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File Number 33-62147
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NUMBER 1
POST-EFFECTIVE AMENDMENT NUMBER
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NUMBER ____
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
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(Exact Name of Registrant)
The Minnesota Mutual Life Insurance Company
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(Name of Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
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(Address of Depositor's Principal Executive Offices) (Zip Code)
(612) 298-3500
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(Depositor's Telephone Number, Including Area Code)
Dennis E. Prohofsky Copy to:
Senior Vice President, J. Sumner Jones, Esq.
General Counsel and Secretary Jones & Blouch L.L.P.
The Minnesota Mutual Life Insurance Company 1025 Thomas Jefferson Street, N.W.
400 Robert Street North Suite 405
St. Paul, Minnesota 55101-2098 Washington, D.C. 20007
(Name and Address of Agent for Service)
Approximate Date of Public Offering: As soon as practicable after the date of
this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which
specifically states that the Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Prospectus
Form N-4
Item Number Caption in Prospectus
1. Cover Page
2. Special Terms
3. Questions and Answers About the Variable Annuity Contracts
4. Condensed Financial Information; Performance Data
5. General Descriptions
6. Contract Charges
7. Description of the Contracts
8. Description of the Contracts; Annuity Payments and Options
9. Description of the Contracts; Death Benefits
10. Description of the Contracts; Purchase Payments and Value of the
Contract
11. Description of the Contracts; Redemptions
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional Information
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IMMEDIATE VARIABLE ANNUITY CONTRACT
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
("VARIABLE ANNUITY ACCOUNT"), A SEPARATE ACCOUNT OF
THE MINNESOTA MUTUAL LIF E INSURANCE COMPANY ("MINNESOTA MUTUAL")
The individual, immediate variable annuity contract offered by this Prospectus
is designed for use in connection with personal retirement plans, some of which
may qualify for federal income tax advantages available under sections 401, 403,
408 or 457 of the Internal Revenue Code. It may also be used apart from a
qualified plan.
The owner of a contract will have contract values invested on a variable basis
in the Variable Annuity Account (the "Separate Account"). Although the Separate
Account is comprised of several sub-accounts, only one of its sub-accounts (the
"Sub-Account") is available under this contract. The Sub-Account invests only in
the Index 500 Portfolio (the "Portfolio") of MIMLIC Series Fund, Inc. (the
"Fund"). The value of the contract and the amount of each variable annuity
payment will vary in accordance with the performance of the Sub-Account and the
Portfolio, except to the extent limited by Minnesota Mutual's contractual
guarantee of a minimum annuity payment amount. The contract is an immediate
annuity and annuity payments must begin within 12 months after the contract is
issued. The contract provides for additional purchase payments and withdrawals
during a portion of the annuity payment period.
This Prospectus sets forth concisely the information that a prospective
investor should know before purchasing a contract, and it should be read and
kept for future reference. A Statement of Additional Information, bearing the
same date, which contains further information, has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be obtained
without charge by calling (612) 298-3500, or by writing Minnesota Mutual at its
principal office at the Minnesota Mutual Life Center, 400 Robert Street North,
St. Paul, Minnesota 55101-2098. A Table of Contents for the Statement of
Additional Information appears in this Prospectus on page 24.
This Prospectus is not valid unless attached to a current prospectus of MIMLIC
Series Fund, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
[LOGO]
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
Ph 612/298-3500
http://www.minnesotamutual.com
The date of this document and the Statement of Additional Information is:
, 199
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Special Terms........................................................................ 3
Questions and Answers About the Variable Annuity Contract............................ 4
Expense Table........................................................................ 7
Condensed Financial Information...................................................... 8
Performance Data..................................................................... 8
General Descriptions
The Minnesota Mutual Life Insurance Company...................................... 9
Separate Account................................................................. 9
MIMLIC Series Fund, Inc.......................................................... 9
Additions, Deletions or Substitutions............................................ 10
Contract Charges
Sales Charges.................................................................... 10
Risk Charge...................................................................... 11
Mortality and Expense Risk Charges............................................... 11
Administration Charge............................................................ 11
Voting Rights........................................................................ 12
Description of the Contracts
General Provisions............................................................... 12
Annuity Payments and Options..................................................... 13
Death Benefits................................................................... 15
Purchase Payments and Value of the Contract...................................... 16
Redemptions...................................................................... 17
Federal Tax Status................................................................... 19
Statement of Additional Information.................................................. 24
Appendix A--Computation and Examples of Withdrawals.................................. 25
Appendix B--Immediate Variable Annuity Illustration.................................. 27
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THE PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
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SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
AGE: the age of a person at nearest birthday.
ANNUITANT: the person named on page one of the contract who may receive lifetime
benefits under the contract. Except in the event of the death of either
annuitant prior to the annuity payment commencement date, joint annuitants will
be considered a single entity.
ANNUITY PAYMENT COMMENCEMENT DATE: the first annuity payment date as specified
on page one of the contract.
ANNUITY PAYMENT DATE: each day indicated by the annuity payment commencement
date and the annuity payment frequency for an annuity payment to be determined.
This is shown on page one of the contract.
ANNUITY PAYMENTS: payments made at regular intervals to the annuitant or any
other payee. The annuity payments will increase or decrease in amount. The
changes will reflect the investment experience of the sub-account of the
separate account.
ANNUITY UNIT: the standard of value for the variable annuity payment amount.
BENEFICIARY: the person, persons or entity designated to receive death benefits
payable under the contract in the event of the annuitant's death.
CASH VALUE: the dollar amount available for withdrawal under the contract at any
time. A cash value exists only as long as both the number of cash value units
and the applicable factor from the cash value factor table shown in the contract
are greater than zero.
CASH VALUE PERIOD: the time during which a cash value exists under the contract.
The cash value period begins on the annuity commencement date and ends on the
cash value end date shown on page one of the contract.
CASH VALUE UNIT: the measure of your interest in the Separate Account that is
available for withdrawal under the contract during the cash value period.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT DATE: the effective date of a contract.
FUND: MIMLIC Series Fund, Inc. or any mutual fund or separate investment
portfolio within a series mutual fund which is designated as an eligible
investment for the Separate Account.
GENERAL ACCOUNT: all of our assets other than those in the Separate Account or
in other separate accounts established by us.
GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT: the amount which is guaranteed as the
minimum annuity payment amount. This amount is payable regardless of the
performance of the Sub-Account. Purchase payments and cash value withdrawals
will cause this guaranteed minimum annuity payment amount to be adjusted. The
adjustment will reflect your new interest in the Separate Account.
JOINT OWNER: the person designated to share equally in the rights and privileges
provided to the owner of this contract. Only you and your spouse may be named as
a joint owner.
PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase plan
under which benefits are to be provided by the variable annuity contracts
described herein.
PURCHASE PAYMENT DATE: the date we receive a purchase payment in our home
office.
PURCHASE PAYMENTS: amounts paid to us as consideration for the benefits provided
by the contract.
SEPARATE ACCOUNT: a separate investment account entitled Minnesota Mutual
Variable Annuity Account. This separate account was established by us under
Minnesota law. The Separate Account is composed of several sub-accounts. The
assets of the Separate Account are ours. Those assets are not subject to claims
arising out of any other business which we may conduct.
SURRENDER VALUE: the surrender value of the contract shall be the total annuity
value as of the date of surrender plus the amounts deducted from purchase
payments. These include deductions for sales charges, risk charges, and state
premium taxes where applicable.
TOTAL ANNUITY VALUE: the total annuity value represents your total interest in
the Separate Account.
VALUATION DATE: any date on which a Fund is valued.
VALUATION PERIOD: the period between successive valuation dates measured from
the time of one determination to the next.
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VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Fund.
WE, OUR, US: The Minnesota Mutual Life Insurance Company.
WRITTEN REQUEST: a request in writing signed by you. In the case of joint
owners, the signatures of both owners will be required to complete a written
request. In some cases, we may provide a form for your use. We may also require
that the contract be sent to us along with your written request.
YOU, YOUR: the owner of this contract. The owner may be the annuitant or someone
else. The owner shall be that person or entity named as owner in the
application.
1940 ACT: the Investment Company Act of 1940, as amended, or any similar
successor federal legislation.
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QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACT
WHAT IS AN ANNUITY?
An annuity is a series of payments for the life of a person or for the joint
lifetimes of the annuitant and another person and thereafter during the lifetime
of the survivor. An annuity with payments which are guaranteed as to amount
during the payment period is a fixed annuity. An annuity with payments which
vary during the payment period in accordance with the investment experience of a
separate account of an insurance company is called a variable annuity.
WHAT IS AN IMMEDIATE ANNUITY?
An immediate annuity is a contract which provides for annuity payments beginning
within a relatively short period after the issue of the contract. This type of
annuity is distinguished from a deferred annuity where contract values may be
left with an insurance company or separate account for some years prior to the
time that annuity payments begin. For the contract described in this Prospectus,
annuity payments must begin within 12 months from the day that the contract is
issued. In some states this period may be shortened so that the contract may be
considered to be an immediate annuity within that state.
WHAT IS THE CONTRACT OFFERED BY THIS PROSPECTUS?
The contract is an immediate, variable annuity contract which provides for
scheduled annuity payments. Annuity payments may be received on a monthly,
quarterly, semi-annual or annual basis. These payments may begin immediately and
must begin on a date within 12 months after the issue date of the contract.
Purchase payments received by us under a contract are allocated to the Separate
Account. In the Separate Account, your purchase payments are put into a Sub-
Account which invests only in the Index 500 Portfolio of the Fund.
IS THERE A GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. You will receive at least the guaranteed minimum annuity payment amount
specified in your contract. Each variable annuity payment will vary upwards or
downwards in accordance with the performance of the Sub-Account, however, unless
it would be less than the guaranteed minimum annuity payment amount. Under the
terms of the contract's guarantee provisions, at each annuity payment date, we
will pay the annuitant or annuitants the greater of: (a) the annuity payment
amount determined by multiplying the number of annuity units times the annuity
unit value; or (b) the guaranteed minimum annuity payment amount currently in
force for the contract.
We guarantee that variable annuity payments will always be at least 85% of the
initial variable annuity payment amount. This guaranteed amount is determined on
the contract issue date and shown on page one of the contract. If an additional
purchase payment is made, we will guarantee that variable annuity payments will
always be at least 85% of the annuity amount attributable to that additional
purchase payment, plus the amount already guaranteed at the time of that
purchase payment. Withdrawals of cash value amounts under the contract will
reduce the guaranteed annuity payment amount by the same proportion that the
withdrawal reduces the number of annuity units under the contract.
IS THE AMOUNT OF THE CASH VALUE OF THE CONTRACT GUARANTEED?
No. The cash value of the contract decreases as annuity payments are made and it
also increases or decreases based upon the performance of the Sub-Account of the
Separate Account as reflected in the annuity unit value. We do not guarantee the
performance of any Sub-Account, nor do we guarantee the annuity unit value,
which may fall
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to zero. The performance of the Sub-Account will not affect the duration of the
cash value period.
ARE THERE LIMITATIONS ON PURCHASE PAYMENTS?
Yes. A purchase payment in an amount of at least $10,000 will be required in
order for us to issue the contract. A contract will not be issued if an initial
purchase payment is tendered which is less than that amount.
After the contract has been issued, you may make additional purchase payments,
but only until the end cash value period of the contract. This period is shown
on page one of the contract. Additional purchase payments may be made only while
the annuitant is alive. Additional purchase payments must be in an amount of at
least $5,000. We will waive this contract limitation for amounts which are
received after the contract effective date as part of an integrated rollover or
Section 1035 transaction.
WHEN ADDITIONAL PURCHASE PAYMENTS ARE MADE UNDER AN EXISTING IMMEDIATE
VARIABLE ANNUITY CONTRACT, THOSE PURCHASE PAYMENTS FOR TAX PURPOSES WILL NOT
RESULT IN A RECALCULATION OF THE OWNER'S INVESTMENT IN THE CONTRACT AND A
DETERMINATION OF A NEW EXCLUSION AMOUNT. THE AMOUNT OF THOSE ADDITIONAL PURCHASE
PAYMENTS WILL BE TAXABLE WHEN DISTRIBUTED, AS AN ANNUITY OR OTHERWISE.
For more information on these matters, see the heading "Federal Tax Status,"
in this Prospectus.
WE RESERVE THE RIGHT TO SUSPEND THE SALE OF THESE CONTRACTS AND TO TERMINATE
YOUR ABILITY TO MAKE ADDITIONAL PURCHASE PAYMENTS INTO THE CONTRACT.
You may not make total purchase payments which exceed the amount of $1,000,000
except with our prior consent.
WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE SEPARATE ACCOUNT?
Purchase payments are allocated to the Sub-Account and are invested only in
shares of the Index 500 Portfolio of the Fund. The Fund is a mutual fund of the
series type, which means that it has several different portfolios which it
offers for investment. Shares of the Index 500 Portfolio are made available at
net asset value to the Separate Account to fund the contracts. The Fund is also
required to redeem its shares at net asset value at our request. The investment
objectives and certain policies of the Index 500 Portfolio are as follows:
The Portfolio seeks investment results that correspond generally to the
price and yield performance of the common stocks included in the Standard &
Poor's Corporation 500 Composite Stock Price Index (the "Index"). It is
designed to provide an economical and convenient means of maintaining a
broad position in the equity market as part of an overall investment
strategy. All common stocks, including those in the Index, involve greater
investment risk than debt securities. The fact that a stock has been
included in the Index affords no assurance against declines in the price or
yield performance of that stock.
There is no assurance that the Portfolio will meet its objectives. Additional
information concerning the investment objectives and policies of the Portfolio
can be found in the current prospectus for the Fund, which is attached to this
Prospectus.
ARE OTHER PORTFOLIOS AVAILABLE?
No. All Separate Account assets of these contracts are invested in the Index 500
Portfolio of the Fund.
WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
Under the contract there are certain charges which are made as deductions from
purchase payments and other charges which are made directly to the assets held
in the Separate Account.
A deduction for a sales charge and a risk charge is made from purchase
payments. The sales charge is based upon the cumulative amount of total purchase
payments made under the contracts, including any new purchase payments. In
addition, for purchases of multiple contracts made by an identical owner or
owners at different times, purchase payments made under all contracts will be
aggregated solely for the purpose of determining the sales charge applicable to
those purchase payments made to later contracts. For additional information on
multiple contracts, see the heading "Federal Tax Status," on page 19 of this
Prospectus. The charges are illustrated in the table shown below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
CUMULATIVE TOTAL PURCHASE PERCENTAGE OF
PAYMENTS PURCHASE PAYMENTS
- ----------------------------- ---------------------
<S> <C>
$ 0 to 499,999.99 4.500%
500,000 to 749,999.99 4.125%
750,000 to 1,000,000.00 3.750%
</TABLE>
5
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The risk charge is also deducted from each purchase payment when made. This
charge is for guaranteeing the minimum annuity payment amount as shown in the
contract. The risk charge may be as much as 2% of each purchase payment.
Currently, a deduction for this charge is made at the per annum rate of 1.25% of
purchase payments made to the contract. This rate is not guaranteed for future
purchase payments made under the contract and may change based upon our
experience in guaranteeing the annuity payment levels based upon the performance
of the Index 500 Portfolio of the Fund.
A deduction is made from the value of the Sub-Account on a daily basis for our
assumption of mortality and expense risks and for administrative charges under
the contract.
We deduct from the net asset value of the Separate Account an amount, computed
daily, not to exceed an annual rate of 1.40% for mortality and expense risk
guarantees. Currently, our charge for mortality and expense risk guarantees
total .80%. This total represents a charge of .55% for our assumption of
mortality risks and .25% for our assumption of expense risks. We reserve the
right to increase the charge for our assumption of mortality risks to not more
than .80% and our charge for our assumption of expense risks to not more than
.60%. If these charges are increased to this maximum amount, then the total of
the mortality risk and expense risk charges would be 1.40% on an annual basis.
Any increase of the total charges above 1.25% on an annual basis would be
subject to the approval of the Securities and Exchange Commission. For more
information on these charges, please see the heading "Contract Charges," on page
10 of this Prospectus.
In addition, MIMLIC Asset Management Company, one of our subsidiaries, acts as
the investment adviser to the Fund and deducts from the net asset value of each
Portfolio of the Fund a fee for its services which are provided under an
investment advisory agreement. The investment advisory agreement provides that
the fee shall be computed at the annual rate which may not exceed .40% of the
Index 500 Portfolio. The Fund is subject to certain expenses that may be
incurred with respect to its operation and those expenses are allocated among
the Portfolios. For more information on the Fund, see the prospectus of MIMLIC
Series Fund, Inc. which is attached to this Prospectus.
We deduct from the net asset value of the Separate Account an amount, computed
daily, not to exceed an annual rate of .40% for administrative expenses.
Currently, our administrative charge is .15% on an annual basis. For more
information on this item, please see the heading "Contract Charges," on page 10
of this Prospectus.
Deductions for any applicable premium taxes may also be made (currently such
taxes range from 0.0% to 3.5%) depending upon applicable law.
For more information on charges, see the heading "Contract Charges," in this
Prospectus.
CAN YOU SURRENDER THE CONTRACT?
Yes. At any time before annuity payments begin, you can surrender the contract
for its surrender value. The surrender value of the contract shall be its total
annuity value as of the date of surrender plus the amounts deducted from your
purchase payments for sales charges, risk charges and state premium taxes where
applicable.
CAN YOU MAKE WITHDRAWALS FROM THE CONTRACT?
Yes. At any time during the cash value period, you can make withdrawals of the
cash value of the contract, pursuant to your written request. Each withdrawal
must be in an amount of at least $500 or, if the cash value of the contract is
less than that amount, all of the total remaining cash value in the contract
must be withdrawn. Withdrawals are not allowed during the period before annuity
payments begin.
A withdrawal of all or a portion of the cash value of the contract, subject to
the dollar limitations described above, may be made during the "cash value
period" of the contract. The amount of the cash value available for withdrawal
is equal to: (a) times (b) times (c), where (a) is the number of cash value
units credited to the contract, (b) is the current annuity unit value and (c) is
the appropriate cash value factor set forth in a table included in the contract.
The cash value period begins at the annuity commencement date of the contract
and runs for a period approximately equal to the annuitant's life expectancy at
the time the contract is issued. The number of cash value units and the cash
value period are shown on page one of each contract. If you make subsequent
purchase payments or withdrawals a new page one of the contract will be provided
to you.
When a withdrawal is made during the cash value period, the amount of the
annuity
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payment to be received by the annuitant after the withdrawal will be
recalculated and the guaranteed minimum annuity payment amount must be
redetermined as well, both of which will be adjusted downward to reflect the
withdrawal of cash values. For a description of the operation of the contract's
provisions on withdrawal and surrender see the heading "Redemptions," found on
page 17 of this Prospectus.
WHEN WITHDRAWALS ARE TAKEN FROM THE CASH VALUE, ALL AMOUNTS RECEIVED BY THE
TAXPAYER ARE TAXABLE AS ORDINARY INCOME IN THE YEAR IN WHICH THE WITHDRAWALS ARE
TAKEN. THOSE AMOUNTS ARE TAXABLE TO THE RECIPIENT WITHOUT REGARD TO THE OWNER'S
INVESTMENT IN THE CONTRACT OR ANY INVESTMENT GAIN IN THE CONTRACT. FOR MORE
INFORMATION ON THESE MATTERS, SEE THE HEADING "FEDERAL TAX STATUS," ON PAGE 19
OF THIS PROSPECTUS. CONSULT WITH YOUR TAX ADVISER.
DO YOU HAVE A RIGHT TO CANCEL THE CONTRACT?
