrease below the Specified Amount while the Policy is in force. There is no
guarantee that the Policy's Fund Value and death benefit will increase. The
Policy Owner bears the investment risk on that portion of the net premiums and
Fund Value allocated to the Variable Account.
The Policy will remain in force until the earliest of the Maturity Date,
the death of the Insured, or a full surrender of the Policy, unless, before any
of these events, the Policy lapses and a Grace Period expires without sufficient
additional premium payment or repayment of Outstanding Debt by the Policy Owner.
Generally, the Policy will remain in force only as long as the Cash Value
is sufficient to pay all the monthly deductions. However, if the premiums paid
meet the Minimum Monthly Premium requirement during the first three Policy
years, the Policy and all Rider coverages will remain in force even if the Cash
Value of the Policy is zero. If an increase in Specified Amount occurs during
the first three Policy years, the Minimum Monthly Premium requirement is
extended to the three Policy years following the effective date of the increase.
If the Guaranteed Death Benefit Rider is purchased, the Specified Amount of the
Policy and most Rider coverages will remain in force for the Guarantee Period if
the required premiums have been paid. The amount by which the death benefit may
exceed the Specified Amount is not guaranteed to remain in force during a
Guarantee Period. The Guaranteed Death Benefit is not available on Policies
offered to residents of, or issued for delivery in, the Commonwealth of
Massachusetts or the States of New Jersey and Texas.
THE DEATH BENEFIT
The minimum Specified Amount for a Policy is $100,000. A Policy Owner may
elect one of two Options to calculate the amount of death benefit payable under
the Policy, which may increase the death benefit.
3
<PAGE> 10
Under Option 1, the death benefit will be equal to the Specified Amount of the
Policy, or, if greater, the Fund Value (determined as of the date of the
Insured's death) multiplied by a death benefit percentage required by the
federal tax law definition of life insurance. Under Option 2, the death benefit
will be equal to the Specified Amount of the Policy plus the Fund Value
(determined as of the date of the Insured's death) or, if greater, the Fund
Value (determined as of the date of the Insured's death) multiplied by the death
benefit percentage. Policy Owners seeking to have favorable investment
performance reflected in increasing Fund Value should choose Option 1; Policy
Owners seeking to have favorable investment performance reflected in increasing
insurance coverage should choose Option 2. A Policy Owner may change the death
benefit Option and increase or decrease the Specified Amount, subject to certain
conditions. See "Death Benefits Under the Policy," page 20.
The Policy Owner may, at time of application, choose to purchase the
Guaranteed Death Benefit Rider. The Rider provides a guarantee that the
Specified Amount and most Rider coverages will remain in force for the Guarantee
Period regardless of the amount of the Policy's Cash Value. The Rider provides a
Guarantee Period to the Insured's Age 70 or ten years from the Policy Date,
whichever is later. Additional premium will be required if the Rider is chosen.
An extra charge will also be deducted from the Fund Value each month the Rider
is in effect. See "Guaranteed Death Benefits," page 23. The Guaranteed Death
Benefit is not available on Policies offered to residents of, or issued for
delivery in, the Commonwealth of Massachusetts or the States of New Jersey and
Texas.
PREMIUM FEATURES
The Company requires a Policy Owner to pay an initial premium equal to at
least the Minimum Monthly Premium that is defined by the Company. Thereafter,
subject to certain limitations, a Policy Owner may choose the amount and
frequency of premium payments. The Policy, therefore, provides the Policy Owner
with the flexibility to vary premium payments to reflect varying financial
conditions.
When applying for a Policy, a Policy Owner will determine a Scheduled
Premium Payment that provides for the payment of level premiums in regular
intervals over a specified period of time. Each Policy Owner will receive a
premium reminder notice for the Scheduled Premium Payment on either an annual,
semiannual, or quarterly basis, at the option of the Policy Owner; however, the
Policy Owner may not be required to pay Scheduled Premium Payments. Premiums may
be paid monthly under the MONYMatic plan where the Owner authorizes the Company
to withdraw Scheduled Premium Payments from the Owner's checking account each
month. (For Policies offered to residents of, or issued for delivery in, the
Commonwealth of Massachusetts, the Policy Owner will be asked to indicate on the
application the amount the Policy Owner intends to pay at selected intervals.
For those Policy Owners, the term "Scheduled Premium Payment" used in this
Prospectus, refers to Planned Premium Payments.)
The amount, frequency, and period of time over which a Policy Owner pays
premiums may affect whether or not the Policy will be classified as a modified
endowment contract, which is a type of life insurance contract subject to
different tax treatment for certain pre-death distributions. For more
information on the tax treatment of life insurance contracts, including those
classified as modified endowment contracts, see "Federal Income Tax
Considerations," page 37.
Payment of the Scheduled Premiums will not guarantee that a Policy will
remain in force. See "Grace Period and Lapse," page 29. The Company also may
reject a part of, or otherwise limit, any premium payment that would result in
an immediate increase in the net amount at risk under the Policy, although such
a premium may be accepted with satisfactory evidence of insurability.
ALLOCATION OPTIONS
Premium payments and Cash Values may be allocated by the Policy Owner among
the various Subaccounts. Each of the Subaccounts uses premium payments and Fund
Values to purchase shares of a designated portfolio (a "Portfolio") of the MONY
Series Fund, Inc. (the "MONY Series Fund") or the Enterprise Accumulation Trust
(the "Accumulation Trust") (collectively the "Funds"). The available Portfolios
of the Funds, each of which has a different investment objective, are the Money
Market Portfolio,
4
<PAGE> 11
the Government Securities Portfolio, the Intermediate Term Bond Portfolio, the
Long Term Bond Portfolio, the Equity Income Portfolio, the Growth and Income
Portfolio, the Growth Portfolio, the Equity Portfolio, the Managed Portfolio,
the Capital Appreciation Portfolio, the Small Company Growth Portfolio, the
Small Company Value Portfolio, the International Growth Portfolio, and the High
Yield Bond Portfolio. See "The Funds," page 11.
The Company is the investment manager of the MONY Series Fund. Enterprise
Capital Management, Inc., a subsidiary of MONY, is the investment manager of the
Accumulation Trust. 1740 Advisers, Inc., an affiliate of MONY, is the
sub-investment adviser of the Equity Income Portfolio; Retirement System
Investors Inc. is the sub-investment adviser of the Growth and Income Portfolio;
Montag & Caldwell, Inc. is the sub-investment adviser of the Growth Portfolio.
OpCap Advisors, a subsidiary of Oppenheimer Capital, is the sub-investment
adviser, of the Equity and Managed Portfolios; Provident Investment Counsel,
Inc. is the sub-investment adviser of the Capital Appreciation Portfolio;
Pilgrim Baxter & Associates, Ltd. is the sub-investment adviser of the Small
Company Growth Portfolio; Gabelli Asset Management, Inc. is the sub-investment
adviser of the Small Company Value Portfolio; Brinson Partners, Inc. is the
sub-investment adviser of the International Growth Portfolio; and Caywood-Scholl
Capital Corporation is the sub-investment adviser of the High Yield Bond
Portfolio
The Policy Owner may choose to allocate net premium payments to any or all
of the available Subaccounts constituting the Variable Account, and to the
Guaranteed Interest Account.
TRANSFER OF FUND VALUE
The Policy Owner may transfer Fund Value among the Subaccounts, and,
subject to certain other limitations, between the Subaccounts and the Guaranteed
Interest Account. Transfers may be made by telephone if an authorization for
telephone transfer form has been properly completed and signed and filed at the
Company's Syracuse Operations Center. See "Transfer of Fund Value," page 26.
POLICY LOANS
The Policy Owner may borrow from the Company an amount up to 90% of the
Policy's Cash Value. The Policy will be the only security required for a loan.
See "Policy Loans," page 27.
The amount of any Outstanding Debt is subtracted from the death benefit.
Outstanding Debt is repaid from the proceeds of a Full Surrender. See "Full
Surrender," page 28. Outstanding Debt may also impact the continuation of the
Policy. See "Grace Period and Lapse," page 29.
FULL SURRENDER
The Owner can surrender the Policy during the life of the Insured and
receive its Cash Value, which is equal to the Fund Value less the Surrender
Charge and less any Outstanding Debt. See "Full Surrender," page 28.
PARTIAL SURRENDER
Partial Surrenders are available under the Policy so long as the Cash Value
remaining after giving effect to the requested surrender and any fees which may
be assessed as a result of the Partial Surrender exceeds any minimum
requirements. If a Partial Surrender is for an amount which exceeds the amount
available, it will be rejected and the request will be returned to the Policy
Owner. A Partial Surrender will decrease the Specified Amount of a Policy if the
Owner has elected death benefit Option 1, and it will decrease the death benefit
if the death benefit is greater than the Specified Amount under either Option 1
or 2. See "Partial Surrender," at page 28.
Among other restrictions, Partial Surrenders must be for at least $500, and
the Policy's Cash Value after the surrender must be at least $500. A Partial
Surrender Fee of $10 will be assessed against the remaining Fund Value. No
Surrender Charge is assessed upon a Partial Surrender.
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<PAGE> 12
RIGHT TO RETURN POLICY PERIOD
A Policy Owner may obtain a full refund of the premium paid if the Policy
is returned within 10 days (or longer in certain states) after the Owner
receives it. During the Right to Return Policy Period, net premiums will be
retained in the Company's General Account and will earn interest at an annual
rate of 4.5%. See "Right to Examine a Policy -- Right to Return Policy Period",
page 17.
GRACE PERIOD AND LAPSE
Payment of Scheduled Premium Payments will not guarantee that a Policy will
remain in force. Instead, unless the Guaranteed Death Benefit Rider has been
elected and all requirements have been met, the duration of the Policy depends
upon the Policy's Cash Value. However, during the first three Policy years, if
on each Monthly Anniversary Day the sum of premiums paid, less the sum of
Partial Surrenders (excluding any fees relating thereto) and any Outstanding
Debt is greater than or equal to the Minimum Monthly Premium times the number of
completed Policy months or the Policy's Cash Value is greater than zero, the
Policy is guaranteed not to lapse. If an increase in Specified Amount occurs
during the first three Policy years, the Minimum Monthly Premium requirement
will be extended to the three Policy years following the date the increase took
effect. Even if Scheduled Premium Payments are made, if either of these two
provisions do not apply, the Policy will lapse any time the Cash Value is
insufficient to pay the current monthly deduction and a Grace Period expires
without sufficient payment.
While the Guaranteed Death Benefit Rider is in force, if on any Monthly
Anniversary Day the total premiums received less any Partial Surrenders and
their fees, less Outstanding Debt do not exceed the premiums required under the
Guaranteed Death Benefit Rider (See "Guaranteed Death Benefits", page 23.), a
notice will be sent which will give the Policy Owner 61 days from the date
thereof to make additional payments to the Policy. See "Grace Period and Lapse",
page 29.
The Guaranteed Death Benefit is not available on Policies offered to
residents of, or issued for delivery in, the Commonwealth of Massachusetts or
the States of New Jersey and Texas, and therefore, Grace Period and Lapse will
be treated as if the Guaranteed Death Benefit Rider is not in effect. See "Grace
Period and Lapse", page 29.
CHARGES AND DEDUCTIONS
Deductions from Premiums
Certain charges are deducted from each premium payment under a Policy prior
to applying the net premium to the Fund Value. These charges consist of the
following items:
Sales Charge -- Sales charge varies based on the total of the Specified
Amount plus Term Insurance Rider amount in force on the Policy Date. For total
amounts less than $500,000, the sales charge is equal to 4% of each premium
paid. For total amounts of $500,000 or more, the sales charge is equal to 3% of
each premium paid.
Tax Charge -- A state and local premium tax charge, currently equal to
2.25% of each premium, and a charge related to the federal tax treatment of
deferred acquisition costs currently equal to 1.5% of each premium will be
deducted to compensate the Company for these taxes. Actual state and local
premium taxes vary, ranging from 0% to 4%. The Company does not expect to make a
profit from this charge. (See "Tax Charges", page 31.)
Daily Deduction from the Variable Account
A charge is deducted from the Variable Account each day for the Mortality
and Expense Risk Charge as described below.
Mortality and Expense Risk Charge -- A charge is deducted daily from each
Subaccount of the Variable Account for mortality and expense risks assumed by
the Company. This charge is guaranteed not to exceed
6
<PAGE> 13
.000959% of the amount in the Subaccount, which is equivalent to an annual rate
of .35% of Subaccount value.
Deductions from Fund Value
A charge called the Monthly Deduction is deducted from the Fund Value on
each Monthly Anniversary Day. The monthly deduction consists of the following
items:
Cost of Insurance -- This monthly charge compensates the Company for
providing life insurance coverage for the Insured. The amount of the charge is
equal to a current cost of insurance rate multiplied by the net amount at risk
under the Policy at the beginning of each Policy Month.
Administrative Charge -- An administrative charge of $5.00 is deducted each
month.
Monthly per $1,000 Specified Amount Charge -- For the first 15 policy years
following issue or increase in Specified Amount, a per $1,000 of Specified
Amount charge will apply. These per $1,000 of Specified Amount charges differ
based on issue age of the coverage segment, gender and smoking status. The
monthly per $1,000 factors are shown in Appendix B.
Guaranteed Death Benefit Charge -- If the Guaranteed Death Benefit Rider
has been elected, a charge of $0.01 per thousand of Policy Specified Amount and
certain Rider amounts per month will be charged during the Guarantee Period. The
Guaranteed Death Benefit Rider is not available on Policies offered to residents
of, or issued for delivery in, the Commonwealth of Massachusetts or the States
of New Jersey and Texas.
Optional Insurance Benefits Charges -- The monthly deduction will include
charges for any other optional insurance benefits added to the Policy by Rider.
Surrender Charge
The Company will assess a Surrender Charge against Fund Value upon Full
Surrender of a Policy. The Surrender Charge is based on a factor per $1,000 of
initial Specified Amount and grades to zero based on a grading schedule. The
factors per $1,000 of initial Specified Amount vary by issue age, gender, and
underwriting class. The grading percentages (as shown below) vary based on issue
age and number of full years since the Policy was issued. For a description of
the effect of changes in Specified Amount on the Surrender Charge, see
"Surrender Charge", page 37.
<TABLE>
<CAPTION>
GRADING PERCENTAGES PERCENT FOR ISSUE PERCENT FOR ISSUE
POLICY YEARS AGES 0-75 AGES 76-85
------------------- ----------------- -----------------
<S> <C> <C>
1-3................................................... 80% 80%
4..................................................... 80 70
5..................................................... 80 60
6..................................................... 80 50
7..................................................... 80 40
8..................................................... 70 30
9..................................................... 60 20
10.................................................... 50 10
11.................................................... 40 0
12.................................................... 30 0
13.................................................... 20 0
14.................................................... 10 0
15+................................................... 0 0
</TABLE>
Transaction and Other Charges
A Partial Surrender Fee of $10 will be assessed against the remaining Fund
Value for any Partial Surrender. In addition, the Company reserves the right to
charge a fee of $25 for each transfer of Fund Value.
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<PAGE> 14
The operating expenses of the Variable Account are paid by the Company and
certain charges, deductions, and fees are made or imposed to compensate the
Company for these expenses and for the risk that the charges, deductions, and
fees may not be sufficient to compensate the Company. Investment advisory fees
and operating expenses of the Fund are paid by the Fund. For a description of
these charges, see "Charges and Deductions," page 31.
TAX TREATMENT OF INCREASES IN FUND VALUE
The Fund Value under the Policy is currently subject to the same federal
income tax treatment as the cash value under fixed life insurance. Therefore,
generally the Policy Owner will not be deemed to be in constructive receipt of
the Fund Value unless and until the Policy Owner is deemed to be in receipt of a
distribution from the Policy. For information on the tax treatment of the Policy
and on the tax treatment of a Full Surrender, a Partial Surrender, or a Policy
loan, see "Federal Income Tax Considerations," page 37.
TAX TREATMENT OF DEATH BENEFIT
The death benefit under the Policy is currently subject to federal income
tax treatment consistent with that of fixed life insurance. Therefore, generally
the death benefit will be fully excludable from the gross income of the
Beneficiary under the Internal Revenue Code. See "Federal Income Tax
Considerations," page 37.
THE GUARANTEED INTEREST ACCOUNT
The Policy Owner may allocate all or a portion of net premium payments and
transfer Fund Value to the Guaranteed Interest Account, within specified limits.
Amounts allocated to the Guaranteed Interest Account are held in the Company's
General Account. The Company guarantees that the Fund Value allocated to the
Guaranteed Interest Account will be credited interest daily at a rate equivalent
to an effective annual rate of 4.5%. In addition, the Company may in its sole
discretion pay interest in excess of the guaranteed amount. See "The Guaranteed
Interest Account," page 43.
CONTACTING THE COMPANY
All written requests, notices, and forms required by the Policies, and any
questions or inquiries should be directed to the Company's Operations Center at
1 MONY Plaza, Syracuse, New York 13202.
INFORMATION ABOUT THE COMPANY AND THE VARIABLE ACCOUNT
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY Life Insurance Company of America (the "Company") is a stock life
insurance company organized in the State of Arizona. The Company is currently
licensed to sell life insurance and annuities in 49 states (not including New
York), the District of Columbia, the U.S. Virgin Islands, and Puerto Rico. The
Company is the corporate successor of Vico Credit Life Insurance Company,
incorporated in Arizona on March 6, 1969.
The Company is a wholly owned subsidiary of The Mutual Life Insurance
Company of New York ("Mutual of New York"), a mutual company organized under the
laws of the State of New York in 1842. The principal office of Mutual of New
York is located at 1740 Broadway, New York, New York 10019.
In September 1997, Mutual of New York announced that it had begun the
process of converting to a stock life insurance company in a process called
demutualization. If completed, it is not expected that demutualization will have
any material effect on the Company, the MONY America Variable Account L, or the
Policies.
At May 1, 1998, the rating assigned to the Company by A. M. Best Company,
Inc., an independent insurance company rating organization, was A- (Excellent)
based upon an analysis of financial condition and
8
<PAGE> 15
operating performance through the end of 1996. At the same date, Mutual of New
York was rated A- (Excellent) on the same basis. The A. M. Best rating of the
Company should be considered only as bearing on the ability of the Company to
meet its obligations under the Policies.
The Company has a service agreement with Mutual of New York whereby Mutual
of New York provides the Company with such personnel, facilities, etc., as are
reasonably necessary for the conduct of the Company's business. These services
are provided on a cost reimbursement basis. The Company intends to administer
the Policies itself, utilizing the services provided by Mutual of New York to
meet its obligations under the Policies.
MONY Securities Corp., a wholly owned subsidiary of Mutual of New York is
the principal underwriter for the Policies.
MONY AMERICA VARIABLE ACCOUNT L
The MONY America Variable Account L (the "Variable Account") is a separate
investment account of the Company and at present is used only to support
flexible premium variable life insurance policies. The assets in the Variable
Account are kept separate from the General Account assets and other separate
accounts of the Company.
The Company owns the assets in the Variable Account and is required to
maintain sufficient assets in the Variable Account with a total market value
equal to the Policy liabilities funded by the Variable Account. The Variable
Account is divided into subdivisions called Subaccounts. The income, gains, or
losses, realized or unrealized, of the Variable Account are credited to or
charged against the assets held in the Variable Account without regard to the
other income, gains, or losses of the Company. Assets in the Variable Account
attributable to the reserves and other liabilities under the Policies are not
chargeable with liabilities arising from any other business that the Company
conducts. Assets held in the Company's General Account, including Fund Values of
the Policy during the Right to Return Period and Fund Values allocated by the
Policy Owner to the Guaranteed Interest Account, are subject to the liabilities
arising from the businesses the Company conducts. However, the Company may
transfer to its General Account any assets which exceed anticipated obligations
of the Variable Account. All obligations arising under the Policy are general
corporate obligations of the Company. The Company may accumulate in the Variable
Account proceeds from various Policy charges and investment results applicable
to those assets.
The Variable Account was established on March 27, 1987 under Arizona law
under the authority of the Board of Directors of Company. The Variable Account
is registered as a unit investment trust with the SEC. Such registration does
not involve any supervision by the SEC of the administration or investment
practices or policies of the Account.
There are currently fourteen Subaccounts within the Variable Account
available to the Policyholder. Each Subaccount invests exclusively in shares of
a designated Portfolio of the Funds. For example, the Long Term Bond Subaccount
invests solely in shares of the MONY Series Fund, Inc. Long Term Bond Portfolio.
These Portfolios are available to serve only as the underlying investment for
variable annuity and variable life insurance contracts issued through separate
accounts of the Company as well as other life insurance companies, and may be
available to certain pension accounts. They are not available directly to
individual investors. The Company may in the future establish additional
Subaccounts within the Variable Account, which may invest in other Portfolios of
the Funds or in other securities. Not all Subaccounts are available to the
Policy Owner.
THE FUNDS
Each Subaccount of the Variable Account currently invests only in shares of
a corresponding Portfolio of the MONY Series Fund, Inc. (the "MONY Series Fund")
or the Enterprise Accumulation Trust (the "Accumulation Trust") (the MONY Series
Fund and the Accumulation Trust are collectively called the "Funds"). The Funds
are diversified, open end management investment companies of the series type.
The
9
<PAGE> 16
Funds are registered with the SEC under the Investment Company Act of 1940. Such
registration does not involve supervision by the SEC of the investments or
investment policy of the Funds.
Of the seven separate Portfolios of the MONY Series Fund, currently only
four portfolios ("Portfolios"), each of which pursues different investment
objectives and policies, are available for purchase by corresponding Subaccounts
of the Variable Account available to the Policy Owner. The Company acts as the
investment manager of the MONY Series Fund. The Company is a registered
investment adviser under the Investment Advisers Act of 1940. As investment
adviser to the MONY Series Fund, the Company receives a daily investment
advisory fee equivalent to an annual rate of 0.50 percent of the first $400
million, 0.35 percent of the next $400 million, and 0.30 percent in excess of
$800 million of the aggregate average daily net assets of the Government
Securities, Long Term Bond, and Intermediate Term Bond Portfolios of the MONY
Series Fund, and 0.40 percent of the first $400 million, 0.35 percent of the
next $400 million, and 0.30 percent of assets in excess of $800 million of the
aggregate average daily net assets of the Money Market Portfolio of the MONY
Series Fund, as described in the accompanying current prospectus for the MONY
Series Fund. The Company, as investment adviser, has agreed to bear all expenses
associated with organizing the Fund, the initial registration of its securities,
and the compensation of the Fund's directors, officers and employees who are
interested persons of the Company. All other expenses will be borne by the Fund
itself, including, without limitation, the calculation of the net asset value of
the Portfolios. The Company has entered into a Services Agreement with Mutual of
New York for the provision of personnel, equipment, facilities and other
services, in order to carry out its duties as investment adviser to the Fund.
Of the ten separate Portfolios of the Accumulation Trust, currently all
separate Portfolios, each of which pursues different investment objectives and
policies, are available for purchase by corresponding Subaccounts of the
Variable Account. Enterprise Capital Management, Inc., a wholly owned subsidiary
of Mutual of New York ("Enterprise Capital") acts as the investment manager of
the Accumulation Trust. Enterprise Capital, as investment adviser to the
Accumulation Trust, will receive from the Accumulation Trust monthly
compensation with respect to the Equity and Managed Portfolios that it advises
at an annual rate of 0.80 percent of the first $400 million of the aggregate
average daily net assets of those portfolios, 0.75 percent of the next $400
million of the aggregate average daily net assets of those portfolios, and 0.70
percent of the aggregate average daily net assets of those portfolios which
exceed $800 million. OpCap Advisors, a subsidiary of Oppenheimer Capital, as the
sub-investment adviser to the Equity and Managed Portfolios of the Accumulation
Trust, will receive from Enterprise Capital and not the Accumulation Trust, 0.40
percent (0.30 percent of assets in excess of $1 billion) of the aggregate
average daily net assets of the Equity Portfolio, and .40 percent (.30 percent
of the next $1 billion of assets, and .25 percent of assets in excess of $2
billion) of the average daily net assets of the Managed Portfolio. Enterprise
Capital, as investment adviser to the Accumulation Trust, will receive from the
Accumulation Trust, .75 percent of the aggregate average average daily net
assets of the Equity Income Portfolio, and 1740 Advisers, Inc. will receive from
Enterprise Capital and not the Accumulation Trust 0.30 percent (0.25 percent of
the next $100 million of assets, and 0.20 percent of assets in excess of $200
million) of the aggregate average daily net assets of the Equity Income
Portfolio. Enterprise Capital, as investment adviser to the Accumulation Trust,
will receive from the Accumulation Trust, .75 percent of the aggregate average
average daily net assets of the Growth and Income Portfolio, and Retirement
System Investors, Inc. will receive from Enterprise Capital and not the
Accumulation Trust 0.30 percent (0.25 percent of the next $100 million of
assets, and 0.20 percent of assets in excess of $200 million) of the aggregate
average daily net assets of the Growth and Income Portfolio. Enterprise Capital,
as investment adviser to the Accumulation Trust, will receive from the
Accumulation Trust, .75 percent of the aggregate average average daily net
assets of the Growth Portfolio, and Montag & Caldwell, Inc. will receive from
Enterprise Capital and not the Accumulation Trust 0.30 percent (0.20 percent of
assets in excess of $1 billion) of the aggregate average daily net assets of the
Growth Portfolio. Enterprise Capital, as investment adviser to the Accumulation
Trust, will receive from the Accumulation Trust, .75 percent of the aggregate
average average daily net assets of the Capital Appreciation Portfolio, and
Provident Investment Counsel, Inc. will receive from Enterprise Capital and not
the Accumulation Trust percent of the aggregate average daily net assets of
the Capital Appreciation Portfolio. Enterprise Capital, as investment adviser to
the Accumulation Trust, will receive from the Accumulation Trust, 1.00 percent
of the aggregate average average daily net assets of the Small Company Growth
Portfolio, and Pilgrim Baxter & Associates will
10
<PAGE> 17
receive from Enterprise Capital and not the Accumulation Trust 0.65 percent
(0.55 percent of the next $50 million of assets, and 0.45 percent of assets in
excess of $100 million) of the aggregate average daily net assets of the Small
Company Growth Portfolio. Enterprise Capital, as investment adviser to the
Accumulation Trust, will receive from the Accumulation Trust monthly
compensation with respect to the Small Cap Portfolio that it advises at an
annual rate of 0.75 percent of the aggregate average daily net assets of the
Small Company Portfolio. GAMCO Investors, Inc., as sub-investment adviser to the
Small Cap Portfolio of the Accumulation Trust, will receive from Enterprise
Capital and not the Accumulation Trust, 0.40 percent (0.30 percent of assets in
excess of $1 billion) of the aggregate average daily net assets of the Small Cap
Portfolio. Enterprise Capital, as investment adviser to the Accumulation Trust,
will receive from the Accumulation Trust monthly compensation with respect to
the International Growth Portfolio that it advises at an annual rate of 0.85
percent of the aggregate average daily net assets of the International Growth
Portfolio, and Brinson Partners, Inc., as the sub-investment adviser to the
International Growth Portfolio, will receive from Enterprise Capital and not the
Accumulation Trust, 0.45 percent (53% of the fee received by Enterprise Capital,
the fee paid to Brinson Partners declines as assets exceed $100 million) of the
aggregate average daily net assets of the International Growth Portfolio.
Enterprise Capital, as investment adviser to the Accumulation Trust, will
receive from the Accumulation Trust monthly compensation with respect to the
High Yield Bond Portfolio that it advises at an annual rate of 0.60 percent of
the aggregate average daily net assets of the High Yield Bond Portfolio, and
Caywood-Scholl Capital Corporation, as sub-investment adviser to the High Yield
Bond Portfolio, will receive from Enterprise Capital and not the Accumulation
Trust, 0.30 percent (0.25 percent for assets in excess of $100 million) of the
aggregate average daily net assets of the High Yield Bond Portfolio.
The investment objectives of each Portfolio are fundamental and may not be
changed without the approval of the holders of a majority of the outstanding
shares of the Portfolio affected (which, for each of the Funds, means the lesser
of (1) 67 percent of the Portfolio shares represented at a meeting at which more
than 50 percent of the outstanding Portfolio shares are represented or (2) more
than 50 percent of the outstanding Portfolio shares).
PURCHASE OF PORTFOLIO SHARES BY THE VARIABLE ACCOUNT
The shares of each Portfolio are purchased by the Company for the
corresponding Subaccount at net asset value, i.e., without sales load. All
dividends and capital gains distributions received from a Portfolio are
automatically reinvested in such Portfolio at net asset value, unless the
Company, on behalf of the Variable Account, elects otherwise. Fund shares will
be redeemed by the Company at their net asset value to the extent necessary to
make payments under the Policies.