Yes. You may cancel the contract any time within 10 days of your receipt of the
contract by returning it to us or your agent.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The contracts allow for the selection of one of two variable annuity options.
One provides for lifetime variable annuity payments based on the life of a
single annuitant, the other provides for the lifetime variable annuity payments
based upon the combined lives of joint annuitants.
WHAT HAPPENS IF THE ANNUITANT DIES?
If the annuitant, or one of the named joint annuitants dies before annuity
payments begin, we will pay a death benefit to you or the named beneficiary.
This death benefit will be the sum of the contract's total annuity value plus
the amounts deducted from the contract's purchase payments for sales charges,
risk charges and state premium taxes, where applicable.
If the annuitant dies after annuity payments have begun, or after the second
death in the case of joint annuitants, we will pay a death benefit which shall
be equal to the cash value, if any, of the contract as of the date of the
annuitant's death. The death benefit will be paid to the beneficiary named in
the application for the contract or as subsequently changed. In each case, the
beneficiary may elect to receive annuity payments during the remainder of the
cash value period rather than a lump sum benefit. For a description of the
calculation of the amount of those annuity payments, please see the headings
"Annuity Payments and Options" and "Death Benefits" found on pages 13 and 15 of
this Prospectus, respectively.
WHAT VOTING RIGHTS DO YOU HAVE?
Contract owners and annuitants will be able to direct us as to how to vote
shares of the Portfolio held for their contracts in the Sub-Account of the
Separate Account. For more information on this subject, please see the heading
entitled "Voting Rights," found on page 12 of this Prospectus.
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EXPENSE TABLE
The following contract expense information is intended to illustrate the
expenses of the individual, immediate variable annuity contract. All expenses
shown are rounded to the nearest dollar. The information contained in the tables
must be considered with the narrative information which immediately follows them
in this heading.
INDIVIDUAL, IMMEDIATE VARIABLE ANNUITY CONTRACT
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
SALES CHARGE AS A
CUMULATIVE PERCENTAGE OF
TOTAL PURCHASE PAYMENTS PURCHASE PAYMENTS
- --------------------------------------------- --------------------
<S> <C>
$ 0 to 499,999.99...................... 4.500%
500,000 to 749,999.99...................... 4.125%
750,000 to 1,000,000.00..................... 3.750%
</TABLE>
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<TABLE>
<S> <C>
Risk Charge...................................................... 1.25%
------
Total Contract Expenses (assuming maximum sales charge)...... 5.75%
------
------
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees*............................. 0.80%
Administrative Charge*....................................... 0.15%
------
Total Separate Account Annual Expenses................... 0.95%
------
------
</TABLE>
<TABLE>
<S> <C>
MIMLIC SERIES FUND, INC. INDEX 500 PORTFOLIO ANNUAL EXPENSES
(as a percentage of average net assets)
Index 500 Portfolio
Management Fees.............................................. .40%
Other Expenses............................................... .07%
-----
Total Index 500 Portfolio Annual Expenses................ .47%
-----
-----
EXAMPLE:
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Whether or not you surrender your contract at the end of the
applicable time period:
You would pay the following expenses on a $10,000
investment as of the end of the period indicated,
assuming a 5% annual return on assets:................. $ 711 $ 999 $ 1,307 $ 2,179
</TABLE>
*Under the terms of the contract, total mortality and expense risk fees may be
increased to as much as 1.40% (provided any necessary regulatory approvals are
obtained) and the administrative charge may be increased to as much as .40% (if
administrative costs have increased accordingly).
These figures are based on the assumption that the contract will accumulate
value prior to the annuity payment commencement date at a 5% annual return on
assets for one and three years, respectively. The maximum period allowable
between the issuance of a contract and the commencement of annuity payments is
one year.
The tables shown above are to assist a contract owner in understanding the
costs and expenses that a contract will bear directly or indirectly. For more
information on contract costs and expenses, see the Prospectus heading "Contract
Charges" and the information immediately following. The table does not reflect
deductions for any applicable premium taxes which may be made from each purchase
payment depending upon applicable law. The examples contained in this table
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
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CONDENSED FINANCIAL INFORMATION
No condensed financial information is included in this Prospectus for the
Variable Annuity Account because no variable annuity contracts of this class
have been sold prior to the date of this Prospectus.
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PERFORMANCE DATA
From time to time the Variable Annuity Account may publish advertisements
containing performance data relating to the Sub-Account. Performance data will
consist of average annual total return quotations for recent one-year and
five-year periods and for the period since June 1, 1987, the date the
Sub-Account first became available pursuant to other registration statements of
the Variable Annuity Account. Performance data may also include cumulative total
return quotations for the period since June 1, 1987 or average annual total
return quotations for periods other than as described above. Performance figures
are based on historical performance information on the assumption that the
contracts offered by this Prospectus were available for sale on June 1, 1987 and
could accumulate value prior to the
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commencement of annuity payments for periods in excess of one year. The figures
are not intended to suggest that such performance will continue in the future.
Average annual total return figures are the average annual compounded rates of
return required for an initial investment to equal its total annuity value at
the end of the period. The surrender value will reflect the sales and risk
charges deducted from purchase payments as well as all other contract charges.
Cumulative total return figures are the percentage changes between the value of
an initial investment and its total annuity value at the end of the period.
Cumulative total return figures will not reflect the deduction of any amounts
from purchase payments. Cumulative total return figures will always be
accompanied by average annual total return figures. More detailed information on
the computations is set forth in the Statement of Additional Information.
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GENERAL DESCRIPTIONS
A. THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
We are a mutual life insurance company organized in 1880 under the laws of
Minnesota. Our home office is at 400 Robert Street North, St. Paul, Minnesota
55101-2098, telephone: (612) 298-3500. We are licensed to do a life insurance
business in all states of the United States (except New York where we are an
authorized reinsurer), the District of Columbia, Canada and Puerto Rico.
B. SEPARATE ACCOUNT
A separate account called the Minnesota Mutual Variable Annuity Account was
established on September 10, 1984, by our Board of Trustees in accordance with
certain provisions of the Minnesota insurance law. The Separate Account is
registered as a "unit investment trust" with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940 (the
"1940 Act"), but such registration does not signify that the Securities and
Exchange Commission supervises the management, or the investment practices or
policies, of the Separate Account. The Separate Account meets the definition of
a "separate account" under the federal securities laws.
The Minnesota law under which the Separate Account was established provides
that the assets of the Separate Account shall not be chargeable with liabilities
arising out of any other business which we may conduct, but shall be held and
applied exclusively to the benefit of the holders of those variable annuity
contracts for which the Separate Account was established. The investment
performance of the Separate Account is entirely independent of both the
investment performance of our General Account and of any other separate account
which we may have established or may later establish. All obligations under the
contracts are general corporate obligations of Minnesota Mutual.
The Separate Account has one Sub-Account to which contract owners may allocate
purchase payments to the contracts described in this Prospectus. The only
Sub-Account which is available to the contract is that which invests in the
Index 500 Portfolio.
C. MIMLIC SERIES FUND, INC.
The Separate Account currently invests exclusively in MIMLIC Series Fund, Inc.
(the "Fund"), a mutual fund of the series type which is advised by MIMLIC Asset
Management Company. The Fund is registered with the Securities and Exchange
Commission as a diversified, open-end management investment company, but such
registration does not signify that the Commission supervises the management, or
the investment practices or policies, of the Fund. The Fund issues its shares,
continually and without sales charge, only to us and our separate accounts,
which currently include the Separate Account, Variable Fund D, the Variable Life
Account, the Group Variable Annuity Account and the Variable Universal Life
Account. Shares are sold and redeemed at net asset value.
The Fund's investment adviser is MIMLIC Asset Management Company ("MIMLIC
Management"). It acts as an investment adviser to the Fund pursuant to an
advisory agreement. MIMLIC Management is a subsidiary of Minnesota Mutual.
The only Portfolio of the Fund which is available for investment by the
contract described in this Prospectus is the Index 500 Portfolio.
A prospectus for the Fund is attached to this Prospectus. A person should
carefully read the Fund's prospectus before investing in the contract.
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<PAGE>
D. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the Sub-Accounts of the Separate Account. If
investment in a fund should no longer be possible or if we determine it becomes
inappropriate for contracts of this class, we may substitute another fund for a
sub-account. Substitution may be with respect to existing total annuity values
and cash values, future purchase payments and future annuity payments.
We reserve the right to transfer assets of the separate account to another
separate account. If this type of transfer is made, the term separate account,
as used in the contract, shall then mean the separate account to which the
assets were transferred.
We may also establish additional Sub-Accounts in the Separate Account and we
reserve the right to add, combine or remove any Sub-Accounts of the Separate
Account. Each additional Sub-Account will purchase shares in a new portfolio or
mutual fund. Such Sub-Accounts may be established when, in our sole discretion,
marketing, tax, investment or other conditions warrant such action. Similar
considerations will be used by us should there be a determination to eliminate
one or more of the Sub-Accounts of the Separate Account. The addition of any
investment option will be made available to existing contract owners on such
basis as may be determined by us.
We also reserve the right, when permitted by law, to de-register the Separate
Account under the Investment Company Act of 1940 (the "1940 Act"), to restrict
or eliminate any voting rights of the contract owners, and to combine the
Separate Account with one or more of our other separate accounts.
Shares of the Portfolios of the Fund are also sold to other of our separate
accounts, which are used to receive and invest premiums paid under our variable
life policies. It is conceivable that in the future it may be disadvantageous
for variable life insurance separate accounts and variable annuity separate
accounts to invest in the Fund simultaneously. Although neither Minnesota Mutual
nor the Fund currently foresees any such disadvantages either to variable life
insurance policy owners or to variable annuity contract owners, the Fund's Board
of Directors intends to monitor events in order to identify any material
conflicts between such policy owners and contract owners and to determine what
action, if any, should be taken in response thereto. Such action could include
the sale of Fund shares by one or more of the separate accounts, which could
have adverse consequences. Material conflicts could result from, for example,
(1) changes in state insurance laws, (2) changes in federal income tax laws, (3)
changes in the investment management of any of the Portfolios of the Fund, or
(4) differences in voting instructions between those given by policy owners and
those given by contract owners.
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CONTRACT CHARGES
Under this contract, there are certain deductions for charges which are made
from purchase payments and other charges which are made directly to the Separate
Account. Deductions from purchase payments are made for sales charges, risk
charges and state premium taxes, where applicable. Deductions for the mortality
risk charge, expense risk charge and the administrative charge are all deducted
on each valuation date from the Separate Account.
A. SALES CHARGES
A sales charge is deducted from the purchase payments using the percentages
shown in the table below:
<TABLE>
<CAPTION>
SALES CHARGE AS A
CUMULATIVE TOTAL PURCHASE PERCENTAGE OF
PAYMENTS PURCHASE PAYMENTS
- ----------------------------- ---------------------
<S> <C>
$ 0 to 499,999.99 4.500%
500,000 to 749,999.99 4.125%
750,000 to 1,000,000.00 3.750%
</TABLE>
The applicable percentage from the chart will be based on the total cumulative
purchase payments to the date of payment, including the new purchase payment. In
addition, for purchases of multiple contracts made by an identical owner or
owners at different times, purchase payments made under all contracts will be
aggregated solely for the purpose of determining the sales charge applicable to
those purchase payments made to later contracts. For additional information on
multiple contracts, see the heading "Federal Tax Status," on page 19 of this
Prospectus.
These sales charges may be waived in whole or in part in certain circumstances
where sales expenses are not paid at the time of sale to registered
representatives and broker-dealers responsible for the sale of the contracts or
where the contract is sold in anticipation of reduced expenses. No elimination
or reduction of the sales charge will be permitted where that
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<PAGE>
reduction or elimination would be unfairly discriminatory to any person or class
of persons.
B. RISK CHARGE
A risk charge is also deducted from each purchase payment for our guarantee of
the minimum annuity payment amount shown on page one of the contract and
described herein under the heading "The Guaranteed Minimum Annuity Payment
Amount", on page 15 of this Prospectus. The risk charge may be as much as 2% of
each purchase payment. Currently, a deduction for this charge is made at the per
annum rate of 1.25% of purchase payments made to the contract. This rate is not
guaranteed for future purchase payments made under the contract and may change
based upon our experience in guaranteeing the annuity payment levels based upon
the performance of the Portfolio.
If this deduction proves to be insufficient to cover the actual cost of the
risk assumed by us in providing a guaranteed minimum as to the amount of each
variable annuity payment made under a contract, then we will absorb the
resulting losses and make sufficient transfers to the Separate Account from our
General Account, where appropriate. Conversely, if these deductions prove to be
more than sufficient after the establishment of any contingency reserves deemed
prudent or required by law, any excess will be profit (or "surplus") to us.
C. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the contracts by our obligation to continue
to make scheduled annuity payments, determined in accordance with the annuity
rate tables and other provisions contained in the contracts, to each annuitant
regardless of how long that annuitant lives or all annuitants as a group live.
This assures an annuitant that neither the annuitant's own longevity nor an
improvement in life expectancy generally will have an adverse effect on the
scheduled annuity payments received under the contract. Actual mortality results
incurred by us shall not adversely affect any payments or values under this
contract.
We assume an expense risk by assuming the risk that deductions provided for in
the contracts for the sales and administrative expenses will be adequate to
cover our actual expenses incurred. Actual expense results incurred by us shall
not adversely affect any payments or values under this contract.
For assuming these risks, we currently make a deduction from the net asset
value of the Separate Account of an amount, computed daily, equal to an annual
rate of .80% for mortality and expense risk guarantees. This is composed of a
deduction of 0.55% for the mortality expense risk charge and 0.25% for the
expense risk charge. We reserve the right to increase the charge for the
assumption of the mortality risk to 0.80% and the assumption of expense risks to
0.60%. If these charges are increased to the maximum amount, then the total for
the mortality risk and expense risk charges would be 1.40% on an annual basis.
Any such increase of the total charges above 1.25% on an annual basis would be
subject to the approval of the Securities and Exchange Commission.
For a discussion of how these charges are applied in the calculation of the
annuity unit value, please see the discussion entitled "Purchase Payments and
Value of the Contract" on page 16.
If these deductions prove to be insufficient to cover the actual cost of the
expense and mortality risks assumed by us, then we will absorb the resulting
losses and make sufficient transfers to the Separate Account from our General
Account, where appropriate. Conversely, if these deductions prove to be more
than sufficient after the establishment of any contingency reserves deemed
prudent or required by law, any excess will be profit (or "surplus") to us. Some
or all of such profit may be used to cover any distribution costs not recovered
through the sales charge.
D. ADMINISTRATION CHARGE
We perform all administrative services relative to the contract. These services
include the review of applications for compliance with our issue criteria, the
preparation and issue of the contract, the receipt of purchase payments,
forwarding amounts to the Fund for investment, the calculation of the guaranteed
minimum annuity payment amount, the preparation and mailing of periodic reports
and the performance of other services.
As consideration for providing these services, we currently make a deduction
from the Separate Account at the annual rate of 0.15%. We reserve the right to
increase this charge, based upon our experience with these contracts, to a
maximum which shall not exceed the amount of 0.40%.
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<PAGE>
VOTING RIGHTS
We will vote fund shares held in the Separate Account at the regular and special
meetings of the Fund. We will vote shares attributable to contracts in
accordance with instructions received from the annuitant or annuitants or,
during the surrender period of the contract, from the owner, if different from
the annuitants. In the event no instructions are received from the person or
persons entitled to direct such a vote, we will vote shares attributable to that
contract in the same proportion as shares of the Portfolio held by the
Sub-Account for which instructions have been received. If, however, the 1940
Act, any regulation under that Act, or any interpretations of that Act or the
regulations under it, should change so that we may be allowed to vote shares in
our own right, then we may elect to do so.
The number of votes will be determined by dividing the total annuity value for
each contract allocated to the Sub-Account by the net asset value per share of
the underlying Fund shares held by that Sub-Account. The votes attributable to
any particular contract will decrease as the reserves decrease. In determining
any voting interest, fractional shares will be recognized.
We will notify each person entitled to vote of a Fund shareholders' meeting if
the shares held for his or her contract may be voted at that meeting. We will
also provide proxy materials and a form of instruction to facilitate provision
of voting instructions.
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DESCRIPTION OF THE CONTRACTS
A. GENERAL PROVISIONS
1. TYPES OF CONTRACTS OFFERED
(a) Variable Annuity Contract
The contract is an individual, immediate, variable annuity contract issued
by us which provides for scheduled annuity payments on a monthly, quarterly,
semi-annual or annual basis. These payments may begin immediately and must
begin on a date within 12 months after the issue date of the contract.
Purchase payments received by us under a contract are allocated to the
Separate Account. In the Separate Account, your purchase payments are put
into a Sub-Account which are then invested in the Portfolio.
This type of contract may be used in connection with a pension or profit
sharing plan under which plan contributions have been accumulating. It may
be used in connection with a plan which has previously been funded with
insurance or annuity contracts. It may also be purchased by individuals not
as a part of any qualified plan. The contract provides for a variable
annuity which is paid on the basis of a single or joint life annuity. Once
made, the annuity option elected may not be changed.
2. ISSUANCE OF CONTRACTS
The contracts are issued to you, the contract owner named in the application.
The owner of the contract may be the annuitant or someone else and the contract
may be owned by two persons jointly.
3. MODIFICATION OF THE CONTRACTS
A contract may be modified at any time by written agreement between you and us.
However, no such modification will adversely affect the rights of an annuitant
under the contract unless the modification is made to comply with a law or
government regulation. Such a modification will be in writing. You will have the
right to accept or reject the modification, except in circumstances where, when
the contract is used in a tax-qualified arrangement, and the change is required
to conform the contract with tax laws or regulations.
4. ASSIGNMENT
The annuitant, or the joint annuitants, can direct or assign the annuity
payments to be made under the contract so that they are paid to someone else. We
will not be bound by any assignment until we have recorded a written request of
it at our home office. We are not responsible for the validity of any
assignment. An assignment will not apply to any payment or action before it was
recorded. Any claim made by an assignee will be subject to proof of the
assignee's interest and the extent of the assignment.
If the contract is sold in connection with a tax-qualified program, (including
employer-sponsored employee pension benefit plans, tax-sheltered annuities and
individual retirement annuities,) your or the annuitant's interest may not be
assigned, sold, transferred, discounted or pledged as collateral for a loan or
as security
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<PAGE>
for the performance of an obligation or for any other purpose. To the maximum
extent permitted by law, benefits payable under the contract shall be exempt
from the claims of creditors.
5. LIMITATIONS ON PURCHASE PAYMENTS
Purchase payments must be made at our home office. Our home office is at 400
Robert Street North, St. Paul, Minnesota 55101-2098. When we receive a purchase
payment from you at our home office, we will send you a confirmation statement
and an updated page one for the contract.
A purchase payment in an amount of at least $10,000 will be required in order
for us to issue the contract. A contract will not be issued if an initial
purchase payment is made which is less than that amount.
After the contract has been issued, you may make additional purchase payments,
but only during the cash value period of the contract as shown on page one.
These additional purchase payments may be made only while the annuitant is
alive. Additional purchase payments must be in an amount of at least $5,000. We
will waive this contract provision for amounts which are received after the
contract effective date as part of an integrated rollover or Section 1035
transaction. When additional purchase payments are made, those purchase payments
will not result in a recalculation of the owner's investment in the contract and
a determination of a new exclusion amount. For more information on these
matters, see the heading "Federal Tax Status," in this Prospectus. You may also
wish to consult with your tax adviser. WE RESERVE THE RIGHT TO SUSPEND THE SALE
OF THESE CONTRACTS AND TO TERMINATE YOUR ABILITY TO MAKE ADDITIONAL PURCHASE
PAYMENTS INTO THE CONTRACT.