Shares of the Funds are offered only for purchase by separate accounts of
insurance companies, which may or may not be affiliated with the Company, or
with each other. This is called "shared funding." They may also sell shares to
separate accounts to serve as an investment medium for variable life insurance
policies and for variable annuity contracts. Thus, the Funds serve as an
investment medium for both variable life insurance policies and variable annuity
contracts. This is called "mixed funding." The Company currently does not
foresee any disadvantages to Policy Owners arising from either mixed or shared
funding; however, due to differences in tax treatment or other considerations,
it is theoretically possible that the interests of owners of various contracts
for which the Funds serve as an investment medium might at some time be in
conflict. However, the Company's and the MONY Series Fund's Boards of Directors,
the Accumulation Trust's Board of Trustees, and any other insurance companies
that participate in the Funds are required to monitor events in order to
identify any material conflicts that arise from the use of the Funds for mixed
and/or shared funding. The Funds' Boards are required to determine what action,
if any, should be taken in the event of such a conflict. If such a conflict were
to occur, the Company might be required to withdraw the investment of one or
more of its separate accounts from the Funds. This might force the Funds to sell
securities at disadvantageous prices.
A summary of the investment objective of each of the Portfolios of the
Funds is described below. There can be no assurance that any Portfolio will
achieve its objective. More detailed information is contained in the
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<PAGE> 18
accompanying prospectus of each Fund, including information on the risks
associated with the investment and investment techniques of each of the
Portfolios.
THE FUNDS' PROSPECTUSES ACCOMPANY THIS PROSPECTUS AND SHOULD BE
READ CAREFULLY BEFORE INVESTING
The Money Market Portfolio:
The investment objective of the Money Market Portfolio is to seek maximum
current income consistent with preservation of capital and maintenance of
liquidity. The Money Market Portfolio attempts to achieve this objective by
investing in money market instruments. MONY Series Fund offers this Portfolio.
The Government Securities Portfolio:
The investment objective of the Government Securities Portfolio is the
maximum current income over the intermediate term consistent with the
preservation of capital, through investment in highly-rated debt securities,
U.S. Government obligations, and money market instruments, with a dollar
weighted average life of up to ten years at the time of purchase. MONY Series
Fund offers this Portfolio.
The Intermediate Term Bond Portfolio:
The investment objective of the Intermediate Term Bond Portfolio is to
maximize income over the intermediate term consistent with the preservation of
capital. The Portfolio seeks to achieve this objective by investing in highly
rated debt securities, U.S. Government obligations, and money market
instruments, together having a dollar-weighted average life of between 4 and 8
years. MONY Series Fund offers this Portfolio.
The Long Term Bond Portfolio:
The investment objective of the Long Term Bond Portfolio is to maximize
income over the longer term consistent with preservation of capital. The
Portfolio seeks to achieve its objective by investing in highly-rated debt
securities, U.S. Government obligations, and money market instruments, together
having a dollar-weighted average life of more than 8 years. MONY Series Fund
offers this Portfolio.
The Equity Income Portfolio:
The Equity Income Portfolio invests in a combination of growth and income
to achieve an above average and consistent total return, primarily from
investments in dividend-paying common stocks. The Accumulation Trust offers this
Portfolio.
The Growth and Income Portfolio:
The Growth and Income Portfolio seeks total return in excess of the total
return of the Lipper Growth and Income Mutual Funds Average measured over a new
period of three to five years, by investing in a broadly diversified group of
large capitalization stocks. The Accumulation Trust offers this Portfolio.
The Growth Portfolio:
The investment objective of the Growth Portfolio is capital appreciation,
primarily from investments in common stocks. The Accumulation Trust offers this
Portfolio.
The Equity Portfolio:
The investment objective of the Equity Portfolio is long-term capital
appreciation. The Portfolio seeks to achieve this investment objective by
investing in a diversified portfolio of primarily equity securities selected on
the basis of a value-oriented approach to investing. The Accumulation Trust
offers this Portfolio.
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<PAGE> 19
The Capital Appreciation Portfolio:
The investment objective of the Capital Appreciation Portfolio is maximum
capital appreciation, primarily through investment in common stock of companies
that demonstrate accelerating earnings momentum and consistently strong
financial characteristics. The Accumulation Trust offers this Portfolio.
The Managed Portfolio:
The investment objective of the Managed Portfolio is to provide growth of
capital over time. The Portfolio seeks to achieve this investment objective by
investing in a portfolio consisting of common stocks, bonds and cash
equivalents, the percentage of which will vary over time based on the investment
manager's assessment of the relative investment values. The Accumulation Trust
offers this Portfolio.
The Small Company Growth Portfolio:
The investment objective of the Small Company Growth Portfolio is capital
appreciation by investing primarily in common stocks of small capitalization
companies believed by the Portfolio Manager to have an outlook for strong
earnings growth and potential for significant capital appreciation. The
Accumulation Trust offers this Portfolio.
The Small Company Value Portfolio:
The Small Company Value Portfolio seeks capital appreciation. The Portfolio
pursues its investment objective by investing in a diversified portfolio of
primarily equity securities of companies with market capitalization of under $1
billion. The Accumulation Trust offers this Portfolio.
The International Growth Portfolio:
The investment objective of the International Growth Portfolio is to
provide capital appreciation, primarily through a diversified portfolio of
non-United States equity securities. The Accumulation Trust offers this
Portfolio.
The High Yield Bond Portfolio:
The investment objective of the High Yield Bond Portfolio is to provide
maximum current income, primarily from debt securities that are rated Ba or
lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's
Corporation. The Accumulation Trust offers this Portfolio.
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<PAGE> 20
THE POLICY
The variable life insurance benefits of the Policies are funded through the
Policy Owner's Fund Value in the Variable Account and the Guaranteed Interest
Account. The information included below describes the benefits, features,
charges, and other major provisions of the Policies.
APPLICATION FOR A POLICY
The Policy is designed to meet the needs of individuals and for
corporations who wish to provide coverage and benefits for key employees.
Purchasers of the Policy must complete an application and personally deliver it
to a licensed agent of the Company, who is also a registered representative of
MONY Securities Corp. ("MSC"). The licensed agent will then submit the completed
application to the Company. The Policy may also be sold through other
broker-dealers authorized by MSC and applicable law to do so. A Policy can be
issued on the life of an Insured for Ages up to and including Age 85 with
evidence of insurability satisfactory to the Company. The Insured's Age is the
age of the Insured on his or her last birthday preceding the Policy Date.
Acceptance is subject to the Company's underwriting rules, and the Company
reserves the right to request additional information and to reject an
application.
The minimum Specified Amount which may be applied for is $100,000. However,
the Company also reserves the right to revise its rules from time to time to
specify a different minimum Specified Amount at issue for subsequent issued
Policies.
Each Policy is issued with a Policy Date, which is the date used to
determine the Monthly Anniversary Day, Policy Months, Policy Years, and Policy
monthly, quarterly, semiannual and annual Anniversaries. The Policy Date will be
stated on Page 1 of the Policy. The Policy Date will normally be the later of
the date that delivery of the Policy is authorized by the Company (the "Policy
Release Date") or the Policy Date requested in the application. Except as
provided under the temporary insurance procedures defined below, no premiums may
be paid with the application.
Temporary Insurance Coverage
If an applicant desires interim insurance coverage prior to the Policy
Release Date, a Temporary Insurance Agreement is available. At the time an
application is accepted by a licensed agent of the Company, the applicant must
satisfactorily complete and sign the Temporary Insurance Agreement Form and
submit payment for at least one Minimum Monthly Premium for the Policy as
applied for. Coverage commences under the Temporary Insurance Agreement on the
date the Temporary Insurance Agreement Form is signed and the required premium
amount has been paid, or if later, the requested Policy Date. See "Premium
Flexibility," page 17.
Once the coverage under the Temporary Insurance Agreement commences, it
generally will run until the Policy Release Date, but in no event for more than
90 days from the date the Temporary Insurance Agreement Form is signed. In
addition, this temporary insurance coverage will also cease on the earliest of
(a) the 45th day after the Temporary Insurance Agreement Form is signed if the
last of the medical exams and tests initially required under the Company's
published underwriting rules has not been completed by the applicant, (b) 5 days
after the Company sends notice to the applicant that it declines to issue any
Policy, (c) the date the applicant informs the Company that the Policy will be
refused, (d) the Policy Release Date, if the Policy is issued as applied for, or
(e) where the Policy is issued other than as applied for, the earlier of the
15th day after the Policy Release Date or the date the Policy takes effect. If
death occurs during the period of temporary coverage, the death benefit will be
(i) the lesser of $500,000 or the insurance coverage applied for on the life of
the proposed Insured (including any optional Riders), less (ii) the Deductions
from Premium and the Monthly Deduction due prior to the date of death.
During the period before the Policy Release Date, premiums paid with the
application pursuant to the Temporary Insurance Agreement will be held in the
Company's General Account. Except as provided below, interest will be credited
on the premium (less any Deductions from Premiums) held in the Company's General
Account. The interest rate will be set by the Company, but will not be less than
4.5 percent per year.
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<PAGE> 21
If the Policy is issued and accepted, these amounts will be applied to the
Policy. These premiums will be returned (without interest) to the applicant
within 5 days after:
(1) the date the applicant informs the Company at or before the Policy
Release Date (or where the Policy is authorized for delivery other than as
applied for, on or before the 15th day after the Policy Release Date) that
the Policy will be refused; or
(2) the date which is 30 days after the application is signed, if any
medical exams or tests required by the Company have not yet been completed;
or
(3) the date the Company sends notice to the applicant declining to
issue any Policy on the Insured.
Initial Premium Payment
If the application is approved and the Policy is subsequently issued, the
balance due (if any) of the first Scheduled Premium Payment, as specified in the
Policy, is payable upon delivery of the Policy. The Policy will take effect on
the date the Policy is accepted by the applicant and the initial Scheduled
Premium Payment has been paid, or the Policy Date requested in the application,
if later. If a specific Policy Date has not been requested or if the Policy Date
requested is prior to the Policy Release Date, upon receipt of the balance due
(if any), the amount attributable to the Policy (including any premiums held in
the General Account under the Temporary Insurance Agreement plus any interest
credited in the General Account, less Deductions from Premiums) will earn
interest at a rate set by the Company, but not less than 4.5 percent per year
from the Policy Release Date pending expiration of the applicable Right to
Return Policy Period. These amounts will be held in the Company's General
Account. The Monthly Deduction due prior to or on the Policy Release Date will
be made. Upon expiration of the Right to Return Policy Period, amounts to be
allocated to the Subaccounts of the Variable Account will be allocated to those
Subaccounts and amounts to be allocated to the Guaranteed Interest Account will
be allocated to that Account. (See "Right to Examine A Policy -- Right to Return
Policy Period," below.)
Policy Date
If a specific Policy Date has been requested which is later than the Policy
Release Date, the amount attributable to the Policy will be initially held in
the General Account until the Policy Date. On the Policy Date, the amount
attributable to the Policy less any Deductions from Premiums for the period
commencing with the Policy Date will be held in the Company's General Account
and will earn interest at a rate set by the Company, but not less than 4.5
percent per year pending expiration of the applicable Right to Return Policy
Period. Upon the expiration of the applicable Right to Return Policy Period,
amounts allocated to the Subaccounts of the Variable Account will be allocated
to those Subaccounts and amounts allocated to the Guaranteed Interest Account
will be allocated to that Account. See "Right to Examine A Policy -- Right to
Return Policy Period," below.
Subject to the Company's approval, a Policy may be backdated, but the
Policy Date may not be more than six months (a shorter period is required in
certain states) prior to the date of the application. Backdating can be
advantageous if the Insured's lower issue Age results in lower cost of insurance
rates. If the Policy is backdated, the initial Scheduled Premium Payment will
include sufficient premium to cover additional charges incurred for the
backdating period, since monthly deductions are made for the period the Policy
Date is backdated.
Risk Classification
Insureds are assigned to underwriting (risk) classes which are used in
calculating the cost of insurance and certain Rider charges. In assigning
Insureds to underwriting classes, the Company will normally use the medical or
paramedical underwriting method, which may require a medical examination of a
proposed Insured, although other forms of underwriting may be used when deemed
appropriate by the Company.
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<PAGE> 22
RIGHT TO EXAMINE A POLICY -- RIGHT TO RETURN POLICY PERIOD
The Right to Return Policy Period follows the application for the Policy
and its issuance to the Policy Owner. The period runs to 10 days (or longer in
certain states) after the Policy Owner receives the Policy. During the Right to
Return Policy Period, the Policy Owner may cancel the Policy and receive a
refund of the full amount of the premium paid. During the Right to Return Policy
Period, net premiums will be held in the Company's General Account and will earn
interest at a rate set by the Company, but not less than 4.5% per year. See
"Allocation of Net Premiums," page 19.
PREMIUMS
The Policy is a flexible premium policy, and it provides considerable
flexibility, subject to the limitations described below, to pay premiums at the
Policy Owner's discretion.
Premium Flexibility
The Company requires a Policy Owner to pay an amount equal to at least the
Minimum Monthly Premium to place the Policy in force. If the premiums are to be
paid less often than monthly, the premium required to place the Policy in force
is equal to the Minimum Monthly Premium multiplied by 12 divided by the
frequency of Scheduled Premium Payments. This Minimum Monthly Premium will be
based upon the Policy's Specified Amount and the Age, smoking status, gender
(unless unisex cost of insurance rates apply, see "Cost of Insurance," page 32),
and underwriting class of the Insured, and any Riders added to the Policy. The
Minimum Monthly Premium will be shown in the Policy. Thereafter, subject to the
limitations described below, a Policy Owner may choose the amount and frequency
of premium payments. The Policy, therefore, provides the Policy Owner with the
flexibility to vary premium payments to reflect varying financial conditions.
If on each Monthly Anniversary Day during the first three Policy years, the
sum of all premiums paid, less any Outstanding Debt and less any Partial
Surrenders (excluding their fees), is greater than or equal to the Minimum
Monthly Premium times the number of completed Policy months or the Policy's Cash
Value is greater than zero, the Policy is guaranteed not to lapse. If an
increase in Specified Amount occurs during the first three Policy years, the
Minimum Monthly Premium requirement is extended to the three Policy years
following the effective date of the increase. See "Grace Period and Lapse," page
29.
Scheduled Premium Payments (Planned Premium Payments)
When applying for a Policy, a Policy Owner will determine a Scheduled
Premium Payment that provides for the payment of level premiums at fixed
intervals over a specified period of time. Each Policy Owner will receive a
premium reminder notice for the Scheduled Premium Payment amount on an annual,
semiannual, or quarterly basis, at the option of the Policy Owner. The minimum
Scheduled Premium Payment is equal to the Minimum Monthly Premium multiplied by
12 divided by the Scheduled Premium Payment frequency. Although reminder notices
will be sent, the Policy Owner may not be required to pay Scheduled Premium
Payments. (For Policies offered or issued for delivery in the Commonwealth of
Massachusetts, the Policy Owner will determine a Planned Premium Payment that
provides for the payment of level premiums at selected intervals over a
specified period of time. For those Policy Owners, the term "Scheduled Premium
Payment" used in this Prospectus, refers to Planned Premium Payments.)
Premiums, other than the first, may also be paid monthly under the
MONYMatic plan where the Policy Owner authorizes the Company to withdraw
premiums from the Owner's checking account each month. Based on the Policy Date,
up to two Minimum Monthly Premiums may be required to be paid in cash before the
MONYMatic plan will be accepted by the Company. Payment of the Scheduled Premium
Payments will not guarantee that a Policy will remain in force. Instead, unless
the Guaranteed Death Benefit Rider has been elected and all requirements have
been met, the duration of the Policy depends upon the Policy's Cash Value.
However, during the first three Policy Years, if on each Monthly Anniversary Day
the sum of premiums paid, less the sum of Partial Surrenders (excluding any fees
relating thereto) and any Outstanding Debt is greater than or equal to the
Minimum Monthly Premium times the number of completed Policy Months or the
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<PAGE> 23
Policy's Cash Value is greater than zero, the Policy is guaranteed not to lapse.
If an increase in Specified Amount occurs during the first three Policy years,
the Minimum Monthly Premium requirement is extended to the three Policy years
following the date the increase took effect. Even if the Scheduled Premium
Payments are made, if either of these two provisions do not apply, the Policy
will lapse any time the Cash Value is insufficient to pay the current monthly
deduction and a Grace Period expires without sufficient payment.
Guaranteed Death Benefit Rider
When application for the Policy is made, the applicant will also have the
opportunity to choose the Guaranteed Death Benefit Rider, which may extend the
period that the Specified Amount of the Policy and certain Rider coverages will
remain in effect. The Guarantee Period is to the Insured's Age 70 or ten years
from the Policy Date, whichever is later, (the "Guarantee Period"). An extra
charge will be deducted from the Fund Value each month during the Guarantee
Period. See "Guaranteed Death Benefits," page 23.
In the event that on any Monthly Anniversary Day the Cash Value is less
than zero, the Guaranteed Death Benefit Rider will keep the Policy in force
provided that the cumulative Monthly Guarantee Premium due to date has been
paid. This amount depends on the Specified Amount of the Policy, the Insured's
age, gender, smoking status and underwriting class, and any additional insurance
benefits added by Rider. Adding other optional insurance benefits by Rider to
the Policy will increase the Monthly Guarantee Premium indicated above.
It is important to consider the Guaranteed Death Benefit Rider premium
requirements when setting the amount of the Scheduled Premium Payments for the
Policy. (See Appendix C.)
The Guaranteed Death Benefit Rider is not available on Policies offered to
residents of, or issued for delivery in, to residents of the Commonwealth of
Massachusetts or the States of New Jersey and Texas.
Modified Endowment Contracts
The amount, frequency and period of time over which a Policy Owner pays
premiums may affect whether the Policy will be classified as a modified
endowment contract, which is a type of life insurance contract subject to
different tax treatment for certain pre-death distributions than conventional
life insurance contracts. See "Federal Income Tax Considerations -- Modified
Endowment Contracts," page 38.
Unscheduled Premium Payments
Generally, the Policy Owner can make unscheduled premium payments at any
time and in any amount. The Company may reject or limit any unscheduled premium
payment that would result in an immediate increase in the death benefit payable,
although such a premium may be accepted with satisfactory evidence of
insurability. A premium payment would result in an immediate increase if the
death benefit under a Policy is equal to a Policy Owner's Fund Value multiplied
by a death benefit percentage as a result of the federal income tax law
definition of life insurance. See "Death Benefits under the Policy," page 20 and
"Federal Income Tax Considerations -- Definition of Life Insurance," page 37. If
satisfactory evidence of insurability is not received, the payment, or a portion
thereof may be returned. In addition, all or a portion of a premium payment will
be rejected and returned to the Policy Owner if it would exceed the maximum
premium limitations prescribed by the federal income tax law definition of life
insurance.
Unscheduled premium payments will be treated as premium payments, and not
as a repayment of Outstanding Debt, unless a Policy Owner requests otherwise. If
the Policy Owner does request that the payment be treated as a repayment of
Outstanding Debt, any portion of a payment that exceeds the amount of
Outstanding Debt will be applied to the Fund Value. Applicable taxes and sales
charges are not deducted from payments used as a repayment of Outstanding Debt,
but are deducted from any payment which constitutes a premium payment.
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<PAGE> 24
Premium Payments Affect the Continuation of the Policy
If premium payments are stopped, temporarily or permanently, the Policy
will continue in effect until the Cash Value can no longer cover the Monthly
Deductions from the Fund Value for the Policy and any optional insurance
benefits added by Rider. At that point, the Policy will lapse. See "Grace Period
and Lapse," page 29. If the Minimum Monthly Premium requirements are satisfied
during the first three Policy years or if the Cash Value is greater than zero,
the Policy is guaranteed not to lapse during this three year period. If an
increase in Specified Amount occurs during the first three Policy years, if the
Minimum Monthly Premium requirements are satisfied during the three Policy years
following the date the increase took effect or if the Cash Value is greater than
zero, the Policy is guaranteed not to lapse during that period. See "Premiums --
Premium Flexibility," page 17. If the Guaranteed Death Benefit Rider is in
effect, the Specified Amount of the Policy and certain Rider coverages will
remain in force until the end of the Guarantee Period if premium payments
required by the Rider have been made. The Guaranteed Death Benefit is not
available on Policies offered to residents of, or issued for delivery in, the
Commonwealth of Massachusetts or the States of New Jersey and Texas. See
"Guaranteed Death Benefits," page 42.
Certain charges will be deducted from each premium payment. See "Charges
and Deductions," page 31. The remainder of the premium, referred to as the "net
premium", will be allocated as described below under "Allocation of Net
Premiums."
ALLOCATION OF NET PREMIUMS
In the application for the Policy, the Policy Owner selects the Subaccounts
of the Variable Account or the Guaranteed Interest Account to which net premium
payments will be allocated. During the Right to Return Policy Period, net
premiums will be held in the Company's General Account and will earn interest at
a rate set by the Company, but not less than 4.5% per year. The Fund Value will
be automatically allocated according to the Policy Owner's instructions
contained in the application at the end of the Right to Return Policy Period.
Net premiums received after the Right to Return Policy Period will be allocated
upon receipt among the Subaccounts of the Variable Account and the Guaranteed
Interest Account according to the Policy Owner's most recent instructions.
Net premiums may be allocated in whole percentages to any number of
Subaccounts and to the Guaranteed Interest Account, provided that no allocation
may be for less than 10% of a net premium. Allocation percentages must sum to
100%. Available allocation alternatives include the fourteen available
Subaccounts and the Guaranteed Interest Account.
A Policy Owner may change the allocation of net premiums at any time by
submitting a proper written request to the Company's Administrative Office. In
addition, changes in net premium allocation instructions may be made by
telephone if an authorization for telephone transfer form has been properly
completed, signed and filed at the Company's Syracuse Operations Center. The
Company reserves the right to discontinue telephone net premium allocation
instructions. See "Telephone Transfer Privileges", page 49. The revised
allocation percentages will be applied within seven days from receipt of
notification.
Unscheduled premium payments may be allocated either by percentage or by
dollar amount. If the allocation is expressed in dollar amounts, the 10% limit
on allocation percentages does not apply.
DEATH BENEFITS UNDER THE POLICY
When the Policy is issued, the Company will determine the initial amount of
insurance based on the instructions provided in the application. That amount
will be shown on the specifications page of the Policy and is called the
"Specified Amount." The minimum initial Specified Amount is $100,000.
For so long as the Policy remains in force, the Company will, upon proof of
the death of an Insured, pay death benefit proceeds to a named Beneficiary.
Death benefit proceeds will consist of the death benefit under the Policy, plus
any insurance proceeds provided by Rider, less any Outstanding Debt (and, if in
the Grace Period, further reduced by any overdue charges).
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<PAGE> 25
Each Policy Owner may select one of two death benefit Options: Option 1 or
Option 2. Generally the applicant designates the death benefit Option in the
application. If no Option is designated, Option 2 will be assumed by the Company
to have been selected. Subject to certain restrictions, the Policy Owner can
change the death benefit Option selected. So long as the Policy remains in
force, the death benefit under either Option will never be less than the
Specified Amount of the Policy.
Option 1
Under Option 1, the death benefit will be equal to the Specified Amount of
the Policy or, if greater, the Fund Value on the date of death multiplied by a
Death Benefit Percentage. The death benefit percentages vary according to the
Age of the Insured and will be at least equal to the percentage defined in the
Internal Revenue Code, which addresses the definition of a life insurance policy
for tax purposes. See "Federal Income Tax Considerations -- Definition of Life
Insurance," page 37. The Death Benefit Percentage is 250% for an Insured at Age
40 or under, and it declines for older Insureds. A table showing the Death
Benefit Percentages is in Appendix A to this prospectus and in the Policy.
Policy Owners who are seeking to have favorable investment performance reflected
in increasing Fund Value, and not in increasing insurance coverage, should
choose Option 1.
Option 2
Under Option 2, the death benefit will be equal to the Specified Amount of
the Policy plus the Fund Value on the date of death or, if greater, the Fund
Value on the date of death multiplied by a Death Benefit Percentage. The Death
Benefit Percentage is the same as that used in connection with Option 1 and is
stated in Appendix A. The death benefit under Option 2 will always vary as Fund
Value varies. Therefore, Policy Owners who seek to have favorable investment
performance reflected in increased insurance coverage should choose Option 2.
Examples of Options 1 and 2
The following examples demonstrate the determination of death benefits
under Options 1 and 2. The examples show three Policies -- Policies 1, 2, and
3 -- with the same Specified Amount, but Fund Values that vary as shown, and
which assume an Insured is Age 40 at the time of death and that there is no
Outstanding Debt. The date of death is also assumed to be on a Monthly
Anniversary Day.
<TABLE>
<CAPTION>
POLICY 1 POLICY 2 POLICY 3
-------- -------- --------
<S> <C> <C> <C>
Specified Amount............................................ $100,000 $100,000 $100,000
Fund Value on Date of Death................................. $ 35,000 $ 60,000 $ 85,000
Death Benefit Percentage.................................... 250% 250% 250%
Death Benefit under Option 1................................ $100,000 $150,000 $212,500
Death Benefit under Option 2................................ $135,000 $160,000 $212,500
</TABLE>
Under Option 1, the death benefit for Policy 1 is equal to $100,000 since
the death benefit is the greater of the Specified Amount ($100,000) or the Fund
Value multiplied by the Death Benefit Percentage ($35,000 X 250%=$87,500). In
contrast, for both Policies 2 and 3 under Option 1, the Fund Value multiplied by
the Death Benefit Percentage ($60,000 X 250%=$150,000 for Policy 2; $85,000 X
250%=$212,500 for Policy 3) is greater than the Specified Amount ($100,000), so
the death benefit is equal to the higher value. Under Option 2, the death
benefit for Policy 1 is equal to $135,000 since the death benefit is the greater
of Specified Amount plus Fund Value ($100,000 + $35,000=$135,000) or the Fund
Value multiplied by the Death Benefit Percentage ($35,000 X 250%=$87,500).
Similarly, in Policy 2, Specified Amount plus Fund Value ($100,000 +
$60,000=$160,000) is greater than Fund Value multiplied by the Death Benefit
Percentage ($60,000 X 250%=$150,000). In contrast, in Policy 3, the Fund Value
multiplied by the Death Benefit Percentage ($85,000 X 250%=$212,500) is greater
than the Specified Amount plus Fund Value ($100,000 + $85,000=$185,000), so the
death benefit is equal to the higher value.
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<PAGE> 26
Death benefit proceeds may be paid to a Beneficiary in a lump sum or under
a payment plan offered under the Policy. The Policy should be consulted for
details.
Changes in Death Benefit Option
A Policy Owner may request that the death benefit under the Policy be
changed from Option 1 to Option 2, or from Option 2 to Option 1. Changes in the
death benefit Option may be made on any Monthly Anniversary Day and should be
made in writing to the Company's Administrative Office. A change from Option 2
to Option 1 may be made without evidence of insurability; a change from Option 1
to Option 2 will require evidence of insurability satisfactory to the Company.
The effective date of any such change requested between Monthly anniversaries
will be the next Monthly Anniversary Day after the change is accepted.
A change in the death benefit from Option 1 to Option 2 is accomplished by
reducing the Specified Amount of the Policy by the amount of the Policy's Fund
Value at the date of the change. This maintains the death benefit payable under
Option 2 at the amount that would have been payable under Option 1 immediately
prior to the change. Although there is no immediate change in the total death
benefit, the change to Option 2 will affect the determination of the death
benefit from that point on since the Fund Value will then be added to the new
Specified Amount, and the death benefit will then vary with Fund Value. This
change will not be permitted if it would result in a new Specified Amount of
less than $100,000.
A change in the death benefit from Option 2 to Option 1 is accomplished by
increasing the specified amount of the Policy by the amount of the Policy's Fund
Value at the date of the charge. This maintains the death benefit payable under
Option 1 at the amount that would have been payable under Option 2 immediately
prior to the change. Although there is no immediate change in total death
benefit, the change to Option 1 will affect the determination of the death
benefit. from that point on since the death benefit will equal the Specified
Amount (or, if higher, the Fund Value times the applicable Death Benefit
Percentage, as required by the federal tax law definition of life insurance).
The change to Option 1 will generally reduce the death benefit payable in the
future.
A change in death benefit Option may affect the monthly cost of insurance
charge since this charge varies with the net amount at risk, which generally is
the amount by which the death benefit exceeds Fund Value. See "Cost of
Insurance," page 32. Assuming that the Policy's death benefit is not based on
the Death Benefit Percentage under either Option 1 or 2, changing from Option 2
to Option 1 will generally decrease the net amount at risk, and therefore
possibly decrease the cost of insurance charges. Changing from Option 1 to
Option 2 will generally result in a net amount at risk that remains level. Such
a change, however, will result in an increase in the cost of insurance charges
over time, since the cost of insurance rates increase with the Insured's Age.
CHANGES IN SPECIFIED AMOUNT
A Policy Owner may request an increase or decrease in the Specified Amount
under a Policy subject to approval from the Company. A change in Specified
Amount may be made at any time after issue. Increases in Specified Amount are
not permitted on or after the Insured's Age 85 and will not be permitted if
monthly deductions are being waived under the Waiver of Monthly Deductions
Rider. Increasing the Specified Amount will generally increase the death benefit
payable under the Policy, and decreasing the Specified Amount will generally
decrease the death benefit payable. The amount of change in the death benefit
will depend, among other things, upon the death benefit Option chosen by the
Policy Owner and whether the death benefit under the Policy is being calculated
using the Death Benefit Percentage at the time of the change. Changing the
Specified Amount could affect the subsequent level of the death benefit while
the Policy is in force and the subsequent level of Policy values. For example,
an increase in Specified Amount may increase the net amount at risk under a
Policy, which will increase a Policy Owner's cost of insurance charges over
time. Conversely, a decrease in Specified Amount may decrease the net amount at
risk, which may decrease a Policy Owner's cost of insurance charges over time.
Any request for an increase or decrease in Specified Amount must be made by
written application to the Company's Administrative Office. It will become
effective on the Monthly Anniversary Day on or next
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<PAGE> 27
following the Company's acceptance of the request. If the Policy Owner is not
the Insured, the Company may also require the consent of the Insured before
accepting a request.
Increases
Additional evidence of insurability satisfactory to the Company will be
required for an increase in Specified Amount.
A requested increase in the Specified Amount will create a new "coverage
segment" for which cost of insurance and other charges will be computed
separately. See "Charges and Deductions," page 31. In addition, the Surrender
Charge associated with the Policy will increase. The Surrender Charge for the
increase is calculated in a similar manner as for the original Specified Amount.
The Minimum Monthly Premium and the required premiums under the Guaranteed Death
Benefit Rider, if applicable, will also be adjusted prospectively to reflect the
increase in Specified Amount. If the Specified Amount is increased at the same
time that a premium payment is received, the increase will be processed before
the premium payment is processed.
If an increase creates a new coverage segment of Specified Amount, Fund
Value after the increase will be allocated to the original coverage segment
first, then to each coverage segment in the order of the increases.
Decreases
Any decrease in Specified Amount (whether specifically requested by the
Policy Owner or as a result of a Partial Surrender or a death benefit Option
change) will first be applied to reduce the coverage segments of Specified
Amount associated with the most recent increases, then the next most recent
increases successively, and finally to the original Specified Amount. A decrease
will not be permitted if the Specified Amount would fall below $100,000. Any
decrease in the Term Insurance Rider will first be applied to reduce the
coverage segment of Term Insurance Rider associated with the most recent
increase, then the next most recent increases successively, and finally to the
original Term Insurance Rider.
The Minimum Monthly Premium will not be adjusted for the decrease in
Specified Amount. The required premiums under the Guaranteed Death Benefit
Rider, if applicable, will be adjusted for the decrease in Specified Amount. If
the Specified Amount is decreased at the same time that a premium payment is
received, the decrease will be processed before the premium payment is
processed. Rider coverages may also be affected by a decrease in Specified
Amount.
The Company reserves the right to disallow a requested decrease, and will
not permit a requested decrease, among other reasons, (i) if compliance with the
guideline premium limitations under federal tax law resulting from the requested
decrease would result in immediate termination of the Policy, or (ii) if, to
effect the requested decrease, payments to the Policy Owner would have to be
made from Fund Value for compliance with the guideline premium limitations, and
the amount of such payments would exceed the Cash Value under the Policy. If we
do not approve a change you have requested, we will send you a written notice of
our decision about making the change. See "Federal Income Tax
Considerations -- Definition of Life Insurance," page 37.
GUARANTEED DEATH BENEFIT
Generally, the length of time the Policy remains in force depends on the
Cash Value of the Policy. Because the charges that maintain the Policy are
deducted monthly from the Fund Value, coverage will last as long as the Cash
Value of the Policy is sufficient to pay these charges. See "Grace Period and
Lapse," page 29. The investment experience of any amounts in the Subaccounts of
the Variable Account and the interest earned in the Guaranteed Interest Account
will affect the amount of the Fund Value and, as a result, the length of time
the Policy remains in force without the payment of additional premiums.
When application for a Policy is made, the Policy Owner will have the
opportunity to choose the Guaranteed Death Benefit Rider, which may extend the
period that the Specified Amount of the Policy and
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certain other Rider coverages will remain in effect if the Subaccounts suffer
adverse investment experience. See "Guaranteed Death Benefit Riders," page 18.
On each Monthly Anniversary Day, the following test will be performed to
determine whether the Guaranteed Death Benefit Rider will remain in effect: (i)
the actual premiums paid, less the amount of any Partial Surrenders (and any
fees imposed as a result of the Partial Surrender) less outstanding debt must
equal or exceed (ii) the Monthly Guarantee Premium for the Rider times the
number of complete months since the Policy Date. If the Policy fails to meet
this test on any Monthly Anniversary Day, the Guarantee Period, and therefore
the Guaranteed Death Benefit Rider, will terminate. Once terminated, the
Guaranteed Death Benefit Rider can not be reinstated.
There is a Grace Period for this Rider. See "Grace Period and Lapse -- If
Guaranteed Death Benefit Rider Is in Effect", page 30.
There is a charge for the Guaranteed Death Benefit Rider. See "Guaranteed
Death Benefit Charge," page 33. This charge will end at the conclusion of the
Guarantee Period if the Rider is chosen, and it will end if at any time the
Policy fails the monthly test.
Please refer to the Policy for additional information on the Guaranteed
Death Benefit Rider.
The Guaranteed Death Benefit Rider is not available on Policies offered to
residents of, or issued for delivery in, the Commonwealth of Massachusetts or
the States of New Jersey and Texas.
OTHER OPTIONAL INSURANCE BENEFITS
Subject to certain requirements, a Policy Owner may elect to add one or
more of the optional insurance benefits described below to the Policy at the
time of application for a Policy. These other optional insurance benefits are
added to the Policy by Rider. A charge will be deducted monthly from the Fund
Value for each optional insurance benefit added to the Policy. See "Charges and
Deductions," page 31. The amounts of these benefits are fully guaranteed at
issue, and they can be canceled by the Policy Owner at any time. Certain
restrictions may apply and are described in the applicable Rider. In addition,
adding or canceling these benefits may have an effect on the Policy's status as
a modified endowment contract. See "Federal Income Tax Considerations --
Modified Endowment Contracts," page 37. An insurance agent authorized to sell
the Policy can describe these extra benefits further. Samples of the provisions
are available from the Company upon written request.
From time to time we may make available Riders other than those listed
below. Contact an insurance agent authorized to sell the Policy for a complete
list of the Riders available.
Primary Insured Term Rider
This Rider provides for additional death benefits on the life of the
Insured, to the Insured's Age 80. The minimum amount of coverage is $25,000. The
Rider coverage may be converted without evidence of insurability to any level
premium, level face amount permanent plan of insurance offered by the Company at
any time prior to the Insured's Age 65 or 5 years from the issue of the Rider,
if later.
Waiver of Monthly Deductions Rider
This Rider provides that during a covered disability of the Insured, while
the Policy remains in force, the monthly administrative charges, per $1000
Specified Amount charges, cost of insurance charges and Rider charges will be
waived and therefore not deducted from the Fund Value. This Rider does not waive
the payment of premiums required by the Guaranteed Death Benefit Rider, however,
the cumulative Monthly Guarantee Premium requirement does not change during the
covered disability. It remains fixed at the level at the beginning of the
disability. The Guaranteed Death Benefit Rider is not available on Policies
offered to residents of, or issued for delivery in, the Commonwealth of
Massachusetts or the States of New Jersey and Texas.
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Waiver of Specified Premiums Rider
This Rider provides that during a covered disability of the Insured, while
the Policy remains in force, the monthly Specified Premium will be waived and
therefore added to the Fund Value on each Monthly Anniversary. Net premiums will
be allocated among the Subaccounts and the Guaranteed Interest Account according
to the Policy Owner's most recent instructions. This Rider does not waive the
monthly deductions of the Policy nor does this Rider waive the payment of
premiums required by the Guaranteed Death Benefit Rider. The Guaranteed Death
Benefit Rider is not available on Policies offered to residents of, or issued
for delivery in, the Commonwealth of Massachusetts or the States of New Jersey
and Texas.
Accidental Death & Dismemberment Rider
This Rider will pay the benefit amount selected if the Insured dies as a
result of an accident after the Insured's Age 5 and prior to Age 70. A benefit
equal to twice the Rider amount is payable if accidental death occurs as the
result of riding as a passenger in a public conveyance then being operated
commercially to transport passengers for hire. The maximum amount of coverage is
the initial specified amount but not more than the greater of $100,000 total
coverage of all such insurance in the Company or in any insurance company
affiliate of the Company nor more than $200,000 of all such coverages,
regardless of insurance companies issuing such coverages.
Purchase Option Rider
This Rider provides the option to purchase up to $100,000 of additional
coverage without providing additional evidence that the Insured remains
insurable. Increases under this Rider may be added on the Policy anniversary
when the Insured's Age is 25, 28, 31, 34, 37, 40, 43, 46 and 49. In addition,
the future right to purchase new insurance on the next option date may be
advanced and exercised immediately upon marriage of the Insured, or the birth of
a child of the Insured, or upon the legal adoption of a child by the Insured. A
period of term insurance is automatically provided starting on the date of the
specified event. The interim term insurance, and the option to accelerate the
purchase of the coverage expires 60 days after the specified event.
Spouse's Term Rider
This Rider provides for term insurance benefits on the life of the
Insured's spouse, to the spouse's Age 80. The minimum amount of coverage is
$25,000 and the maximum amount of coverage equals the Initial Specified Amount
of the Policy. The Rider coverage may be converted without evidence of
insurability to any level premium, level face amount permanent plan of insurance
offered by the Company at any time prior to the Spouse's Age 65 or 5 years from
the issue of the Rider, if later.
Children's Term Insurance Rider
This Rider provides term insurance coverage on the lives of the children of
the Insured under age 18 which continues to the Policy anniversary after the
child's 22nd birthday. It provides coverage for children upon birth or legal
adoption without presenting evidence of insurability. Coverage is limited to the
lesser of 1/5th of the initial Specified Amount or $10,000. Upon the expiration
of the Rider coverage it may be converted to any level premium, level face
amount permanent plan of insurance then offered by the Company.
Benefits at Maturity
If the Insured is living on the Maturity Date, the Company will pay to the
Policy Owner, as an endowment benefit, the Cash Value of the Policy. Payment
ordinarily will be made within seven days of the Policy Anniversary, although
payments may be postponed in certain circumstances. See "Payments," page 46. At
the option of the Policy Owner, payment of the endowment benefit may be deferred
until the date of the Insured's death. Death proceeds payable immediately after
the Maturity Date equal the Cash Value of the Policy multiplied by the death
benefit percentage at the Insured's Age 100. Premiums will not be accepted, nor
will monthly deductions be made, after the Maturity Date.
Please refer to the Policy for additional information on the Maturity
Extension Rider.
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POLICY VALUES
Fund Value
The Fund Value is the sum of the amounts under the Policy held in each
Subaccount of the Variable Account and any Guaranteed Interest Account, as well
as the amount set aside in the Company's Loan Account, and any interest thereon,
to secure Outstanding Debt.
On each Business Day, the portion of the Fund Value allocated to any
particular Subaccount will be adjusted to reflect the investment experience of
that Subaccount. On each Monthly Anniversary Day, the Fund Value also will be
adjusted to reflect the assessment of the monthly deduction. See "Determination
of Fund Value," page 25. No minimum amount of Fund Value allocated to a
particular Subaccount is guaranteed. A Policy Owner bears the risk for the
investment experience of Fund Value allocated to the Subaccounts.
Cash Value
The Cash Value of the Policy equals the Fund Value less the Surrender
Charge less any Outstanding Debt. Thus, the Fund Value will exceed the Policy's
Cash Value by the amount of the Surrender Charge and any Outstanding Debt. Once
the Surrender Charge has expired, the Fund Value will equal the Cash Value less
any Outstanding Debt.
DETERMINATION OF FUND VALUE
Although the death benefit under a Policy can never be less than the
Policy's Specified Amount, the Fund Value will vary depending upon several
factors, including the investment performance of the Subaccounts to which Fund
Value has been allocated, payment of premiums, the amount of any Outstanding
Debt, Partial Surrenders and the charges assessed in connection with the Policy.
There is no guaranteed minimum Fund Value and the Policy Owner bears the entire
investment risk relating to the investment performance of Fund Value allocated
to the Subaccounts.
The amounts allocated to the Subaccounts will be invested in shares of the
corresponding Portfolios of the Funds. The value of the Subaccounts will reflect
the investment experience of the corresponding Portfolio. The investment
experience reflects the investment income, realized and unrealized capital gains
and losses and expenses of the Portfolio and any dividends or distributions
declared by a Portfolio. Any dividends or distributions from any Portfolio of
the Funds will be automatically reinvested in shares of the same Portfolio,
unless the Company, on behalf of the Variable Account, elects otherwise. The
Subaccount value will also reflect the mortality and expense risk charges the
Company makes each day to the Variable Account.
Amounts allocated to the Subaccounts are measured in terms of Units, which
are a measure of value used for bookkeeping purposes. The value of amounts
invested in each Subaccount is represented by the value of the Units credited to
the Policy for that Subaccount. On any given day, the amount in a Subaccount of
the Variable Account is equal to the Unit value times the number of Units
credited to the Policy in that Subaccount. The Units of each Subaccount will
have different Unit values.
Units of a Subaccount are purchased (credited) whenever premiums or
transfer amounts (including transfers from the Loan Account) are allocated to
that Subaccount. Units are redeemed (debited) to make Partial or Full
Surrenders, to transfer amounts from a Subaccount (including transfers to the
Loan Account), and to pay the death benefit when the Insured dies. Units are
also redeemed to pay the monthly deductions from the Policy's Fund Value, for
Policy transaction charges, and to pay Surrender Charges, if any. The number of
Units purchased or redeemed in connection with any such transaction is
determined by dividing the dollar amount of such transaction by the Unit Value
of the affected Subaccount, calculated after the close of business that day. The
number of Units changes only as a result of Policy transactions or charges; the
number of Units credited will not change because of subsequent changes in Unit
Value.
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Transactions are processed as of the Transaction Date. The Transaction Date
is the date a premium or an acceptable written or telephone request is received
at the Administrative Office. If the premium or request reaches the
Administrative Office on a day which is not a Business Day, or after the close
of business on a Business Day (that is, after 4:00 p.m. Eastern Time), the
Transaction Date will be the next succeeding Business Day. All Policy
transactions are performed as of a Business Day. If a Transaction Date or
Monthly Anniversary Day occurs on a day other than a Business Day (e.g., on a
Saturday), the calculation will take place on the next Business Day (e.g., on
the following Monday).
CALCULATING UNIT VALUES FOR EACH SUBACCOUNT
The Unit Value of a Subaccount on any Business Day is calculated by the
Company on every Business Day as follows:
1. Calculate the value of the shares of the Portfolio belonging to the
Subaccount as of the close of business that Business Day (before giving
effect to any Policy transactions for that day, such as premium payments or
surrenders). For this purpose, the Net Asset Value per share reported to
the Company by the managers of the Portfolio is used.
2. Add the value of any dividends or capital gains distributions
declared and reinvested by the Portfolio during the Valuation Period.
Subtract from this amount a charge for taxes, if any.
3. Subtract a charge for the mortality and expense risk assumed by the
Company under the Policy. See "Daily Deductions From the Variable
Account -- Mortality and Expense Risk Charge", page 31. If the previous day
was not a Business Day, then the charge is adjusted for the additional days
between valuations.
4. Divide the resulting amount by the number of Units held in the
Subaccount on the Business Day before the purchase or redemption of any
Units on that Date.
The Unit Value of each Subaccount on its first Business Day was set at $10.00.
TRANSFER OF FUND VALUE
Fund Value may be transferred after the Right to Return Policy Period among
the Subaccounts by the Policy Owner upon proper written request to the Company's
Administrative Office. Transfers may be made by telephone if an authorization
for telephone transfer form has been properly completed and signed and filed at
the Company's Syracuse Operations Center. See "Telephone Transfer Privileges,"
page 49. Currently, there are no limitations on the number of transfers between
Subaccounts, no minimum amount required for a transfer, nor any minimum amount
required to remain in a given Subaccount after a transfer. Further, no transfer
may be made if a Policy is in the Grace Period and a payment required to avoid
lapse is not paid. See "Grace Period and Lapse," page 29. No charges are
currently imposed upon such transfers. The Company reserves the right, however,
at a future date to assess a $25 transfer charge on Policy transfers and to
discontinue telephone transfers. For Policies issued for delivery to residents
of the Commonwealth of Pennsylvania, the Company guarantees that no transfer
charge will be imposed on transfers made within one year from the date the
Policy is issued.
Fund Value may also be transferred after the Right to Return Policy Period
from the Subaccounts to the Guaranteed Interest Account. Transfers from the
Guaranteed Interest Account to the Subaccounts will only be permitted in the
Policy month following a Policy Anniversary as described in "The Guaranteed
Interest Account," page 43.
RIGHT TO EXCHANGE POLICY
During the first 24 months following the Policy Date, the Policy Owner may
exercise the right to exchange the Policy from one in which the investment
experience is not guaranteed into a guaranteed Policy. This is accomplished by
the transfer of the entire amount in the Subaccounts of the Variable Account to
the Guaranteed Interest Account, and the allocation of all future premium
payments to the Guaranteed Interest
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Account. This will, in effect, serve as an exchange of the Policy for the
equivalent of a flexible premium universal life insurance policy. See "The
Guaranteed Interest Account," page 43. No charge will be imposed on the transfer
in exercising the exchange privilege.
POLICY LOANS
The Policy Owner may borrow money from the Company at any time using the
Policy as the only security for the loan by submitting a proper written request
to the Company's Administrative Office. A loan may be taken any time a Policy
has a positive Cash Value. The maximum amount that can be borrowed at any time
is 90% of the Cash Value of the Policy. (If the loan is requested on a Monthly
Anniversary Day, the maximum loan amount is further reduced by the monthly
deduction due on that day.) The Outstanding Debt is the cumulative amount of
outstanding loans and loan interest payable to the Company at any time.
Loan interest is payable in arrears on each policy anniversary at an annual
rate which varies by the number of years since the Policy was issued. For the
first ten policy years a loan rate of 5.25% applies. After the tenth policy
anniversary, a loan rate of 4.75% applies. Interest on the full amount of any
Outstanding Debt is due on the Policy Anniversary, until the Outstanding Debt is
repaid. If interest is not paid when due, it will be added to the amount of the
Outstanding Debt.
The Owner may repay all or part of the Outstanding Debt at any time while
the Policy is in force. Only payments indicated as loan or interest payments
will be treated as such. If a loan repayment is made which exceeds the
Outstanding Debt, the excess will be applied as a Scheduled Premium Payment,
subject to the rules on acceptance of premium payments.
When a Policy Owner takes a loan, an amount equal to the loan is
transferred out of the Policy Owner's Fund Value in the Subaccounts and the
Guaranteed Interest Account into the Loan Account to secure the loan. The Policy
Owner may, within certain limits, specify the amount or the percentage of the
loan amount to be deducted from the Subaccounts and the Guaranteed Interest
Account. If the Policy Owner does not specify the source of the transfer, or if
the transfer instructions are incorrect, the request for loan will not be
accepted. On each Policy Anniversary, an amount equal to the loan interest due
and unpaid for the Policy Year will be transferred to the Loan Account from the
Subaccounts and Guaranteed Interest Account on a proportional basis.
The Loan Account is a part of the Company's General Account. Amounts held
in the Loan Account are credited monthly with a rate of interest not less than
an annualized rate of 4.5%.
Loan repayments release funds from the Loan Account. Unless otherwise
requested by a Policy Owner, amounts released from the Loan Account as a result
of a loan repayment will be transferred into the Subaccounts and Guaranteed
Interest Account in accordance with the most recent valid allocation
instructions for Scheduled Premium Payments. In addition, Fund Value in the Loan
Account in excess of the outstanding loan is treated differently depending on
whether at the time the loan was made, Fund Values were transferred from the
Subaccounts or the Guaranteed Interest Account and whether or not loan interest
due is paid when due or the amount of the interest is added to the loan
("capitalized"). If the loan is from the Subaccounts and loan interest is
capitalized, this excess offsets the amount that must be transferred from the
Subaccounts to the Loan Account on the Policy Anniversary. If the loan is from
the Subaccounts and loan interest is paid in cash, this excess is allocated to
the Subaccounts and/or the Guaranteed Interest Account on the Policy Anniversary
using the most recent valid Scheduled Premium Payment allocation on record. If
the loan is from the GIA, this excess is allocated back to the GIA on a monthly
basis proportionately to all interest crediting generations from which the loan
was taken.
While the amount to secure the Outstanding Debt is held in the Loan
Account, the Policy Owner foregoes the investment experience of the Subaccounts
and the current interest rate of the Guaranteed Interest Account on that amount.
Thus Outstanding Debt, whether or not repaid, will have a permanent effect on
the Policy's values and may have an effect on the amount and duration of the
death benefit. If not repaid, the Outstanding Debt will be deducted from the
amount of death benefit paid upon the death of the Insured, or the value paid
upon surrender or maturity.
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Outstanding Debt may affect the length of time the Policy remains in force.
After the third Policy Anniversary, the Policy will lapse when the Cash Value is
insufficient to cover the monthly deduction against the Policy's Fund Value on
any Monthly Anniversary Day and the minimum payment required is not made during
the Grace Period. Moreover, the Policy may enter the Grace Period more quickly
when Outstanding Debt exists, because the Outstanding Debt is not available to
cover the monthly deduction. In addition, the Guarantee Period under the
Guaranteed Minimum Death Benefit Rider may end if total premiums received less
any Partial Surrenders and their fees, less Outstanding Debt do not exceed the
premiums required under that Rider. The Guaranteed Death Benefit Rider is not
available on Policies offered to residents of, or issued for delivery in, the
Commonwealth of Massachusetts or the States of New Jersey and Texas. Additional
payments or repayment of a portion of Outstanding Debt may be required to keep
the Policy or Rider in force. See "Grace Period and Lapse," page 29.
A loan will not be treated as a distribution from the Policy and will not
result in taxable income to the Policy Owner unless the Policy is a modified
endowment contract, in which case a loan will be treated as a distribution that
may give rise to taxable income. For more information on the tax treatment of
loans, see "Federal Income Tax Considerations," page 37.
FULL SURRENDER
A Policy Owner may fully surrender a Policy at any time during the life of
the Insured. The amount received in the event of a full surrender is the
Policy's Cash Value, which is equal to its Fund Value less any applicable
Surrender Charge and less any Outstanding Debt.
A Policy Owner may surrender a Policy by sending a written request together
with the Policy to the Company's Administrative Office. The proceeds will be
determined as of the end of the Valuation Period during which the request for a
surrender is received. A Policy Owner may elect to have the proceeds paid in
cash or applied under a payment plan offered under the Policy. See "Payment
Plan," page 46. For information on the tax effects of a surrender of a Policy,
see "Federal Income Tax Considerations," page 37.
PARTIAL SURRENDER
A Partial Surrender allows the Policy Owner to obtain a portion of the Cash
Value of the Policy without having to surrender the Policy in full. A request
for a Partial Surrender may be made at any time and the partial surrender will
take effect on the Business Day that we receive your request at our
Administrative Office, or on the next Business Day if that day is not a Business
Day. There is currently no limit on the number of Partial Surrenders allowed in
a Policy year.
A Partial Surrender must be for at least $500 (plus the applicable fee),
and the Policy's Cash Value after the Partial Surrender must be at least $500.
If a Loan on the Policy has been taken, the amount of the Partial Surrender is
limited so that the Loan amount, after giving effect to the Partial Surrender,
is not greater than 90 percent of Cash Value.
The Policy Owner may make a Partial Surrender by submitting a proper
written request to the Company's Administrative Office. As of the effective date
of any Partial Surrender, the Policy Owner's Fund Value and Cash Value will be
reduced by the amount surrendered (plus the applicable fee). The amount of the
Partial Surrender (plus the applicable fee) will be allocated by amount or
percent to the Policy Owner's Fund Value in the Subaccounts and the Guaranteed
Interest Account as specified by the Policy Owner. Allocations by percentage
must be in whole percentages and the minimum percentage is 10% against any
Subaccount or the Guaranteed Interest Account. Percentages must total 100%. We
will not accept an allocation which does not comply with the rules or if there
is not enough fund value in a Subaccount or the Guaranteed Interest Account to
provide its share of the allocation. If the Insured dies after the request for a
Partial Surrender is sent to the Company and prior to the Partial Surrender
being effected, the amount of the Partial Surrender will be deducted from the
death benefit proceeds, which will be determined without taking into account the
amount surrendered.
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When a Partial Surrender is made on a Policy on which the Owner has
selected death benefit Option 1, the Specified Amount under the Policy is
decreased by the amount of the Partial Surrender (excluding its fee). A Partial
Surrender will not change the Specified Amount of a Policy on which the Owner
has selected death benefit Option 2. However, assuming that the death benefit is
not equal to Fund Value times a death benefit percentage, the Partial Surrender
will reduce the death benefit by the amount of the Partial Surrender. Under
either death benefit Option, to the extent the death benefit is based upon the
Fund Value times the death benefit percentage applicable to the Insured, a
Partial Surrender may cause the death benefit to decrease by an amount greater
than the amount of the Partial Surrender. See "Death Benefits under the Policy,"
page 20.
A fee for each Partial Surrender will be assessed. See "Charges and
Deductions -- Transaction and Other Charges", page 35.
For information on the tax treatment of Partial Surrenders, see "Federal
Income Tax Considerations," page 37.
GRACE PERIOD AND LAPSE
In general, the Policy and all Riders attached to it will continue in force
as long as the Cash Value of the Policy is sufficient to pay all the deductions
that are taken from Fund Value each month. The Policy will lapse only when the
Cash Value is insufficient to cover the current monthly deduction against the
Policy's Fund Value on any Monthly Anniversary Day, and a 61-day Grace Period
expires without the Policy Owner making a sufficient payment.
Special Rule for First Three Policy Years
During the first three Policy years (or first three policy years following
an increase in Specified Amount during that period), if on each Monthly
Anniversary Day the sum of premiums paid, less the sum of Partial Surrenders
(excluding its fees) and any Outstanding Debt is greater than or equal to the
Minimum Monthly Premiums times the number of completed Policy months (or number
of months from the most recent increase in Specified Amount) or if the Cash
Value is greater than zero, the Policy and all attached Riders are guaranteed
not to lapse.
If the insufficiency occurs at any other time, or if the Minimum Monthly
Premium test has not been met during the first three Policy years as described
above, the Policy may be at risk of lapse depending on whether or not a
Guaranteed Death Benefit Rider is in effect, as explained below.
If Guaranteed Death Benefit Rider Is Not in Effect
If an insufficiency occurs and a Guaranteed Death Benefit Rider is not in
effect, the Owner must pay during the Grace Period the amount required under the
Policy to avoid Lapse. In addition, payment of any loan interest accrued for the
Policy year but unpaid as of the Monthly Anniversary Day when insufficiency
occurs may be required prior to the end of the Grace Period.
The Company will not accept any payment if it would cause the Policy
Owner's total premium payments to exceed the maximum permissible premium for the
Policy's Specified Amount under the Internal Revenue Code. This may occur when
the Policy Owner has Outstanding Debt, in which case the Policy Owner could
repay a sufficient portion of the Outstanding Debt to avoid termination. In this
instance, the Policy Owner may wish to repay an additional portion of the
Outstanding Debt to avoid recurrence of the potential lapse. If premium payments
have not exceeded the maximum permissible premiums for the Policy's Specified
Amount, the Policy Owner may also wish to make larger or more frequent premium
payments to avoid recurrence of the potential lapse. However, the Company will
not reject any premium payments necessary to prevent lapse of the Policy.
If the Cash Value of the Policy is insufficient to cover the entire Monthly
Deduction on a Monthly Anniversary Day, the Company will deduct the amount that
is available. The Company will notify the Policy Owner (and any assignee of
record) of the payment required to keep the Policy in force. The Policy Owner
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will then have a Grace Period of 61 days, measured from the date the notice is
sent, to make the required payment. During the first three Policy years (or
within three years of an increase in Specified Amount during that period), if
the Cash Value of the Policy is less than zero, the payment required is the
amount of Minimum Monthly Premium not paid plus one succeeding Minimum Monthly
Premium. After the Third Policy anniversary (or after three years from the most
recent increase in Specified Amount), the payment required is the amount of the
Monthly Deduction not paid plus two succeeding Monthly Deductions, grossed up by
the amount of the Deductions from Premiums (see "Charges and
Deductions -- Deductions from Premiums", page 31). The Policy will remain in
force through the Grace Period. Failure to make the required payment within the
Grace Period will result in termination of coverage under the Policy, and the
Policy will lapse. If the required payment is made during the Grace Period, any
premium paid will be allocated among the Subaccounts of the Variable Account and
the Guaranteed Interest Account in accordance with the Policy Owner's current
Scheduled Premium Payment allocation instructions. Any monthly deduction due
will be charged to the Subaccounts and the Guaranteed Interest Account on a
proportionate basis. If the Insured dies during the Grace Period, the death
benefit proceeds will equal the amount of the death benefit immediately prior to
the commencement of the Grace Period, reduced by any unpaid monthly deductions
(which for Policies offered to residents of, or issued for delivery in, the
State of New Jersey cannot exceed the minimum premium for the following month)
and any Outstanding Debt .