You may not make total purchase payments which exceed the amount of $1,000,000
except with our prior consent.
Some states will limit these contracts to a single purchase payment and
contracts issued there are so limited.
There may be limits on the maximum contributions to retirement plans that
qualify for special tax treatment.
6. DEFERMENT OF PAYMENT
Whenever any payment under a contract is to be made in a single sum, payment
will be made within 7 days after the date such payment is called for by the
terms of the contract, except as payment may be subject to postponement for:
(a) any period during which the New York Stock Exchange is closed other than
customary weekend and holiday closings, or during which trading on the
New York Stock Exchange is restricted, as determined by the Commission;
(b) any period during which an emergency exists as determined by the
Commission as a result of which it is not reasonably practical to
dispose of securities in the Fund or to fairly determine the value of
the assets of the Fund; or
(c) such other periods as the Commission may by order permit for the
protection of the contract owners.
7. PARTICIPATION IN DIVISIBLE SURPLUS
The contracts participate in our divisible surplus, according to the annual
determination of our Board of Trustees as to the portion, if any, of our
divisible surplus which has accrued on the contracts.
No assurance can be given as to the amount of divisible surplus, if any, that
will be distributable under these contracts in the future. Such amount may arise
if mortality and expense experience is more favorable than assumed. When any
distribution of divisible surplus is made, it will take the form of the purchase
of additional annuity units.
B. ANNUITY PAYMENTS AND OPTIONS
1. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of (a) the mortality table
specified in the contract, which reflects the age of the annuitant or the joint
annuitants, and (b) the investment performance of the Sub-Account. The amount of
the variable annuity payments will not be affected by adverse mortality
experience or by an increase in our expenses in excess of the expense deductions
provided for in the contract. The annuitant will receive the value of a fixed
number of annuity units on each scheduled annuity payment date. The value of
such units, and thus the amount of each scheduled annuity payment will reflect
investment gains and losses and investment income of the Portfolio. The amount
of the annuity payment may increase or decrease from one annuity payment date to
the next unless affected by the guaranteed minimum annuity payment amount.
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<PAGE>
2. ELECTING THE ANNUITY COMMENCEMENT DATE
The contracts are issued as immediate annuities on the contract date. When you
purchase a contract, you must indicate the annuity commencement date which, in
any event, must be within 12 months from the contract date. Some jurisdictions
may restrict this time limit to a shorter period.
An annuity payment may begin on any day of the month. Annuity payments may be
received on a monthly, quarterly, semi-annual or annual basis.
Benefits under retirement plans that qualify for special tax treatment
generally must commence no later than the April 1 following the year in which
the participant reaches age 70 1/2 and are subject to other conditions and
restrictions.
3. ANNUITY FORMS
The contracts provide for two lifetime annuity forms, a life annuity or a joint
and last survivor annuity. Each annuity payment option is available only as a
variable annuity. No additional optional annuity forms are provided or allowed
under the contracts.
LIFE ANNUITY
This is a scheduled annuity payable during the lifetime of the annuitant.
Annuity payments terminate with the last scheduled payment preceding the death
of the annuitant if the annuitant's death occurs after the cash value period has
expired. If the annuitant dies during the cash value period, the beneficiary
will be paid a death benefit that permits the beneficiary to elect to continue
receiving payments until the end of the cash value period or to withdraw some or
all of the cash value amount. Annuity payment amounts payable as a death benefit
will be reduced for any cash value withdrawals received by the beneficiary.
JOINT AND LAST SURVIVOR ANNUITY
This is a scheduled annuity payable during the joint lifetime of the annuitant
and a designated joint annuitant and continuing thereafter during the remaining
lifetime of the survivor. If the last surviving annuitant dies during the cash
value period, the beneficiary will be paid a death benefit that permits the
beneficiary to elect to continue receiving payments until the end of the cash
value period or to withdraw some or all of the cash value. Annuity payment
amounts payable as a death benefit will be reduced for any cash value
withdrawals received by the beneficiary. If this option is elected, the contract
and payments shall then be the joint property of the annuitant and the
designated joint annuitant.
The amount of the first scheduled payment depends on the annuity form elected
and the age of the annuitant and the joint annuitant, if any.
4. DETERMINATION OF AMOUNT OF VARIABLE ANNUITY PAYMENTS
Unless annuity payments are based on the guaranteed minimum annuity payment
amount, the dollar amount of each variable annuity payment is equal to the
number of annuity units credited to the contract multiplied by the annuity unit
value as of the due date of the payment. A number of annuity units is credited
at issuance of the contract based upon the initial annuity payment amount
attributable to the initial purchase payment received for the contract. The
number of annuity units to be credited is determined by dividing the initial
annuity payment amount by the annuity unit value as of the contract date. The
number of annuity units remains unchanged except as adjusted for additional
purchase payments, cash value withdrawals or an annuitant's death. For further
information on the crediting of annuity units, see "Crediting Annuity Units"
below.
The initial annuity payment amount is determined by applying the purchase
payment, net of deductions, to the appropriate annuity purchase rate per $1,000.
Deductions from purchase payments may include premium taxes imposed by certain
states depending upon the type of plan involved. Where applicable, these taxes
currently range from 0% to 3.5%.
The initial annuity payment amount depends on the annuity form elected and
upon the adjusted age of the annuitant and the joint annuitant, if any. A
formula for determining the adjusted age of persons receiving contract payments
is contained in the contract. The initial annuity payment amount is also based
upon annuity payment purchase rate tables which assume an interest rate of 4.5%
per annum. The 4.5% interest rate assumed in the variable annuity determination
will produce level annuity payments if the net investment performance remains
constant at 4.5% per year. Subsequent payments will decrease, remain the same or
increase depending upon whether the actual net investment performance is less
than, equal to, or greater than 4.5%.
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<PAGE>
5. AMOUNT OF SECOND AND SUBSEQUENT SCHEDULED ANNUITY PAYMENTS
Unless annuity payments are based on the guaranteed minimum annuity payment
amount, the dollar amount of the second and later variable annuity payments is
equal to the number of annuity units determined for each Sub-Account times the
annuity unit value for that Sub-Account as of the due date of the payment. This
amount may increase or decrease from payment to payment.
6. THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT
You will receive at least the guaranteed minimum annuity payment amount
specified in your contract. Each variable annuity payment will vary upwards or
downwards in accordance with the performance of the Sub-Account unless it would
be less than the guaranteed minimum annuity payment amount. Under the terms of
the contract's guarantee provisions, at each annuity payment date, we will pay
the annuitant or annuitants the greater of: (a) the annuity payment amount
determined by multiplying the number of annuity units times the annuity unit
value; or (b) the guaranteed minimum annuity payment amount currently in force
for the contract.
We guarantee that variable annuity payments will always be at least 85% of the
initial variable annuity payment amount. This guaranteed amount is determined on
the contract issue date and shown on page one of the contract. If an additional
purchase payment is made, we will guarantee that variable annuity payments will
always be at least 85% of the annuity amount attributable to that additional
purchase payment, plus the amount already guaranteed at the time of that
purchase payment. Withdrawals of cash value amounts under the contract will
reduce the guaranteed annuity payment amount by the same proportion that the
withdrawal reduces the number of annuity units under the contract.
C. DEATH BENEFITS
The contracts provide that in the event of the death of the annuitant or a joint
annuitant before the annuity commencement date, a death benefit will be paid to
you or, if applicable, to your beneficiary. This death benefit will be paid when
we receive due proof, satisfactory to us, of the death at our home office. This
death benefit will be the sum of the total annuity value of the contract plus
the amounts deducted from your purchase payments for sales charges, risk
charges, and state premium taxes where applicable. Death proceeds will be paid
in a single sum to the beneficiary designated to receive a lump sum benefit.
Payment will be made within 7 days after we receive due proof of death. Except
as noted below, the entire interest in the contract must be distributed within 5
years of an owner's death.
The contracts provide that in the event of the death of the annuitant or the
second joint annuitant after annuity payments have begun, we will pay the cash
value of the contract, if any, as a lump sum death benefit. The beneficiary will
be the person or persons named in the application for this contract or as
subsequently changed by you. In that event, we will pay the death benefit to the
beneficiary named in your last change of beneficiary request as provided for in
the contract.
If you are not an annuitant and you die, or if any joint owner who is not an
annuitant dies, a death benefit will be paid. This death benefit will be the
same amount as the amount that would be paid on the death of the annuitant or
joint annuitant and will be paid out in the same manner, except that if death
occurs before the annuity payment commencement date, such death benefit will be
paid out within five years of the date of death. On the payment of such a death
benefit in the event of the death of the owner, no other contract benefits are
then payable.
You can file a written request with us to change the beneficiary. Your written
request will not be effective until it is recorded in our home office records.
After it has been recorded, it will take effect as of the date you signed the
request. However, if a death occurs before the request has been recorded, the
request will not be effective as to any death proceeds we have paid before the
request was recorded in our home office. If a beneficiary dies, that
beneficiary's interest in a contract ends with his or her death. Only those
beneficiaries who survive will be eligible to share in the amount payable to the
beneficiary at the annuitant's death. If there is no surviving beneficiary upon
the death of the annuitant, any remaining value of death benefit payable to the
beneficiary will be paid to the annuitant's estate.
If the death benefit is payable after annuity payments have begun, the
beneficiary may elect to receive annuity payments during the remainder of the
cash value period rather than a lump sum benefit. However, the number of annuity
units will be set as a number equal to the number of cash value units as of the
date of the annuitant's death. The annuity payments to
15
<PAGE>
the beneficiary will terminate at the end of the cash value period and the
guaranteed minimum annuity payment amount will be adjusted in proportion to any
change in the number of annuity units. The new guaranteed minimum annuity
payment amount will be equal to the guaranteed minimum annuity payment amount
just prior to the annuitant's death, multiplied by the number of annuity units
after the annuitant's death divided by the number of annuity units prior to the
annuitant's death.
If the beneficiary elects to continue the annuity payments, the cash value
will also continue on the beneficiary's behalf as part of the death benefit.
This allows the beneficiary to withdraw any or all of the cash value available
at any time during the remaining cash value period. As with cash value
withdrawals while the annuitant is alive, cash value withdrawals by the
beneficiary after the annuitant's death will reduce future annuity payments and
the guaranteed minimum annuity payment amount based on the reduced interest in
the Separate Account as described under the heading "Withdrawals and Surrender"
on page 17 of this Prospectus.
Death benefits payable after the annuitant's death must be distributed at
least as rapidly as under the method elected by the annuitant or annuitants.
D. PURCHASE PAYMENTS AND VALUE OF THE CONTRACT
1. CREDITING ANNUITY AND CASH VALUE UNITS
Application forms are completed by the applicant and forwarded to our home
office when the contract is originally issued. We will review each application
form submitted to us for compliance with our issue criteria and, if it is
accepted, a contract will be issued. The initial purchase payment for the
contract must be an amount of at least $10,000.
If the initial purchase payment is accompanied by an incomplete application,
that purchase payment will not be credited until the valuation date coincident
with or next following the date a completed application is received and
accepted. We will offer to return the initial purchase payment accompanying an
incomplete application if it appears that the application cannot be completed
within five business days.
Purchase payments will be credited to the contract in the form of annuity
units and cash value units. Each purchase payment is credited on the valuation
date coincident with or next following the date such purchase payment is
received by us at our home office, except for the initial purchase payment. The
number of annuity and cash value units credited with respect to each purchase
payment is determined by dividing the initial annuity payment amount
attributable to the purchase payment by the then current annuity unit value for
the Sub-Account on the date the purchase payment is credited.
The net amount of each purchase payment, after deductions, will be applied to
purchase an additional initial annuity payment amount at least as great as that
determined by using the guaranteed annuity payment purchase rate table for new
purchase payments included in the contract. The guaranteed annuity payment
purchase rates used for new purchase payments as shown in the contract are based
on a 4.5% assumed interest rate and Individual Annuity 1983 Table A mortality
rates projected to the terminal age of the table using projections scale G. If,
when a purchase payment is made, we are using a table of annuity payment
purchase rates for new purchase payments for this class of contract which would
result in a larger initial annuity payment, we will use that table instead.
The number of annuity and cash value units so determined shall not be changed
by any subsequent change in the value of a unit, but the value of a unit will
vary from valuation date to valuation date to reflect the investment experience
of the Sub-Account.
We will determine the value of annuity units on each day on which the
Portfolio of the Fund is valued.
Cash value units will be credited for each purchase payment in a number equal
to the number of annuity units credited for each respective purchase payment.
2. TOTAL ANNUITY VALUE OF THE CONTRACT
The total annuity value of the contract at any time is the present value of the
future annuity payments expected to be made under the contract. The total
annuity value represents your total interest in the Separate Account.
When the annuitant is alive, the total annuity value is equal to the sum of
the number of cash value units, multiplied by the annuity unit value, multiplied
by the appropriate factor from the total annuity value factor table(s) included
in the contract; plus the number of annuity units in excess of the number of
cash value units, multiplied by the annuity unit value, multiplied
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by the appropriate factor from the total annuity value factor table(s) included
in the contract.
After the annuitant's death, if the beneficiary elects to continue annuity
payments for the remainder of the cash value period, the total annuity value
will be equal to the cash value at all times during the cash value period.
3. VALUE OF THE ANNUITY UNIT
The value of an annuity unit for the Sub-Account is determined on each valuation
date by using the product of: (a) the value of an annuity unit on the preceding
valuation date, (b) the net investment factor for the Sub-Account for the
valuation period ending on the current valuation date; and (c) a daily factor
(.999879) which adjusts the value for the effect in the valuation period of the
4.5% annual assumed interest rate that has already been built into each
contract's total annuity value, cash value, and annuity payment calculations.
4. NET INVESTMENT FACTOR FOR EACH VALUATION PERIOD
The net investment factor is an index used to measure the investment performance
of a Sub-Account from one valuation period to the next. For the Sub-Account, the
net investment factor for a valuation period is the gross investment rate for
the valuation period, less a deduction for the mortality and expense risk
charges and the administrative charge at the current rate of 0.95% per annum.
The gross investment rate is equal to: (1) the net asset value of a Portfolio
share determined at the end of the current valuation period, plus (2) the per
share amount of any dividend or capital gain distribution by the Portfolio if
the "ex-dividend" date occurs during the current valuation period, divided by
(3) the net asset value of a Portfolio share determined at the end of the
preceding valuation period. The gross investment rate may be positive or
negative.
E. REDEMPTIONS
1. WITHDRAWALS AND SURRENDER
Withdrawals are not allowed prior to the "cash value period" which commences
when annuity payments begin. At any time during the cash value period of the
contract, you may request a withdrawal from the cash value of the contract. Each
withdrawal must be in an amount of at least $500 or, if the cash value of the
contract is less than that amount, the total of any remaining cash value in the
contract must be withdrawn. Other restrictions on withdrawals may be present
when the contract is used in conjunction with tax qualified programs. See the
heading "Federal Tax Status," on page 19 in this Prospectus. You must make a
written request for any withdrawal or surrender.
You may surrender the contract at any time before the annuity payment
commencement date. The annuity payment commencement date is the day the first
annuity payment is made under the contract and it is the beginning of the cash
value period. If you make a surrender request, you will receive the contract's
surrender value. The surrender value will be determined on the valuation date
coincident with or next following the day your written request is received at
our home office.
Withdrawal or surrender proceeds will be paid in a single sum within seven
days of our receipt of your written request.
(a) Determination of Surrender Value
The surrender value of a contract is the total annuity value of the contract
as of the date of surrender plus the amounts deducted from your purchase
payments for sales charges, risk charges, and state premium taxes where
applicable. As this surrender value is available only until the time the
first annuity payment is made under the contract, this provision has the
effect of providing a return of your contract's charges, the net purchase
payments, plus or minus investment gains or losses and less Separate Account
charges, up until the time of that payment. As the maximum period of
deferral is 12 months after the Contract Date, this provision offers a
benefit which is limited in time.
(b) Determination of Cash Value
The cash value of the contract is not guaranteed. The cash value decreases
as annuity payments are made, but also increases or decreases based on the
performance of the Sub-Account of the Separate Account given by the relative
change in the annuity unit value.
A withdrawal of all or a portion of the cash value of the contract, subject
to the dollar limitations described above, may be made during the "cash
value period" of the contract. The amount of the cash value available for
withdrawal is equal to: (a) times (b) times (c), where (a) is the number of
cash value units credited to the contract, (b) is the current annuity unit
value and (c) is the appropriate cash value factor set forth in a table in
the contract. The
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cash value period begins at the annuity payment commencement date of the
contract and runs for a period approximately equal to the annuitant's life
expectancy at the time the contract is issued. The number of cash value
units and the cash value period are shown on page one of the contract. A new
page one will be provided to you if you make subsequent purchase payments or
withdrawals. This will inform you of the number of cash value units
remaining in your contract.
The number of cash value units credited under a contract is based on
purchase payments to, and cash withdrawals from, the contract. On the issue
date of the contract the number of cash value units will be equal to the
number of annuity units credited to the contract. (The crediting of annuity
units is discussed under the heading "Crediting Annuity and Cash Value
Units" found on page 16 in this Prospectus.) Normally, withdrawals will
reduce both the number of cash value units and the number of annuity units
but at different rates, so that after a withdrawal the number or cash value
units will no longer equal the number of annuity units. For a description of
the manner in which withdrawals affect the cash value of the contract, see
"Effect of Withdrawals on Cash Value," below.
(c) Effect of Withdrawals on Cash Value
A withdrawal during the cash value period reduces the number of cash value
units of the contract. The new number of cash value units after a withdrawal
is equal to the number of cash value units just prior to the withdrawal,
multiplied by the cash value prior to withdrawal, less the cash value
withdrawn, divided by the cash value prior to withdrawal. Cash value units
are reduced on a last in, first out basis. Therefore, if additional purchase
payments were made to the contract after its issue, the value of the cash
value units attributable to those payments will be valued and cashed out as
withdrawals first, running backwards in time until the values attributable
to the initial purchase payment are reached.
(d) Annuity Payment Determinations after Withdrawals
A cash value withdrawal will affect future annuity payments by reducing the
number of annuity units, the basis for determining the amount of such
payments. The new number of annuity units following a cash value withdrawal
will depend on whether or not the annuitant is alive at the time the cash
value withdrawal is made. If the annuitant is not alive, in other words if
the withdrawal is made by the beneficiary as part of the death benefit, the
new number of annuity units will equal the number of cash value units
following the withdrawal. At the death of the annuitant, the number of
annuity units is adjusted, if necessary, to equal the then number of cash
value units, and this equivalency is continued through any subsequent cash
value withdrawals.
If the annuitant is alive at the time of the withdrawal, the adjustment of
subsequent annuity payments that occurs after a withdrawal is designed to
produce a new level of annuity payments -- assuming a rate of return exactly
equal to 4.5% -- over the remaining lifetime of the contract, including the
period after the end of the cash value period. After such a withdrawal,
there will be less cash value to support benefit payments during the cash
value period, so that the same level of annuity payments as before the
withdrawal cannot be maintained during the cash value period. In order to
levelize payments -- again, based on the assumption of a 4.5% return -- both
before and after the end of the cash value period, it is necessary to
"redistribute" annuity payments, reducing payments after the end of the cash
value period and using the portion of the excess reserves attributable to
the reduction to increase payments during the cash value period above the
level that could be supported by the remaining cash value alone to the level
payable after the cash value period. (As a result, even if all of a
contract's cash value is withdrawn, annuity payments will continue to be
made, although at a considerably reduced level.)