If Guaranteed Death Benefit Rider Is in Effect
If a Guaranteed Death Benefit Rider is in effect and the test for
continuation of the Guarantee Period has been met, the Specified Amount of the
Policy and most Rider coverages will not lapse during the Guarantee Period even
if the Cash Value is not sufficient to cover all the deductions from the Fund
Value on any Monthly Anniversary Day. See "Guaranteed Death Benefits", page 23.
While the Guaranteed Death Benefit Rider is in effect, the Fund Value of
the Policy may be reduced by Monthly Deductions, but not below zero. Any Monthly
Deductions during the Guarantee Period which would reduce the Fund Value below
zero will be waived.
The Guaranteed Death Benefit Rider will be terminated if the Policy does
not meet the monthly test, as explained in "Guaranteed Death Benefits", page 23,
and the payment required under the Rider is not made within the Grace Period. If
the Guaranteed Death Benefit Rider is terminated, the normal test for lapse will
resume.
The Guaranteed Death Benefit Rider is not available on Policies offered to
residents of, or issued for delivery in, the Commonwealth of Massachusetts or
the States of New Jersey and Texas, and, therefore, Grace Period and Lapse will
be treated as described in the immediately preceding section entitled "If the
Guaranteed Death Benefit Is Not In Effect".
Reinstatement
The Company will reinstate a lapsed Policy (but not a Policy which has been
surrendered for its Cash Value) at any time within five years after the Monthly
Anniversary Day immediately before the start of the Grace Period but before the
Maturity Date, provided the Company receives the following: (i) a written
application from the Policy Owner; (ii) evidence of insurability satisfactory to
the Company; (iii) payment of all monthly deductions that were due and unpaid
during the Grace Period; (iv) payment of an amount at least sufficient to keep
the Policy in force for one month after the date of reinstatement; and (v)
payment or reinstatement of any debt on the Policy Anniversary at the start of
the Grace Period and (vi) payment of interest on debt reinstated from the
beginning of the grace period to the end of the grace period at the rate which
applies to policy loans on the date of reinstatement.
When the Policy is reinstated, the Fund Value will be equal to the Fund
Value on the date of the lapse, subject to the following: (i) the Surrender
Charge will be equal to the Surrender Charge that would have existed had the
Policy been in force since the original Policy Date; (ii) the Fund Value will be
reduced by the decrease, if any, in the Surrender Charge during the period which
the Policy was not in force; (iii) any Outstanding Debt on the date of lapse
will also be reinstated; and, (iv) no interest on amounts held in the
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Company's Loan Account to secure Outstanding Debt will be paid or credited
between lapse and reinstatement. Reinstatement will be effective as of the
Monthly Anniversary Day on or preceding the date of approval by the Company, and
Fund Value minus, if applicable, Outstanding Debt will be allocated among the
Subaccounts and the Guaranteed Interest Account in accordance with the Policy
Owner's most recent Scheduled Premium Payment allocation instructions.
CHARGES AND DEDUCTIONS
DEDUCTIONS FROM PREMIUMS
Certain charges are deducted from each premium payment under a Policy prior
to allocation of the net premium to the Policy Owner's Fund Value. These charges
consists of the following items:
Sales Charge
Sales charge varies based on the total of the Specified Amount plus Term
Insurance amount in force on the Policy Date. For total amounts less than
$500,000, the sales charge is equal to 4% of each premium paid. For total
amounts of $500,000 or more, the sales charge is equal to 3% of each premium
paid.
The sales charge is deducted to compensate the Company for the cost of
distributing the Policies. The amount derived by the Company from the sales
charge is not expected to be sufficient to cover the sales and distribution
expenses in connection with the Policies. If surrendered within 15 years after
issuance, or within 15 years following an increase in the Specified Amount, the
Policy will also be subject to a Surrender Charge, which is described on page
33. To the extent that sales and distribution expenses exceed sales charges and
any amounts derived from the Surrender Charge, such expenses may be recovered
from other charges, including amounts derived indirectly from the charge for
mortality and expense risks and from mortality gains.
Tax Charges
All states levy taxes on life insurance premium payments. The amount of
these taxes vary from state to state, and may vary from jurisdiction to
jurisdiction within a state. The Company currently deducts an amount equal to
2.25% of each premium to pay applicable premium taxes. Currently, these taxes
range from 0% to 4%, and, therefore, the 2.25% deduction may be higher or lower
than the actual premium tax imposed by the applicable jurisdiction. The 2.25%
rate approximates the average tax rate the Company expects to pay on premiums.
The Company does not expect to make a profit from this charge.
A charge currently equal to 1.5% of each premium payment is deducted from
each premium to cover the estimated cost for the Federal income tax treatment of
deferred acquisition costs determined solely by the amount of life insurance
premiums received. The Company believes this charge for deferred acquisitions
costs is reasonable in relation to the Company's increased federal tax burden
under IRC Section 848 resulting from the receipt of premium payments. No charge
will be deducted where premiums received from a Policy Owner are not subject to
this tax.
The Company reserves the right to increase or decrease the charge for taxes
due to any change in tax law or due to any change in the cost to the Company.
DAILY DEDUCTIONS FROM THE VARIABLE ACCOUNT
Mortality and Expense Risk Charge
Each day a charge is deducted for mortality and expense risks assumed by
the Company. This charge is guaranteed not to exceed .000959% per day of the
amount in the Subaccounts of the Variable Account, which is equivalent to an
annual rate of .35% of the portion of the Policy Fund Value allocated to the
Variable Account.
The mortality and expense risk charge is assessed to compensate the Company
for assuming mortality and expense risks under the Policies. The mortality risk
assumed is that Insureds, as a group, may live for a
30
<PAGE> 37
shorter period of time than estimated and, therefore, the cost of insurance
charges specified in the Policy will be insufficient to meet the Company's
actual claims. The expense risk the Company assumes is that other expenses
incurred in issuing and administering the Policies and operating the Variable
Account will be greater than the amount estimated when setting the charges for
these expenses. The Company will realize a profit from this fee to the extent it
is not needed to provide benefits and pay expenses under the Policies. The
Company may use this profit for other purposes, including any distribution
expenses not covered by the sales charge or Surrender Charge.
This charge is not assessed against the amount of the Policy Fund Value
which is allocated to the Guaranteed Interest Account, nor to amounts in the
Loan Account.
MONTHLY DEDUCTIONS FROM FUND VALUE
A charge called the monthly deduction is deducted from a Policy's Fund
Value in the Subaccounts and Guaranteed Interest Account beginning on the Policy
Date and on each Monthly Anniversary Day thereafter. The monthly deduction
consists of the following items:
Cost of Insurance
This monthly charge compensates the Company for the anticipated cost of
paying death benefits in excess of Fund Value to Beneficiaries of Insureds who
die. The amount of the charge is equal to a current cost of insurance rate
multiplied by the net amount at risk under a Policy at the beginning of the
Policy Month. The net amount at risk for these purposes is equal to the amount
of death benefit payable at the beginning of the Policy Month less the Fund
Value at the beginning of the Policy Month.
The Policy contains guaranteed cost of insurance rates that may not be
increased. The guaranteed rates are based on the 1980 Commissioners Standard
Ordinary Smoker and Nonsmoker Mortality Tables (for issue ages under 18, no
smoker/nonsmoker adjustment is made until attained age 15 and where unisex cost
of insurance rates apply, the 1980 Commissioners Ordinary Smoker and Nonsmoker
Mortality Table B). These rates are based on the Age and underwriting class of
the Insured. They are also based on the gender of the Insured, except that
unisex rates are used where appropriate under applicable law, including in the
state of Montana and in Policies purchased by employers and employee
organizations in connection with employment related insurance or benefit
programs. As of the date of this prospectus, the Company charges "current rates"
that are lower (i.e., less expensive) than the guaranteed rates, and the Company
may also change current rates in the future. Like the guaranteed rates, the
current rates also vary with the age, gender, smoking status, and underwriting
class of the Insured. In addition, they also vary with the policy duration. The
cost of insurance rate generally increases with the Age of the Insured.
If there have been increases in the Specified Amount, then for purposes of
calculating the cost of insurance charge, the Fund Value will first be applied
to the initial Specified Amount. If the Fund Value exceeds the initial Specified
Amount, the excess will then be applied to any increase in Specified Amount in
the order of the increases. If the death benefit equals the Fund Value
multiplied by the applicable death benefit percentage, any increase in Fund
Value will cause an automatic increase in the death benefit. The underwriting
class and duration for such increase will be the same as that used for the most
recent increase in Specified Amount (that has not been eliminated through a
subsequent decrease in Specified Amount).
Administrative Charge
An administrative charge of $5.00 is deducted monthly from the Fund Value.
The administrative charge is assessed to reimburse the Company for the
expenses associated with administration and maintenance of the Policies. The
administrative charge is guaranteed never to exceed $5.00. The Company does not
expect to profit from this charge.
31
<PAGE> 38
Monthly per $1,000 Specified Amount Charge
For the first 15 policy years following issue or increase in Specified
Amount, a per $1,000 Specified Amount charge will apply. These per $1,000 of
Specified Amount charges differ based on issue age of the coverage segment,
gender and smoking status. The monthly per $1,000 factors are shown in Appendix
B.
Guaranteed Death Benefit Charge
If the Guaranteed Death Benefit Rider has been elected, a charge of $0.01
per thousand dollars of Policy Specified Amount and certain Rider amounts is
deducted each month during the Guarantee Period. This charge is guaranteed never
to exceed this amount.
The Guaranteed Death Benefit Rider is not available on Policies offered to
residents of, or issued for delivery in, the Commonwealth of Massachusetts or
the States of New Jersey and Texas.
Other Optional Insurance Benefits Charges
The monthly deduction will include charges for any other optional insurance
benefits added to the Policy by Rider. See "Other Optional Insurance Benefits,"
page 23.
SURRENDER CHARGE
There will be a difference between the Fund Value of the Policy and its
Cash Value for at least the first fourteen Policy years. If there is no
Outstanding Debt, this difference is the Surrender Charge, a contingent deferred
load. It is a contingent load because it is assessed only if the Policy is
surrendered or if the Policy lapses. It is a deferred load because it is not
deducted from the premiums paid. The Surrender Charge is based on a factor per
$1,000 of initial Specified Amount and grades to zero based on a grading
schedule. The factors per $1,000 of initial Specified Amount vary by issue age,
gender, and underwriting class. The grading percentages (as shown below) vary
based on issue age and the number of full years since the Policy was issued. The
Company will assess the Surrender Charge against the Fund Value upon surrender
or lapse within fourteen years after its issuance, or within fourteen years
following an increase in Specified Amount.
<TABLE>
<CAPTION>
GRADING PERCENTAGES PERCENT FOR ISSUE PERCENT FOR ISSUE
POLICY YEAR AGES 0-75 AGES 76-85
- ------------------- ----------------- -----------------
<S> <C> <C>
1-3................................................... 80% 80%
4..................................................... 80 70
5..................................................... 80 60
6..................................................... 80 50
7..................................................... 80 40
8..................................................... 70 30
9..................................................... 60 20
10.................................................... 50 10
11.................................................... 40 0
12.................................................... 30 0
13.................................................... 20 0
14.................................................... 10 0
15+................................................... 0 0
</TABLE>
As an example of the Surrender Charge calculation, if a Male Insured Age 35
purchases a Policy with a Specified Amount of $100,000, the per $1,000 of
initial Specified Amount factor, based upon the assumptions described above,
would be $7.25 (Preferred, nonsmoker, Death Benefit Option 1). The maximum
Surrender Charge during the first seven Policy years would be 80% of (100 x
7.25), or $580.00.
The purpose of the Surrender Charge is to reimburse the Company for some of
the expenses of distributing the Policies.
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<PAGE> 39
Effect of Changes in Specified Amount on the Surrender Charge
The Surrender Charge will increase when a new coverage segment of Specified
Amount is created due to a requested increase in coverage. The Surrender Charge
related to the increase will be calculated in the same manner as the Surrender
Charge for the original Specified Amount, and will be reduced over the 15 year
period following the increase. The new Surrender Charge for the Policy will
equal the remaining portion of the Surrender Charge for the original Specified
Amount, plus the Surrender Charge related to the increase.
Decreases in Specified Amount have no effect on surrender charges.
CORPORATE PURCHASERS
The Policy is available for individuals and for corporations and other
institutions. For corporate or other group or sponsored arrangements purchasing
one or more Policies, the Company may reduce the amount of the Surrender Charge
or other charges where the expenses associated with the sale of the Policy or
Policies or the underwriting or other administrative costs associated with the
Policy or Policies are reduced. Sales, underwriting or other administrative
expenses may be reduced for reasons such as expected economies resulting from a
corporate purchase or a group or sponsored arrangement, from the amount of the
initial premium payment or payments, or the amount of projected premium
payments.
TRANSACTION AND OTHER CHARGES
A Partial Surrender fee of $10 will be deducted from the Fund Value for
each Partial Surrender Transaction. This charge is guaranteed not to exceed $10.
The Company currently does not charge for transfers of Fund Value between
the Subaccounts. The Company does, however, reserve the right to assess a $25
charge on transfers (including transfers by telephone, if permitted by the
Company). For Policies issued for delivery to residents of the Commonwealth of
Pennsylvania, the Company guarantees that no transfer charge will be imposed on
transfers made within one year from the date the Policy is issued.
The Company may charge the Subaccounts for federal income taxes incurred by
the Company that are attributable to the Variable Account and its Subaccounts.
No such charge is currently assessed. See "Charge for Company Income Taxes,"
page 40.
The Company will bear the direct operating expenses of the Variable
Account. The Subaccounts purchase shares of the corresponding Portfolio of the
underlying Fund. The Fund and each of its Portfolios incur certain charges
including the investment advisory fee and certain operating expenses. The Funds
are governed by their Boards. The Fund's expenses are not fixed or specified
under the terms of the Policy. The advisory fees and other expenses are more
fully described in the prospectuses of the Funds.
FEES AND EXPENSES OF THE FUNDS
The Subaccounts purchase shares of the corresponding Portfolio of the
underlying Fund. The Fund and each of its Portfolios incur certain charges
including the investment advisory fee and certain operating expenses. These fees
and expenses vary by Portfolio are set forth below. The Funds are governed by
their Boards. The Fund's expenses are not fixed or specified under the terms of
the Policy. The advisory fees and other expenses are summarized at pages 11-12
of this Prospectus and are more fully described in the prospectuses of the
Funds.
Information contained in the following table was provided by the respective
Funds, which are solely responsible for such information.
33
<PAGE> 40
PRO FORMA ANNUAL EXPENSES FOR THE YEAR ENDED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EXPENSES
MANAGEMENT (AFTER TOTAL
FUND/PORTFOLIO FEES REIMBURSEMENT) EXPENSES
-------------- ---------- -------------- --------
<S> <C> <C> <C>
MONY Series Fund, Inc.
Intermediate Term Bond Portfolio................. .50%(1) .09%(2) .59%
Long Term Bond Portfolio......................... .50(1) .07(2) .57
Government Securities Portfolio.................. .50(1) .14(2) .64
Money Market Portfolio........................... .40 .06(2) .46
Enterprise Accumulation Trust
Equity Portfolio................................. .80% .04%(3) .84%
Small Cap Portfolio.............................. .80 .06(3) .86
Managed Portfolio................................ .73 .03(3) .76
International Growth Portfolio................... .85 .34(3) 1.19
High Yield Bond Portfolio........................ .60 .17(3) .77
Small Company Growth Portfolio................... 1.00 * *
Equity Income Portfolio.......................... .75 * *
Capital Appreciation Portfolio................... .75 * *
Growth and Income Portfolio...................... .75 * *
Growth Portfolio................................. .75 * *
</TABLE>
- ---------------
* No data is provided as these subaccounts first became available with the
offering of the Policy.
1. Management Fees reflect investment advisory fees of .50% which became
effective on and after October 14, 1997. Prior thereto, the investment
advisory fees were .40%. The amount shown reflects fees actually incurred
by the respective Portfolio.
2. Includes custodial credit percentages as follows: Intermediate Term
Bond -- .0080%; Long Term Bond -- .0043%; Government Securities -- .0169%;
and Money Market -- .0048% which expenses are borne by the Investment
Adviser pursuant to the Investment Advisory Agreement.
3. Reflects expense reimbursements in effect on May 1, 1996. Absent these
expense reimbursements, expenses would have been as follows:
Equity -- .84%; Small Cap -- .86%; Managed -- .76%; International
Growth -- 1.19%; and High Yield Bond -- .77%. The Equity, Small Cap, and
Managed Portfolio reimbursements relate to mutual fund accounting expense.
GUARANTEE OF CERTAIN CHARGES
The Company guarantees that certain charges will not increase. This
includes the charge for mortality and expense risks, the administrative charge,
the per $1000 Specified Amount charge, the sales charge, the guaranteed cost of
insurance rates, and the Surrender Charge.
Any changes in the current cost of insurance charges or charges for
optional insurance benefits will be made by class of Insured and will be based
on changes in future expectations with respect to investment earnings,
mortality, length of time policies will remain in effect, expenses, and taxes.
In no event will they exceed the guaranteed rates defined in the Policy.
OTHER INFORMATION
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion provides a general description of the federal
income tax considerations relating to the Policy. This discussion is based upon
the Company's understanding of the present federal income tax laws as they are
currently interpreted by the Internal Revenue Service ("IRS"). This discussion
is not intended as tax advice. Because of the inherent complexity of such laws
and the fact that tax results will vary according to the particular
circumstances of the individual involved, tax advice may be needed by a person
34
<PAGE> 41
contemplating the purchase of the Policy. It should, therefore, be understood
that these comments concerning federal income tax consequences are not an
exhaustive discussion of all tax questions that might arise under the Policy and
that special rules which are not discussed herein may apply in certain
situations. Moreover, no representation is made as to the likelihood of
continuation of federal income tax or estate or gift tax laws or of the current
interpretations by the IRS or the courts. Future legislation may adversely
affect the tax treatment of life insurance policies or other tax rules described
in this discussion or that relate directly or indirectly to life insurance
policies. Finally, these comments do not take into account any state or local
income tax considerations which may be involved in the purchase of the Policy.
Definition of Life Insurance
Section 7702 of the Internal Revenue Code (the "Code") provides that if one
of two alternate tests are met, a policy will be treated as a life insurance
policy for federal tax purposes. These tests are referred to as the "Cash Value
Accumulation Test" and the "Guideline Premium/Cash Value Corridor Test".
The Policy described in this Prospectus is tested under the Guideline
Premium/Cash Value Corridor Test. This test provides for, among other things,
(i) a maximum allowable premium per thousand dollars of death benefit, known as
the "guideline annual premium", and (ii) a minimum ongoing "corridor" of death
benefit in relation to the Fund Value of the Policy, known as the "death benefit
percentage." See Appendix A, for a table of the Guideline Premium/Cash Value
Corridor Test factors.
The Company believes that the Policy meets this statutory definition of
life insurance and hence will receive federal income tax treatment consistent
with that of fixed life insurance. Thus, the death benefit should be excludable
from the gross income of the Beneficiary (whether the Beneficiary is a
corporation, individual or other entity) under Section 101(a)(1) of the Code for
purposes of the regular federal income tax and the Policy Owner generally should
not be deemed to be in constructive receipt of the cash values under the Policy
until a full surrender thereof, maturity of the Policy, or Partial Surrender. In
addition, certain Policy loans may be taxable in the case of Policies that are
modified endowment contracts. Prospective Policy Owners that intend to use
Policies to fund deferred compensation arrangements for their employees are
urged to consult their tax advisors with respect to the tax consequences of such
arrangements. Prospective corporate Owners should consult their tax advisors
about the treatment of life insurance in their particular circumstances for
purposes of the alternative minimum tax applicable to corporations.
Diversification Requirements
To comply with regulations under Section 817(h) of the Code, each Portfolio
is required to diversify its investments. Generally, a Portfolio is required to
diversify its investments so that on the last day of each quarter of a calendar
year, no more than 55% of the value of its assets is represented by any one
investment, no more than 70% is represented by any two investments, no more than
80% is represented by any three investments, and no more than 90% is represented
by any four investments. Securities of a single issuer generally are treated for
purposes of Section 817(h) as a single investment. However, for this purpose,
each U.S. Government agency or instrumentality is treated as a separate issuer,
and any security issued, guaranteed, or insured (to the extent so guaranteed or
insured) by the U.S. or by an agency or instrumentality of the U.S. is treated
as a security issued by the U.S. Government or its agency or instrumentality,
whichever is applicable.
While there should be no question that, for federal income tax purposes,
the Portfolio shares underlying the Policies are owned by the Company and not by
a Policy Owner or any Beneficiary, no representation is or can be made regarding
the likelihood of the continuation of current interpretations by the IRS.
Tax Treatment of Policies
The Technical and Miscellaneous Revenue Act of 1988 established a new class
of life insurance contracts referred to as modified endowment contracts. With
the enactment of this legislation, the Policies will be treated for tax purposes
in one of two ways. Policies that are not classified as modified endowment
contracts
35
<PAGE> 42
will be taxed as conventional life insurance contracts, as described below.
Taxation of pre-death distributions from Policies that are classified as
modified endowment contracts is somewhat different, as described below.
A life insurance contract becomes a "modified endowment contract" if, at
any time during the first seven contract years, the sum of actual premiums paid
exceeds the sum of the "seven-pay premium." Generally, the "seven-pay premium"
is the level annual premium, such that if paid for each of the first seven
years, will fully pay for all future death and endowment benefits under a
contract. For example, if the "seven-pay premiums" were $1,000, the maximum
premiums that could be paid during the first seven years to avoid "modified
endowment" treatment would be $1,000 in the first year; $2,000 through the first
two years and $3,000 through the first three years, etc. Under this test, a
Policy may or may not be a modified endowment contract, depending on the amount
of premiums paid during each of the Policy's first seven contract years. Changes
in benefits may require retesting to determine if the Policy is to be classified
as a modified endowment contract.
Conventional Life Insurance Policies
If a Policy is not a modified endowment contract, upon full surrender or
maturity of a Policy for its Cash Value, the excess, if any, of the Cash Value
plus any outstanding Policy Debt over the cost basis under a Policy will be
treated as ordinary income for federal income tax purposes. A Policy's cost
basis will usually equal the premiums paid less any premiums previously
recovered through Partial Surrenders. Under Section 7702 of the Code, special
rules apply to determine whether part or all of the cash received through
Partial Surrenders in the first 15 Policy years is paid out of the income of the
Policy and therefore subject to income tax. Cash distributed to a Policy Owner
on Partial Surrenders occurring more than 15 years after the Policy Date will be
taxable as ordinary income to the Policy Owner to the extent that it exceeds the
cost basis under a Policy.
The Company also believes that loans received under Policies that are not
modified endowment contracts will be treated as indebtedness of the Owner, and
that no part of any loan under the Policy will constitute income to the Owner
unless the Policy is surrendered or upon maturity of the Policy. Interest paid
(or accrued by an accrual basis taxpayer) on a loan under a Policy that is not a
modified endowment contract may be deductible, subject to several limitations,
depending on the use to which the proceeds are put and the tax rules applicable
to the Policy Owner. If, for example, the loan proceeds are used by an
individual for business or investment purposes, all or part of the interest
expense may be deductible. Generally, if the Policy Loan is used for personal
purposes by an individual, the interest expense is not deductible. The
deductibility of loan interest (whether incurred under a Policy Loan or on other
indebtedness) also may be subject to other limitations. For example, where the
interest is paid (or accrued by an accrued basis taxpayer) on a loan under a
Policy covering the life of an officer, employee, or person financially
interested in the trade or business of the Policy Owners, the interest may be
deductible to the extent that the interest is attributable to the first $50,000
of the Outstanding Debt. Other tax law provisions may limit the deduction of
interest payable on loan proceeds that are used to purchase or carry certain
life insurance policies.
Modified Endowment Contracts
Pre-death distributions from modified endowment contracts may give rise to
taxable income. Upon full surrender or maturity of the Policy, the Policy Owner
would recognize ordinary income for federal income tax purposes equal to the
amount by which the Cash Value plus Outstanding Debt exceeds the investment in
the Policy (usually the premiums paid plus certain pre-death distributions that
were taxable less any premiums previously recovered that were excludable from
gross income). Upon Partial Surrenders and Policy loans, the Policy Owner would
recognize ordinary income to the extent allocable to income (which includes all
previously non-taxed gains) on the Policy. The amount allocated to income is the
amount by which the Fund Value of the Policy exceeds investment in the Policy
immediately before the distribution. Under a tax law provision, if two or more
policies which are classified as modified endowment contracts are purchased from
any one insurance company, including the Company, during any calendar year, all
such policies will be aggregated for purposes of determining the portion of the
pre-death distributions allocable to income on the policies and the portion
allocable to investment in the policies.
36
<PAGE> 43
Amounts received under a modified endowment contract that are included in
gross income are subject to an additional tax equal to 10% of the amount
included in gross income, unless an exception applies. The 10% additional tax
does not apply to any amount received: (i) when the taxpayer is at least 59 1/2
years old; (ii) which is attributable to the taxpayer becoming disabled; or
(iii) which is part of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his
or her beneficiary.
If a Policy was not originally a modified endowment contract but becomes
one, under Treasury Department regulations which are yet to be prescribed,
pre-death distributions received in anticipation of a failure of a Policy to
meet the seven-pay premium test are to be treated as pre-death distributions
from a modified endowment contract (and, therefore, are to be taxable as
described above) even though, at the time of the distribution(s), the Policy was
not yet a modified endowment contract. For this purpose, pursuant to the Code,
any distribution made within two years before the Policy is classified as a
modified endowment contract shall be treated as being made in anticipation of
the Policy's failing to meet the seven-pay premium test.
It is unclear whether interest paid (or accrued by an accrual basis
taxpayer) on Outstanding Debt with respect to a modified endowment contract
constitutes interest for federal income tax purposes. If it does constitute
interest, it may be deductible, subject to several limitations, depending on the
use to which the proceeds are put and the tax rules applicable to the Policy
Owner. If, for example, the loan proceeds are used by an individual for business
or investment purposes, all or part of the interest expense may be deductible.
Generally, if the Policy loan is used for personal purposes by an individual,
the interest expense is not deductible. The deductibility of loan interest
(whether incurred under a Policy Loan or on other indebtedness) also may be
subject to other limitations. For example, where the interest is paid (or
accrued by an accrual basis taxpayer) on a loan under a Policy covering the life
of an officer, employee, or person financially interested in the trade or
business of the Policy Owners, the interest may be deductible to the extent that
the interest is attributable to the first $50,000 of the Outstanding Debt. Other
tax law provisions may limit the deduction of interest payable on loan proceeds
that are used to purchase or carry certain life insurance policies.
Reasonableness Requirement for Charges
Another provision of the tax law deals with allowable charges for mortality
costs and other expenses that are used in making calculations to determine
whether a contract qualifies as life insurance for federal income tax purposes.
For life insurance policies entered into on or after October 21, 1988, these
calculations must be based upon reasonable mortality charges and other charges
reasonably expected to be actually paid. The Treasury Department is expected to
promulgate regulations governing reasonableness standards for mortality charges.
The Company believes that the mortality costs and other expenses used in making
calculations to determine whether the Policy qualifies as life insurance meet
the current requirements. It is possible that future regulations will contain
standards that would require the Company to modify its mortality charges used
for the purposes of the calculations in order to retain qualification of the
Policy as life insurance for federal income tax purposes, and the Company
reserves the right to make any such modifications.
Pension and Profit-Sharing Plans
If the Policies described in this Prospectus are purchased by a fund which
forms part of a pension or profit-sharing plan qualified under Sections 401(a)
or 403 of the Code for the benefit of participants covered under the plan, the
federal income tax treatment of such policies will be somewhat different from
that described above.
If purchased as part of a pension or profit sharing plan, the current cost
of insurance for the net amount at risk is treated as a "current fringe benefit"
and is required to be included annually in the plan participant's gross income.
This cost (generally referred to as the "P.S. 58" cost) is reported to the
participant annually. If the plan participant dies while covered by the plan and
the policy proceeds are paid to the participant's beneficiary, then the excess
of the death benefit over the Policy Fund Value will not be subject to Federal
income tax. However, the Policy Fund Value will generally be taxable to the
extent it exceeds the sum of $5,000 plus the participant's cost basis in the
Policy. The participant's cost basis will generally include the
37
<PAGE> 44
costs of insurance previously reported as income to the participant. Special
rules may apply if the participant had borrowed from his Policy or was an
owner-employee under the plan.
There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit sharing plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased by
a tax qualified plan.
Other Employee Benefit Programs
Complex rules may apply when a Policy is held by an employer or a trust, or
acquired by an employee, in connection with the provision of employee benefits.
These Policy Owners also must consider whether the Policy was applied for by or
issued to a person having an insurable interest under applicable state law, as
the lack of insurable interest may, among other things, affect the qualification
of the Policy as life insurance for federal income tax purposes and the right of
the beneficiary to death benefits. Employers and employer-created trusts may be
subject to reporting, disclosure, and fiduciary obligations under the Employee
Retirement Income Security Act of 1974 (ERISA). The Policy Owner's legal advisor
should be consulted to address these issues.
Other
Federal estate and gift and state and local estate, inheritance, and other
tax consequences of ownership or receipt of Policy proceeds depend on the
jurisdiction and the circumstances of each Owner or Beneficiary.
For complete information on federal, state, local and other tax
considerations, a qualified tax advisor should be consulted.
THE COMPANY DOES NOT MAKE ANY GUARANTEE REGARDING
THE TAX STATUS OF ANY POLICY
CHARGE FOR COMPANY INCOME TAXES
For federal income tax purposes, variable life insurance generally is
treated in a manner consistent with fixed life insurance. The Company will
review the question of a charge to the Variable Account for the Company's
federal income taxes periodically. A charge may be made for any federal income
taxes incurred by the Company that are attributable to the Variable Account.
This might become necessary if the tax treatment of the Company is ultimately
determined to be other than what the Company currently believes it to be, if
there are changes made in the federal income tax treatment of variable life
insurance at the insurance company level, or if there is a change in the
Company's tax status.
Under current laws, the Company may incur state and local taxes (in
addition to premium taxes imposed by the states) in several states. At present,
these taxes are not significant. If there is a material change in applicable
state or local tax laws or in the cost to the Company, the Company reserves the
right to charge the Account for such taxes, if any, attributable to the Account.
VOTING OF FUND SHARES
In accordance with its view of present applicable law, the Company will
exercise voting rights attributable to the shares of each portfolio of the Funds
held in the Subaccounts at any regular and special meetings of the shareholders
of the Funds on matters requiring shareholder voting under the Investment
Company Act of 1940. The Company will exercise these voting rights based on
instructions received from persons having the voting interest in corresponding
Subaccounts of the Variable Account. However, if the Investment Company Act of
1940 or any regulations thereunder should be amended, or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote the shares of the Funds in its own right, it may
elect to do so.
The person having the voting interest under a Policy is the Policy Owner.
Unless otherwise required by applicable law, the number of votes as to which a
Policy Owner will have the right to instruct for any Portfolio
38
<PAGE> 45
will be determined by dividing a Policy Owner's Fund Value in the Subaccount
which corresponds to the Portfolio by $100. Fractional votes will be counted.
The number of votes as to which a Policy Owner will have the right to instruct
will be determined as of the date determined by the Company, but in no event
shall such date be more than 90 days prior to the date established by the
respective Fund for determining shareholders eligible to vote at the meeting of
the respective Fund. If required by the Securities and Exchange Commission, the
Company reserves the right to determine in a different fashion the voting rights
attributable to the shares of the respective Fund based upon the instructions
received from Policy Owners. Voting instructions may be cast in person or by
proxy.
Voting rights attributable to the Policy Owner's Fund Value held in each
Subaccount for which no timely voting instructions are received will be voted by
the Company in the same proportion as the voting instructions which are received
in a timely manner for all Policies participating in that Subaccount. The
Company will also exercise the voting rights from assets in each Subaccount
which are not otherwise attributable to Policy Owners, if any, in the same
proportion as the voting instructions which are received in a timely manner for
all Policies participating in that Subaccount and generally will exercise voting
rights attributable to shares of Portfolios of the Funds held in its General
Account, if any, in the same proportion as votes cast with respect to shares of
Portfolios of the Funds held by the Variable Account and other separate accounts
of the Company, in the aggregate.
DISREGARD OF VOTING INSTRUCTIONS
The Company may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that voting rights be
exercised so as to cause a change in the subclassification or investment
objective of a Portfolio or to approve or disapprove an investment advisory
contract. In addition, the Company itself may disregard voting instructions of
changes initiated by Policy Owners in the investment policy or the investment
adviser (or portfolio manager) of a Portfolio, provided that the Company's
disapproval of the change is reasonable and is based on a good faith
determination that the change would be contrary to state law or otherwise
inappropriate, considering the Portfolio's objectives and purpose, and
considering the effect the change would have on the Company. In the event the
Company does disregard voting instructions, a summary of that action and the
reasons for such action will be included in the next report to Policy Owners.
REPORT TO POLICY OWNERS
A statement will be sent at least annually to each Policy Owner setting
forth a summary of the transactions which occurred since the last statement and
indicating the death benefit, Specified Amount, Fund Value, Cash Value, and any
Outstanding Debt. In addition, the statement will indicate the allocation of
Fund Value among the Guaranteed Interest Account, the Loan Account and the
Subaccounts and any other information required by law. Confirmations will be
sent out upon premium payments, transfers, loans, loan repayments, withdrawals,
and surrenders.
Each Policy Owner will also receive an annual and a semiannual report
containing financial statements for the Variable Account and the Funds, the
latter of which will include a list of the portfolio securities of the Funds, as
required by the Investment Company Act of 1940, and/or such other reports as may
be required by federal securities laws.
SUBSTITUTION OF INVESTMENTS AND RIGHT TO CHANGE OPERATIONS
The Company reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, or substitutions for the
securities that are held by the Variable Account or any of its other separate
accounts or that the Variable Account or any of its other separate accounts may
purchase. If shares of any or all of the Portfolios of the Funds should no
longer be available for investment, or if, in the judgment of the Company's
management, further investment in shares of any or all Portfolios of the Funds
should become inappropriate in view of the purposes of the Policies, the Company
may substitute shares of another Portfolio of the Funds or of a different fund
for shares already purchased, or to be purchased in the future under the
Policies.
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<PAGE> 46
Where required, the Company will not substitute any shares attributable to
a Policy Owner's interest in a Variable Account without notice, Policy Owner
approval, or prior approval of the Securities and Exchange Commission and
without following the filing or other procedures established by applicable state
insurance regulators. Applicable state insurance regulators include the
Commissioner of Insurance of the State of Arizona.
The Company also reserves the right to establish additional Subaccounts of
the Variable Account, each of which would invest in a new portfolio of the
Funds, or in shares of another investment company, a portfolio thereof, or
another suitable investment vehicle, with a specified investment objective. New
Subaccounts may be established when, in the sole discretion of the Company,
marketing needs or investment conditions warrant, and any new Subaccounts will
be made available to existing Policy Owners on a basis to be determined by the
Company. The Company may also eliminate one or more Subaccounts if, in its sole
discretion, marketing, tax, or investment conditions so warrant.
In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in this and other policies as may be
necessary or appropriate to reflect such substitution or change. If deemed by
the Company to be in the best interests of persons having voting rights under
the Policies, the Variable Account may be operated as a management investment
company under the Investment Company Act of 1940 or any other form permitted by
law, it may be deregistered under that Act in the event such registration is no
longer required, or it may be combined with other separate accounts of the
Company or an affiliate thereof. Subject to compliance with applicable law, the
Company also may combine one or more Subaccounts and may establish a committee,
board, or other group to manage one or more aspects of the operation of the
Variable Account.
CHANGES TO COMPLY WITH LAW
The Company reserves the right to make any change without consent of Policy
Owners to the provisions of the Policy to comply with, or give Policy Owners the
benefit of, any Federal or State statute, rule, or regulation, including but not
limited to requirements for life insurance contracts under the Internal Revenue
Code, under regulations of the United States Treasury Department or any state.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of the Variable Account may
appear in advertisements, sales literature, or reports to Policy Owners or
prospective purchasers. Performance information in advertisements or sales
literature may be expressed in any fashion permitted under applicable law, which
may include presentation of a change in a Policy Owner's Fund Value attributable
to the performance of one or more Subaccounts, or as a change in Policy Owner's
death benefit. Performance quotations may be expressed as a change in a Policy
Owner's Fund Value over time or in terms of the average annual compounded rate
of return on the Policy Owner's Fund Value, based upon a hypothetical Policy in
which premiums have been allocated to a particular Variable Account over certain
periods of time that will include one, five and ten years, or from the
commencement of operation of the Variable Account if less than one, five, or ten
years. Any such quotation may reflect the deduction of all applicable charges to
the Policy including premium load, the cost of insurance, the administrative
charge, and the mortality and expense risk charge. The quotation may also
reflect the deduction of the Surrender Charge, if applicable, by assuming a
surrender at the end of the particular period, although other quotations may
simultaneously be given that do not assume a surrender and do not take into
account deduction of the Surrender Charge.
Performance information for the Variable Account may be compared, in
advertisements, sales literature, and reports to Policy Owners to: (i) other
variable life separate accounts or investment products tracked by research
firms, ratings services, companies, publications, or persons who rank separate
accounts or investment products on overall performance or other criteria; and
(ii) the Consumer Price Index (measure for inflation) to assess the real rate of
return from the purchase of a Policy. Reports and promotional literature may
also contain the Company's rating or a rating of the Company's claim paying
ability as determined by firms that analyze and rate insurance companies and by
nationally recognized statistical rating organizations.
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<PAGE> 47
Performance information for any Subaccount of the Variable Account reflects
only the performance of a hypothetical Policy whose Fund Value is allocated to
the Variable Account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies, characteristics and quality of the
Portfolios of the Funds in which the Variable Account invests, and the market
conditions during the given period of time, and should not be considered as a
representation of what may be achieved in the future.
THE GUARANTEED INTEREST ACCOUNT
Policy Owners may allocate all or a portion of their net premiums and
transfer Fund Value to the Guaranteed Interest Account of the Company. Amounts
allocated to the Guaranteed Interest Account become part of the "General
Account" of the Company, which supports insurance and annuity obligations. The
amounts allocated to the General Account of the Company are subject to the
liabilities arising from the business the Company conducts. Descriptions of the
Guaranteed Interest Account are included in this Prospectus for the convenience
of the Purchaser. The Guaranteed Interest Account and the General Account of the
Company have not been registered under the Securities Act of 1933 and the
Investment Company Act of 1940. Accordingly, neither the Guaranteed Interest
Account nor any interest therein is generally subject to the provisions of these
Acts and, as a result, the staff of the Securities and Exchange Commission has
not reviewed the disclosure in this prospectus relating to the Guaranteed
Interest Account. Disclosures regarding the Guaranteed Interest Account may,
however, be subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus. For more details regarding the Guaranteed Interest Account, see
the Policy.
GENERAL DESCRIPTION
Amounts allocated to the Guaranteed Interest Account become part of the
General Account of Company which consists of all assets owned by the Company
other than those in the Variable Account and other separate accounts of the
Company. Subject to applicable law, the Company has sole discretion over the
investment of the assets of its General Account.
The Policy Owner may elect to allocate net premiums to the Guaranteed
Interest Account, the Variable Account, or both. The Policy Owner may also
transfer Fund Value from the Subaccounts of the Variable Account to the
Guaranteed Interest Account, or from the Guaranteed Interest Account to the
Subaccounts. Company guarantees that the Fund Value in the Guaranteed Interest
Account will be credited with a minimum interest rate of 0.0121% daily,
compounded daily, for a minimum effective annual rate of 4.5%. Such interest
will be paid regardless of the actual investment experience of the Guaranteed
Interest Account. In addition, Company may in its sole discretion declare
current interest in excess of the 4.5% annual rate, which will be guaranteed for
approximately one year. (The portion of a Policy Owner's Fund Value that has
been used to secure Outstanding Debt will be credited with a guaranteed interest
rate of 0.0121% daily, compounded daily, for a minimum effective annual rate of
4.5%.)
The Company bears the full investment risk for the Fund Value allocated to
the Guaranteed Interest Account.
DEATH BENEFIT
The death benefit under the Policy will be determined in the same fashion
for a Policy Owner who has Fund Value in the Guaranteed Interest Account as for
a Policy Owner who has Fund Value in the Subaccounts. The death benefit under
Option 1 will be equal to the Specified Amount of the Policy or, if greater,
Fund Value on the date of death multiplied by a death benefit percentage. Under
Option 2, the death benefit will be equal to the Specified Amount of the Policy
plus the Fund Value or, if greater, Fund Value on the date of death multiplied
by a death benefit percentage. See "Death Benefits under the Policy," page 20.
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<PAGE> 48
POLICY CHARGES
Deductions from premium, monthly deductions from the Fund Value, and Fund
Charges will be the same for Policy Owners who allocate net premiums or transfer
Fund Value to the Guaranteed Interest Account as for Policy Owners who allocate
net premiums to the Subaccounts. These charges include the sales and tax
charges; the charges for the cost of insurance, administrative charge, per
$1,000 of Specified Amount charge, the charge for any optional insurance
benefits added by Rider; and the Surrender Charge. Fees for Partial Surrenders
and, if applicable, transfer charges, will also be deducted from the Guaranteed
Interest Account.
Charges applicable to the Portfolios, including the operating expenses of
the Portfolios, as well as the investment advisory fee charged by the Portfolio
managers, will not be paid directly or indirectly by Policy Owners to the extent
the Fund Value is allocated to the Guaranteed Interest Account. Likewise, the
mortality and expense risk charge applicable to the Fund Value allocated to the
Subaccounts is not deducted from Fund Value allocated to the Guaranteed Interest
Account. Any amounts that the Company pays for income taxes allocable to the
Subaccounts will not be charged against the Guaranteed Interest Account.
However, it is important to remember that Policy Owners will not participate in
the investment experience of the Subaccounts to the extent that Fund Values are
allocated to the Guaranteed Interest Account.
TRANSFERS
Amounts may be transferred after the Right to Return Policy Period from the
Subaccounts to the Guaranteed Interest Account and from the Guaranteed Interest
Account to the Subaccounts, subject to the following limitations.
Transfers to the Guaranteed Interest Account may be made at any time and in
any amount.
Transfers from the Guaranteed Interest Account to the Subaccounts are
limited to one in any Policy year. Transfers from the Guaranteed Interest
Account may only be made during the time period which begins on the Policy
Anniversary and which ends 30 days after the Policy Anniversary. If the transfer
request is received on the Policy Anniversary, it will be processed as of the
Policy Anniversary; if it is received within 30 days after the Policy
Anniversary, the transfer will be effective as of the close of business on the
day received if it is a Business Day, or if not a Business Day, then at the
close of business on the next day which is a Business Day. Any request received
within 10 days before the Policy Anniversary will be deemed received on the
Policy Anniversary. Any transfer requests received at other times will not be
honored, and will be returned to the Policy Owner.
Currently there is no charge imposed upon transfers; however, the Company
reserves the right to assess such a charge in the future.
SURRENDERS AND POLICY LOANS
The Policy Owner may also make Full Surrenders and Partial Surrenders from
the Guaranteed Interest Account to the same extent as a Policy Owner who has
invested in the Subaccounts. See "Full Surrender," page 28 and "Partial
Surrenders", page 28. Transfers and surrenders payable from the Guaranteed
Interest Account, and the payment of Policy loans allocated to the Guaranteed
Interest Account, may be delayed for up to six months. However, with respect to
Policies issued for delivery to residents of the Commonwealth of Pennsylvania,
the Company will not delay payment of surrenders or loans, the proceeds of which
will be used to pay premiums on the Policy.
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MORE ABOUT THE POLICY
OWNERSHIP
The Policy Owner is the individual named as such in the application or in
any later change shown in the Company's records. While the Insured is living,
the Policy Owner alone has the right to receive all benefits and exercise all
rights that the Policy grants or the Company allows.
Joint Owners
If more than one person is named as Policy Owner, they are joint owners.
Any Policy transaction requires the signature of all persons named jointly.
Unless otherwise provided, if a joint owner dies, ownership passes to the
surviving joint owner(s). When the last joint owner dies, ownership passes
through that person's estate, unless otherwise provided.
BENEFICIARY
The Beneficiary is the individual named as such in the application or any
later change shown in the Company's records. The Policy Owner may change the
Beneficiary at any time during the life of the Insured by written request on
forms provided by the Company, which must be received by the Company at its
Administrative Office. The change will be effective as of the date this form is
signed. Contingent and/or concurrent Beneficiaries may be designated. The Policy
Owner may designate a permanent Beneficiary, whose rights under the Policy
cannot be changed without his or her consent. Unless otherwise provided, if no
designated Beneficiary is living upon the death of the Insured, the Policy Owner
or the Policy Owner's estate is the Beneficiary.
The Company will pay the death benefit proceeds to the Beneficiary. Unless
otherwise provided, in order to receive proceeds at the Insured's death, the
Beneficiary must be living at the time of the Insured's death.
THE POLICY
This Policy is a contract between the Policy Owner and the Company. The
entire contract consists of the Policy, a copy of the initial application, all
subsequent applications to change the Policy, any endorsements, all Riders, and
all additional Policy information sections (specification pages) added to the
Policy.
NOTIFICATION AND CLAIMS PROCEDURES
Any election, designation, change, assignment, or request made by the
Policy Owner must be in writing on a form acceptable to the Company. The Company
is not liable for any action taken before such written notice is received and
recorded. The Company may require that the Policy be returned for any Policy
change or upon its surrender.
In the event of an Insured's death while the Policy is in force notice
should be given to the Company as soon as possible. Claim procedure instructions
will be sent immediately. As due proof of death, the Company may require proof
of Age and a certified copy of a death certificate. The Company may also require
the Beneficiary and the Insured's next of kin to sign authorizations as part of
this process. These authorization forms allow the Company to obtain information
about the Insured, including but not limited to medical records of physicians
and hospitals used by the Insured.
PAYMENTS
The Company will pay death benefit proceeds, the Cash Value on surrender,
Partial Surrenders and loan proceeds based on allocations made to the
Subaccounts, and will effect a transfer between Subaccounts or from the Variable
Account to the Guaranteed Interest Account within seven days after the Company
receives all the information needed to process a payment.
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<PAGE> 50
However, the Company can postpone the calculation or payment of such a
payment or transfer of amounts based on investment performance of the
Subaccounts if:
The New York Stock Exchange is closed on other than customary weekend
and holiday closing or trading on the New York Stock Exchange is restricted
as determined by the SEC; or
An emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Account's net assets.
PAYMENT PLAN/SETTLEMENT PROVISIONS
Maturity or surrender benefits may be used to purchase a payment plan
providing monthly income for the lifetime of the Insured, and death benefit
proceeds may be used to purchase a payment plan providing monthly income for the
lifetime of the Beneficiary. The monthly payments consisting of proceeds plus
interest will be paid in equal installments for at least ten years. The purchase
rates for the payment plan are guaranteed not to exceed those shown in the
Policy, but current rates that are lower (i.e., providing greater income) may be
established by the Company from time to time. This benefit is not available if
the income would be less than $25 a month or if the proceeds are less than
$1,000. Maturity or surrender benefits or death benefit proceeds may be used to
purchase any other payment plan that the Company makes available at that time.
PAYMENT IN CASE OF SUICIDE
If the Insured dies by suicide, while sane or insane, within two years from
the Policy Date or Reinstatement Date, the Company will limit the death benefit
proceeds to the premium payments less any Partial Surrender amounts (and their
fees) and less any Outstanding Debt. If an Insured dies by suicide, while sane
or insane, within two years of the effective date of any increase in the
Specified Amount, the Company will refund the cost of insurance charges made
with respect to such increase.
ASSIGNMENT
The Policy Owner may assign a Policy as collateral security for a loan or
other obligation. No assignment will bind the Company unless the original, or a
copy, is received at the Company's Administrative Office, and it will be
effective only when recorded by the Company. An assignment does not change the
ownership of the Policy. However, after an assignment, the rights of any Policy
Owner or Beneficiary will be subject to the assignment. The entire Policy,
including any attached payment option or Rider, will be subject to the
assignment. The Company will rely solely on the assignee's statement as to the
amount of the assignee's interest. The Company will not be responsible for the
validity of any assignment. Unless otherwise provided, the assignee may exercise
all rights this Policy grants except (a) the right to change the Policy Owner or
Beneficiary; and (b) the right to elect a payment option. Assignment of a Policy
that is a modified endowment contract may generate taxable income. (See "Federal
Income Tax Considerations", page 37.)
ERRORS ON THE APPLICATION
If the Age or gender of the Insured has been misstated, the death benefit
under this Policy will be the greater of that which would be purchased by the
most recent cost of insurance charge at the correct Age and gender, or the death
benefit derived by multiplying the Fund Value by the death benefit percentage
for the correct Age and gender. If unisex cost of insurance rates apply, no
adjustment will be made for a misstatement of gender. See "Cost of Insurance",
page 32.
INCONTESTABILITY
The Company may contest the validity of this Policy if any material
misstatements are made in the application. However, the Policy will be
incontestable as follows: the initial Specified Amount cannot be contested after
the Policy has been in force during the Insured's lifetime for two years from
the Policy Date;
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and an increase in the Specified Amount or any reinstatement cannot be contested
after the increase or the reinstated policy has been in force during an
Insured's lifetime for two years from its effective date.
POLICY ILLUSTRATIONS
Upon request, the Company will send the Policy Owner an illustration of
future benefits under the Policy based on both guaranteed and current cost
assumptions.
DISTRIBUTION OF THE POLICY
MONY Securities Corp. ("MSC"), a wholly owned subsidiary of Mutual of New
York, is principal underwriter (distributor) of the Policies. MSC is registered
as a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers. The Policies are sold by
individuals who are registered representatives of MSC and who are also licensed
as life insurance agents for the Company. The Policies may also be sold through
other broker/dealers authorized by MSC and applicable law to do so.
Except where MSC has authorized other broker/dealers to sell the Policies
(as described in the preceding paragraph), compensation payable for the sale of
the Policies will be based upon the following schedule. After issue of the
Contract, commissions will equal at most 50 percent of premiums paid up to a
maximum amount. Thereafter, commissions will equal at most 3.0 percent of any
additional premiums plus, on the sixth and each succeeding quarterly Anniversary
for so long as the Policy shall remain in force, an annualized rate of 0.15
percent of the Fund Value of the Policy. Upon any subsequent increase in
Specified Amount, commissions will equal at most 50 percent of premiums paid on
or after the increase up to a maximum amount. Thereafter, commissions will
return to no more than the 3.0 percent level. Further, registered
representatives may be eligible to receive certain bonuses and other benefits
based on the amount of earned commissions.
In addition, registered representatives who meet specified production
levels may qualify, under sales incentive programs adopted by Company, to
receive noncash compensation such as expense-paid trips, expense-paid
educational seminars and merchandise. Company makes no separate deductions,
other than previously described, from premiums to pay sales commissions or sales
expenses.
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MORE ABOUT THE COMPANY
MANAGEMENT
The directors and officers of the Company are listed below. The business
address for all directors and officers of MONY Life Insurance Company of America
is 1740 Broadway, New York, New York 10019.
Current Officers and Directors of MONY America are:
<TABLE>
<CAPTION>
NAME POSITION AND OFFICES WITH DEPOSITOR
---- -----------------------------------
<S> <C>
Michael I. Roth................................ Director, Chairman and Chief Executive
Officer
Samuel J. Foti................................. Director, President and Chief
Operating Officer
Kenneth M. Levine.............................. Director and Executive Vice President
Richard E. Connors............................. Director
Richard Daddario............................... Director, Vice President, and
Controller
Phillip A. Eisenberg........................... Director, Vice President and Actuary
Margaret G. Gale............................... Director, Vice President
Stephen J. Hall................................ Director
Charles P. Leone............................... Director, Vice President and Chief
Corporate Compliance Officer
Sam Chiodo..................................... Vice President
Edward E. Hill................................. Vice President -- Chief Compliance
Officer
William D. Goodwin............................. Vice President
Evelyn L. Peos................................. Vice President
Michael Slipowitz.............................. Vice President
David S. Waldman............................... Secretary
David V. Weigel................................ Treasurer
</TABLE>
No officer or director listed above receives any compensation from the
Variable Account. No separately allocable compensation has been paid by the
Company or any of its affiliates to any person listed for services rendered to
the Account.
STATE REGULATION
The Company is subject to the laws of the state of Arizona governing
insurance companies and to regulation by the Commissioner of Insurance of
Arizona. In addition, it is subject to the insurance laws and regulations of the
other states and jurisdictions in which it is licensed or may become licensed to
operate. An annual statement in a prescribed form must be filed with the
Commissioner of Insurance of Arizona and with regulatory authorities of other
states on or before March 1st in each year. This statement covers the operations
of the Company for the preceding year and its financial condition as of December
31st of that year. The Company's affairs are subject to review and examination
at any time by the Commissioner of Insurance or his agents, and subject to full
examination of Company's operations at periodic intervals.
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TELEPHONE TRANSFER PRIVILEGES
A Policy Owner may request a transfer of Fund Value or change allocation
instructions for future premiums by telephone if an authorization for telephone
transfer form has been completed, signed, and received at the Company's Syracuse
Operations Center. All or part of any telephone conversation with respect to
transfer and allocation instructions may be recorded by the Company. Telephone
instructions received by the Company by 4:00 p.m. Eastern time on any Valuation
Date will be effected as of the end of that Valuation Date in accordance with
the Policy Owner's instructions, subject to the limitations stated in this
prospectus (presuming that the Free Look Period has expired). The Company
reserves the right to deny any telephone transfer or allocation request. If all
telephone lines are busy (which might occur, for example, during periods of
substantial market fluctuations), Policy Owners might not be able to request
transfers by telephone and would have to submit written requests. Telephone
transfer and allocation instructions will only be accepted if complete and
correct.
The Company has adopted guidelines relating to telephone transfers and
allocation instructions that, among other things, outlines procedures to be
followed which are designed, and which the Company believes are reasonable, to
prevent unauthorized instructions. If these procedures are followed, the Company
shall not be liable for, and the Policy Owner will therefore bear the entire
risk of, any loss as a result of the Company's following telephone instructions
in the event that such instructions prove to be fraudulent. A copy of the
guidelines and the Company's form for electing telephone transfer privileges is
available from licensed agents of the Company who are also registered
representatives of MSC or by calling 1-800-487-6669. The Company's form must be
signed and received at the Company's Syracuse Operations Center before telephone
transfers will be accepted.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Variable Account is a
party, or which would materially affect the Variable Account.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the Policies
described in this Prospectus and the organization of the Company, its authority
to issue the Policies under Arizona law, and the validity of the forms of the
Policies under Arizona law have been passed on by the Vice President and Deputy
General Counsel of the Mutual of New York.
Legal matters relating to the federal securities and federal income tax
laws have been passed upon by Edward P. Bank, Vice President and Deputy General
Counsel of Mutual of New York.
EXPERTS
Actuarial matters included in this Prospectus have been examined by Evelyn
L. Peos, FSA, Vice President of MONY America, whose opinion is filed as an
exhibit to the Registration Statement.
REGISTRATION STATEMENT
A Registration Statement under the Securities Act of 1933 has been filed
with the SEC relating to the offering described in this Prospectus. This
Prospectus does not include all of the information set forth in the Registration
Statement, as portions have been omitted pursuant to the rules and regulations
of the SEC. The omitted information may be obtained at the SEC's principal
office in Washington, D.C., upon payment of the SEC's prescribed fees.
INDEPENDENT ACCOUNTANTS
The audited financial statements for the Variable Account and for the
Company included in this Prospectus and in the Registration Statement have been
audited by Coopers & Lybrand L.L.P., independent accountants, as indicated in
their reports hereon, and are included in reliance upon the authority of said
firm as
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<PAGE> 54
experts in accounting and auditing. Coopers & Lybrand L.L.P.'s office is located
at 1301 Avenue of the Americas, New York, New York, 10019.
FINANCIAL STATEMENTS
The audited financial statements for the Variable Account are set forth
herein, starting on page F-2. The audited financial statements of the Company
are set forth herein, starting on page F-13.
The financial statements of the Variable Account and of the Company have
been audited by Coopers & Lybrand L.L.P. The financial statements of the Company
should be distinguished from the financial statements of the Variable Account
and should be considered only as bearing upon the ability of the Company to meet
its obligations under the Policies.