If the annuitant is alive at the time of the withdrawal, annuity payments
after a withdrawal are determined as follows. When a withdrawal occurs, the
total annuity value of the contract is recomputed by adding the sum of the
new cash value immediately after the withdrawal and the contract's excess
reserves. The new total
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annuity value is then converted into a new "initial annuity payment amount,"
based on tables set forth in the contract, and the new initial annuity
payment amount is in turn converted into annuity units by dividing it by the
annuity unit value on the date of the withdrawal. The tables are actuarially
computed to produce a level annuity payment for the remaining lifetime of
the contract based on an interest rate of 4.5% and the mortality rates
originally applied to purchase payments received under the contract (which
cannot be less favorable than the Individual Annuity 1983 Table A mortality
rates projected to the terminal age of the table using projection scale G).
When a cash value withdrawal is made, we will inform you of the new number
of annuity units by sending you a new page one for your contract.
Redistribution of annuity payments after withdrawals do not adjust
redistributions made in connection with prior withdrawals. Despite
redistributions, the original mortality guarantees associated with each
purchase payment are preserved.
While annuity payments will be reduced as a result of cash value
withdrawals, so long as the annuitant is alive, annuity payments will never
be eliminated by cash value withdrawals even if all available cash value is
completely withdrawn. Some level of annuity benefit, under the option
elected, will always be payable. Also, a new guaranteed annuity amount will
always be in effect after cash withdrawals. While a new initial annuity
payment amount is determined after a cash withdrawal, additional cash values
are not created.
A description of the computation used to determine the new initial annuity
payment amount and examples of the computation are set forth in Appendix A
of this Prospectus.
For an example which assumes a pattern of withdrawals and the effect of such
withdrawals on contract values, please see Appendix A to this Prospectus.
2. RIGHT OF CANCELLATION
You should read the contract carefully as soon as it is received. You may cancel
the purchase of a contract within ten days after its delivery, for any reason,
by giving us written notice at 400 Robert Street North, St. Paul, Minnesota
55101-2098, of your intention to cancel. If the contract is canceled and
returned, we will refund to you the greater of (a) the total annuity value of
the contract attributable to your purchase payments, plus the amounts deducted
from your purchase payments, or (b) the amount of purchase payments paid under
this contract. Payment of the requested refund will be made to you within 7 days
after we receive notice of cancellation.
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FEDERAL TAX STATUS
INTRODUCTION
The discussion contained herein is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No attempt
is made to consider any applicable state or other tax laws. In addition, this
discussion is based on our understanding of federal income tax laws as they are
currently interpreted. No representation is made regarding the likelihood of
continuation of current income tax laws or the current interpretations of the
Internal Revenue Service.
We are taxed as a "life insurance company" under the Internal Revenue Code.
The operations of the Separate Account form a part of, and are taxed with, our
other business activities. Currently, no federal income tax is payable by us on
income dividends received by the Separate Account or on capital gains arising
from the Separate Account's activities. The Separate Account is not taxed as a
"regulated investment company" under the Code and it does not anticipate any
change in that tax status.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Code governs taxation of nonqualified annuities in general and
some aspects of qualified programs. No taxes are imposed on increases in the
value of a contract until distribution occurs, either in the form of a payment
in a single sum or as annuity payments under the annuity option elected. As a
general rule, annuity contracts held by a corporation, trust or other similar
entity, as opposed to a natural person, are not treated as annuity contracts for
federal tax purposes. The investment income on such contracts is taxed as
ordinary income that is received or accrued by the owner of the contract during
the taxable year. There is an exception to this general
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rule for immediate annuity contracts. An immediate annuity contract for these
purposes is an annuity (i) purchased with a single premium or annuity
consideration, (ii) the annuity starting date of which commences within one year
from the date of the purchase of the annuity, and (iii) which provides for a
series of substantially equal periodic payments (to be made not less frequently
than annually) during the annuity period. Corporations, trusts and other similar
entities, other than natural persons, seeking to take advantage of this
exception for immediate annuity contracts should consult with a tax adviser.
Under current guidance, the tax consequences of additional premium payments
and partial withdrawals under nonqualified and qualified annuities are unclear,
including the effect on taxation of distributions, required distribution
provisions and penalty taxes. Consult a qualified tax adviser before submitting
additional premium payments or requesting a partial withdrawal.
For payments made in the event of a full surrender of an annuity not part of a
qualified program, the taxable portion is generally the amount in excess of the
cost basis of the contract. Amounts withdrawn from the variable annuity
contracts are generally treated first as taxable income to the extent of the
excess of the contract value over the purchase payments made under the contract.
Such taxable portion is taxed at ordinary income tax rates.
In the case of a withdrawal under an annuity that is part of a qualified
program, a portion of the amount received is taxable based on the ratio of the
"investment in the contract" to the individual's balance in the retirement plan,
generally the value of the annuity. The "investment in the contract" generally
equals the portion of any deposits made by or on behalf of an individual under
an annuity which was not excluded from the gross income of the individual. For
annuities issued in connection with qualified plans, the "investment in the
contract" can be zero.
For annuity payments, the taxable portion is generally determined by a formula
that establishes a specific dollar amount of each payment that is not taxed. In
this respect, Congress has indicated that the Treasury Department may have
authority to treat the combination purchase of an immediate annuity contract and
a separate deferred annuity contract as a single annuity contract under its
general authority to prescribe rules as may be necessary to enforce the income
tax laws. A prospective purchaser of more than one annuity contract in a
calendar year should consult a tax adviser. The taxable part of each annuity
payment is taxed at ordinary income rates.
If a taxable distribution is made under the variable annuity contracts, an
additional tax of 10% of the amount of the taxable distribution may apply. This
additional tax does not apply where the payment is made under an immediate
annuity contract, as defined above, or where the taxpayer is 59 1/2 or older,
where payment is made on account of the taxpayer's disability, or where payment
is made by reason of the death of an owner.
The Code also provides an exception to the 10% additional tax for
distributions, in periodic payments, of substantially equal installments, being
made for the life (or life expectancy) of the taxpayer or the joint lives (or
joint life expectancies) of the taxpayer and beneficiary.
For some types of qualified plans, other tax penalties may apply to certain
distributions.
A transfer of ownership of a contract, the designation of an annuitant or
other payee who is not also the contract owner, or the assignment of the
contract may result in certain income or gift tax consequences to the contract
owner that are beyond the scope of this discussion. A contract owner who is
contemplating any such transfer, designation or assignment should consult a
competent tax adviser with respect to the potential tax effects of that
transaction.
NOTICE -- PLEASE READ CAREFULLY
WE HAVE BEEN ADVISED THAT IT IS THE POSITION OF THE INTERNAL REVENUE SERVICE
THAT WHEN WITHDRAWALS (OTHER THAN ANNUITY PAYMENTS) ARE TAKEN FROM THE CASH
VALUE OF AN IMMEDIATE VARIABLE ANNUITY CONTRACT, SUCH AS THAT OFFERED BY THIS
PROSPECTUS, THEN ALL AMOUNTS RECEIVED BY THE TAXPAYER ARE TAXABLE AT ORDINARY
INCOME RATES AS AMOUNTS "NOT RECEIVED AS AN ANNUITY." IN ADDITION, SUCH AMOUNTS
ARE TAXABLE TO THE RECIPIENT WITHOUT REGARD TO THE OWNER'S INVESTMENT IN THE
CONTRACT OR ANY INVESTMENT GAIN WHICH MIGHT BE PRESENT IN THE CURRENT ANNUITY
VALUE. FOR EXAMPLE, UNDER THIS VIEW, A CONTRACT OWNER WITH A CASH VALUE OF
$100,000, SEEKING TO OBTAIN $20,000 OF THE CASH VALUE IMMEDIATELY AFTER ISSUE,
WOULD PAY INCOME TAXES ON THE ENTIRE $20,000 AMOUNT IN THAT TAX YEAR. FOR SOME
TAXPAYERS, SUCH AS THOSE UNDER AGE 59 1/2, ADDITIONAL TAX PENALTIES MAY ALSO
APPLY. THIS ADVERSE TAX RESULT MEANS THAT OWNERS OF NONQUALIFIED CONTRACTS
SHOULD CONSIDER CAREFULLY THE TAX IMPLICATIONS OF ANY
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WITHDRAWAL REQUESTS AND THEIR NEED FOR CONTRACT FUNDS PRIOR TO THE EXERCISE OF
THIS RIGHT. CONTRACT OWNERS SHOULD ALSO CONTACT THEIR TAX ADVISER PRIOR TO
MAKING WITHDRAWALS.
IN ADDITION, WE HAVE BEEN ADVISED THAT IT IS THE POSITION OF THE INTERNAL
REVENUE SERVICE THAT WHEN ADDITIONAL PURCHASE PAYMENTS ARE MADE UNDER AN
EXISTING IMMEDIATE VARIABLE ANNUITY CONTRACT, SUCH AS THAT OFFERED BY THIS
PROSPECTUS, THOSE PURCHASE PAYMENTS WILL NOT RESULT IN A RECALCULATION OF THE
OWNER'S INVESTMENT IN THE CONTRACT AND A DETERMINATION OF A NEW EXCLUSION
AMOUNT. FOR EXAMPLE, A CONTRACT OWNER AGED 60 MIGHT PURCHASE A CONTRACT FOR THE
SUM OF $100,000, WHICH WOULD RESULT IN AN INITIAL LIFETIME ANNUITY PAYMENT OF
$460.00 PER MONTH. EACH YEAR, $4,132.23 WOULD BE RECEIVED AS A RETURN OF
INVESTMENT IN THE CONTRACT AND THE EXCESS WOULD BE TAXED AS ORDINARY INCOME. IF
WE ASSUME THAT THE CONTRACT OWNER MAKES AN ADDITIONAL PURCHASE PAYMENT OF
$20,000, THE EXCLUSION AMOUNT OF $4,123.23 WOULD NOT CHANGE, EVEN THOUGH
ADDITIONAL CASH VALUE WILL RESULT IN A NEW VARIABLE ANNUITY PAYMENT. THIS
POSITION OF THE SERVICE WILL RESULT IN THE OWNER'S INABILITY TO RECOVER HIS OR
HER INVESTMENT OVER THE PERIOD OF THE PAYMENTS. ACCORDINGLY, CONTRACT OWNERS,
ESPECIALLY THOSE INTENDING TO MAKE SUBSTANTIAL AND MATERIAL ADDITIONAL PAYMENTS,
SHOULD CONSIDER PURCHASING AN ADDITIONAL CONTRACT INSTEAD OF MAKING AN
ADDITIONAL PAYMENT. FOR FURTHER INFORMATION YOU SHOULD CONSULT YOUR OWN
QUALIFIED TAX ADVISER.
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the contract to be treated as a life
insurance contract for federal tax purposes. The Separate Account, through the
Fund, intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Fund's assets may be invested.
Although the investment adviser is an affiliate of Minnesota Mutual, Minnesota
Mutual does not have control over the Fund or its investments. Nonetheless,
Minnesota Mutual believes that the Portfolio of the Fund in which the Separate
Account owns shares will be operated in compliance with the requirements
prescribed by the Treasury.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
Separate Account used to support their contracts. In those circumstances, income
and gains from the Separate Account assets would be includible in the variable
annuity contract owner's gross income. The IRS has stated in published rulings
that a variable contract owner will be considered the owner of Separate Account
assets if the contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular sub-accounts without being treated as
owners of the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets.
These differences could result in a contract owner being treated as the owner of
the assets of the Separate Account. In addition, Minnesota Mutual does not know
what standards will be set forth, if any, in the regulations or rulings which
the Treasury Department has stated it expects to issue. Minnesota Mutual
therefore reserves the right to modify the contract as necessary to attempt to
prevent a contract owner from being considered the owner of a pro rata share of
the assets of the Separate Account.
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for federal income tax purposes,
Section 72(s) of the Code requires any nonqualified contract issued after
January 18, 1985 to provide that (a) if an owner dies on or after the annuity
starting date but prior to the time the entire interest in the contract has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the
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method of distribution being used as of the date of that owner's death; and (b)
if an owner dies prior to the annuity starting date, the entire interest in the
contract must be distributed within five years after the date of the owner's
death. These requirements shall be considered satisfied if any portion of the
owner's interest which is payable to or for the benefit of a "designated
beneficiary" is distributed over the life of such beneficiary or over a period
not extending beyond the life expectancy of that beneficiary and such
distributions begin within one year of that owner's death. The owner's
"designated beneficiary" is the person designated by such owner as a beneficiary
and to whom ownership of the contract passes by reason of death. It must be a
natural person. However, if the owner's "designated beneficiary" is the
surviving spouse of the owner, the contract may be continued with the surviving
spouse as the new owner.
Nonqualified contracts issued after January 18, 1985 contain provisions which
are intended to comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have yet been issued.
Minnesota Mutual intends to review such provisions and modify them if necessary
to assure that they comply with the requirements of Code Section 72(s) when
clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above. For these purposes, the investment in the contract is not
affected by the owner's death. That is, the investment in the contract remains
the amount of any purchase payments paid which were not excluded from gross
income.
POSSIBLE LEGISLATION
In the past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this Prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
TAX QUALIFIED PROGRAMS
The annuity is designed for use with several types of retirement plans that
qualify for special tax treatment. The tax rules applicable to participants and
beneficiaries in retirement plans vary according to the type of plan and the
terms and conditions of the plan. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions); distributions
that do not conform to specified minimum distribution rules; aggregate
distributions in excess of a specified annual amount; and in other specified
circumstances.
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
annuity. Owners and participants under retirement plans as well as annuitants
and beneficiaries are cautioned that the rights of any person to any benefits
under annuities purchased in connection with these plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the annuity issued in connection with such a plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into our annuity administration procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the annuities comply with
applicable law. Purchasers of annuities for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
contract.
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PUBLIC SCHOOL SYSTEMS AND CERTAIN TAX EXEMPT ORGANIZATIONS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
INDIVIDUAL RETIREMENT ANNUITIES
Code Sections 219 and 408 permit individuals or their employers to contribute to
an individual retirement program known as an "Individual Retirement Annuity" or
"IRA". Individual Retirement Annuities are subject to limitations on the amount
which may be contributed and deducted and the time when distributions may
commence. In addition, distributions from certain other types of retirement
plans may be placed into an Individual Retirement Annuity on a tax deferred
basis. Employers may establish Simplified Employee Pension (SEP) Plans for
making IRA contributions on behalf of their employees.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of retirement
plans for employees, and permits self-employed individuals to establish
retirement plans for themselves and their employees. These retirement plans may
permit the purchase of the contracts to accumulate retirement savings under the
plans. Adverse tax or other legal consequences to the plan, to the participant
or to both may result if this annuity is assigned or transferred to any
individual as a means to provide benefit payments, unless the plan complies with
all legal requirements applicable to such benefits prior to transfer of the
annuity.
DEFERRED COMPENSATION PLANS
Code Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax exempt organizations. The plans may permit participants
to specify the form of investment for their deferred compensation account. All
investments are owned by the sponsoring employer and are subject to the claims
of the general creditors of the employer. Depending on the terms of the
particular plan, the employer may be entitled to draw on deferred amounts for
purposes unrelated to its Section 457 plan obligations. In general, all amounts
received under a Section 457 plan are taxable and are subject to federal income
tax withholding as wages.
WITHHOLDING
In general, distributions from annuities are subject to federal income tax
withholding unless the recipient elects not to have tax withheld. Different
rules may apply to payments delivered outside the United States. Some states
have enacted similar rules.
Recent changes to the Code allow the rollover of most distributions from
tax-qualified plans and Section 403(b) annuities directly to other tax-qualified
plans that will accept such distributions and to individual retirement accounts
and individual retirement annuities. Distributions which may not be rolled over
are those which are: (1) one of a series of substantially equal annual (or more
frequent) payments made (a) over the life or life expectancy of the employee,
(b) the joint lives or joint expectancies of the employee and the employee's
designated beneficiary, or (c) for a specified period of ten years or more; (2)
a required minimum distribution; or (3) the non-taxable portion of a
distribution.
Any distribution eligible for rollover, which may include payment to an
employee, an employee's surviving spouse or an ex-spouse who is an alternate
payee, will be subject to federal tax withholding at a 20% rate unless the
distribution is made as a direct rollover to a tax-qualified plan or to an
individual retirement account or annuity. It may be noted that amounts received
by individuals which are eligible for rollover may still be placed in another
tax-qualified plan or individual retirement account or individual retirement
annuity if the transaction is completed within 60
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days after the distribution has been received. Such a taxpayer must replace
withheld amounts with other funds to avoid taxation on the amount previously
withheld.
SEE YOUR OWN TAX ADVISER
It should be understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that special rules are
provided with respect to situations not discussed herein. It should also be
understood that should a plan lose its qualified status, employees will lose
some of the tax benefits described. Statutory changes in the Internal Revenue
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax consequences of specific factual situations. Due to the complexity
of the applicable laws, tax advice may be needed by a person contemplating the
purchase of a variable annuity contract or exercising elections under such a
contract. For further information a qualified tax adviser should be consulted.
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STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information, which contains additional information
including financial statements, is available from the offices of Minnesota
Mutual at your request. The Table of Contents for that Statement of Additional
Information is as follows:
Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Performance Data
Auditors
Registration Statement
Financial Statements
24
<PAGE>
APPENDIX A--COMPUTATION AND EXAMPLES OF WITHDRAWALS
A cash value withdrawal will affect future annuity payments by reducing the
number of annuity units, the basis for determining the amount of such payments.
If the annuitant is alive at the time of the withdrawal, the new number of
annuity units is determined by, first, computing a new initial annuity payment
amount and, then, dividing that amount by the annuity unit value at the time of
the withdrawal.
IF NO PRIOR WITHDRAWALS
If no prior cash withdrawals have been made, the new initial annuity payment
amount is the sum of
(i) the product of the number of cash value units after the withdrawal times
the current annuity unit value, and
(ii) the product of ([(a) X (b)]/1000) times (c), where
(a) is the excess of the total annuity value over the cash value
immediately prior to the withdrawal,
(b) is the ratio of the cash value withdrawn over the cash value prior to
the withdrawal, and
(c) is the applicable annuity purchase rate set forth in the contract in
the table captioned "Total Annuity Value Factors and Annuity Payment
Purchase Rates Applicable at a Cash Value Withdrawal while the
Annuitant is Alive" ("Table I").
In the above computation "(i)" reflects the portion of the new initial annuity
payment amount supported by the reserves attributable to the cash value of the
contract, and "(ii)" reflects the portion of the new initial annuity payment
amount supported by the annuity reserves in excess of the cash value. The excess
reserves, "(ii) (a)," are multiplied by the proportionate reduction in the cash
value, "(ii) (b)," to determine the portion of the excess reserves that are to
be redistributed, and the redistribution is effected by dividing the portion so
determined by 1000 and multiplying the result by the appropriate annuity
purchase rate.
An example of the withdrawal calculation may serve as a useful illustration.
Assume a contract issued to a woman, age 60, for an initial purchase payment of
$100,000, and assume further that the net Sub-Account performance matches the
assumed interest rate of 4.5% so that we need not consider the variation in
annuity payments as a result of fluctuations in investment performance. Assume
also that the annuity unit value is and remains $1.00. At the time of issue of
the contract, the initial annuity payment amount, if paid as a life annuity,
will be $460.99, and the number of annuity units and cash value units will be
460.9900. The guaranteed minimum annuity payment amount is $391.84 (85% X
$460.99).