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FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
With respect to MONY America Variable Account L:
Report of Independent Accountants......................... F-2
Statements of assets and liabilities as of December 31,
1997................................................... F-3
Statements of operations for the year ended December 31,
1997................................................... F-5
Statements of changes in net assets....................... F-7
Notes to financial statements............................. F-10
With respect to MONY Life Insurance Company of America:
Report of Independent Accountants......................... F-13
Statements of admitted assets, liabilities and surplus as
of December 31, 1997 and 1996.......................... F-14
Statements of operations for the years ended December 31,
1997 and 1996.......................................... F-15
Statements of capital and surplus for the years ended
December 31, 1997 and 1996............................. F-16
Statements of cash flows for the years ended December 31,
1997 and 1996.......................................... F-17
Notes to financial statements............................. F-18
</TABLE>
F-1
<PAGE> 56
APPENDIX A
DEATH BENEFIT PERCENTAGE FOR
GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST
<TABLE>
<CAPTION>
APPLICABLE
ATTAINED AGE PERCENTAGE
- ------------ ----------
<S> <C>
40 and Under................................................ 250%
41.......................................................... 243
42.......................................................... 236
43.......................................................... 229
44.......................................................... 222
45.......................................................... 215
46.......................................................... 209
47.......................................................... 203
48.......................................................... 197
49.......................................................... 191
50.......................................................... 185
51.......................................................... 178
52.......................................................... 171
53.......................................................... 164
54.......................................................... 157
55.......................................................... 150
56.......................................................... 146
57.......................................................... 142
58.......................................................... 138
59.......................................................... 134
60.......................................................... 130
61.......................................................... 128
62.......................................................... 126
63.......................................................... 124
64.......................................................... 122
65.......................................................... 120
66.......................................................... 119
67.......................................................... 118
68.......................................................... 117
69.......................................................... 116
70.......................................................... 115
71.......................................................... 113
72.......................................................... 111
73.......................................................... 109
74.......................................................... 107
75-90....................................................... 105
91.......................................................... 104
92.......................................................... 103
93.......................................................... 102
94-100...................................................... 101
</TABLE>
A-1
<PAGE> 57
APPENDIX B
MONTHLY PER $1,000 SPECIFIED AMOUNT FACTORS
<TABLE>
<CAPTION>
ISSUE FACTOR
AGE PER $1,000
- ----- ----------
<S> <C>
0-17........................................................ $0.07
18-36....................................................... 0.08
37.......................................................... 0.09
38.......................................................... 0.09
39.......................................................... 0.10
40.......................................................... 0.10
41.......................................................... 0.10
42.......................................................... 0.11
43.......................................................... 0.11
44.......................................................... 0.12
45.......................................................... 0.12
46.......................................................... 0.12
47.......................................................... 0.13
48.......................................................... 0.13
49.......................................................... 0.14
50.......................................................... 0.14
51.......................................................... 0.14
52.......................................................... 0.15
53.......................................................... 0.15
54.......................................................... 0.16
55.......................................................... 0.16
56.......................................................... 0.16
57.......................................................... 0.17
58.......................................................... 0.17
59.......................................................... 0.18
60.......................................................... 0.18
61.......................................................... 0.18
62.......................................................... 0.19
63.......................................................... 0.19
64.......................................................... 0.20
65.......................................................... 0.20
66.......................................................... 0.20
67.......................................................... 0.21
68.......................................................... 0.21
69.......................................................... 0.22
70.......................................................... 0.22
71.......................................................... 0.22
72.......................................................... 0.23
73.......................................................... 0.23
74.......................................................... 0.24
75.......................................................... 0.24
76.......................................................... 0.24
77.......................................................... 0.25
78.......................................................... 0.25
79.......................................................... 0.26
80.......................................................... 0.26
81.......................................................... 0.26
82.......................................................... 0.27
83.......................................................... 0.27
84.......................................................... 0.28
85.......................................................... 0.28
</TABLE>
B-1
<PAGE> 58
APPENDIX C
GUARANTEED DEATH BENEFIT RIDER
MONTHLY GUARANTEE PREMIUM FOR GUARANTEED DEATH
BENEFIT RIDER WITH TEN YEAR/AGE 70 GUARANTEE PERIOD
<TABLE>
<CAPTION>
MONTHLY GUARANTEE
PREMIUM
-----------------
<S> <C>
Specified Amount = $200,000
Male age 45 Preferred Nonsmoker Death Benefit Option 1...... $229.17
Female age 45 Preferred Nonsmoker Death Benefit Option 1.... $174.00
Male age 45 Standard Smoker Death Benefit Option 1.......... $379.83
Male age 45 Preferred Nonsmoker Death Benefit Option 2...... $229.17
Male age 35 Preferred Nonsmoker Death Benefit Option 1...... $155.83
Male age 55 Preferred Nonsmoker Death Benefit Option 1...... $370.83
</TABLE>
C-1
<PAGE> 59
PART II
(INFORMATION NOT REQUIRED IN A PROSPECTUS)
<PAGE> 60
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the 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.
RULE 484 UNDERTAKING
The By-Laws of MONY Life Insurance Company of America ("MONY America")
provide, in Article VI as follows:
SECTION 1. The Corporation shall indemnify any existing or former
director, officer, employee or agent of the Corporation against all
expenses incurred by them and each of them which may arise or be incurred,
rendered or levied in any legal action brought or threatened against any of
them for or on account of any action or omission alleged to have been
committed while acting within the scope of employment as director, officer,
employee or agent of the Corporation, whether or not any action is or has
been filed against them and whether or not any settlement or compromise is
approved by a court, all subject and pursuant to the provisions of the
Articles of Incorporation of this Corporation.
SECTION 2. The indemnification provided in this By-Law shall not be
deemed exclusive of any other rights to which those seeking indemnification
may be entitled under By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors,
and administrators of such a person.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification for such
liabilities (other than the payment by the Registrant of expense incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant, will (unless in the opinion of its counsel the
matter has been settled by controlling precedent) submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
REPRESENTATIONS RELATING TO SECTION 26 OF THE
INVESTMENT COMPANY ACT OF 1940
Registrant and MONY Life Insurance Company of America represent that 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 MONY Life Insurance Company of America.
II-1
<PAGE> 61
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The Facing Sheet.
Cross-Reference to items required by Form N-8B-2.
Prospectus consisting of pages.
The Undertaking to file reports.
The signatures.
Written consents of the following persons:
a. Edward P. Bank, Vice President and Deputy General Counsel, The
Mutual Life Insurance Company of New York
b. Evelyn Peos, FSA
c. Coopers & Lybrand L.L.P. Independent Accountants
The following exhibits:
1. The following exhibits correspond to those required by paragraph A
of the instructions as exhibits to Form N-8B2:
(1) Resolution of the Board of Directors of MONY America
authorizing establishment of MONY America Variable Account L, filed as
Exhibit 1 to Registration Statement on Form S-6, dated February 21, 1985
(Registration Nos. 2-95900 and 811-4235), is incorporated herein by
reference.
(2) Not applicable.
(3) (a) Underwriting Agreement between MONY Life Insurance Company
of America, MONY Series Fund, Inc., and MONY Securities Corp., filed as
Exhibit 3(a) to Pre-Effective Amendment No. 1 to Registration Statement
on Form S-6, dated January 6, 1995 (Registration Nos. 33-82570 and
811-4235), is incorporated by referenced herein.
(b) Proposed specimen agreement between MONY Securities Corp. and
registered representatives, filed as Exhibit 3(b) of Pre-Effective
Amendment No. 1, dated December 17, 1990, to Registration Statement on
Form N-4 (Registration Nos. 33-37722 and 811-6126) is incorporated
herein by reference.
(c) Commission schedule (with Commission Contract), filed as
Exhibit 3(c) to Pre-Effective Amendment No. 1 to Registration Statement
on Form S-6, dated January 6, 1995 (Registration Nos. 33-82570 and
811-4235), is incorporated by referenced herein.
(4) Not applicable.
(5) Form of policy filed herewith as Exhibit 1(5).
(6) Articles of Incorporation and By-Laws of MONY America filed as
Exhibits 6(a) and 6(b), respectively, to Registration Statement
Registration No. 33-13183) dated April 6, 1987, is incorporated herein
by reference.
(7) Not applicable.
(8) (a) Form of agreement to purchase shares. [To be filed by
amendment]
(b) Investment Advisory Agreement between MONY Life Insurance
Company of America and MONY Series Fund, Inc. filed as Exhibit 5(i) to
Post-Effective amendment No. 14 to
II-2
<PAGE> 62
Registration Statement (Registration Nos. 2-95501 and 811-4209) dated
February 27, 1998, is incorporated herein by reference.
Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise Accumulation
Trust ("Trust"), and Enterprise Capital, the Trust, and OpCap Advisors,
as sub-advisor, filed as Exhibit 5 to Post-Effective Amendment No. 8,
dated September 30, 1994, to Registration Statement on Form N-1A
(Registration No. 33-21534), is incorporated herein by reference.
Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise Accumulation
Trust ("Trust"), and Enterprise Capital, the Trust, and , as
sub-adviser [to be filed by amendment].
Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise Accumulation
Trust ("Trust"), and Enterprise Capital, the Trust, and , as
sub-adviser [to be filed by amendment].
Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise Accumulation
Trust ("Trust"), and Enterprise Capital, the Trust, and , as
sub-adviser [to be filed by amendment].
Investment Advisory Agreement between Enterprise Capital
Management, Inc., ("Enterprise Capital") and The Enterprise Accumulation
Trust ("Trust"), and Enterprise Capital, the Trust, and , as
sub-adviser [to be filed by amendment].
(c) Services Agreement between The Mutual Life Insurance Company of
New York and MONY Life Insurance Company of America filed as Exhibit
5(ii) to Pre-Effective Amendment to Registration Statement (Registration
Nos. 2-95501 and 811-4209) dated July 19, 1985, is incorporated herein
by reference.
(9) Not applicable.
(10) Application Form for Flexible Premium Variable Universal Life
Insurance Policy. [See Exhibit 1(3)(a).]
2. Opinion and consent of Edward P. Bank, Vice President and Deputy
General Counsel, The Mutual Life Insurance Company of New York, as to
legality of the securities being registered, to be filed by amendment.
3. Not applicable.
4. Not applicable.
5. Not applicable.
6. Opinion and consent of Evelyn L. Peos, FSA, as to actuarial
matters, to be filed by amendment.
7. Consent of Coopers & Lybrand L.L.P. as to financial statements of
MONY America Variable Account L and of MONY Life Insurance Company of
America, to be filed by amendment.
II-3
<PAGE> 63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
MONY America Variable Account L of MONY Life Insurance Company of America, has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and the State of
New York, on this 16 day of June, 1998.
MONY AMERICA VARIABLE ACCOUNT L OF
MONY LIFE INSURANCE COMPANY OF AMERICA
By: /s/ MICHAEL I. ROTH
------------------------------------
Michael I. Roth, Director,
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE DATE
- --------- ----
<C> <S> <C>
/s/ MICHAEL I. ROTH Director, Chairman of the Board June 16, 1998
- ------------------------------------------------ and Chief Executive Officer
Michael I. Roth
/s/ SAMUEL J. FOTI Director, President and Chief June 16, 1998
- ------------------------------------------------ Operating Officer
Samuel J. Foti
/s/ RICHARD DADDARIO Director, Vice President and June 16, 1998
- ------------------------------------------------ Controller
Richard Daddario (Principal Financial and Accounting
Officer)
/s/ KENNETH M. LEVINE Director and Executive Vice President June 16, 1998
- ------------------------------------------------
Kenneth M. Levine
/s/ PHILLIP A. EISENBERG Director, Vice President and Chief June 16, 1998
- ------------------------------------------------ Actuary
Phillip A. Eisenberg
/s/ MARGARET G. GALE Director and Vice President June 16, 1998
- ------------------------------------------------
Margaret G. Gale
/s/ CHARLES P. LEONE Director and Vice President June 16, 1998
- ------------------------------------------------
Charles P. Leone
/s/ RICHARD E. CONNORS Director June 16, 1998
- ------------------------------------------------
Richard E. Connors
/s/ STEPHEN J. HALL Director June 16, 1998
- ------------------------------------------------
Stephen J. Hall
</TABLE>
II-4
<PAGE> 64
EXHIBIT INDEX
1.(5) Form of Policy
II-5
<PAGE> 1
MONY Life Insurance Company of America
Signed for MONY Life Insurance Company of America , a stock company, on the Date
of Issue.
Administrative Office - 1740 Broadway
New York, N.Y. 10019
Operations Center - One MONY Plaza,
PO Box 4830, Syracuse, NY 13221
1(800) 487-6669
Home Office - 40 North Central Avenue,
Phoenix, Arizona 85004
MICHAEL I. ROTH, Chairman
SAMUEL J. FOTI, President
DAVID S. WALDMAN, Secretary
RIGHT TO RETURN POLICY - THIS POLICY MAY BE RETURNED TO US WITHIN TEN DAYS FROM
THE DATE YOU RECEIVE IT BY DELIVERING OR MAILING IT TO OUR ADMINISTRATIVE
OFFICE, A LOCAL OFFICE OF OURS, OR TO ANY AGENT OF OURS. WE WILL THEN REFUND ANY
PREMIUM PAID. THE POLICY WILL BE CONSIDERED NEVER TO HAVE BEEN ISSUED. IF YOU
RETURN BY MAIL THE CANCELLATION WILL BE EFFECTIVE ON THE DATE IT IS POSTMARKED
(IF PROPERLY ADDRESSED WITH POSTAGE PREPAID).
MONY Life Insurance Company of America will pay the benefits provided in this
Policy, subject to all the policy provisions.
INSURED: John Doe
ISSUE AGE: 35
CLASS: Standard Class - Non Smoker
POLICY NUMBER: B 0000-00-00
ISSUE AGE: 35
POLICY DATE: 04-01-1998
INITIAL SPECIFIED AMOUNT: $100,000
DATE OF ISSUE: 04-01-1998
BRIEF DESCRIPTION
THIS IS A FLEXIBLE PREMIUM VARIABLE LIFE TO MATURITY AGE POLICY. SPECIFIED
AMOUNT MAY BE INCREASED OR DECREASED. NET PREMIUMS MAY BE ALLOCATED TO ONE OR
MORE SUB-ACCOUNTS OF THE VARIABLE ACCOUNT OR TO THE GUARANTEED INTEREST ACCOUNT.
IF THE VALUES HAVE BEEN SUFFICIENT TO CONTINUE THE POLICY IN FORCE: DEATH
PROCEEDS ARE PAYABLE IN EVENT OF DEATH OF THE INSURED BEFORE THE MATURITY AGE;
CASH VALUE, IF ANY, IS PAYABLE IF INSURED IS LIVING AT THE MATURITY AGE. DEATH
BENEFIT AND POLICY VALUES REFLECT INVESTMENT RESULTS. FLEXIBLE PREMIUMS UNTIL
MATURITY AGE. NONPARTICIPATING (NO DIVIDENDS PAYABLE).
Important Notice(s)
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE POLICY OWNER AND THE COMPANY. READ
YOUR POLICY CAREFULLY.
THE AMOUNT OR THE DURATION OF THE DEATH BENEFIT (OR BOTH) MAY INCREASE OR
DECREASE DEPENDING ON INVESTMENT RESULTS. BUT THE DEATH BENEFIT WILL NEVER BE
LESS THAN THE SPECIFIED AMOUNT IN FORCE LESS ANY DEBT. SEE DEATH PROCEEDS -
DEATH BENEFIT OPTIONS SECTION TO DETERMINE DEATH PROCEEDS.
THE FUND VALUE IN THE VARIABLE ACCOUNT INCREASES OR DECREASES DEPENDING ON
INVESTMENT RESULTS. THERE IS NO GUARANTEED MINIMUM FUND VALUE OR CASH VALUE. SEE
FUND VALUE, CASH VALUE, SURRENDER AND SUB-ACCOUNT UNIT VALUE SECTIONS.
FLEXIBLE PREMIUM VARIABLE LIFE
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C> <C> <C>
1 BENEFITS AND PREMIUMS, - POLICY DESCRIPTION, DEATH BENEFIT, RIDERS, PREMIUMS, 3
CHARGES AND EXPENSES SPECIFICATIONS AND CHARGES.
2 GUARANTEED MONTHLY - TABLE OF INSURED'S ATTAINED AGE AND CORRESPONDING RATE. 5
INSURANCE RATES
3 VARIABLE ACCOUNT, THE - LISTING OF SUB-ACCOUNTS AND FUNDS. 6
FUNDS AND SUB-ACCOUNTS
4 ABOUT THIS POLICY - AN OVERVIEW OF BASIC POLICY PROVISIONS. 7
5 WE WILL PAY - PAYMENT OF DEATH PROCEEDS; CASH VALUE; DUE PROOF OF DEATH. 8
-
6 PREMIUMS - PAYMENT OF PREMIUMS, GUIDELINE PREMIUM LIMIT; NET PREMIUM; 8
PREMIUMS BEFORE OR AT DELIVERY; ALLOCATION OF NET PREMIUMS;
SCHEDULED PREMIUMS; UNSCHEDULED PREMIUMS.
-
7 DEATH PROCEEDS-DEATH - HOW ARE DEATH PROCEEDS DETERMINED? WHAT ARE THE DEATH BENEFIT 10
BENEFIT OPTIONS OPTIONS?
-
8 FUND VALUE - HOW FUND VALUE IS DETERMINED. 11
9 CASH VALUE - WHAT IS THE CASH VALUE? 12
10 TRANSFERS - TYPES OF TRANSFERS AND THEIR ALLOCATION RULES; WHEN AND HOW THEY 13
CAN BE MADE.
11 SURRENDER - SURRENDER FOR CASH VALUE. 13
12 PARTIAL SURRENDER - PARTIAL SURRENDERS, FEES, ALLOCATION OF PARTIAL SURRENDERS; EFFECT 14
ON DEATH BENEFIT.
13 SURRENDER CHARGE - WHAT IS THE SURRENDER CHARGE, WHEN IS IT ASSESSED? 15
-
14 LOANS - LOAN VALUE; LOAN INTEREST; MISCELLANEOUS PROVISIONS; LOAN 15
ALLOCATIONS.
15 LOAN ACCOUNT - WHAT IS LOAN ACCOUNT; ANNUAL LOAN INTEREST RATE; INTEREST 16
ALLOCATION.
-
16 OPTIONAL POLICY CHANGES - INCREASING AND DECREASING THE SPECIFIED AMOUNT; CHANGING THE DEATH 17
BENEFIT OPTION.
17 RIGHTS OF OWNER - WHO IS THE OWNER AND WHAT RIGHTS DOES THE OWNER HAVE. 18
18 BENEFICIARY - WHAT IS A BENEFICIARY? CHANGING THE BENEFICIARY. 18
19 THE VARIABLE ACCOUNT - WHAT IS THE VARIABLE ACCOUNT? WHAT ARE SUB-ACCOUNTS? CHANGES TO 19
THE VARIABLE ACCOUNT
20 SUB-ACCOUNT UNIT VALUE - WHAT IS THE UNIT VALUE? 20
21 THE GUARANTEED INTEREST - WHAT IS THE GUARANTEED INTEREST ACCOUNT; INTEREST RATE APPLIED TO 20
ACCOUNT THE GUARANTEED INTEREST ACCOUNT?
22 MONTHLY DEDUCTION - HOW IS THE MONTHLY DEDUCTION DETERMINED? 21
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C> <C>
23 GRACE PERIOD - THE MINIMUM MONTHLY PREMIUM AND HOW THE GRACE PERIOD WORKS DURING 21
AND AFTER THE FIRST THREE POLICY YEARS.
24 REINSTATEMENT - PERIOD AND REQUIREMENTS FOR REINSTATEMENT. 22
25 COST OF INSURANCE - HOW IS THE COST OF INSURANCE DETERMINED? WHAT IS THE AMOUNT AT 23
RISK?
26 INSURANCE RATE - HOW IS INSURANCE RATE DETERMINED? REVIEW OF INSURANCE RATE. 24
-
27 CONTINUATION OF INSURANCE - CONTINUATION OF POLICY IF PREMIUM PAYMENTS ARE NOT CONTINUED. 24
28 BASIS OF CALCULATION - METHOD OF CALCULATIONS ON FILE WITH STATE SUPERVISORY OFFICIAL. 25
29 DATES AND POLICY PERIODS - HOW DATES ARE DETERMINED; HOW PERIODS ARE MEASURED. 25
30 GENERAL PROVISIONS - THE CONTRACT; STATEMENTS IN APPLICATION; INCONTESTABILITY; 28
MISSTATEMENT OF AGE OR GENDER; SUICIDE EXCLUSION; ASSIGNMENT;
POLICY PAYMENT; RELATIONSHIPS POSTPONEMENT OF CERTAIN PAYMENTS OF
TRANSFERS; REPORTS; PROJECTION OF BENEFITS AND VALUES;
NONPARTICIPATION.
31 SETTLEMENT OPTIONS - WHAT SETTLEMENT (PAYOUT) OPTIONS ARE AVAILABLE? 26
</TABLE>
- ENDORSEMENTS, IF ANY
- APPLICATION
FOR INFORMATION OR TO MAKE A COMPLAINT, CALL 1-800-487- MONY (1-800-487-6669)OR
WRITE TO US AT OUR OPERATIONS CENTER: ONE MONY PLAZA, PO BOX 4830, SYRACUSE NY
13221.
<PAGE> 4
SCHEDULE OF BENEFITS AND PREMIUMS, CHARGES AND EXPENSES
1. Benefits and premiums
Flexible premium variable life policy
Death benefit option 1 in effect
Specified Amount in force - $100,000
guaranteed monthly insurance rates for initial specified amount - see
section ii
Guaranteed death benefit rider
Guarantee period to later of 10th policy anniversary or age 70
Monthly Guarantee Premium - $xxxx.xx
First premium $x,xxx.xx
Scheduled Premiums - $xxx.xx at xx policy month intervals measured from
x-xx-xxxx.
Guideline Premium limit as of policy date $xx,xxx.xx
Minimum Monthly Premium - $xx.xx (see grace period section xxiii for
explanation.)
Under the terms of the Policy, the scheduled premium shown above may not
continue The policy inforce to the Maturity Age even if this amount is paid as
scheduled. The period for which the policy will continue will depend on: the
amount of premiums paid; Changes in Specified Amount and death benefit options;
changes in interest credited, Expenses, fund performance and mortality
deductions; deductions for riders and Benefits and any partial surrenders and
policy loans. During the first 3 policy years or First three policy years
following an increase in specified amount, premiums paid less Partial surrenders
(excluding their fees) and any debt must equal the minimum monthly Premium times
the number of months the policy has been in force. Election of the guaranteed
Death benefit rider can provide for guaranteed continuation of the policy and
some Riders if certain requirements are met.
Charges and Expenses
Transfer charge: current - $0 (subject to change; see transfers section x)
guaranteed maximum - $25
Daily mortality and expense risk charge - .000959% (0.35% annually)
Sales charge - 4% of each premium received
Premium tax charge - 2.25% of each premium received subject to change based upon
Changes in applicable state tax laws or cost to the company.
Federal tax charge - 1.5% of each premium received subject to change based upon
Changes in applicable federal tax laws or cost to the company.
Administrative charge - $5.00 per month is included in the monthly deduction on
a Monthly anniversary day.
Per $1,000 initial specified amount charge - $x.xx per month during years 1
through 15
3
<PAGE> 5
IA. SURRENDER CHARGE
THE SURRENDER CHARGE AS OF THE POLICY DATE FOR THE INITIAL SPECIFIED AMOUNT IS
$X,XXX.XX . THE SURRENDER CHARGE FOR THE INITIAL SPECIFIED AMOUNT DECLINES EACH
YEAR AND IS THE APPLICABLE PERCENTAGE (SHOWN IN THE TABLE BELOW) OF THE
SURRENDER CHARGE AS OF THE POLICY DATE.
<TABLE>
<CAPTION>
POLICY YEAR APPLICABLE % POLICY YEAR APPLICABLE %
- ----------- ------------ ----------- ------------
<S> <C> <C> <C>
1 80% 9 60%
2 80 10 50
3 80 11 40
4 80 12 30
5 80 13 20
6 80 14 10
7 80 15 AND LATER 0
8 70
</TABLE>
SEE SURRENDER CHARGE SECTION FOR THE EFFECT OF ANY CHANGE IN SPECIFIED AMOUNT.
4
<PAGE> 6
2. GUARANTEED MONTHLY INSURANCE RATES FOR INITIAL SPECIFIED AMOUNT. RATES ARE
PER $1,000 OF AMOUNT AT RISK - SEE COST OF INSURANCE SECTION.
- ---------------------------------------------
<TABLE>
<CAPTION>
INSURED'S INSURED'S
ATTAINED ATTAINED
AGE RATE AGE RATE
- --------- ---- --------- -----
<S> <C> <C> <C>
35 0.14 65 1.88
36 0.15 66 2.08
37 0.16 67 2.30
38 0.17 68 2.53
39 0.18 69 2.80
40 0.20 70 3.10
41 0.21 71 3.44
42 0.23 72 3.84
43 0.25 73 4.29
44 0.27 74 4.79
45 0.29 75 5.33
46 0.31 76 5.91
47 0.34 77 6.51
48 0.36 78 7.15
49 0.39 79 7.85
50 0.43 80 8.62
51 0.47 81 9.50
52 0.51 82 10.50
53 0.57 83 11.63
54 0.62 84 12.86
55 0.69 85 14.18
56 0.76 86 15.57
57 0.83 87 17.00
58 0.92 88 18.49
59 1.01 89 20.04
60 1.12 90 21.69
61 1.23 91 23.49
62 1.37 92 25.50
63 1.52 93 27.96
64 1.69 94 31.38
95 36.80
96 46.59
97 67.04
98 83.33
99 83.33
</TABLE>
5
<PAGE> 7
3. Variable Account, The Funds and Sub-Accounts (see Variable Account section
for further information)
The Variable Account is MONY America Variable Account L and includes the
sub-accounts listed below.
The sub-accounts available for investment purposes, and the corresponding
portfolios of the applicable funds are:
<TABLE>
<CAPTION>
Sub-Account Applicable Fund
- ----------- ---------------
<S> <C>
Intermediate Term Bond MONY Series Fund, Inc.
Long Term Bond MONY Series Fund, Inc.
Money Market MONY Series Fund, Inc.
Government Securities MONY Series Fund, Inc.
Managed Enterprise Accumulation Trust
High Yield Bond Enterprise Accumulation Trust
Small Company Value Enterprise Accumulation Trust
Equity Enterprise Accumulation Trust
International Growth Enterprise Accumulation Trust
Growth Enterprise Accumulation Trust
Growth and Income Enterprise Accumulation Trust
Small Company Growth Enterprise Accumulation Trust
Equity Income Enterprise Accumulation Trust
Capital Appreciation Enterprise Accumulation Trust
</TABLE>
The MONY Series Fund, Inc. is organized under the laws of Maryland. The
Enterprise Accumulation Trust is organized under the laws of Massachusetts. Each
fund is registered with the Securities and Exchange Commission (SEC) as an open
end, diversified management investment company under the Investment Company Act
of 1940.
6
<PAGE> 8
- -------------------------------------------------------------------------------
4 ABOUT THIS POLICY
The following is an overview of some basic policy provisions to aid your
understanding. The specific provisions of the Policy are found in the pages
following this overview. In the event of a discrepancy between this overview and
any specific provisions of this Policy, the specific Policy provisions will
control.
This is a Flexible Premium Variable Life to Maturity Age (Age 100) Insurance
Policy. This Policy goes into effect on the Policy Date. This Policy is a
"promise to pay" the Death Proceeds in the event the Insured dies before the
Maturity Age, while the Policy is in force. Payment will be made, subject to all
the provisions of this Policy, when we receive due proof of death. The Insured
is the person on whose life the Policy is based. "Specified Amount in force" is
the Initial Specified Amount, adjusted for any increases or decreases in
Specified Amount. The Death Proceeds are paid to the Beneficiary. If the Insured
is living at the Maturity Age, while the Policy is in force, we will pay the
Cash Value, if any, to the Owner. Maturity Age means the policy anniversary
following the Insured's 100th birthday.
The value of this Policy is based on Premiums which you allocate to either the
Variable Account and/or the Guaranteed Interest Account. The Fund Value is the
combined value of the Variable Account and the Guaranteed Interest Account
BEFORE the deduction of any surrender charge. The Cash Value, if any, is value
AFTER the surrender charge and any Debt is deducted. The "Guaranteed Interest
Account" is a "fixed" account and is part of our General Account. The Variable
Account is an account that is separate from our General Account. The value of
the Variable Account can increase or decrease depending on investment
experience. The Variable Account is made up of several sub-accounts
(subdivisions) with different investment objectives. Each sub-account invests
only in the shares of its own portfolio of its fund. The measure of value in a
sub-account is called a Unit.
The value of Units in a sub-account can only change on a Business Day. A
Business Day is any day the New York Stock Exchange is open for trading or on
any other day there is enough trading to change the Unit value of a sub-account.
Trading refers to the securities held by the portfolio.
A "Monthly Anniversary Day" is the first Business Day of each policy month. Each
month, a Monthly Deduction (the cost of insurance, cost of additional benefits
an Administrative Charge and a per $1,000 of Specified Amount charge) is
deducted from the Fund Value.
If, on a Monthly Anniversary Day, additional payments by you are required to
keep this Policy in force, we will send a notice of insufficient premium or
INSUFFICIENT VALUE to you. A grace period of 61 days will be allowed for payment
of the required amount.
When we refer to "I" or "my" in a question, or to "you" or "your" in an answer,
we mean the Owner. The Owner is the person who holds the Policy and who has the
rights of ownership. The Owner chooses any options the Policy offers. When we
refer to "we", "us" and "our" we mean MONY Life Insurance Company of America.
"Administrative Office" means our office at 1740 Broadway, New York, N.Y. 10019
and also includes our Operations Center at One MONY Plaza, Syracuse, New York
13221.
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<PAGE> 9
You can read more about the terms used in the overview on the following pages.
"Beneficiary" (see Section 18).
"Cash value" (see Section 9).
"Death Proceeds" (see Section 7).
"Fund value" (see Section 8).
"Grace Period" (see Section 23).
"Guaranteed Interest Account" (see Section 21).
"Monthly Deduction" (see Section 22).
"Owner" (see Section 17).
"Specified Amount in force" (see Section 16).
"Units" and "sub-account unit value" (see Section 20).
"Variable Account" and "sub-accounts" (see Section 19).
5. WE WILL PAY
WHAT WILL THE COMPANY PAY AND WHEN WILL THEY PAY IT?
- --------------------------------------------------------------------------------
If the Insured dies before the Maturity Age and while this Policy is in force,
we will pay the Death Proceeds of this Policy to the Beneficiary. Payment will
be made subject to all the provisions of this Policy, when we receive due proof
of death at our Administrative Office.
If the proceeds are not paid by the end of 30 days from the date we receive due
proof of death of the Insured, we will pay interest on the proceeds if required
by the state in which the Policy is delivered at the rate specified by that
state. If interest is payable, it will be paid from date of the death to date of
payment of proceeds.
Payment in any case will only be made in accordance with all the provisions of
this Policy.
If the Insured is living at the Maturity Age, we will pay the Cash Value, if
any, to the Owner(s).
6. PREMIUMS
WHERE DO I PAY PREMIUMS?
Premiums after the first may be paid at any time to us at our Administrative
Office or through any agent or other person authorized to accept them in
exchange for a receipt signed by our Treasurer and by the person receiving the
payment.
IS THERE A LIMIT ON PREMIUMS?
8
<PAGE> 10
Yes. Premiums after the first (shown in section I), are limited as described
below. We will not accept any part of an unscheduled premium if that part would
result in the sum of all premiums paid, less any partial surrenders (including
their fees), being in excess of the Guideline Premium Limit that then applies to
the Policy.
We reserve the right to reject all or a portion of any unscheduled premium if
part (b) of either Death Benefit Option 1 or Death Benefit Option 2 is in
effect.
HOW IS THE GUIDELINE PREMIUM LIMIT DETERMINED?
The Guideline Premium Limit that applies to the Policy at any time will never be
more than as determined in accordance with Section 7702 of the Internal Revenue
Code of 1986 as now or later amended or any further amendment of such Code
superseding or modifying that section. The Guideline Premium Limit that applies
to the Policy on the Policy Date is shown in Section I.
CAN THE GUIDELINE PREMIUM LIMIT CHANGE?
Yes. Changes in the Specified Amount in force, the Death Benefit Option in
effect or an additional benefit provided by rider will change the Guideline
Premium Limit. In the event of any such change, we reserve the right to reduce
the amount of the Policy's Fund Value after deduction of any surrender charge,
so that the Guideline Premium Limit that applies to the Policy is not violated.
The amount by which we reduce the Fund Value after deduction of any surrender
charge, will be refunded to you in cash. We will issue an endorsement to reflect
any such change and it will include the revised Guideline Premium Limit that
then applies to the Policy.
WHAT IS A NET PREMIUM?
A net premium is a premium paid by you, less the sales charge, Premium Tax
Charge and Federal Tax Charge shown in Section I.
WHEN MUST I PAY THE FIRST PREMIUM AND WILL THE PREMIUM EARN INTEREST?
You must pay the first premium before or at delivery of the Policy. The premium
will earn interest at a rate not less than 4.5%. Interest will be credited
annually from the later of the Policy Date and the Business Day that falls on,
or next follows, the date we receive it at our Administrative Office until the
date we transfer it to the sub-accounts and/or Guaranteed Interest Account as
you have chosen. If you do not accept the Policy at delivery, we will refund any
premium paid without interest.
WILL ANY SUBSEQUENT PREMIUMS EARN INTEREST DURING THE "RIGHT TO RETURN POLICY"
PERIOD?
Any premium we receive after delivery of the Policy but before the end of the
"Right to Return Policy " period (see page 1) will also earn interest at a rate
not less than a 4.5% annual interest rate.
WHEN IS THIS VALUE TRANSFERRED INTO THE ACCOUNTS I'VE CHOSEN?
If you have not returned the Policy, at the end of the Right to Return Policy
period, we transfer the net premiums with interest less any monthly deductions
that may apply to the sub-accounts and/or the Guaranteed Interest Account as you
have chosen. When we do this, we use the most recent valid scheduled premium
allocation choice we have from you. If we have no valid scheduled premium
allocation choice from you, we will transfer the net premiums with interest,
less deductions to the Money Market Sub-account.
AFTER THE "RIGHT TO RETURN POLICY" PERIOD, WHERE ARE NET PREMIUMS ALLOCATED?
After the "Right to Return Policy" period, we allocate net premiums to the
sub-accounts and/or the Guaranteed Interest Account as chosen by you on the day
we receive them if it is a Business Day. If the day we receive the premium is
not a Business Day, we allocate it on the next Business Day. When we do this, we
use the most recent valid scheduled premium allocation choice we have from you.
If we have no valid scheduled premium allocation choice from you, we will
allocate the net premiums, less deductions to the Money Market Sub-account.
ARE THERE ANY ALLOCATION RULES FOR SCHEDULED PREMIUMS?
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<PAGE> 11
Yes, allocations must be made in whole percentages. If a sub-account or the
Guaranteed Interest Account is to receive any allocation, the allocation must be
at least 10% of the net premium and, the total must equal 100% of the net
premium. We use the most recent valid allocation choice we have from you. You
may change your allocation choice by writing to us at our Administrative Office.
A change will take effect within 7 days after we receive that notice.
WILL I RECEIVE ANY NOTICE REGARDING SCHEDULED PREMIUMS?
Yes, we will send reminder notices to you for the payment of the scheduled
premiums shown in Section I.
CAN I CHANGE THE AMOUNT AND INTERVAL OF SCHEDULED PREMIUMS?
Yes, you can change the amount and interval of payment of scheduled premiums by
writing to us. But the new payment interval must satisfy our rules in use at the
time of the change.
CAN I MAKE UNSCHEDULED PREMIUM PAYMENTS?
Yes, additional premium payments may be made at any time. However, we will not
accept any part of an unscheduled premium if that part will result in total
premiums paid (less any partial surrenders, including their fees) in excess of
the Guideline Premium Limit if applicable.
CAN I EARMARK AN UNSCHEDULED PREMIUM FOR AN ALLOCATION DIFFERENT FROM MY REGULAR
ALLOCATION CHOICE?
Yes, you can choose a specific allocation for an unscheduled premium and it will
not change your allocation choice for future scheduled premiums. Allocations
must be by amount or percentage in whole numbers only. If a sub-account or the
Guaranteed Interest Account is to receive any allocation, the allocation must be
at least 10% and the total must equal 100% of the net premium.
If you do not give us a specific allocation for the unscheduled premium, or if
your allocation choice is not valid, we will use the most recent valid scheduled
premium allocation choice we have from you.
7. DEATH PROCEEDS-DEATH BENEFIT OPTIONS
WHAT ARE THE DEATH PROCEEDS OF THE POLICY?
The Death Proceeds will be paid to the Beneficiary when we receive due proof of
the death of the Insured while this Policy is in force. The Death Proceeds will
be the sum of:
- - the Death Benefit; and
- - any death benefit provided by any additional benefit rider in force on the
date of death.
LESS:
- - any Debt due us on this Policy; and
- - if the death of the Insured occurs during any period for which a monthly
deduction has not been made, any monthly deduction that may apply to that
period, including the deduction for the month of death.
WHAT IS THE DEATH BENEFIT UNDER DEATH BENEFIT OPTION 1?
If Death Benefit Option 1 is in effect on the date of the Insured's death, the
Death Benefit is the greater of:
(a) the Specified Amount in force on the date of death; and
(b) the Fund Value on the date of death multiplied by the applicable
percentage (see below).
WHAT IS THE DEATH BENEFIT UNDER DEATH BENEFIT OPTION 2?
If Death Benefit Option 2 is in effect on the date of the Insured's death, the
Death Benefit is the greater of:
(a) the Specified Amount in force on the date of death, plus the Fund Value
on the date of death; and
(b) the Fund Value on the date of death multiplied by the applicable
percentage (see below).
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<PAGE> 12
The applicable percentage of the Fund Value used to determine the Death Benefit
payable is:
<TABLE>
<CAPTION>
Insured's
Attained Age on
date Applicable Percentage
of Death of Fund value
--------- -----------------
<S> <C>
40 or under 250%
41-45 250% less 7% for each year over
attained age 40
46-50 215% less 6% for each year over attained age 45
51-55 185% less 7% for each year over attained age 50
56-60 150% less 4% for each year over attained age 55
61-65 130% less 2% for each year over attained age 60
66-70 120% less 1% for each year over attained age 65
71-74 115% less 2% for each year over attained age 70
75-90 105%
91-94 105% less 1% for each year over attained age 90
95-99 101%
100 100%
</TABLE>
UNDER WHAT CIRCUMSTANCES WILL THE DEATH BENEFIT OPTION CHANGE AUTOMATICALLY?
If a Waiver of Monthly Deduction Benefit rider or a Waiver of Specified Premium
rider is part of this Policy, and if Death Benefit Option 1 is in effect, it
will automatically change to Death Benefit Option 2 under the terms and
conditions explained in that rider.
8. FUND VALUE
WHAT IS THE FUND VALUE ON THE POLICY DATE?
The Fund Value on the Policy Date is the net Premiums received by us on or
before the Policy Date with interest, if applicable, less the monthly deduction
due on the Policy Date.
WHEN ARE FUND VALUE CALCULATIONS MADE?
After the Policy Date, Fund Value calculations are made on Business Days. If a
Fund Value calculation has to be made for a day that is not a Business Day, then
we will use the next Business Day.
HOW IS THE FUND VALUE DETERMINED ON A BUSINESS DAY?
The Fund Value on a Business Day is determined as follows:
(a) Determine the Fund Value in each sub-account on that Day (see below for
details).
(b) Total the Fund Value in each sub-account on that Day.
(c) Add the Fund Value in the Guaranteed Interest Account on that Day (see below
for details).
(d) Add any amounts in the Loan Account on that Day.
(e) Add interest credited on that Day on the amounts in (d) since the last
Monthly Anniversary Day.
(f) Add any net Premiums received on that Day.
(g) Deduct any transfer charges on that Day.
(h) Deduct any partial surrender, and its fee, made on that Day.
(i) Deduct any monthly deduction to be made on that Day.
REGARDING (a) ABOVE, HOW IS THE FUND VALUE FOR EACH SUB-ACCOUNT DETERMINED ON
THAT BUSINESS DAY?
For each sub-account we multiply the number of Units credited to that
sub-account by its Unit value on that Day. The multiplication is done BEFORE the
purchase or redemption of any Units on that Day.
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<PAGE> 13
REGARDING (c) ABOVE, WHAT MAKES UP THE FUND VALUE IN THE GUARANTEED INTEREST
ACCOUNT ON THAT BUSINESS DAY?
The Fund Value in the Guaranteed Interest Account on that Day is the accumulated
value with interest of net Premiums allocated, and amounts transferred, to the
Guaranteed Interest Account BEFORE that Day, decreased by allocations against
the Guaranteed Interest Account BEFORE that Day for: (i) any partial surrender,
and its fee; (ii) any amounts transferred from the Guaranteed Interest Account,
and transfer charge; and (iii) any monthly deductions.
HOW IS THE FUND VALUE DETERMINED ON A MONTHLY ANNIVERSARY DAY FOR PURPOSES OF
CALCULATING THE COST OF INSURANCE AND THE COST OF ANY WAIVER OF MONTHLY
DEDUCTION RIDER?
The Fund Value on a Monthly Anniversary Day for purposes of calculating the cost
of insurance and the cost of any waiver of monthly deduction rider is determined
as described in items (a) through (h) above.
9. CASH VALUE
WHAT IS THE CASH VALUE OF THIS POLICY?
The Cash Value of this Policy at any time is the Fund Value, less the surrender
charge and less any Debt.
10. TRANSFERS
WHEN CAN I MAKE TRANSFERS?
Transfers may be made only after the "Right to Return Policy" period has ended.
WHAT TRANSFERS CAN I MAKE?
There are 2 types of transfers you can make. Each type is explained (along with
any rules and limitations) below:
Type 1. Transfers FROM a sub-account. There are no restrictions on this type of
transfer.
Type 2. Transfers FROM the Guaranteed Interest Account. This type of transfer
can only be made ONCE per policy year. Your request for this type of transfer
MUST be received at our Administrative Office WITHIN 10 DAYS BEFORE OR 30 DAYS
AFTER a policy anniversary.
There is no limit on transfers INTO a sub-account or the Guaranteed Interest
Account.
WHEN WILL A TRANSFER REQUEST TAKE EFFECT?
Type 1 transfers will take effect on the Business Day that falls on, or next
follows, the date we receive the request at our Administrative Office. Type 2
transfers will take effect on the policy anniversary or, if later (subject to
above rules), on the Business Day that falls on, or next follows, the date we
receive the request at our Administrative Office.
WHAT IS THE CHARGE FOR A TRANSFER AND HOW DOES IT WORK?
Each request for a transfer is considered one transaction and is subject to a
transfer charge. The current amount of that charge is shown on page 3. We may
increase the charge but it will never be more than the guaranteed maximum shown
on page 3.
If we change the amount of the charge we will send an endorsement to show the
change.
IF A TRANSFER CHARGE IS APPLICABLE, HOW IS IT ALLOCATED AMONG THE ACCOUNTS?
The transfer charge is allocated against the first of the sub-accounts and/or
the Guaranteed Interest Account from which Fund Value is being transferred.
CAN I CHANGE THIS POLICY TO A POLICY THAT DOES NOT DEPEND ON THE INVESTMENT
RESULTS OF A SEPARATE ACCOUNT?
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<PAGE> 14
Yes. During the first 24 months after the Date of Issue of the Policy, the
entire amount of Fund Value in the sub-accounts may be transferred to the
Guaranteed Interest Account. Election of this exchange transfer will change this
Policy to a policy that is not dependent upon the investment results of a
separate account. There will be no transfer charge for an exchange transfer. On
the date an exchange transfer takes effect, the premium allocation will be
changed so that all future net premiums will be allocated to the Guaranteed
Interest Account only.
11. SURRENDER
WHEN MAY I SURRENDER THE POLICY AND WHAT IS ITS VALUE ON SURRENDER?
You may surrender the Policy at any time during the Insured's lifetime for its
Cash Value, if any. If the Policy If the Policy is surrendered within 30 days of
a policy anniversary, the following will apply. The portion of the Cash Value of
the Policy in the Guaranteed Interest Account on the surrender date will not be
less than the Cash Value in the Guaranteed Interest Account on that anniversary.
The Cash Value on that anniversary will be adjusted for amounts attributable to:
any partial surrender and its fee; any transfer to or from the Guaranteed
Interest Account and applicable transfer charge, and any policy loan.
12. PARTIAL SURRENDER
CAN I WITHDRAW MONEY FROM THE POLICY?
Yes, money may be withdrawn by making a partial surrender.
WHAT ARE THE RULES AND LIMITATIONS FOR A PARTIAL SURRENDER?
A partial surrender of this Policy may be made for any amount of at least $500
which, with its fee (see below), is less than the Policy's Cash Value on the
date of the partial surrender. A partial surrender may not result in a Specified
Amount in force less than $100,000. Nor may it result in a remaining Cash Value
of less than $500.
IS THERE A FEE FOR A PARTIAL SURRENDER?
Yes, a partial surrender fee equal to $10 will apply to each partial surrender.
The amount of a partial surrender, plus its fee, will be deducted from the Fund
Value of the Policy on the date of the partial surrender. The fee will be
retained by us.
WHEN WILL PARTIAL SURRENDERS TAKE EFFECT?
Partial surrenders will take effect on the Business Day that falls on or next
follows the date we receive your request at our Administrative Office.
HOW CAN I SPECIFY PARTIAL SURRENDER ALLOCATIONS AND ARE THERE MINIMUMS?
You can specify partial surrender allocations by amount or percentage.
Allocations by percentage must be in whole percentages and the minimum
percentage is 10% against any sub-account or the Guaranteed Interest Account.
Percentages must total 100%.
We will not accept an allocation which does not comply with the above rules or
if there is not enough Fund Value in a sub-account or the Guaranteed Interest
Account to provide its share of the allocation.
WHAT IF I DON'T SPECIFY AN ALLOCATION?
If you do not specify an allocation, we will not accept the request for partial
surrender.
HOW WILL THE PARTIAL SURRENDER FEE BE ALLOCATED?
Each sub-account and/or the Guaranteed Interest Account will be charged its
pro-rata share of the partial surrender fee, based on the allocation percentages
you specify for the partial surrender.
HOW WILL A PARTIAL SURRENDER AFFECT THE AMOUNT OF DEATH BENEFIT AND SPECIFIED
AMOUNT IN FORCE?
13
<PAGE> 15
If Death Benefit Option 1 is in effect on the day on which a partial surrender
is made, we shall then reduce the amount of the Death Benefit payable on that
day by the amount of the partial surrender, excluding its fee. But, the amount
of partial surrender cannot result in a Specified Amount in force less than
$100,000.
If Death Benefit Option 2 is in effect on the day on which a partial surrender
is made, the Fund Value on that day will be reduced by the amount of the partial
surrender, plus its fee. The Specified Amount in force on that day will be
unaffected.
HOW DO PARTIAL SURRENDERS AFFECT THE SURRENDER CHARGE DESCRIBED IN SURRENDER
CHARGE SECTION XIII ON PAGE 17?
Partial surrenders have no effect on the amount of surrender charge that may be
applicable.
13. SURRENDER CHARGE
WHAT IS THE SURRENDER CHARGE FOR THE INITIAL SPECIFIED AMOUNT?
The surrender charge for the Initial Specified Amount is shown in Section IA.
WHAT EFFECT DOES AN INCREASE IN SPECIFIED AMOUNT HAVE ON THE SURRENDER CHARGE?
A new separate surrender charge will be determined for each increase in
Specified Amount and will be provided in the endorsement issued to reflect that
increase. The surrender charge for the Specified Amount in force reflects any
charge attributable to the Initial Specified Amount and to each increase in
Specified Amount.
WHEN WILL A SURRENDER CHARGE BE ASSESSED?
A full surrender will result in all of the outstanding surrender charge (if any)
being assessed against the Fund Value.
14. LOANS
MAY I OBTAIN A LOAN FROM THE POLICY?
Yes, loans may be obtained at any time while this Policy has a loan value. The
loan value is up to 90% of the Cash Value on the date of the loan. A proper
assignment of this Policy to us as security will be needed.
IS THERE ANY INTEREST CHARGED ON LOANS AND HOW IS IT PAYABLE?
Loan interest at an annual rate of 5.25% will be charged in arrears on new or
outstanding loans (4.75% in policy years 11 and later). This includes a loan
continued after any reinstatement of the Policy. Loan interest will accrue from
day to day between policy anniversaries. Interest will be payable in arrears on
each policy anniversary.
WHAT ELSE SHOULD I KNOW ABOUT LOANS?
The Policy will be the sole security for any policy loan. But it need not be
given to us for endorsement unless we ask for it.
Any reference to Debt under this Policy means total loan principal under this
Policy plus any due or accrued loan interest.
If ever the Debt exceeds the Fund Value less any outstanding surrender charge,
this Policy will end. But we must first give at least 61 days written notice of
INSUFFICIENT VALUE.
Any Debt may be repaid in whole or part before the Insured's death.
Any written notice referred to in this "Loans" Section will be mailed to the
last known address of the Owner or any assignee of record.
WHEN WILL LOANS TAKE EFFECT?
14
<PAGE> 16
Loans will take effect on the Business Day that falls on, or next follows, the
date we receive the request for the loan at our Administrative Office.
HOW CAN I SPECIFY LOAN ALLOCATIONS AND ARE THERE MINIMUMS?
You can specify loan allocations by amount or percentage. Allocations by
percentage must be in whole percentages and the minimum percentage is 10%
against any sub-account and/or the Guaranteed Interest Account. Percentages must
total 100%.
We will not accept an allocation which does not comply with the above rules or
if there is not enough Cash Value in a sub-account and/or the Guaranteed
Interest Account to provide its share of the allocation.
WHAT IF I DON'T SPECIFY AN ALLOCATION?
If you do not specify an allocation, we will not accept the request for loan.
WHAT HAPPENS IF I DON'T PAY THE LOAN INTEREST WHEN IT'S DUE?
Any interest not paid when due will be added to the loan and bear interest at
the 5.25% annual rate (4.75% in policy years 11 and later). It will be deducted
from the Fund Value of each sub-account and/or the Guaranteed Interest Account
in the same proportion that each bears to the total Fund Value on the policy
anniversary.
HOW WILL DEBT REPAYMENTS BE ALLOCATED?
Any Debt repayment must be earmarked as such and will be allocated to the
sub-accounts and/or the Guaranteed Interest Account according to the most recent
valid scheduled premium allocation choice that we have from you.
15. LOAN ACCOUNT
WHAT IS THE LOAN ACCOUNT AND HOW IS INTEREST CREDITED TO IT?
The Loan Account is a portion of the Policy's Fund Value that was transferred
from the sub-accounts and/or the Guaranteed Interest Account to secure any
outstanding loan. The Loan Account will earn interest at a rate not less than
4.5% per year. Any interest in excess of this rate will be credited in a manner
determined by us. The Fund Value of the Loan Account in excess of the Debt will
be allocated to the sub-accounts and/or the Guaranteed Interest Account in a
manner determined by us.
WHAT IF I PAY THE ENTIRE DEBT BETWEEN POLICY ANNIVERSARIES?
If the entire Debt is repaid on a date that is not a policy anniversary, we
determine the interest earned on the Loan Account from the last date it was
calculated to the date that payment was received by us at our Administrative
Office. This interest will be allocated on the date of repayment among the
sub-accounts and/or the Guaranteed Interest Account in accordance with the most
recent valid scheduled premium allocation that we have from you (see Premiums
section VI).
16. OPTIONAL POLICY CHANGES
WHAT CHANGES CAN I MAKE TO THE POLICY?
You may request an increase or a decrease to the Specified Amount. You may also
request a change in Death Benefit Option. Requests for these changes may be made
by writing to us at our Administrative Office. We will issue an endorsement to
the Policy to show any such change.
ARE THERE ANY RULES OR LIMITATIONS REGARDING A REQUEST FOR AN INCREASE
IN SPECIFIED AMOUNT?
Yes. The rules and limitations for a requested increase in Specified Amount
are:
1. The request can not be made after the policy anniversary on which
the Insured attains the maximum age we then allow for increases;
2. Monthly deductions are not being waived under the terms of a Waiver
of Monthly Deduction Benefit rider; and
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<PAGE> 17
3. Specified Premiums are not being waived under the terms of a Waiver
of Specified Premiums Benefit rider.
HOW DO I REQUEST AN INCREASE IN SPECIFIED AMOUNT?
You must submit a supplemental application to us and provide evidence
satisfactory to us of the insurability of the Insured.
WHEN WILL AN INCREASE TAKE EFFECT?
The increase will take effect on the Monthly Anniversary Day that falls on, or
next follows, the date we approve it.
ARE THERE ANY RULES OR LIMITATIONS REGARDING A DECREASE IN SPECIFIED AMOUNT?
Yes. We will reject any requested decrease if that decrease would result in a
Specified Amount that is less than $100,000.
WHEN WILL THE DECREASE TAKE EFFECT AND HOW WILL IT BE APPLIED?
The decrease will take effect on the Monthly Anniversary Day that falls on, or
next follows, the date we approve it.
The decrease will be applied as follows:
(a) first, to reduce the amount provided by the most recent increase in
Specified Amount;
(b) next, to reduce the next most recent increases, successively;
(c) finally, to reduce the Initial Specified Amount.
WHEN WILL A CHANGE IN DEATH BENEFIT OPTION TAKE EFFECT AND HOW WILL THE
SPECIFIED AMOUNT BE AFFECTED?
Any change in Death Benefit Option will take effect on the Monthly Anniversary
Day that falls on, or next follows, the date on which we approve the request to
change the Option. If the change is from Option 2 to Option 1, the Specified
Amount in force will be increased by the amount of the Fund Value on the
effective date of the change. If the change is from Option 1 to Option 2, the
Specified Amount in force will be decreased by the amount of the Fund Value on
the effective date of the change. But, the Specified Amount in force after the
decrease cannot be less than $100,000.
ARE THERE ANY REQUIREMENTS FOR A CHANGE IN DEATH BENEFIT OPTION?
We reserve the right to request evidence satisfactory to us of the insurability
of the Insured for a change from Option 1 to Option 2.
17. RIGHTS OF OWNER
WHO IS THE OWNER OF THE POLICY AND WHAT RIGHTS DOES THE OWNER HAVE?
While the Insured is living, all rights, benefits, options and privileges under
the Policy or allowed by us belong to the Owner unless otherwise provided by
endorsement. These rights include the right to change the Beneficiary, to assign
the Policy, to transfer policy values or make full or partial surrenders, all in
accordance with our rules and procedures. The Owner is the person so named in
the attached application for this Policy unless otherwise provided by
endorsement.
18. BENEFICIARY
WHO IS THE BENEFICIARY?
The Beneficiary is the person to whom the proceeds of the Policy are payable
upon the death of the Insured. The Beneficiary is the person so named in the
attached application for this Policy unless otherwise provided by endorsement.
If the beneficiary designation requires the Beneficiary to be living or
surviving, then, unless otherwise provided, that Beneficiary must be living on
the 14th day after the Insured's death or, if earlier, the date we receive due
proof
16
<PAGE> 18
of the Insured's death. The share of the Death Proceeds of any Beneficiary who
is not living on that earlier day will be payable to the remaining
Beneficiaries. Payment will be made in the manner provided for in that
designation.
WHAT IF THERE IS NO BENEFICIARY NAMED OR THEN LIVING?
Unless otherwise provided in the beneficiary designation, the Death Proceeds
will be payable to the Insured's executors or administrators.
CAN I CHANGE THE BENEFICIARY?
Yes, you can change the Beneficiary, unless you have given up this right, as
long as the Insured is living by writing to us at our Administrative Office. You
do not need to return the Policy to make the change unless we ask for it.
WHEN WILL A CHANGE OF BENEFICIARY TAKE EFFECT?
A change will take effect when we record it retroactively as of the date the
request was signed. We shall not be charged with notice of a change of
beneficiary until the change is received at our Administrative Office. The
change will be subject to any payment made or action taken by us before we
received your request.
19. THE VARIABLE ACCOUNT
WHAT IS THE VARIABLE ACCOUNT AND WHAT IS ITS PURPOSE?
The Variable Account is an investment account established and maintained by us,
separate from our general account or other separate accounts. The variable
benefits under this Policy are provided through investments we make in the
Variable Account. It is used for our flexible premium variable life policies
and, if permitted by law, may be used for other policies.
WHAT ELSE SHOULD I KNOW ABOUT THE VARIABLE ACCOUNT?
We own the assets in the Variable Account. Assets equal to the reserves and
other liabilities of the Variable Account will not be charged with liabilities
that arise from any other business we conduct. We may from time to time transfer
to our general account, assets which exceed the reserves and other liabilities
of the Variable Account.
The Variable Account is registered with the Securities and Exchange Commission
(SEC) as a unit investment trust under the Investment Company Act of 1940. It is
also governed by the laws of the state of Arizona.
WHAT CHANGES CAN THE COMPANY MAKE TO THE VARIABLE ACCOUNT?
We may, to the extent permitted by applicable laws and regulations, make these
changes:
(a) the Variable Account may be operated as a management company under the
Investment Company Act of 1940; or (b) the Variable Account may be de-registered
under that Act if registration is no longer required; or (c) the Variable
Account may be combined with any of our other separate accounts.
WHAT SHOULD I KNOW ABOUT SUB-ACCOUNTS?
We use the assets of each separate sub-account to buy shares in a corresponding
portfolio of the applicable fund. (See Section 3).
WHAT RIGHTS DOES THE COMPANY HAVE TO CHANGE SUB-ACCOUNTS?
We reserve the right to establish new sub-accounts or eliminate one or more
sub-accounts if marketing needs, tax considerations or investment conditions
warrant.
Any new sub-accounts may be made available to existing policies on a basis to be
determined by us. If any of these changes are made, we may by appropriate
endorsement change the Policy to reflect the change.
Income and realized and unrealized gains or losses from assets of each
sub-account are credited to or charged against that sub-account without regard
to income, gains or losses in the other sub-accounts, our general account or
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any other separate accounts. We reserve the right to credit or charge a
sub-account in a different manner if required, or appropriate, by reason of a
change in the law.
WHEN WILL THE COMPANY VALUE THE ASSETS IN THE SUB-ACCOUNTS?
We will value the assets of each sub-account on each Business Day after the
assets in its corresponding fund portfolio have been valued on that Day.
WHAT CHANGES CAN THE COMPANY MAKE TO THE PORTFOLIO?
If, in our judgment, a portfolio no longer suits the purposes of the Policy due
to a change in its investment objectives or restrictions, we may substitute
shares of another portfolio of that fund or shares of another investment fund.
But, we will notify you before doing so and, to the extent required by law, we
will get prior approval from the SEC and the Arizona Insurance Department. Such
approval process is on file with the Arizona Insurance Department. We also will
get any other required approvals.
20. SUB-ACCOUNT UNIT VALUE
WHAT IS THE UNIT VALUE OF EACH SUB-ACCOUNT?