Assume that at year five, the contract owner makes a withdrawal of 60% of the
cash value. Immediately prior to the withdrawal, the contract has a total
annuity value of $85,594, which is determined by multiplying the current annuity
payment amount, $460.99, by the appropriate factor set forth in the contract
applicable to cash value units in Table I, 185.6737. The total annuity reserves
amount is $85,594. The cash value of the contract immediately prior to the
withdrawal is $70,890, which is determined by multiplying the current annuity
payment amount, $460.99, by the appropriate factor set forth in the contract in
the table captioned "Cash Value Factors." ("Table II"), 153.7783. $70,890 is the
amount of the annuity reserves attributable to the cash value of the contract.
The cash value after the withdrawal is $28,356 ($70,890 - $42,534 (60% X
$70,890)), and the new number of cash value units is 184.3960 (460.9900 X
($28,356/$70,890)).
The new initial annuity payment amount is $235.19, the sum of
(i) $184.40, the product of the number of cash value units after the
withdrawal (184.3960) times the annuity unit value ($1.00), and
(ii) $50.79, the product of ([(a) X (b)]/1000) times (c), where
(a) is $14,704, the excess of the total annuity value ($85,594) over the
cash value ($70,890) immediately prior to the withdrawal,
(b) is .6, the ratio of the cash value withdrawn ($42,534) over the cash
value prior to the withdrawal ($70,890), and
(c) is 5.7568, the applicable annuity purchase rate set forth in the
contract in Table I.
The new guaranteed minimum annuity payment amount after the withdrawal is
$199.91 ($391.84 X (235.1900/460.9900)).
IF PRIOR WITHDRAWALS
Where prior withdrawals have been made, the above formula is adjusted in the
manner shown
25
<PAGE>
in the following example. Assume that after the withdrawal of 60% of the cash
value in the contract described above the owner withdraws 75% of the remaining
cash value at year 15.
Immediately prior to the transaction the contract has a total annuity value of
$32,003. This is determined by multiplying the two components of the current
annuity payment amount $184.40 -- the portion attributable to the cash value
reserves, and $50.79 -- the portion attributable to the annuity reserves in
excess of the cash value, by the appropriate factors set forth in the contract
applicable to cash value units and annuity units in excess of cash value units,
respectively, in Table I, namely, 137.7353 and 130.0297. ($32,003 = ($184.40 X
137.7353) + ($50.79 X 130.0297)) The cash value of the contract immediately
prior to the withdrawal is $16,289, which is determined by multiplying the
portion of the current annuity payment amount attributable to the cash value,
$184.40, by the appropriate factor set forth in the contract in Table II,
88.3373 ($16,289 = $184.40 X 88.3373). The cash value after the withdrawal is
$4,072 ($16,289 - $12,217 (75% X $16,289)), and the new number of cash value
units is 46.0962 (184.3960 X ($4,072/$16,289)).
The new initial annuity payment amount is $149.44, the sum of
(i) $46.10, the product of the number of cash value units after the
withdrawal (46.0962) times the current annuity unit value ($1.00),
(ii) $50.79, the product of the number of annuity units (235.19) minus the
number of cash value units (184.40), each prior to the withdrawal,
times the current annuity unit value ($1.00), and
(iii) $52.55, the product of ([(a) X (b)]/1000) times (c), where
(a) is $9110, which is
(A) $15,714, the excess of the total annuity value ($32,003) over the
cash value ($16,289) immediately prior to the withdrawal, minus
(B) $6,604, the value is (ii) above ($50.79) multiplied by the
appropriate factor as of the withdrawal date applicable to Annuity
Units in excess of Cash Value Units set forth in the contract in
Table I (130.0297),
(b) is .75, the ratio of the cash value withdrawn ($12,217) over the cash
value prior to the withdrawal ($16,289), and
(c) is 7.6905, the applicable annuity purchase rate set forth in the
contract in Table I.
The new initial annuity payment amount has a new guaranteed minimum annuity
payment amount associated with it of $127.02 ($199.91 X 149.4400/235.1900).
26
<PAGE>
APPENDIX B--IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
PREPARED FOR: Jane M. Doe
DATE OF BIRTH: 10/01/35 SEX: Female
STATE: MN
PREPARED BY: Minnesota Mutual
FUNDS: Non-Qualified
LIFE EXPECTANCY: 24.2 (IRS)
ANNUITIZATION OPTION: Single Life
QUOTATION DATE: 10/01/95
COMMENCEMENT DATE: 10/01/95
SINGLE PAYMENT RECEIVED: $100,000.00
INCOME FREQUENCY: Monthly
INITIAL PERIODIC INCOME: $460.99
GUARANTEED MINIMUM INCOME AT ISSUE: $391.84
*ESTIMATED ANNUAL EXCLUSION AMOUNT AT ISSUE: $3,471.07
The variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.5% is the assumed rate used to
calculate the first payment. Thereafter, payments will increase or decrease
based upon the relationship between the initial interest rate and the
performance of the Index 500 Portfolio of the MIMLIC Series Fund, Inc. The
investment returns shown are hypothetical and not a representation of future
results. Actual value of the contract will fluctuate depending on the
performance of the underlying subaccounts.
The cash value is the dollar amount available for withdrawal under this
contract at a given point in time. The total annuity value represents your total
interest in the subaccount.
<TABLE>
<CAPTION>
0.00% GROSS (-1.42% NET)
---------------------------------------------------
GUARANTEED PROJECTED TOTAL ANNUITY
DATE BEG OF YR. AGE INCOME INCOME CASH VALUE VALUE
- --------------- ---------- --- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Oct 1, 1995.... 1 60 392 461 81,667 93,789
Oct 1, 1996.... 2 61 392 435 75,182 87,058
Oct 1, 1997.... 3 62 392 410 69,091 80,731
Oct 1, 1998.... 4 63 392 392 63,371 74,783
Oct 1, 1999.... 5 64 392 392 58,001 69,194
Oct 1, 2004.... 10 69 392 392 35,727 45,975
Oct 1, 2009.... 15 74 392 392 19,611 29,194
Oct 1, 2014.... 20 79 392 392 8,061 17,447
Oct 1, 2018.... 24 83 392 392 1,297 11,108
Oct 1, 2019.... 25 84 392 392 0 9,932
Oct 1, 2024.... 30 89 392 392 0 5,621
Oct 1, 2029.... 35 94 392 392 0 3,151
Oct 1, 2034.... 40 99 392 392 0 1,521
Oct 1, 2035.... 41 100 392 392 0 1,343
</TABLE>
* This calculation does not include future contributions or withdrawals.
Deductions from your purchase payments are made for sales charges, risk
charges, and state premium taxes where applicable. Sales charges are based on
your total cumulative purchase payments (see prospectus for schedule). A risk
charge is deducted for Minnesota Mutual's guarantee of a minimum annuity payment
amount. This charge is 1.25% of each purchase payment.
Net rates of return reflect expenses totaling 1.42%, which consist of the .95%
Variable Annuity Account mortality and expense risk charge and administrative
charge, and .47% for the Series Fund management fee.
Minnesota Mutual variable immediate annuities are available through registered
representatives of MIMLIC Sales Corporation. This illustration must be
accompanied or preceded by a current prospectus for the Minnesota Mutual
Variable Annuity Account and for the MIMLIC Series Fund, Inc.
Page 1 of 4
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
27
<PAGE>
IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
PREPARED FOR: Jane M. Doe
DATE OF BIRTH: 10/01/35 SEX: Female
STATE: MN
PREPARED BY: Minnesota Mutual
FUNDS: Non-Qualified
LIFE EXPECTANCY: 24.2 (IRS)
ANNUITIZATION OPTION: Single Life
QUOTATION DATE: 10/01/95
COMMENCEMENT DATE: 10/01/95
SINGLE PAYMENT RECEIVED: $100,000.00
INCOME FREQUENCY: Monthly
INITIAL PERIODIC INCOME: $460.99
GUARANTEED MINIMUM INCOME AT ISSUE: $391.84
*ESTIMATED ANNUAL EXCLUSION AMOUNT AT ISSUE: $3,471.07
The variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.5% is the assumed rate used to
calculate the first payment. Thereafter, payments will increase or decrease
based upon the relationship between the initial interest rate and the
performance of the Index 500 Portfolio of the MIMLIC Series
Fund, Inc. The investment returns shown are hypothetical and not a
representation of future results. Actual value of the contract will fluctuate
depending on the performance of the underlying subaccounts.
The cash value is the dollar amount available for withdrawal under this
contract at a given point in time. The total annuity value represents your total
interest in the subaccount.
<TABLE>
<CAPTION>
5.92% GROSS
(4.50% NET)
---------------------------------------------------------------
PROJECTED TOTAL ANNUITY
DATE BEG OF YR. AGE GUARANTEED INCOME INCOME CASH VALUE VALUE
- ----------------------------- --------------- --------- ----------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Oct 1, 1995.................. 1 60 392 461 81,667 93,789
Oct 1, 1996.................. 2 61 392 461 79,697 92,286
Oct 1, 1997.................. 3 62 392 461 77,638 90,718
Oct 1, 1998.................. 4 63 392 461 75,487 89,081
Oct 1, 1999.................. 5 64 392 461 73,239 87,373
Oct 1, 2004.................. 10 69 392 461 60,387 77,708
Oct 1, 2009.................. 15 74 392 461 44,371 66,050
Oct 1, 2014.................. 20 79 392 461 24,412 52,838
Oct 1, 2018.................. 24 83 392 461 4,961 42,480
Oct 1, 2019.................. 25 84 392 461 0 40,261
Oct 1, 2024.................. 30 89 392 461 0 30,498
Oct 1, 2029.................. 35 94 392 461 0 22,888
Oct 1, 2034.................. 40 99 392 461 0 14,791
Oct 1, 2035.................. 41 100 392 461 0 13,837
</TABLE>
* This calculation does not include future contributions or withdrawals.
Deductions from your purchase payments are made for sales charges, risk
charges, and state premium taxes where applicable. Sales charges are based on
your total cumulative purchase payments (see prospectus for schedule). A risk
charge is deducted for Minnesota Mutual's guarantee of a minimum annuity payment
amount. This charge is 1.25% of each purchase payment.
Net rates of return reflect expenses totalling 1.42%, which consist of the
.95% Variable Annuity Account mortality and expense risk charge and
administrative charge, and .47% for the Series Fund management fee.
Minnesota Mutual variable immediate annuities are available through registered
representatives of MIMLIC Sales Corporation. This illustration must be
accompanied or preceded by a current prospectus for the Minnesota Mutual
Variable Annuity Account and for the MIMLIC Series Fund, Inc.
Page 2 of 4
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
28
<PAGE>
IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
PREPARED FOR: Jane M. Doe
DATE OF BIRTH: 10/01/35 SEX: Female
STATE: MN
PREPARED BY: Minnesota Mutual
FUNDS: Non-Qualified
LIFE EXPECTANCY: 24.2 (IRS)
ANNUITIZATION OPTION: Single Life
QUOTATION DATE: 10/01/95
COMMENCEMENT DATE: 10/01/95
SINGLE PAYMENT RECEIVED: $100,000.00
INCOME FREQUENCY: Monthly
INITIAL PERIODIC INCOME: $460.99
GUARANTEED MINIMUM INCOME AT ISSUE: $391.84
*ESTIMATED ANNUAL EXCLUSION AMOUNT AT ISSUE: $3,471.07
The variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 4.5% is the assumed rate used to
calculate the first payment. Thereafter, payments will increase or decrease
based upon the relationship between the initial interest rate and the
performance of the Index 500 portfolio of the MIMLIC Series Fund, Inc. The
investment returns shown
are hypothetical and not a representation of future results. Actual value of the
contract will fluctuate depending on the performance of the underlying
subaccounts.
The cash value is the dollar amount available for withdrawal under this
contract at a given point in time. The total annuity value represents your total
interest in the subaccount.
<TABLE>
<CAPTION>
12.00% GROSS
(10.58% NET)
-------------------------------------------------------------
PROJECTED TOTAL ANNUITY
DATE BEG OF YR. AGE GUARANTEED INCOME INCOME CASH VALUE VALUE
- ----------------------------- --------------- --------- ----------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Oct 1, 1995.................. 1 60 392 461 81,667 93,789
Oct 1, 1996.................. 2 61 392 488 84,334 97,656
Oct 1, 1997.................. 3 62 392 516 86,935 101,582
Oct 1, 1998.................. 4 63 392 546 89,444 105,552
Oct 1, 1999.................. 5 64 392 578 91,830 109,552
Oct 1, 2004.................. 10 69 392 767 100,458 129,274
Oct 1, 2009.................. 15 74 392 1,017 97,935 145,787
Oct 1, 2014.................. 20 79 392 1,350 71,489 154,736
Oct 1, 2018.................. 24 83 392 1,693 18,215 155,980
Oct 1, 2019.................. 25 84 392 1,791 0 156,436
Oct 1, 2024.................. 30 89 392 2,376 0 157,226
Oct 1, 2029.................. 35 94 392 3,153 0 156,550
Oct 1, 2034.................. 40 99 392 4,183 0 134,228
Oct 1, 2035.................. 41 100 392 4,427 0 132,881
</TABLE>
- ------------------------
* This calculation does not include future contributions or withdrawals.
Deductions from your purchase payments are made for sales charges, risk
charges, and state premium taxes where applicable. Sales charges are based on
your total cumulative purchase payments (see prospectus for schedule). A risk
charge is deducted for Minnesota Mutual's guarantee of a minimum annuity payment
amount. This charge is 1.25% of each purchase payment.
Net rates of return reflect expenses totaling 1.42%, which consist of the .95%
Variable Annuity Account mortality and expense risk charge and administrative
charge, and .47% for the Series Fund management fee.
Minnesota Mutual variable immediate annuities are available through registered
representatives of MIMLIC Sales Corporation. This illustration must be
accompanied or preceded by a current prospectus for the Minnesota Mutual
Variable Annuity Account and for the MIMLIC Series Fund, Inc.
Page 3 of 4
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
29
<PAGE>
IMMEDIATE VARIABLE ANNUITY ILLUSTRATION
SPECIAL TAX RULES APPLY TO NON-QUALIFIED IMMEDIATE ANNUITIES
When withdrawals are taken from the cash value of an immediate variable annuity
contract, all amounts received by the taxpayer are taxable as ordinary income in
the year in which the withdrawals are taken. Under certain circumstances, you
may be able to get an offsetting deduction.
When additional purchase payments are made under an existing immediate
variable annuity contract, those purchase payments will not result in a
recalculation of the owners investment in the contract and a determination of a
new exclusion amount.
For more information on these matters, see your prospectus under the heading
Federal Tax Status. Consult with your tax advisor.
Page 4 of 4
Not valid without all pages.
This is an illustration only and not a contract.
Prepared by The Minnesota Mutual Life Insurance Company
30
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Statement of Additional Information
Form N-4
Item Number Caption in Statement of Additional Information
15. Cover Page
16. Cover Page
17. Trustees and Principal Management Officers of Minnesota Mutual
18. Not Applicable
19. Not Applicable
20. Distribution of Contracts
21. Performance Data
22. Not Applicable
23. Financial Statements
<PAGE>
Minnesota Mutual Variable Annuity Account
("Variable Annuity Account"), a Separate Account of
The Minnesota Mutual Life Insurance Company
("Minnesota Mutual")
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (612) 298-3500
Statement of Additional Information
The date of this document and the Prospectus is: _______________
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands upon
subjects discussed in the Prospectus. Therefore, this Statement should be read
in conjunction with the Fund's current Prospectus, bearing the same date, which
may be obtained by calling The Minnesota Mutual Life Insurance Company at (612)
298-3500, or writing to Minnesota Mutual at Minnesota Mutual Life Center, 400
Robert Street North, St. Paul, Minnesota 55101-2098.
Trustees and Principal Management Officers of Minnesota Mutual
Distribution of Contracts
Performance Data
Auditors
Registration Statement
Financial Statements
-1-
<PAGE>
TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL
Trustees Principal Occupation
-------- --------------------
Giulio Agostini Senior Vice President, Finance and Office
Administration, Minnesota Mining and
Manufacturing Company, Maplewood, Minnesota
since July 1991, prior thereto for more than
five years Director, Finance and Administration,
Minnesota Mining and Manufacturing - Italy
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller Company,
St. Paul, Minnesota, since June 1995, prior
thereto for more than five years President and
Chief Executive Officer, H. B. Fuller Company
(Adhesive Products)
John F. Grundhofer President, Chairman and Chief Executive Officer,
First Bank System, Inc., Minneapolis, Minnesota
(Banking)
Harold V. Haverty Retired since May 1995, prior thereto, for more
than five years Chairman of the Board, President
and Chief Executive Officer, Deluxe Corporation,
Shoreview, Minnesota (Check Printing)
Lloyd P. Johnson Retired since May 1995, prior thereto, for more
than five years Chairman of the Board, Norwest
Corporation, Minneapolis, Minnesota (Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota, since August 1991; prior thereto, Dean
of the School and Professor, University of
Connecticut, School of Business Administration
from 1988 to July 1991
Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota
Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Terry N. Saario, Ph.D. President, Northwest Area Foundation, St. Paul,
Minnesota (Private Regional Foundation)
Robert L. Senkler Chairman of the Board, President and Chief
Executive Officer, The Minnesota Mutual Life
Insurance Company, since August 1995; prior
thereto for more than five years Vice President
and Actuary, The Minnesota Mutual Life Insurance
Company
Michael E. Shannon Chairman and Chief Financial and Administrative
Officer, Ecolab, Inc., St. Paul, Minnesota, since
August 1992, prior thereto President, Residential
Services Group, Ecolab, Inc., St. Paul, Minnesota
from October 1990 to July 1992 (Develops and
Markets Cleaning and Sanitizing Products)
Frederick T. Weyerhaeuser Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
-2-
<PAGE>
Principal Officers (other than Trustees)
Name Position
John F. Bruder Senior Vice President
Keith M. Campbell Vice President
Paul H. Gooding Vice President and Treasurer
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Richard D. Lee Vice President
Joel W. Mahle Vice President
Dennis E. Prohofsky Senior Vice President, General Counsel and
Secretary
Gregory S. Strong Vice President and Actuary
Terrence S. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years with the
exception of Messrs Agostini, Andersen and Shannon and Dr. Kidwell, whose
prior employment is as indicated above. All officers of Minnesota Mutual
have been employed by Minnesota Mutual for at least five years.
DISTRIBUTION OF CONTRACTS
The contract will be sold in a continuous offering by our life insurance
agents who are also registered representatives of MIMLIC Sales Corporation
("MIMLIC Sales") or other broker-dealers who have entered into selling
agreements with MIMLIC Sales. MIMLIC Sales acts as principal underwriter of
the contracts. MIMLIC Sales is a wholly-owned subsidiary of MIMLIC Asset
Management Company, which in turn is a wholly-owned subsidiary of Minnesota
Mutual. MIMLIC Asset Management Company is a registered investment adviser
and the investment adviser to the MIMLIC Series Fund, Inc. MIMLIC Sales is
registered as a broker-dealer under the Securities Exchange Act of 1934 and
is a member of the National Association of Securities Dealers, Inc. Amounts
paid by Minnesota Mutual to the underwriter for 1995, 1994 and 1993 were in
the amount of $7,203,781, $7,363,105 and $8,574,958, respectively, for
payments to associated dealers on the sale of other contracts issued through
the Variable Annuity Account. Agents of Minnesota Mutual who are also
registered representatives of MIMLIC Sales are compensated directly by
Minnesota Mutual.
PERFORMANCE DATA
TOTAL RETURN FIGURES FOR THE SUB-ACCOUNT
Cumulative total return quotations for the Sub-Account represents the total
return for the period since the Portfolio became available pursuant to other
registration statements of the Variable Annuity Account. Cumulative total
return is equal to the percentage change between the net asset value of a
hypothetical $10,000 investment at the beginning of the period and the net asset
value
-3-
<PAGE>
of that same investment at the end of the period. Such quotations of cumulative
total return will not reflect the deduction of any amounts deducted from
purchase payments.
The cumulative total return figures published by the Variable Annuity Account
relating to the contract described in the Prospectus will reflect Minnesota
Mutual's voluntary absorption of certain expenses of the Index 500 Portfolio
(the "Portfolio") described below.
Cumulative total return quotations for the Sub-Account will be accompanied by
average annual total return figures for one-year and five-year periods and for
the period since the Sub-Account became available pursuant to other registration
statements of the Variable Annuity Account's registration statement. Average
annual total return figures are the average annual compounded rates of return
required for an initial investment of $10,000 to equal the total annuity value
of that same investment at the end of the period. The total annuity value will
reflect the deduction of the sales and risk charges applicable to the contract.
AUDITORS
The financial statements of Minnesota Mutual included herein have been
audited by KPMG Peat Marwick LLP, 4200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, independent auditors, whose reports thereon
appear elsewhere herein, and have been so included in reliance upon the reports
of KPMG Peat Marwick LLP and upon the authority of said firm as experts in
accounting and auditing.
-4-
<PAGE>
REGISTRATION STATEMENT
We have filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended, with respect to the
contracts offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and amendments thereto and the exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Variable Annuity Account, Minnesota Mutual, and the
contracts. Statements contained in this Statement of Additional Information as
to the contents of contracts and other legal instruments are summaries, and
reference is made to such instruments as filed.
-5-
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report............................................... 1
Balance Sheets............................................................. 2
Statements of Operations and Policyowners' Surplus......................... 3
Statements of Cash Flows................................................... 4
Notes to Financial Statements.............................................. 5
Financial Statement Schedules:
I. Summary of Investments--Other than Investments in Related Parties..... 15
V. Supplementary Insurance Information................................... 16
VI. Reinsurance.......................................................... 17
</TABLE>
I
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
The Minnesota Mutual Life Insurance Company:
We have audited the accompanying balance sheets of The Minnesota Mutual Life
Insurance Company as of December 31, 1995 and 1994 and the related statements
of operations and policyowners' surplus and cash flows for each of the years in
the three-year period ended December 31, 1995. In connection with our audits of
the financial statements, we also have audited the financial statement
schedules as listed in the accompanying index. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Minnesota Mutual Life
Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles (notes 2 and 11). Also in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 7, 1996
1
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- ----------
(IN THOUSANDS)
<S> <C> <C>
Bonds $ 5,488,876 $5,134,554
Common stocks 279,353 209,958
Mortgage loans 754,501 598,186
Real estate, including Home Office property 76,639 76,346
Other invested assets 90,264 60,604
Policy loans 197,555 185,599
Investments in subsidiary companies 197,413 155,404
Cash and short-term securities 99,031 112,869
Premiums deferred and uncollected 116,878 125,422
Other assets 147,155 134,594
----------- ----------
Total assets, excluding separate accounts 7,447,665 6,793,536
Separate account assets 2,609,396 1,750,680
----------- ----------
Total assets $10,057,061 $8,544,216
=========== ==========
LIABILITIES AND POLICYOWNERS' SURPLUS
Liabilities:
Policy reserves:
Life insurance $ 2,129,336 $1,981,469
Annuities and other fund deposits 3,322,866 3,179,279
Accident and health 369,273 343,241
Policy claims in process of settlement 50,512 53,670
Dividends payable to policyowners 107,366 100,287
Other policy liabilities 403,683 388,538
Asset valuation reserve 201,721 165,341
Interest maintenance reserve 32,899 19,922
Federal income taxes 40,195 35,050
Other liabilities 237,434 186,575
----------- ----------
Total liabilities, excluding separate accounts 6,895,285 6,453,372
Separate account liabilities 2,560,211 1,708,529
----------- ----------
Total liabilities 9,455,496 8,161,901
Policyowners' surplus
Surplus notes 124,967 --
Unassigned funds 476,598 382,315
----------- ----------
Total policyowners' surplus 601,565 382,315
Total liabilities and policyowners' surplus $10,057,061 $8,544,216
=========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND POLICYOWNERS' SURPLUS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Premiums, annuity considerations and fund
deposits $1,473,666 $1,424,352 $1,289,954
Net investment income 524,671 488,813 493,011
---------- ---------- ----------
Total revenues 1,998,337 1,913,165 1,782,965
---------- ---------- ----------
Benefits and expenses:
Policyowner benefits 1,138,723 1,259,685 1,131,638
Increase in policy reserves 260,482 94,116 122,280
General insurance expenses and taxes 299,348 279,022 268,041
Commissions 78,642 75,443 70,899
Federal income taxes 46,135 49,626 36,656
---------- ---------- ----------
Total benefits and expenses 1,823,330 1,757,892 1,629,514
---------- ---------- ----------
Gain from operations before net realized
capital gains and dividends 175,007 155,273 153,451
Realized capital gains, net of tax 29,358 18,559 2,907
---------- ---------- ----------
Gain from operations before dividends 204,365 173,832 156,358
Dividends to policyowners 115,659 108,709 97,937
---------- ---------- ----------
Net income $ 88,706 $ 65,123 $ 58,421
========== ========== ==========
STATEMENTS OF POLICYOWNERS' SURPLUS
Policyowners' surplus, beginning of year $ 382,315 $ 347,900 $ 264,542
Surplus notes 124,967 -- --
Net income 88,706 65,123 58,421
Net change in unrealized capital gains
and losses 49,761 (317) 3,286
Change in asset valuation reserve (36,380) (29,405) (17,002)
Change in policy reserve bases (10,828) 1,463 --
Change in separate account surplus 7,579 (3,764) 5,623
Guaranty fund certificate redemption -- -- 19,171
Business combination -- -- 16,684
Other, net (4,555) 1,315 (2,825)
---------- ---------- ----------
Policyowners' surplus, end of year $ 601,565 $ 382,315 $ 347,900
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
CASH PROVIDED: 1995 1994 1993
- -------------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
From operations:
Revenues:
Premiums, annuity considerations and fund
deposits $1,480,303 $1,474,471 $1,252,183
Net investment income 496,421 468,927 473,487
---------- ---------- ----------
Total receipts 1,976,724 1,943,398 1,725,670
---------- ---------- ----------
Benefits and expenses paid:
Policyowner benefits 1,139,133 1,301,060 1,069,090
Dividends to policyowners 109,249 103,634 97,697
Commissions and expenses 392,337 360,150 348,397
Federal income taxes 61,245 40,482 50,994
---------- ---------- ----------
Total payments 1,701,964 1,805,326 1,566,178
---------- ---------- ----------
Cash provided from operations 274,760 138,072 159,492
Proceeds from investments sold, matured or
repaid:
Bonds 1,713,579 1,031,279 1,631,215
Common stocks 205,757 113,228 113,945
Mortgage loans 112,954 152,418 265,356
Real estate 15,948 17,571 10,100
Other invested assets 10,618 16,831 17,266
Surplus notes 124,967 -- --
Separate account redemption 2,041 14,519 --
Business combination -- -- 24,628
Other sources, net 77,772 58,072 53,531
---------- ---------- ----------
Total cash provided 2,538,396 1,541,990 2,275,533
---------- ---------- ----------
<CAPTION>
CASH APPLIED:
- -------------
<S> <C> <C> <C>
Cost of investments acquired:
Bonds 2,026,116 1,146,117 1,966,653
Common stocks 222,491 132,301 123,185
Mortgage loans 266,401 203,803 109,559
Real estate 16,596 11,904 16,572
Other invested assets 20,515 12,732 9,800
Separate account investment 115 12,530 3,365
---------- ---------- ----------
Total cash applied 2,552,234 1,519,387 2,229,134
---------- ---------- ----------
Net change in cash and short-term securi-
ties (13,838) 22,603 46,399
Cash and short-term securities, beginning of
year 112,869 90,266 43,867
---------- ---------- ----------
Cash and short-term securities, end of year $ 99,031 $ 112,869 $ 90,266
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(1)NATURE OF OPERATIONS
The Minnesota Mutual Life Insurance Company (the Company), both directly and
through its subsidiaries, provides a diversified array of insurance and
financial products and services designed principally to protect and enhance the
long-term financial well-being of individuals and families.
The Company's strategy is to be successful in carefully selected niche
markets, primarily in the United States, while focusing on the retention of
existing business and the maintenance of profitability. To achieve this
objective, the Company has divided its businesses into four strategic business
units, which focus on various markets: Individual, Financial Services, Group,
and Pension. Revenues in 1995 for these business units were $1,051,749,000,
$268,004,000, $205,926,000, and $472,658,000, respectively.
At December 31, 1994 the Company was one of the 15 largest mutual life
insurance companies in the United States, as measured by total assets. The
Company employs over 2,100 persons throughout the United States; in addition,
the Company maintains an independent sales force of approximately 100 general
agents and 1,850 agents. The Company insures or provides other financial
services to nearly seven million people.
(2)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Company have been prepared in
accordance with accounting practices prescribed or permitted by the Commerce
Department of the State of Minnesota (Department of Commerce), which are
currently considered generally accepted accounting principles for mutual life
insurance companies (note 11). The significant accounting policies follow:
Revenues and Expenses
Premiums are credited to revenue over the premium paying period of the
policies. Annuity considerations and fund deposits are recognized as revenue
when received. Expenses, including acquisition costs related to acquiring new
business, are charged to operations as incurred. Investment income is
recognized as earned, net of related investment expenses.
Valuation of Investments
Bonds and stocks are valued as prescribed by the National Association of
Insurance Commissioners (NAIC).
Bonds are generally carried at cost, adjusted for the amortization of
premiums and discounts, and common stocks at market value. Premiums and
discounts are amortized over the estimated lives of the bonds based on the
interest yield method.
Mortgage loans are generally stated at the outstanding principal balances,
net of unamortized premiums and discounts. Premiums and discounts are amortized
over the terms of the related mortgage loans based on the interest yield
method.
Real estate, exclusive of properties acquired through foreclosure, is
generally carried at cost less accumulated depreciation of $35,323,535 and
$35,954,239 at December 31, 1995 and 1994, respectively. Depreciation is
computed principally on a straight-line basis. Properties acquired through
foreclosure are carried at the lower of cost or market.
Policy loans are carried at the unpaid principal balance.
Investments in subsidiary companies are accounted for using the equity
method. The Company records its equity in the earnings of its subsidiaries as
investment income and its equity in other changes in its subsidiaries' surplus
as credits (charges) to policyowners' surplus. These investments include
$95,373,000 and $74,154,000 at December 31, 1995 and 1994, respectively, of
initial contributions to affiliated registered investment funds managed by a
subsidiary of the Company which are carried at the market value of the
underlying net assets. All significant subsidiaries are wholly-owned.
Short-term securities at December 31, 1995 and 1994 amounted to $61,561,000
and $103,203,000, respectively, and are included in the caption cash and short-
term securities.
5
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(2)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Asset Valuation Reserve (AVR) is a formula reserve for possible losses
on bonds, stocks, mortgage loans, real estate, and other invested assets.
Changes in the reserve are reflected as direct charges or credits to
policyowners' surplus and are included in the change in asset valuation
reserve line.
Interest Maintenance Reserve
The Company separates realized capital gains and losses, net of tax, on fixed
income investments between those due to changes in interest rates and those
due to changes in credit quality. Realized capital gains and losses due to
interest rate changes are transferred to the Interest Maintenance Reserve
(IMR) and amortized into investment income over the original remaining life of
the related bond or mortgage sold.
Capital Gains and Losses
Realized capital gains and losses, net of related taxes and amounts
transferred to the IMR, if any, are reflected as a component of net income.
The Company reduces the carrying value of its assets for credit risk and
records a realized capital loss only if the underlying asset has been
converted to another asset of lesser value. Unrealized capital gains and
losses are accounted for as a direct increase or decrease to policyowners'
surplus. Both realized and unrealized capital gains and losses are determined
using the specific identification method.
Separate Account Business
Separate account business represents funds administered and invested by the
Company for the exclusive benefit of certain pension and variable life policy
and annuity contract holders. The Company receives administrative and
investment advisory fees for services rendered on behalf of these funds.
Separate account assets are carried at market value.
The Company periodically invests money in its separate accounts. The
appreciation or depreciation on the investment is reflected as a direct charge
or credit to policyowners' surplus. A realized capital gain of $603,995 and
$3,018,248 was recognized in 1995 and 1994, respectively, on the separate
accounts. No gain was realized in 1993.
Policy Reserves
Policy reserves for life insurance and annuities are based on mortality and
interest assumptions without consideration for lapses and withdrawals.
Mortality assumptions for life insurance and annuities are based on various
mortality tables including American Experience, 1941 Commissioners Standard
Ordinary (CSO), 1958 CSO, 1980 CSO, Progressive Annuity and 1960 Commissioners
Standard Group. Interest assumptions range from 2.0% to 6.0% for individual
life insurance policy reserves and from 2.25% to 12.0% for group policy and
annuity reserves.
Approximately 15% of the individual life and group life reserves are
calculated on a net level reserve basis and 85% on a modified reserve basis.
The use of a modified reserve basis partially offsets the effect of
immediately expensing acquisition costs by providing a policy reserve increase
in the first policy year which is less than the reserve increase in renewal
years.
Policy reserves for individual deferred annuities are generally equal to the
total contract holders' account balance, less applicable surrender charges,
calculated according to the Commissioners Annuity Reserve Valuation Method.
Policy reserves for immediate annuities and supplementary contracts are equal
to the present value of future benefit payments based on the purchase interest
rate and the Progressive Annuity tables. Group annuity reserves are equal to
the account value plus expected interest strengthening.
Policy reserves for individual accident and health contracts include
reserves for active lives based on the 1964 Commissioners Disability Table
(CDT) and the 1985 Commissioners Disability Table B (CIDB), modified for
company experience and discounted at various interest rates. Disabled life
reserves on individual policies are equal to the present value of future
benefits using the 1964 CDT and the 1985 CIDB, discounted at various interest
rates. Disabled life reserves for group mortgage disability policies are equal
to the present value of future benefits using the 1964 CDT, modified for
Company experience and discounted at various interest rates.
6
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(2)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Group employer-employee long term disability reserves are equal to the present
value of future benefits at 3%
interest and the 1964 CDT modified for Company experience. Disabled life
reserves for credit disability are computed using a lag factor method based on
Company experience, discounted at 4% interest.
The Company issues certain life and annuity products which are considered
financial instruments. The estimated fair value of these liabilities as of the
respective years ended December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
CARRYING CARRYING
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred annuities $2,147,662 $2,156,885 $2,042,383 $2,042,060
Annuity certain contracts 49,113 50,732 41,934 41,828
Other fund deposits 836,149 847,975 798,509 791,732
Guaranteed investment contracts 47,426 47,987 68,568 69,353
Supplementary contracts without
life contingencies 41,431 39,962 43,205 42,433
---------- ---------- ---------- ----------
Total financial liabilities $3,121,781 $3,143,541 $2,994,599 $2,987,406
========== ========== ========== ==========
</TABLE>
The fair value of deferred annuities, annuity certain contracts, and other
fund deposits, which have guaranteed interest rates and surrender charges, were
calculated using Commissioners Annuity Reserve Valuation Method calculation
procedures and current market interest rates. Contracts without guaranteed
interest rates and surrender charges have fair values equal to their
accumulation values plus applicable market value adjustments. The fair value of
guaranteed investment contracts and supplementary contracts without life
contingencies were calculated using discounted cash flows, based on interest
rates currently offered for similar products with maturities consistent with
those remaining for the contracts being valued. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1995 and 1994. Although management
is not aware of any factors that would significantly affect the estimated fair
values, such amounts have not been comprehensively revalued since those dates
and therefore, estimates of fair value subsequent to the valuation dates may
differ significantly from the amounts presented herein.
Non-admitted Assets
Certain assets, designated as "non-admitted assets" (principally furniture,
equipment and certain receivables), amounting to $27,022,000 and $26,123,000 at
December 31, 1995 and 1994, respectively, have been charged to policyowners'
surplus.
Participating Business
Substantially all of the Company's premium revenues are derived from
participating policies. Dividends and other discretionary payments are declared
by the Board of Trustees based upon actuarial determinations which take into
consideration current mortality, interest earnings, expense factors, and
federal income taxes. Dividends are generally recognized as expenses consistent
with the recognition of premiums and contract considerations.
Federal Income Taxes
Federal income taxes are based on income that is currently taxable. Deferred
federal income taxes are not provided for differences between financial
statement and taxable income.
7
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Reclassifications
Certain prior year financial statement balances have been reclassified to
conform with the 1995 presentation.
(3)INVESTMENTS
Net investment income for the respective years ended December 31, is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds $422,242 $412,873 $404,353
Common stocks--unaffiliated 3,465 3,188 3,390
Common stocks--affiliated 16,555 8,526 9,562
Mortgage loans 58,946 49,882 63,881
Real estate, including Home Office property 11,440 11,337 11,554
Policy loans 12,821 11,800 10,866
Short-term securities 6,183 4,026 2,067
Other, net 4,994 1,717 2,868
-------- -------- --------
536,646 503,349 508,541
Amortization of interest maintenance reserve 4,527 3,741 3,458
Investment expenses (16,502) (18,277) (18,988)
-------- -------- --------
Total $524,671 $488,813 $493,011
======== ======== ========
Changes in unrealized capital gains (losses) for the respective years ended
December 31, are as follows:
<CAPTION>
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds $ 2,332 $ 4,039 $(3,753)
Common stocks--unaffiliated 39,013 (5,465) 2,854
Common stocks--affiliated 9,863 (997) (1,305)
Mortgage loans 447 (71) 1,361
Real estate (1,481) 2,270 4,211
Other, net (413) (93) (82)
-------- -------- --------
Total $ 49,761 $ (317) $ 3,286
======== ======== ========
The cost and gross unrealized gains (losses) on unaffiliated common stocks at
December 31, are as follows:
<CAPTION>
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost $189,893 $159,511 $155,881
Gross unrealized gains 91,050 56,813 58,440
Gross unrealized losses (1,590) (6,366) (2,529)
-------- -------- --------
Admitted asset value $279,353 $209,958 $211,792
======== ======== ========
</TABLE>
8
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
Net realized capital gains (losses) for the respective years ended December
31 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds $22,411 $(3,511) $31,234
Common stocks--unaffiliated 33,432 11,268 9,651
Mortgage loans (945) (46) (741)
Real estate 3,787 2,041 (8,496)
Other 7,288 15,872 7,837
------- ------- -------
65,973 25,624 39,485
Less: Amount transferred to the interest mainte-
nance reserve, net of taxes 17,503 (685) 20,336
Income tax expense 19,112 7,750 16,242
------- ------- -------
Total $29,358 $18,559 $ 2,907
======= ======= =======
</TABLE>
Gross realized gains (losses) on sales of bonds for the respective years
ended December 31, are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Gross realized gains $ 34,898 $ 13,249 $38,443
Gross realized losses (12,487) (16,760) (7,209)
</TABLE>
Proceeds from the sale of bonds amounted to $1,338,481,000, $638,420,000, and
$1,058,684,000 for the years ended December 31, 1995, 1994, and 1993,
respectively.
Bonds and mortgage loans held at December 31, 1995 and 1994 for which no
income was recorded for the previous twelve months totaled $20,852 and $88,000,
respectively.
At December 31, 1995 and 1994, bonds with a carrying value of $2,740,000 and
$2,748,000, respectively, were on deposit with various regulatory authorities
as required by law.