The unit value of each Sub-account on its first Business Day was set at $10. The
unit value of each sub-account on any subsequent Business Day is obtained by
subtracting (b) from (a) and dividing the result by (c), where:
<TABLE>
<S> <C> <C>
(a) is The per share net asset value on the Business Day of the applicable
fund portfolio in which the sub-account invests times the number of
such shares held in the sub-account before the purchase or redemption
of any shares on that Day.
(b) is The mortality/expense risk charge accrued as of that Business Day. The
DAILY MORTALITY/EXPENSE RISK CHARGE is a percentage (shown in
Section I) of the sub-account's net asset value on the previous
Business Day. (If the previous day was not a Business Day, then the
daily mortality/expense risk charge is the percentage shown in
Section I times the number of days since the last Business Day times
the sub-account's net asset value on that last Business Day.)
(c) is The total number of Units held in the sub-account on the Business Day
before the purchase or redemption of any Units on that Day.
</TABLE>
For any Policy transaction which is applied to a sub-account, the dollar amount
of transaction is divided by the sub-account unit value to determine the number
of units credited or subtracted from a sub-account.
21. GUARANTEED INTEREST ACCOUNT
WHAT IS THE GUARANTEED INTEREST ACCOUNT?
The Guaranteed Interest Account is an account which is part of our general
account. The general account consists of all of our assets except those held by
the Variable Account and other separate accounts maintained by us.
WHAT INTEREST RATE APPLIES TO THE GUARANTEED INTEREST ACCOUNT?
The guaranteed annual interest rate that applies in the calculation of the Fund
Value in the Guaranteed Interest Account is 4 .5% (0.0121%, compounded daily).
Interest in excess of the guaranteed rate may be applied in the calculation of
that Fund Value in a manner determined by us. We may use different rates of
interest for different portions of the Fund Value in the Guaranteed Interest
Account.
22. MONTHLY DEDUCTION
WHAT IS THE MONTHLY DEDUCTION?
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<PAGE> 20
The monthly deduction on a Monthly Anniversary Day for the following policy
month is the sum of (a) through (d), where:
(a) is the cost of insurance (see Cost of Insurance section below).
(b) is the cost of any additional benefits provided by rider.
(c) is the Administrative Charge (shown in Section I).
(d) is the per $1,000 Specified Amount in force charge.
HOW IS A MONTHLY DEDUCTION ALLOCATED BEFORE THE END OF THE "RIGHT TO RETURN
POLICY" PERIOD?
Any monthly deduction to be made before the end of the "Right to Return Policy"
period (see page 1) will be charged against the net premiums.
HOW ARE MONTHLY DEDUCTIONS ALLOCATED AFTER THE END OF THE "RIGHT TO RETURN
POLICY" PERIOD?
Monthly deductions made after the end of the "Right to Return Policy" period
will be allocated against each sub-account and/or the Guaranteed Interest
Account in the same proportion that the Policy's Fund Value held in each bears
to the total Fund Value of the Policy on that Business Day.
WHAT EFFECT DOES AN INCREASE IN SPECIFIED AMOUNT HAVE ON THE PER $1,000
SPECIFIED AMOUNT CHARGE?
An additional Per $1,000 charge will be determined for each increase in
Specified Amount and will be provided in the endorsement issued to reflect that
increase. The charge for the Specified Amount in force reflects any charge
attributable to the Initial Specified Amount and to each increase in Specified
Amount.
23. GRACE PERIOD
WHAT IS THE GRACE PERIOD?
The grace period is the time we allow you to pay any amount needed to keep this
Policy in force.
WILL I BE NOTIFIED IF I NEED TO PAY ADDITIONAL AMOUNTS TO KEEP THIS POLICY IN
FORCE?
Yes. We will send a notice of INSUFFICIENT PREMIUM if you must pay an additional
amount to keep this Policy in force during:
(a) the first three policy years; or
(b) the three policy years following an increase in Specified Amount, if
that increase became effective during the first three policy years.
After the periods described in (a) and (b) above, we will send a notice of
INSUFFICIENT VALUE if you must pay an additional amount to keep this Policy in
force.
IS THERE A MINIMUM MONTHLY PREMIUM?
Yes. The Minimum Monthly Premium is shown in Section I. The Minimum Monthly
Premium after any increase in Specified Amount will be provided in the
endorsement issued to reflect that increase. The Minimum Monthly Premium is not
reduced after any decrease in Specified Amount.
WHEN ARE THE PREMIUMS I'VE PAID INSUFFICIENT TO KEEP THE POLICY IN FORCE?
(1) On each Monthly Anniversary Day during the periods described in (a)
and (b) above, we total all premiums paid and subtract any partial surrenders
(excluding their fees) and any Debt.
(2) Then we calculate the sum of:
(i) the Minimum Monthly Premium shown in Section 1 times the number of
months the Policy has been in force; plus
(ii) any increase in the Minimum Monthly Premium due to an increase in
Specified Amount times the number of months that increase has been
in effect.
If the amount from (1) above is less than the amount from (2) above, we will
send a notice of INSUFFICIENT
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<PAGE> 21
PREMIUM to the last known address of the Owner or any assignee of record at
least 61 days before the Policy ends.
The Cash Value of the Policy must also be less than zero for this notice to be
sent.
WHAT AMOUNT MUST I PAY AFTER A NOTICE OF INSUFFICIENT PREMIUM IS SENT AND, IS
THERE A GRACE PERIOD FOR THAT PAYMENT ?
A. After you receive a notice of INSUFFICIENT PREMIUM, you must pay:
(i) any balance needed on the Monthly Anniversary Day to cover the
Minimum Monthly Premium for the following month plus;
(ii) an amount equal to 1 Minimum Monthly Premium.
A grace period of 61 days from the date of the notice will be allowed for
payment of the above amount. The Policy is in force during the grace period.
WHEN IS THE VALUE OF THE POLICY INSUFFICIENT TO KEEP THE POLICY IN FORCE?
On each Monthly Anniversary Day after the periods described in (a) and (b)
above, if the Cash Value is not enough to cover the monthly deduction (see
Monthly Deduction Section 22) for the following month, we will send a notice of
INSUFFICIENT VALUE to the last known address of the Owner or any assignee of
record at least 61 days before the Policy ends.
WHAT AMOUNT MUST I PAY AFTER A NOTICE OF INSUFFICIENT VALUE IS SENT AND, IS
THERE A GRACE PERIOD FOR THAT PAYMENT?
B. After you receive a notice of INSUFFICIENT VALUE, you must pay:
(i) any balance needed on the Monthly Anniversary Day for the monthly
deduction plus;
(ii) an amount equal to 2 monthly deductions.
A grace period of 61 days from the date of the notice will be allowed for
payment of the above amount. The Policy is in force during the grace period.
WHAT HAPPENS IF I DON'T PAY THE AMOUNT DESCRIBED?
If the payment described in A or B above, as applicable, is not received within
the grace period, the Policy will end at the end of the grace period and any
remaining Cash Value on that date will be refunded.
24. REINSTATEMENT
IF THE POLICY ENDS AT THE END OF THE GRACE PERIOD, MAY IT BE REINSTATED?
Yes. If the Policy ends at the end of the grace period, the Policy may be
reinstated.
WHAT IS THE PERIOD OF REINSTATEMENT AND WHAT IS REQUIRED TO REINSTATE THE
POLICY?
Reinstatement may only be done within 5 years after the Monthly Anniversary Day
at the beginning of the grace period. We shall need:
(a) evidence satisfactory to us of the insurability of the Insured.
(b) payment of a premium large enough to cover:
(i) the balance needed as described in subsection A or B of Grace
Period, whichever is applicable, (see Section 23); and
(ii) an amount sufficient to keep the Policy in force for at least 1
month from the reinstatement date.
(c) payment or reinstatement of any Debt due us on the Policy, plus payment of
interest on any reinstated Debt from the beginning of the grace period to the
end of the grace period at the rate which applies to policy loans on the date of
reinstatement. This is an annual rate of 5.25% for policy years 1 through 10;
4.75% for policy years 11
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and later.
We will reinstate any surrender charge that would have been outstanding on the
date of reinstatement had the Policy remained in force.
IF I FULFILL THE ABOVE REQUIREMENTS FOR REINSTATEMENT, WHEN WILL THE POLICY BE
REINSTATED?
The reinstatement date will be the Monthly Anniversary Day that falls on, or
immediately precedes, the date the application for reinstatement is approved by
us.
25. COST OF INSURANCE
HOW IS THE COST OF INSURANCE DETERMINED?
The cost of insurance is determined on a monthly basis on a Monthly Anniversary
Day. It is determined separately for each of the following, in the order shown:
(a) the Initial Specified Amount; and
(b) each increase in Specified Amount, successively, in the order in which it
took effect; and
(c) either (i) or (ii) below, depending upon the Death Benefit Option in
effect on the Monthly Anniversary Day:
(i) if Death Benefit Option 1 is in effect, any excess between the
Death Benefit payable on that Day and the Specified Amount then in
force;
(ii) if Death Benefit Option 2 is in effect, any excess between the
Death Benefit payable on that Day less the Fund Value on that Day,
less the Specified Amount then in force.
The cost of insurance on a Monthly Anniversary Day for each of (a), (b),(c)(i)
and (c)(ii) above is calculated by multiplying its insurance rate (see Insurance
Rate section below) by its Amount At Risk (defined below) divided by 1,000. The
insurance rate that applies to (c)(i) and (c)(ii) is the same as the rate that
applies to the most recent increase in Specified Amount. (If there has been no
increase, the rate for the Initial Specified Amount applies.)
WHAT IS THE "AMOUNT AT RISK"?
If Death Benefit Option 1 is in effect, the "Amount At Risk" on the Monthly
Anniversary Day is the difference between (1) and (2), where: (1) is the Death
Benefit that would have been payable in the event of the death of the Insured on
that Day divided by 1.003675; and (2) is the Fund Value on that Day determined
as described in the last paragraph of the Fund Value section before any monthly
deduction made on that Day. The Policy's Fund Value on the Monthly Anniversary
Day is applied in the order shown to (a), (b) and, if applicable, (c)(i) above,
to determine the Amount At Risk for each. If the Fund Value when so applied
equals or exceeds the Initial Specified Amount (divided by 1.003675), there is
no Amount At Risk for that Initial Specified Amount and no cost of insurance for
it. If the Fund Value when so applied equals or exceeds the Initial Specified
Amount plus any increase in Specified Amount (divided by 1.003675), there is no
Amount at Risk for that increase and no cost of insurance for it.
If Death Benefit Option 2 is in effect, the "Amount At Risk" on the Monthly
Anniversary Day is the Specified Amount in force plus the amount described in
(c)(ii) above, if applicable.
26. INSURANCE RATE
WHAT IS THE INSURANCE RATE FOR THE INITIAL SPECIFIED AMOUNT BASED ON?
The insurance rate for the Initial Specified Amount is based on the Insured's
gender, age on the Policy Date, "Class of Risk", the number of years since the
Policy Date and the amount of Initial Specified Amount. "Class of Risk" for the
Initial Specified Amount is the class of risk to which the Insured belonged on
the Policy Date and is shown on Page 1.
WHAT IS THE INSURANCE RATE FOR ANY OPTIONAL INCREASES IN SPECIFIED AMOUNT BASED
ON?
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<PAGE> 23
The insurance rate for any optional increase in Specified Amount will be
based on the Insured's gender, age on the effective date of the increase, "Class
of Risk" on that date, number of years since that date, and the total Specified
Amount including the increase.
WHEN ARE MONTHLY INSURANCE RATES REVIEWED AND ON WHAT BASIS ARE ANY CHANGES IN
MONTHLY INSURANCE RATES MADE?
Each year we shall review the monthly insurance rates to determine if any change
should be made. Monthly insurance rates will be based on our expectations as to
future: (a) mortality; (b) investment earnings; (c) expenses, and (d)
persistency. But, we guarantee that the insurance rates for the Initial
Specified Amount will never be more than the rates shown in the Guaranteed
Monthly Insurance Rates for Initial Specified Amount table in Section 2. And,
insurance rates for any optional increase in Specified Amount will never be more
than the guaranteed rates provided by us at the time the increase takes effect.
WHAT ARE GUARANTEED RATES BASED ON?
All guaranteed rates are based on the 1980 Commissioners Standard Ordinary Age
Last Birthday Smoker or Nonsmoker Mortality Tables as applicable, (for issue
ages under 18, a composite table is used for attained ages less than 15 and the
Smoker Table is used thereafter), with interest at the rate of 4.5% a year
(0.0121%, compounded daily) with appropriate increase for rated risk. Any change
in insurance rates will be on a uniform basis for Insureds of the same age,
gender and class of risk. Changes in rates and the way in which they are
determined will be filed with the insurance supervisory official of the state in
which the Policy is delivered.
27. CONTINUATION OF INSURANCE
IF I DON'T CONTINUE PREMIUM PAYMENTS, HOW LONG WILL THE POLICY BE CONTINUED?
If premium payments are not continued, the Policy will be continued only as long
as stated in (a) or (b) below, as applicable:
(a) during the first 3 policy years or during the 3 policy years following an
increase in Specified Amount (if that increase became effective during the
first 3 policy years), if the Cash Value of the Policy is less than zero,
as long as the sum of all premiums paid less any partial surrenders
(excluding their fees) and less any Debt is equal to or greater than the sum
of each Minimum Monthly Premium times the number of in force policy months
during which that premium was applicable; or
(b) in all other situations, as long as the Cash Value is sufficient to cover
any monthly deductions. (See Grace Period section 23)
This Continuation of Insurance provision will not continue the Policy beyond the
Maturity Age. Nor will it continue any additional benefit rider beyond its date
for termination.
28. BASIS OF CALCULATION
WHAT SHOULD I KNOW ABOUT THE BASIS OF CALCULATION?
The method of determining Cash Values, surrender charge and other charges has
been filed with the insurance supervisory official of the state in which this
Policy is delivered. The values under this Policy are not less than the minimum
values required by the law of the state in which the Policy is delivered.
Minimum Cash Values are based on the 1980 Commissioners Standard Ordinary Age
Last Birthday Smoker or Nonsmoker Mortality Tables, as applicable (for issue
ages under 18, a composite table is used for attained ages less than 15 and the
smoker table is used thereafter) and interest at an annual rate of 4.5% a year.
29. DATES AND POLICY PERIODS
HOW ARE PERIODS MEASURED IN THE POLICY?
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<PAGE> 24
Months, years and anniversaries are measured from the Policy Date unless we
state otherwise. Policy months start on the same date in each calendar month as
the Policy Date. That means if the Policy Date is on the 1st of the month, then
each policy month will start on the first of the month.
WHAT IF THE POLICY DATE IS A DATE THAT DOESN'T OCCUR IN ALL MONTHS, SUCH AS THE
31ST?
If the Policy date is the 29th, 30th or 31st of a month, there will be some
calendar months when there is no such date. For those months the policy month
will start on the last day of the calendar month.
Where dates are shown, the numbers stand for month, day and year, in that order.
The Policy date is shown on Page 1.
30. GENERAL PROVISIONS
WHAT MAKES UP THIS CONTRACT?
This Policy is a contract and has been issued in consideration of the
application and payment of the first premium (shown in Section I). The
application, a copy of which is attached, and any supplemental applications are
a part of the Policy. Any such supplemental application will be attached to the
Policy. The Policy, any attached riders and/or endorsements, the application and
any supplemental applications make up the entire contract.
The questions in this Policy, including the questions in any rider or
endorsement attached hereto, are for purposes of convenience and reference only.
They do not form a part of and shall not in any way limit or affect the meaning
or interpretation of any of the terms and conditions of this Policy.
HOW DOES THE COMPANY USE THE STATEMENTS I MAKE IN THE APPLICATION?
All statements made in the application will be considered to be representations
and not warranties. No statement may be used to make this Policy invalid or to
deny a claim under it, unless the statement is contained in the written
application, a copy of which must have been attached to the Policy at issue or
delivery or on the effective date of any increase in Specified Amount.
WHEN WILL THIS POLICY BE INCONTESTABLE?
This Policy will be incontestable, as to statements made in the application for
it, after it has been in force during the lifetime of the Insured for 2 years
from its Date of Issue, except as to any provision for benefits in case of total
disability.
Any optional increase in Specified Amount or any reinstatement, will be
incontestable as to statements made in the supplemental application for it, only
after the increase or reinstatement has been in force during the lifetime of the
Insured for 2 years from the date it took effect.
WHAT IF THE INSURED'S AGE OR GENDER HAS BEEN MISSTATED?
If the age, date of birth or gender of the Insured has been misstated, the
amount of any Death Benefit will be the sum of (a) and (b), where:
(a) is the Fund Value on the date of death of the Insured; and
(b) is the Amount At Risk on the last Monthly Anniversary Day, multiplied
by the ratio of the insurance rate on the last Monthly Anniversary
Day based on the incorrect age or gender to the insurance rate that
would have applied on that Day based on the correct age or gender.
A misstatement of age or gender does not affect the Fund Value.
WHAT DOES THE COMPANY PAY IN CASE OF THE SUICIDE OF THE INSURED?
If the Insured commits suicide, within 2 years of the Date of Issue, the amount
payable by us will be limited to the amount of the premiums paid less: (a) any
Debt; and (b) any partial surrenders and their fees. But, in case of the
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<PAGE> 25
suicide of the Insured, within 2 years of the date any optional increase in
Specified Amount took effect, the amount payable by us with respect to that
increase will be limited to its cost.
HOW DOES THE COMPANY HANDLE AN ASSIGNMENT OF THE POLICY?
We shall not be charged with notice of assignment of any interest in this Policy
until the assignment (or a copy) is received and recorded by us at our
Administrative Office. We are not responsible as to the validity or effect of
any assignment. We may rely solely on the statement of the assignee as to the
amount of his or her interest. All assignments will be subject to any Debt on
this Policy. The interest of any Beneficiary (except an irrevocable beneficiary)
or other person will be subordinate to any assignment, whenever made. The
assignee will receive any sum payable to the extent of his or her interest.
WHAT MAY THE COMPANY REQUIRE FOR POLICY PAYMENT?
In any settlement of this Policy, by reason of death, surrender, or otherwise,
we may require the return of the Policy. Any Debt on this Policy will be
deducted when we determine the proceeds.
Due proof of death or total disability must be submitted to us at our
Administrative Office.
WHAT DO RELATIONSHIPS IN ANY DESIGNATION REFER TO?
Relationships used in any beneficiary or other designation will refer to the
Insureds unless the wording indicates otherwise.
WHO HAS THE AUTHORITY TO CHANGE THIS POLICY?
No change in the Policy will be valid until it is approved by one of our
executive officers. This approval must be endorsed on or attached to this
Policy. No agent or other person has authority to change the Policy, waive any
of its provisions or accept representations or information not in the written
application.
CAN THE COMPANY POSTPONE CERTAIN PAYMENTS OR TRANSFERS?
We will usually pay any amount payable on surrender, partial surrender or loan
within 7 days after we receive written request for the payment at our
Administrative Office. We will usually pay any Death Proceeds within 7 days
after we receive due proof of death of the Insured.
But, any payment involving Cash Value in the Guaranteed Interest Account (except
when used to pay premiums) may be postponed for up to 6 months from the date we
receive the request for a surrender or receive due proof of death. And, any
payment involving a determination of Cash Value in sub-accounts (except when
used to pay premiums) may be postponed in any case whenever:
(a) the New York Stock Exchange is closed (except for customary weekend and
holiday closings), or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission
(SEC); or
(b) the SEC determines that a state of emergency exists, so that valuation
of the assets of the Variable Account or disposal of securities is not
reasonably practicable.
Transfers among sub-accounts, and allocations to and against sub-accounts, also
may be postponed under the circumstances described in (a) or (b) above.
WHAT REPORTS WILL THE COMPANY SEND?
We will send a report at least annually to the Owner showing the then current
status of the Policy. It will show since the last report: premiums received;
expense charges (including any transfer charges); cost of insurance and any
riders; interest earned on Fund Value in the Loan Account; interest earned on
Fund Value in the Guaranteed Interest Account; and any partial surrenders (and
their fees). It will show as of the current report date; Death Benefit;
Specified Amount; Cash Value; and any Debt. It will also show as of the current
and prior report dates: Fund Value; sub-account Unit values; Fund Value in the
Guaranteed Interest Account; and any other information required by state law or
regulation.
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We will also send to the Owner any reports required by the Investment Company
Act of 1940.
WILL THE COMPANY PROVIDE A ILLUSTRATION WHICH PROJECTS FUTURE BENEFITS AND
VALUES?
Yes. We will provide a projection of illustrative future benefits and values at
any time after the first policy anniversary upon: (a) written request; and (b)
payment of a service fee. The fee will be the one then in effect for this
service, but in no case more than $25. The illustration will be based on (a) the
current Policy status as to Specified Amount, Death Benefit Option and scheduled
premiums; and (b) any other assumptions that are needed or that we agree to.
DOES THIS POLICY PAY DIVIDENDS?
We pay no dividends on this Policy.
31. SETTLEMENT OPTIONS
WHAT IS A SETTLEMENT OPTION?
Instead of being paid in a single sum, you may elect to receive any death or
surrender proceeds from this Policy in the form of a Settlement Option. If you
elect a Settlement Option in the form of income payments, the dollar amount of
the payments and how long will we pay them (for example, over the lifetime of a
single payee or joint payees), will depend on the terms of that settlement.
CAN ANY PROCEEDS PAID IN A SINGLE SUM?
Yes, if one of the Settlement Options described below is not elected, any death
or surrender proceeds will be paid in a single sum.
WHOM CAN I SELECT AS THE PAYEE UNDER A SETTLEMENT OPTION?
Any natural person (not a business entity or trust) in his or her own right. The
payee must be the person to whom proceeds are payable under this Policy.
WHEN CAN I ELECT A SETTLEMENT OPTION?
At any time while the Insured is living, you may elect to have the proceeds paid
under one of the Settlement Options described below.
HOW CAN I ELECT OR CHANGE A SETTLEMENT OPTION FOR DEATH PROCEEDS?
You may choose an option or change a prior election while the Insured is living
by sending written request to us at our Administrative Office. However, we must
record this choice or change. You do not need to return the Policy to us to make
the choice or change unless we ask for it.
WHAT IS THE MINIMUM AMOUNT OF PROCEEDS I CAN ELECT TO HAVE APPLIED TOWARD ONE OF
THESE SETTLEMENT OPTIONS?
The amount of proceeds applied toward any of these Settlement Options must be at
least $1,000.
CAN THE PAYEE CHOOSE A SETTLEMENT OPTION?
Yes, if the Payee was to receive the proceeds in a single sum, the Payee may
instead choose one of the Settlement Options for proceeds not yet paid. This
must be done by written request to us at our Administrative Office not more than
1 month after the proceeds become payable.
WHAT SETTLEMENT OPTIONS ARE AVAILABLE?
- - Option 1. Interest Income. Under this option, we hold the proceeds and credit
interest earned on those proceeds to the Payee. We set the rate of interest
for each year, but that rate will never be less than 2 3/4% a year. This
Option will continue until the earlier of the date the Payee dies or the date
you elect another Settlement Option.
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- - Option 2. Income for Specified Period. Under this option, the Payee receives
an income for the number of years chosen. We then calculate an income that
will be based on the Minimum Monthly Income Table 2 for that period. Note that
the longer the period selected (i.e. number of years) the lower the dollar
amount per $1,000 of proceeds. Payments may be increased by additional
interest as we may determine for each year.
- - Option 3. Single Life Income. Under this option, a number of years called the
period certain is chosen. We will then pay income to a single Payee for as
long as that Payee lives or for the number of years chosen (the period
certain), whichever is longer. If the Payee dies after the end of the period
certain, the income payments will stop.
The period certain elected may be:
(a) 0, 10, or 20 years; or
(b) until the total income payments equal the proceeds applied (this is called a
refund period certain).
The amount of the income payments will be figured by us on the date the proceeds
become payable. This amount will be at least as much as the applicable amount
shown in the Minimum Monthly Income Table 3. The income amounts are based on the
1983 Table a (discrete functions, without projections for future mortality) with
3 1/2% interest.
If the income payments for the period certain elected are the same as income
payments based on another available longer period certain, we will deem an
election to have been made for the longer period certain.
- - Option 3A. Joint Life Income. We pay income during the joint lifetime of two
people (the Payee and another person. That means if one person dies, we will
continue to pay the same income (or a lesser income) to the survivor for as long
as the survivor lives.
The survivor may receive the same dollar amount that we were paying before the
first Payee died or two-thirds of that amount depending on the election made at
the time of settlement. Note that if the lesser (two-thirds) amount paid to the
survivor is elected, the dollar amount payable while both persons are living
will be larger than it would have been if the same amount paid to the survivor
had been elected.
The amount of income payable while both persons are living (the joint lifetime)
will be figured by us on the date the proceeds become payable. This amount will
be at least as much as the applicable amount shown in the Minimum Monthly Income
Table 3A. The minimum income amounts are based on the 1983 Table a (discrete
functions, without projections for future mortality) with 3 1/2% interest.
If a person for whom Option 3A is chosen dies before the first income amount is
payable, the survivor will receive settlement instead under Option 3 with 10
years certain.
- - Option 4. Income of Specified Amount. Under this Option, the dollar amount of
the income payments is chosen. We will pay that amount for as long as the
proceeds and interest last; but, the dollar amount chosen must add up to a
yearly amount of at least 10% of the proceeds applied. Interest will be credited
annually on the balance of the proceeds. We set the rate of interest for each
year, but that rate will never be less than 2 3/4% a year.
ARE ANY OTHER SETTLEMENT OPTIONS AVAILABLE?
Yes, the proceeds may be settled under any other option we may agree to.
HOW OFTEN WILL THE PAYEE RECEIVE INCOME PAYMENTS?
Payment will be made monthly unless quarterly, semi-annual or annual payment is
requested by you (or the Payee) when the option is chosen. If payments of the
chosen frequency would be less than $25 each, we may
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<PAGE> 28
use a less frequent payment basis.
Multiply the monthly payment by the appropriate factor to obtain less frequent
payment amounts.
<TABLE>
<CAPTION>
Ann. Semi-Ann. Quarterly
------------------------------
<S> <C> <C> <C>
Option 2 11.85 5.97 2.99
- ----------------------------------------------------------------
Option 3 (0 Yrs Certain) 11.68 5.90 2.97
- ----------------------------------------------------------------
Option 3 (20 Yrs Certain or
- ---------------------------
Refund Period Certain) 11.80 5.95 2.99
- ----------------------------------------------------------------
Option 3 (10 Yrs Certain) or
- ----------------------------
Option 3A 11.74 5.92 2.97
- ----------------------------------------------------------------
</TABLE>
WILL I (OR THE PAYEE) RECEIVE AN EXPLANATION OF THE SETTLEMENT OPTION?
Yes, you (or the Payee) will receive a supplementary contract when the proceeds
are settled under one of these options. The contract will state the terms of the
settlement.
WHAT WILL BE PAID WHEN THE PAYEE DIES AFTER THE EFFECTIVE DATE OF THE
SUPPLEMENTARY CONTRACT?
The amount payable under each Option at the Payee's death will be paid as stated
below in a single sum to the Payee's executors or administrators unless
otherwise provided in the settlement approved by us at the time it was chosen.
Option 1 or 4 - Any unpaid proceeds and interest to the date of death.
Options 2 or 3 - The amount which, with compound annual interest, would have
provided any future income payments for: (a) the specified period (Option 2); or
(b) the specified period certain (Option 3). Interest will be at the rate or
rates assumed in computing the amount of income.
WHAT ELSE SHOULD I KNOW ABOUT SETTLEMENT OPTIONS?
Before we pay Option 3 or 3A, we shall need proof of age of the Payee(s) which
satisfies us.
MINIMUM MONTHLY INCOME TABLES
THESE TABLES SHOW THE MINIMUM MONTHLY INCOME PER $1,000 OF PROCEEDS APPLIED
UNDER THE APPLICABLE OPTION.
Table 2 - Income for a Specified Period Option
<TABLE>
<CAPTION>
Yrs Monthly Amt Yrs Monthly Amt
- --------------------------------------------
<S> <C> <C> <C>
1 $84.37 11 $8.75
- --------------------------------------
2 42.76 12 8.13
- --------------------------------------
3 28.89 13 7.60
- --------------------------------------
4 21.96 14 7.15
- --------------------------------------
5 17.80 15 6.76
- --------------------------------------
6 15.03 16 6.41
- --------------------------------------
7 13.06 17 6.11
- --------------------------------------
8 11.58 18 5.85
- --------------------------------------
9 10.42 19 5.61
- --------------------------------------
10 9.50 20 5.39
- --------------------------------------
</TABLE>
27
<PAGE> 29
Brief Description
This is a FLEXIBLE PREMIUM VARIABLE LIFE TO AGE 100 POLICY. Specified Amount may
be increased or decreased. Net premiums may be allocated to one or more
sub-accounts of the Variable Account or to the Guaranteed Interest Account. If
the values have been sufficient to continue the Policy in force: Death Proceeds
are payable in event of death of the Insured before Age 100; Cash Value, if any,
is payable if Insured is living at Age 100. Death Benefit and reflect investment
results. Flexible premiums until Age 100. Nonparticipating (no dividends
payable).
28