The estimated fair value of the Company's financial instruments has been
determined using available market information as of December 31, 1995 and 1994
and appropriate valuation methodologies. Considerable judgment, however, is
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. The admitted asset value
for bonds, commercial mortgages, and residential mortgages are $5,488,876,
$501,439, and $253,062 in 1995 and $5,134,554, $342,205, and $255,981 in 1994,
respectively. The estimated fair value for these financial instruments are
$5,821,024, $523,129, and $258,966 in 1995 and $4,919,495, $341,195, and
$255,449 in 1994, respectively.
Fair values for bonds and commercial and residential mortgages are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are estimated using values obtained from independent
pricing services which specialize in matrix pricing and modeling techniques for
estimating fair values. The admitted asset value approximates fair value for
common stock, policy loans, cash and short-term securities, and other assets.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1995 and 1994. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of the financial statements since the original valuation dates and therefore,
subsequent estimates of fair value may differ significantly from the amounts
presented herein.
9
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3)INVESTMENTS (CONTINUED)
The admitted asset value, gross unrealized appreciation and depreciation, and
estimated fair value of investments in bonds are as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
ADMITTED ------------------------- FAIR
DECEMBER 31, 1995 ASSET VALUE APPRECIATION DEPRECIATION VALUE
- ----------------- ----------- ------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal government $ 241,228 $ 10,914 $ 440 $ 251,702
State and local government 26,337 3,268 0 29,605
Foreign government 861 79 0 940
Corporate bonds 3,494,386 262,214 6,542 3,750,058
Mortgage-backed securities 1,726,064 66,260 3,605 1,788,719
---------- -------- -------- ----------
Total $5,488,876 $342,735 $ 10,587 $5,821,024
========== ======== ======== ==========
<CAPTION>
GROSS UNREALIZED
ADMITTED ------------------------- FAIR
DECEMBER 31, 1994 ASSET VALUE APPRECIATION DEPRECIATION VALUE
- ----------------- ----------- ------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal government $ 210,335 $ 19 $ 9,983 $ 200,371
State and local government 26,493 10 1,171 25,332
Foreign government 17,691 413 20 18,084
Corporate bonds 3,325,331 41,167 167,404 3,199,094
Mortgage-backed securities 1,554,704 11,110 89,200 1,476,614
---------- -------- -------- ----------
Total $5,134,554 $ 52,719 $267,778 $4,919,495
========== ======== ======== ==========
</TABLE>
The amortized cost and estimated fair value of bonds at December 31, 1995, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ADMITTED FAIR
ASSET VALUE VALUE
----------- ----------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less $ 39,108 $ 39,811
Due after one year through five years 764,085 803,817
Due after five years through ten years 1,677,321 1,778,549
Due after ten years 1,282,298 1,410,128
---------- ----------
3,762,812 4,032,305
Mortgage-backed securities 1,726,064 1,788,719
---------- ----------
Total $5,488,876 $5,821,024
========== ==========
</TABLE>
10
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4)FEDERAL INCOME TAXES
The federal income tax expense varies from amounts computed by applying the
federal income tax rate of 35% to the gain from operations after dividends to
policyowners and before federal income taxes and realized capital gains. The
reasons for this difference, and the tax effects thereof, are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax expense $36,918 $33,666 $32,260
Difference between statutory and tax basis:
Investment income (9,284) (5,853) (7,204)
Policy reserves (81) (767) (2,079)
Dividends to policyowners 1,043 593 (1,907)
Acquisition expense 7,508 9,013 8,393
Other expenses 453 2,137 3,739
Special tax on mutual life insurance companies 8,201 15,466 3,396
Other, net 1,377 (4,629) 58
------- ------- -------
Tax expense $46,135 $49,626 $36,656
======= ======= =======
</TABLE>
The Company's tax returns for 1993 through 1994 are under examination by the
Internal Revenue Service. The Company believes additional taxes, if any,
assessed as a result of these examinations will not have a material effect on
its financial position.
(5)LIABILITY FOR UNPAID ACCIDENT AND HEALTH CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
Activity in the liability for unpaid accident and health claims and claim
adjustment expenses, exclusive of $96,728,000, $89,540,000, and $81,990,000,
respectively, for active life reserves, is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1 $301,352 $274,253 $246,777
Less: reinsurance recoverable 47,651 38,418 29,622
-------- -------- --------
Net balance at January 1 253,701 235,835 217,155
-------- -------- --------
Incurred related to:
Current year 95,392 91,573 85,112
Prior years 1,367 (308) 7,121
-------- -------- --------
Total incurred 96,759 91,265 92,233
-------- -------- --------
Paid related to:
Current year 26,291 23,019 22,002
Prior years 51,624 50,380 51,551
-------- -------- --------
Total paid 77,915 73,399 73,553
-------- -------- --------
Net Balance at December 31 272,545 253,701 235,835
Plus: reinsurance recoverable 72,617 47,651 38,418
-------- -------- --------
Balance at December 31 $345,162 $301,352 $274,253
======== ======== ========
</TABLE>
Incurred claims related to prior years are due to the difference between
actual and estimated claims incurred as of the prior year end.
11
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6)BUSINESS COMBINATION
On July 1, 1993, the Company entered into an "Agreement and Plan of
Reorganization" that combined all of the assets, liabilities, and surplus of
Ministers Life--A Mutual Life Insurance Company (Ministers Life) into the
Company. Ministers Life sold life and health insurance products to religious
professionals in the continental United States. The business combination
increased the Company's assets by $272,649,000, liabilities by $255,965,000 and
policyowners' surplus by $16,684,000.
(7)RELATED PARTY TRANSACTIONS
In 1993, the Company received 2,375,000 shares of common stock of the Minnesota
Fire and Casualty Company (the Casualty Company) in return for the surrender of
outstanding guaranty fund certificates totalling $21,800,000 which had
previously been charged to surplus. The surrender of the certificates and
concurrent issuance of stock were part of the Casualty Company's
"Demutualization and Stock Conversion Plan" (the Plan) approved by the
Department of Commerce. Pursuant to the Plan, the Casualty Company became a
subsidiary of the Company on December 31, 1993. The effect of the transaction
was an increase to investments in subsidiary companies and an increase to
policyowners' surplus as of December 31, 1993 of $19,171,000.
(8)PENSION PLANS AND OTHER RETIREMENT PLANS
Pension Plans
The Company has self-insured, noncontributory, defined benefit retirement plans
covering substantially all employees. The Company's funding policy is to
contribute annually the maximum amount that may be deducted for federal income
tax purposes. The Company expenses amounts as contributed. The Company made
contributions of $3,003,400 and $1,714,200 in 1995 and 1994, respectively. No
contributions were made in 1993. Information for these plans as of the
beginning of the plan year is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefits:
Vested $47,271 $42,849 $36,281
Nonvested 14,588 12,033 12,996
------- ------- -------
Total $61,859 $54,882 $49,277
======= ======= =======
Net assets available for benefits $85,348 $85,651 $78,952
======= ======= =======
</TABLE>
In determining the actuarial present value of accumulated benefits, the
Company used a weighted average assumed rate of return of 8.3% in 1995 and 8.4%
in 1994 and 1993.
Profit Sharing Plans
The Company also has profit sharing plans covering substantially all employees
and agents. The Company's contribution rate to the employee plan is determined
annually by the Trustees of the Company and is applied to each participant's
prior year earnings. The Company's contribution to the agent plan is made as a
certain percentage, based upon years of service, applied to each agent's total
annual compensation. The Company recognized contributions to the plans during
1995, 1994, and 1993 of $6,595,000, $6,866,000 and $6,753,000, respectively.
Participants may elect to receive a portion of their contributions in cash.
Postretirement Benefits Other than Pensions
The Company also has postretirement plans that provide certain health care and
life insurance benefits ("postretirement benefits") to substantially all
retired employees and agents. These plans are unfunded.
In 1993, the Company changed its method of accounting for the costs of its
postretirement benefit plans to the accrual method, and elected to amortize its
transition obligation for retirees and fully eligible employees and
12
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(8)PENSION PLANS AND OTHER RETIREMENT PLANS (CONTINUED)
agents over 20 years. The unamortized transition obligation was $11,203,000 and
$13,000,000 at December 31, 1995 and 1994, respectively.
The net postretirement benefit cost for the years ended December 31, 1995,
1994, and 1993, was $3,163,000, $3,202,000 and $3,832,000, respectively. This
amount includes the expected cost of such benefits for newly eligible
employees, interest cost, and amortization of the transition obligation. The
Company made payments under the plans of $575,000, $526,000, and $555,000 in
1995, 1994, and 1993, respectively, as claims were incurred.
At December 31, 1995 and 1994, the postretirement benefit obligation for
retirees and other fully eligible participants was $17,410,000 and $19,635,000,
respectively. The estimated cost of the benefit obligation for active employees
and agents who are not yet fully eligible was $9,808,000 and $13,065,000 for
1995 and 1994, respectively. The discount rate used in determining the
accumulated postretirement benefit obligation for 1995 and 1994 was 7.5%. The
1995 net health care cost trend rate was 11.0% graded to 5.5% over 11 years,
and the 1994 net health care cost rate was 11.5%, graded to 5.5% over 12 years.
The assumptions presented herein are based on pertinent information available
to management as of December 31, 1995 and 1994. Actual results could differ
from those estimates and assumptions. For example, increasing the assumed
health care cost trend rates by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1995 by
$1,874,000 and the estimated eligibility cost and interest cost components of
net periodic postretirement benefit costs for 1995 by $290,889.
(9)COMMITMENTS AND CONTINGENCIES
The Company reinsures certain individual and group business. At December 31,
1995 and 1994, policy reserves in the accompanying balance sheet are reflected
net of reinsurance ceded of $97,854,000 and $68,289,000, respectively. To the
extent that an assuming reinsurer is unable to meet its obligation under its
agreement, the Company remains liable.
The Company has issued certain participating group annuity and life insurance
contracts jointly with another life insurance company. The joint contract
issuer has liabilities related to these contracts of $378,475,000 as of
December 31, 1995. To the extent the joint contract issuer is unable to meet
its obligation under the agreement, the Company remains liable.
The Company has long-term commitments to fund venture capital and real estate
investments totalling $76,461,000 as of December 31, 1995. The Company
estimates that $11,650,000 of these commitments will be invested in 1996 with
the remaining $64,811,000 invested over the next five years.
At December 31, 1995, the Company had guaranteed the payment of $64,100,000
in policyowner dividends payable in 1996. The Company has pledged bonds, valued
at $66,906,000, to secure this guarantee.
The Company is contingently liable under state regulatory requirements for
possible assessment pertaining to future insolvencies and impairments of
unaffiliated companies.
(10) SURPLUS NOTES
In September 1995, the Company issued surplus notes with a face value of
$125,000,000, at 8.25%, due in 2025. The surplus notes are reported in the
Company's surplus at a statement value of $124,966,578, which represents the
face value of the notes less unamortized discount. The surplus notes are
subordinate to all current and future policyowners' interests, including
claims, and indebtedness of the Company. All payments of
interest and principal on the notes are subject to the approval of the
Department of Commerce. The unapproved accrued interest at December 31, 1995,
is $3,007,800. The issuance costs of $1,403,400 are deferred and treated as a
non-admitted asset. The deferred expense is amortized over 30 years on a
straight-line basis. Interest, discount amortization, and deferred expense
amortization are included in general insurance expenses in the statement of
operations. The Company's method of accounting for its surplus notes has been
approved by the Department of Commerce.
13
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(11) MUTUAL LIFE INSURANCE COMPANY ACCOUNTING POLICIES
In April 1993 the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises." In January 1995 the
FASB issued the statement, "Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts" and, jointly with the American Institute of Certified
Public Accountants, issued a Statement of Position (SOP), "Accounting for
Certain Insurance Activities of Mutual Insurance Enterprises." Under
Interpretation No. 40, the statement and SOP (collectively "the statements"),
mutual life insurance companies that report their financial statements in
conformity with generally accepted accounting principles will be required to
apply the statements and all related authoritative GAAP pronouncements.
The statements apply to years beginning after December 15, 1995 and will
require restatement of prior year balances. The Company plans to prepare such
financial statements as of and for the year-ended December 31, 1996 with
restatement of the then prior year financial statements. Applying the
provisions of the statements will likely result in policyholders' surplus and
net income amounts differing from the amounts included in the accompanying
financial statements. Management is in the process of determining the impact of
the adoption of GAAP.
The Company will also continue to prepare its financial statements in
accordance with statutory accounting practices prescribed or permitted by the
Department of Commerce, which will no longer be considered generally accepted
accounting principles.
14
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE I
SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
AMOUNT AT
WHICH SHOWN
MARKET IN THE BALANCE
TYPE OF INVESTMENT COST(4) VALUE SHEET(1)(3)
- ------------------ ---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Bonds:
United States government and government
agencies and authorities $ 241,228 $ 251,702 $ 241,228
States, municipalities and political
subdivisions 26,337 29,605 26,337
Foreign governments 861 940 861
Public utilities 547,229 590,445 547,229
Mortgage-backed securities 1,726,064 1,788,719 1,726,064
All other corporate bonds 2,909,767 3,116,990 2,907,107
---------- ---------- ----------
Total bonds 5,451,486 5,778,401 5,448,826
---------- ---------- ----------
Equity securities:
Common stocks:
Public utilities 17,500 23,333 23,333
Banks, trusts and insurance companies 11,950 22,358 22,358
Industrial, miscellaneous and all
other 160,443 233,662 233,662
---------- ---------- ----------
Total equity securities 189,893 279,353 279,353
---------- ---------- ----------
Mortgage loans on real estate 755,997 xxxxxx 754,501
Real estate (2) 86,646 xxxxxx 76,639
Policy loans 197,555 xxxxxx 197,555
Other long-term investments 96,080 xxxxxx 90,264
Short-term investments 51,904 xxxxxx 51,816
---------- ----------
Total $1,188,182 xxxxxx $1,170,775
---------- ----------
Total investments $6,829,561 xxxxxx $6,898,954
========== ==========
</TABLE>
- -------
(1) Debt securities are carried at amortized cost or investment values pre-
scribed by the National Association of Insurance Commissioners.
(2) The carrying value of real estate acquired in satisfaction of indebtedness
is $1,999. Real estate includes property occupied by the Company.
(3) Differences between cost and amounts shown in the balance sheet for invest-
ments, other than equity securities and bonds, represent non-admitted in-
vestments.
(4) Original cost for equity securities and original cost reduced by repayments
and adjusted for amortization of premiums or accrual of discounts for bonds
and other investments.
15
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE V
SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------
FUTURE POLICY
DEFERRED BENEFITS OTHER POLICY
POLICY LOSSES, CLAIMS CLAIMS AND
ACQUISITION AND SETTLEMENT UNEARNED BENEFITS
SEGMENT COSTS(1) EXPENSES(3) PREMIUMS(3) PAYABLE
- ------- ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
1995:
Life insurance $2,129,336 $37,784
Accident and
health insurance 369,273 12,724
Annuity consid-
erations 3,322,866 4
------- ---------- ------- -------
Total -- 5,821,475 -- 50,512
======= ========== ======= =======
1994:
Life insurance $1,981,469 $37,909
Accident and
health insurance 343,241 15,754
Annuity consid-
erations 3,179,279 7
------- ---------- ------- -------
Total -- 5,503,989 -- 53,670
======= ========== ======= =======
1993:
Life insurance $1,875,570 $83,365
Accident and
health insurance 317,825 14,979
Annuity consid-
erations 3,166,944 7
------- ---------- ------- -------
Total -- $5,360,339 -- $98,351
======= ========== ======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
AMORTIZATION
PREMIUMS, BENEFITS, OF DEFERRED
ANNUITY, AND NET CLAIMS, LOSSES POLICY OTHER
OTHER FUND INVESTMENT AND SETTLEMENT ACQUISITION OPERATING PREMIUMS
SEGMENT DEPOSITS INCOME EXPENSES COSTS(1) EXPENSES WRITTEN(2)
- ------- ------------ ---------- -------------- ------------ --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1995:
Life insurance $ 789,350 $212,641 $591,775 $243,379
Accident and
health insurance 154,358 35,894 94,164 79,491
Annuity consid-
erations 529,958 276,136 713,266 55,120
---------- -------- ---------- ------- -------- -------
Total 1,473,666 524,671 1,399,205 -- 377,990 --
========== ======== ========== ======= ======== =======
1994:
Life insurance $ 802,265 $196,877 $ 608,091 $230,327 --
Accident and
health insurance 142,032 32,724 93,634 71,958
Annuity consid-
erations 480,055 259,212 652,076 52,180
---------- -------- ---------- ------- -------- -------
Total 1,424,352 488,813 1,353,801 -- 354,465 --
========== ======== ========== ======= ======== =======
1993:
Life insurance $ 718,232 $193,724 $ 538,880 $220,861
Accident and
health insurance 138,690 31,452 88,857 72,616
Annuity consid-
erations 433,032 267,835 626,181 45,463
---------- -------- ---------- ------- -------- -------
Total $1,289,954 $493,011 $1,253,918 -- $338,940 --
========== ======== ========== ======= ======== =======
</TABLE>
- -----
(1) Does not apply to financial statements of mutual life insurance companies
which are prepared on a statutory basis.
(2) Does not apply to life insurance.
(3) Unearned premiums and other deposit funds are included in future policy
benefits, losses, claims and settlement expenses.
16
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
SCHEDULE VI
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
OTHER FROM OTHER NET ASSUMED TO
GROSS AMOUNT COMPANIES COMPANIES AMOUNT NET
------------ ----------- ----------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1995:
Life insurance in
force $104,059,399 $15,291,357 $21,129,067 $109,897,109 19.2%
============ =========== =========== ============ ====
Premiums, annuity con-
siderations and fund
deposits:
Life insurance $ 782,558 $ 55,362 $ 62,154 $ 789,350 7.9%
Accident and health
insurance 164,683 12,724 2,399 154,358 1.6%
Annuity 529,958 -- -- 529,958 --
------------ ----------- ----------- ------------ ----
Total premiums*,
annuity considera-
tions and fund
deposits $ 1,477,199 $ 68,086 $ 64,553 $ 1,473,666 4.4%
============ =========== =========== ============ ====
1994:
Life insurance in
force $ 97,181,118 $13,314,267 $20,555,910 $104,422,761 19.7%
============ =========== =========== ============ ====
Premiums, annuity con-
siderations and fund
deposits:
Life insurance $ 792,087 $ 48,773 $ 58,951 $ 802,265 7.3%
Accident and health
insurance 150,876 10,145 1,301 142,032 0.9%
Annuity 480,055 -- -- 480,055 --
------------ ----------- ----------- ------------ ----
Total premiums*,
annuity considera-
tions and fund
deposits $ 1,423,018 $ 58,918 $ 60,252 $ 1,424,352 4.2%
============ =========== =========== ============ ====
1993:
Life insurance in
force $ 93,206,579 $11,674,202 $19,758,935 $101,291,312 19.5%
============ =========== =========== ============ ====
Premiums, annuity con-
siderations and fund
deposits:
Life insurance $ 704,172 $ 43,313 $ 57,373 $ 718,232 8.0%
Accident and health
insurance 147,229 9,699 1,160 138,690 0.8%
Annuity 433,032 -- -- 433,032 --
------------ ----------- ----------- ------------ ----
Total premiums*,
annuity considera-
tions and fund de-
posits $ 1,284,433 $ 53,012 $ 58,533 $ 1,289,954 4.5%
============ =========== =========== ============ ====
</TABLE>
- -------
* There are no premiums related to either property and liability or title
insurance.
17
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Minnesota Mutual Variable Annuity Account
Cross Reference Sheet to Other Information
Form N-4
Item Number Caption in Other Information
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
27. Number of Contract Owners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Minnesota Mutual Variable Annuity
Account:
Not applicable.
(b) Audited Financial Statements of the Depositor, The Minnesota Mutual
Life Insurance Company, for the fiscal year ended December 31, 1995
and 1994, are included in Part B of this filing and consist of the
following:
1. Independent Auditors' Report - The Minnesota Mutual Life
Insurance Company.
2. Balance Sheets - The Minnesota Mutual Life Insurance Company.
3. Statements of Operations and Policyowners' Surplus - The
Minnesota Mutual Life Insurance Company.
4. Statements of Cash Flows - The Minnesota Mutual Life Insurance
Company.
5. Notes to Financial Statements - The Minnesota Mutual Life
Insurance Company.
6. Summary of Investments-Other than Investments in Related
Parties - The Minnesota Mutual Life Insurance Company.
7. Supplementary Insurance Information - The Minnesota Mutual Life
Insurance Company.
8. Reinsurance - The Minnesota Mutual Life Insurance Company.
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance Company's
Executive Committee of its Board of Trustees establishing the
Variable Annuity Account, previously filed as Exhibit (c)1. to
Registrant's Form N-4, File Number 33-62147, is hereby
incorporated by reference.
2. Not applicable.
3. (a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and MIMLIC Sales Corporation, previously
filed as Exhibit (c)3.(a) to Registrant's Form N-4, File
Number 33-62147, is hereby incorporated by reference.
(b) Dealer Selling Agreement, previously filed as Exhibit
(c)3.(b) to Registrant's Form N-4, File Number 33-62147, is
hereby incorporated by reference.
<PAGE>
4. (a) The Immediate Variable Annuity Contract, form 95-9326.
(b) The Immediate Variable Annuity Contract (Unisex), form
95-9327.
(c) The Individual Retirement Annuity Agreement, form 83-9058
Rev. 10-93, previously filed as Exhibit (c)4.(c) to
Registrant's Form N-4, File Number 33-62147, is hereby
incorporated by reference.
(d) The Qualified Plan Agreement, form 88-9176 Rev. 8-93,
previously filed as Exhibit (c)4.(d) to Registrant's Form
N-4, File Number 33-62147, is hereby incorporated by
reference.
(e) Tax Sheltered Annuity, form 88-9213, previously filed as
Exhibit (c)4.(e) to Registrant's Form N-4, File Number
33-62147, is hereby incorporated by reference.
5. (a) Application, form 95-9328.
6. Certificate of Incorporation and Bylaws.
(a) The Articles of Re-Incorporation of the Depositor,
previously filed as Exhibit (c)6.(a) to Registrant's Form
N-4, File Number 33-62147, is hereby incorporated by
reference.
(b) The Bylaws of the Depositor, previously filed as Exhibit
(c)6.(b) to Registrant's Form N-4, File Number 33-62147,
is hereby incorporated by reference.
7. Not applicable.
8. Not applicable.
9. Opinion and consent of Donald F. Gruber, Esq.
10. Consent of KPMG Peat Marwick LLP.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. The Minnesota Mutual Life Insurance Company Power of Attorney To
Sign Registration Statements.
Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices Positions and Offices
Business Address with Insurance Company with Registrant
---------------- ---------------------- ---------------
Giulio Agostini Trustee None
3M
3M Center -
Executive 220-14W-08
P. O. Box 33220
St. Paul, MN 55133-3220
Anthony L. Andersen Trustee None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
John F. Bruder Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Paul H. Gooding Vice President and None
The Minnesota Mutual Life Treasurer
Insurance Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Trustee None
First Bank System, Inc.
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402
Harold V. Haverty Trustee None
Deluxe Corporation
1080 West County Road F
Shoreview, MN 55126-8201
<PAGE>
Robert E. Hunstad Executive Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
James E. Johnson Senior Vice President None
The Minnesota Mutual Life and Actuary
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Lloyd P. Johnson Trustee None
Norwest Corporation
4900 IDS Center
80 S. 8th Street
Minneapolis, MN 55479-1060
David S. Kidwell, Ph.D. Trustee None
The Curtis L. Carlson
School of Management
University of Minnesota
271 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Trustee None
General Mills Foundation
P.O. Box 1113
Minneapolis, MN 55440
Richard D. Lee Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Joel W. Mahle Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Dennis E. Prohofsky Senior Vice President, None
The Minnesota Mutual Life General Counsel and
Insurance Company Secretary
400 Robert Street North
St. Paul, MN 55101
Thomas E. Rohricht Trustee None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World
Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry N. Saario, Ph.D. Trustee None
Norwest Area Foundation
E-1201 First National
Bank Building
St. Paul, MN 55101-1373
Robert L. Senkler Chairman, President and None
The Minnesota Mutual Life Chief Executive Officer
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Trustee None
Ecolab, Inc.
Ecolab Center
St. Paul, MN 55102
Gregory S. Strong Vice President and None
The Minnesota Mutual Life Actuary
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Frederick T. Weyerhaeuser Trustee None
Clearwater Management
Company
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Wholly-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Asset Management Company
The Ministers Life Insurance Company
MIMLIC Corporation
Minnesota Fire and Casualty Company
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
Open-end registered investment company offering shares solely to separate
accounts of The Minnesota Mutual Life Insurance Company:
MIMLIC Series Fund, Inc.
Wholly-owned subsidiary of MIMLIC Asset Management Company:
MIMLIC Sales Corporation
Advantus Capital Management, Inc.
Wholly-owned subsidiaries of MIMLIC Corporation:
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MIMLIC Venture Corporation
Personal Finance Company (Delaware)
Wedgewood Valley Golf, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
HomePlus Agency, Inc.
<PAGE>
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Oakleaf Service Corporation
Lafayette Litho, Inc.
Financial Ink Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
National Association of Religious Professionals, Inc.
Wholly-owned subsidiary of Minnesota Fire and Casualty Company:
HomePlus Insurance Company
Majority-owned subsidiaries of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation
Consolidated Capital Advisors, Inc.
Majority-owned subsidiary of MIMLIC Sales Corporation:
MIMLIC Insurance Agency of Ohio, Inc.
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Wholly-owned subsidiary of Oakleaf Service Corporation:
New West Agency, Inc. (Oregon)
Majority-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Life Insurance Company (Arizona)
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Less than majority owned, but greater than 25% owned, subsidiaries of The
Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Money Market Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Bond Fund, Inc.
Unless indicated otherwise, parenthetically, each of the above
corporations is a Minnesota corporation.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 11, 1996, the number of holders of securities of the Registrant were
as follows:
Number of Record
Title of Class Holders
-------------- ----------------
Variable Annuity Contracts 46,114
<PAGE>
ITEM 28. INDEMNIFICATION
The State of Minnesota has an indemnification statute (Minnesota Statutes
300.083), as amended, effective January 1, 1984, which requires indemnification
of individuals only under the circumstances described by the statute. Expenses
incurred in the defense of any action, including attorneys' fees, may be
advanced to the individual after written request by the board of directors upon
receiving an undertaking from the individual to repay any amount advanced unless
it is ultimately determined that he or she is entitled to be indemnified by the
corporation as authorized by the statute and after a determination that the
facts then known to those making the determination would not preclude
indemnification.
Indemnification is required for persons made a part to a proceeding by reason of
their official capacity so long as they acted in good faith, received no
improper personal benefit and have not been indemnified by another organization.
In the case of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other acts arising out
of official capacity: (1) where the person is acting directly for the
corporation there must be a reasonable belief by the person that his or her
conduct was in the best interests of the corporation or, (2) where the person is
serving another organization or plan at the request of the corporation, the
person must have reasonably believed that his or her conduct was not opposed to
the best interests of the corporation. In the case of persons not directors,
officers or policy-making employees, determination of eligibility for
indemnification may be made by a board-appointed committee of which a director
is a member. For other employees, directors and officers, the determination of
eligibility is made by the Board or a committee of the Board, special legal
counsel, the shareholder of the corporation or pursuant to a judicial
proceeding.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Annuity
Account pursuant to the foregoing provisions, or otherwise, The Minnesota Mutual
Life Insurance Company and Minnesota Mutual Variable Annuity Account have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by The Minnesota Mutual Life Insurance
Company and Minnesota Mutual Variable Annuity Account of expenses incurred or
paid by a director, officer or controlling person of The Minnesota Mutual Life
Insurance Company and Minnesota Mutual Variable Annuity Account in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, The Minnesota Mutual Life Insurance Company and Minnesota Mutual
Variable Annuity Account 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.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The principal underwriter is MIMLIC Sales Corporation. MIMLIC
Sales Corporation is also the principal underwriter for nine
mutual funds (Advantus Horizon Fund, Inc.; Advantus Spectrum
Fund, Inc.; Advantus Money market Fund, Inc.; Advantus Mortgage
Securities Fund, Inc.; Advantus Bond Fund, Inc.,; Advantus
Cornerstone Fund, Inc.; Advantus Enterprise Fund, Inc.; Advantus
International Balanced Fund, Inc.; and the MIMLIC Cash
<PAGE>
Fund, Inc.) and for four additional registered separate accounts
of The Minnesota Mutual Life Insurance Company, all of which
offer annuity contracts and life insurance policies on a variable
basis.
(b) Directors and Officers of Underwriter.
DIRECTORS AND OFFICERS OF UNDERWRITER
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Depositor
- ------------------ --------------------- ---------------------
Robert E. Hunstad Chairman of the Board Executive Vice
400 Robert Street North and Director President
St. Paul, Minnesota 55101
Bardea C. Huppert President, Chief Second Vice President
400 Robert Street North Executive Officer
St. Paul, Minnesota 55101 and Director
Derick R. Black Vice President and Manager
400 Robert Street North Chief Compliance
St. Paul, Minnesota 55101 Officer
Margaret Milosevich Vice President, Chief Manager
400 Robert Street North Operations Officer and
St. Paul, Minnesota 55101 Treasurer
Dennis E. Prohofsky Secretary and Director Vice President,
400 Robert Street North General Counsel and
St. Paul, Minnesota 55101 Secretary
Thomas L. Clark Assistant Secretary Compliance Analyst
400 Robert Street North
St. Paul, Minnesota 55101
Kevin Collier Assistant Secretary Broker-Dealer Trader
400 Robert Street North
St. Paul, Minnesota 55101
(c) All commissions and other compensation received by each principal
underwriter, directly or indirectly, from the Registrant during
the Registrant's last fiscal year:
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation
----------- ---------------- --------------- ----------- ------------
MIMLIC Sales, $7,203,781 ___ ___ ___
Inc.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules promulgated thereunder are in the physical
possession of The Minnesota Mutual Life Insurance Company, St. Paul, Minnesota
55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
<PAGE>
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in the
registration statement are never more than 16 months old for so
long as payments under the Contracts may be accepted.
(b) The Registrant hereby undertakes to include as part of any
application to purchase a contract offered by the prospectus a
space that an applicant can check to request a Statement of
Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statement required to be
made available under this form promptly upon written or oral
request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the Registrant,
Minnesota Mutual Variable Annuity Account, has duly caused this Pre-Effective
Amendment to the Registration Statement to be signed on its behalf by the
Undersigned, thereunto duly authorized, in the City of Saint Paul, and State
of Minnesota, on the 25th day of April, 1996.
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ Robert L. Senkler
-------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor, The
Minnesota Mutual Life Insurance Company, has duly caused this Pre-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Saint Paul, and State
of Minnesota, on the 25th day of April, 1996.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By /s/ Robert L. Senkler
-------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in their capacities
with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
Robert L. Senkler* Chairman,)
- -------------------------- President and)
Robert L. Senkler Chief Executive)
Officer)
)
Giulio Agostini* Trustee)
- -------------------------- )
Giulio Agostini )
)
Anthony L. Andersen* Trustee)
- -------------------------- )
Anthony L. Andersen )
)
John F. Grundhofer* Trustee)
- -------------------------- )
John F. Grundhofer )
<PAGE>
Signature Title Date
--------- ----- ----
Harold V. Haverty* Trustee)
- -------------------------- )
Harold V. Haverty )
)
Lloyd P. Johnson* Trustee) By /s/ Dennis E. Prohofsky
- -------------------------- ) -----------------------
Lloyd P. Johnson ) Dennis E. Prohofsky
) Attorney-in-Fact
David S. Kidwell, Ph.D.* Trustee)
- -------------------------- ) Dated: April 25, 1996
David S. Kidwell, Ph.D. )
)
Reatha C. King, Ph.D.* Trustee)
- -------------------------- )
Reatha C. King, Ph.D. )
)
Thomas E. Rohricht* Trustee)
- -------------------------- )
Thomas E. Rohricht )
)
Terry N. Saario, Ph.D.* Trustee)
- -------------------------- )
Terry N. Saario, Ph.D. )
)
Michael E. Shannon* Trustee)
- -------------------------- )
Michael E. Shannon )
)
Frederick T. Weyerhaeuser* Trustee)
- -------------------------- )
Frederick T. Weyerhaeuser )
- -------------
*Registrant's Officer and Trustee executing power of attorney dated February
12, 1995, a copy of which is filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
4(a) The Immediate Variable Annuity
Contract, form 95-9326.
4(b) The Immediate Variable Annuity
Contract (Unisex), form 95-9327.
5(a) Application, form 95-9328.
9 Opinion and Consent of Donald F.
Gruber, Esq.
10 Consent of KPMG Peat Marwick LLP.
14 The Minnesota Mutual Life
Insurance Company Power of
Attorney To Sign Registration
Statements.
<PAGE>
Exhibit 4(a)
READ YOUR CONTRACT CAREFULLY
THIS IS A LEGAL CONTRACT
We promise to pay, subject to the provisions of this
contract, the benefits described by this contract.
We make this promise and issue this contract in
consideration of the application for this contract and
the payment of the purchase payments.
The owner and beneficiary are as named in the
application unless they are changed as provided for in
this contract.
You are a member of The Minnesota Mutual Life
Insurance Company. Our annual meetings are held at
our home office on the first Tuesday in March of each
year. The meetings begin at three o'clock in the afternoon.
Signed for The Minnesota Mutual Life Insurance
Company at St. Paul, Minnesota, on the contract date.
/s/ Robert L. Senkler
President
/s/ Dennis E. Prohofsky
Secretary
Registrar
NOTICE OF YOUR RIGHT TO EXAMINE THIS
CONTRACT FOR 10 DAYS.
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
CONTRACT. IF YOU ARE NOT SATISFIED, YOU MAY RETURN
THE CONTRACT TO US OR TO YOUR AGENT WITHIN 10 DAYS
OF ITS RECEIPT. IF YOU EXERCISE THIS RIGHT, YOU WILL
RECEIVE THE GREATER OF: (A) THE TOTAL ANNUITY VALUE
OF THIS CONTRACT ATTRIBUTABLE TO YOUR PURCHASE PAYMENTS
PLUS THE AMOUNTS DEDUCTED FROM YOUR PURCHASE PAYMENTS;
OR (B) THE AMOUNT OF PURCHASE PAYMENTS PAID UNDER THIS
CONTRACT. WE WILL PAY THIS REFUND WITHIN 7 DAYS AFTER WE IMMEDIATE
RECEIVE YOUR NOTICE OF CANCELLATION. VARIABLE ANNUITY
CONTRACT
ALL PAYMENTS AND VALUES PROVIDED BY GUARANTEED MINIMUM
THIS CONTRACT ARE VARIABLE. A MINIMUM ANNUITY PAYMENT
ANNUITY PAYMENT AMOUNT IS GUARANTEED AMOUNT
TO YOU. OTHER PAYMENTS AND VALUES ARE
NOT GUARANTEED. A PARTICIPATING
CONTRACT
MINNESOTA MUTUAL
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
95-9326
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provisions of Your Contract
Page
----
Additional Information
Amount Payable at Death
Annuity Provisions
Assignment
Beneficiary
Contract Charges
Definitions
Dividends
General Information
Misstatement
Purchase Payments
Valuation
Withdrawal and Surrender
<PAGE>
YOUR CONTRACT INFORMATION - EFFECTIVE OCTOBER 1, 1995
This page one supersedes any previously dated page one for this contract.
Please replace any prior page one of your contract with this new page.
Owner: Jane M. Doe
Contract Number: 1-234-567
Contract Date: October 1, 1995
Jurisdiction: Minnesota
Annuity Option: Single Life
Annuitant: Jane M. Doe
Annuitant's Date of Birth: October 1, 1935
Annuitant's Sex: Female
Joint Annuitant: not applicable
Joint Annuitant's Date of Birth: not applicable
Joint Annuitant's Sex: not applicable
Annuity Payment Commencement Date: October 1, 1995
Annuity Payment Frequency: Monthly
End of Cash Value Period: September 30, 2019
Annuity Unit Value on October 1, 1995: 1.012345
<TABLE>
<CAPTION>
Prior to Effect of
Purchase Payment Purchase Payment As of
October 1, 1995 October 1, 1995 October 1, 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Cumulative Purchase Payments: 0.00 100,000.00 100,000.00
Total Annuity Value: 0.00 93,789.44 93,789.44
Cash Value: 0.00 81,667.70 81,667.70
* Initial Annuity Payment Amount: 0.00 460.99 460.99
** Guaranteed Minimum
Annuity Payment Amount: 0.00 391.84 391.84
** Number of Annuity Units: 0.00 455.3685 455.3685
** Number of Cash Value Units: 0.00 455.3685 455.3685
<FN>
* The annuity payment amount shown here is annuity units multiplied by
the annuity unit value as of the effective date of this page one. The
actual annuity payment amount at the next annuity payment date will
differ from this amount. It will be based on the net separate account
sub-account performance from the effective date to the next annuity
payment date.
** These values will change each time you make a cash value withdrawal or
an additional purchase payment. You will be notified of the new
values.
</TABLE>
95-9326 1
<PAGE>
CASH VALUE FACTORS AND GUARANTEED ANNUITY PAYMENT PURCHASE RATES FOR
CALCULATING THE INITIAL ANNUITY PAYMENT AMOUNT WHICH IS PURCHASED WITH
EACH $1,000 OF VALUE APPLIED FOR A NEW PURCHASE PAYMENT
Annuitant: Jane M. Doe
Contract Number: 1-234-567
Guaranteed Annuity Payment
Amount per $1,000 of Value Applied
Cash Value Factor for a New Purchase Payment
----------------- --------------------------
Contract Date: not applicable 4.8911
Annuitization
Anniversary
-----------
0 177.1572 4.8911
1 172.8837 4.9703
2 168.4179 5.0558
3 163.7512 5.1482
4 158.8745 5.2483
5 153.7783 5.3569
6 148.4528 5.4749
7 142.8876 5.6034
8 137.0720 5.7437
9 130.9947 5.8972
10 124.6440 6.0657
11 118.0074 6.2510
12 111.0722 6.4553
13 103.8249 6.6810
14 96.2515 6.9309
15 88.3373 7.2079
16 80.0670 7.5141
17 71.4244 7.8540
18 62.3930 8.2312
19 52.9552 8.6490
20 43.0926 9.1100
21 32.7862 9.6147
22 22.0161 10.1598
23 10.7613 10.7353
24 0.0000 11.3202
over 24 0.0000 not applicable
This table provides factors to determine cash values and the guaranteed annuity
payment amount per $1,000 of value applied for a new purchase payment at the
contract date and each annuitization anniversary. The applicable factor at
times between these dates will be determined consistently with the mortality and
interest rates used to determine the factors shown here.
95-9326 1A
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive
per $1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON OR AFTER:
OCTOBER 1, 1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Cash Value in excess of Annuitant is alive
Units Cash Value Units per $1,000 Applied
----- ---------------- ------------------
Contract Date: 203.4522 191.6400 not applicable
Annuitization
Anniversary
-----------
0 203.4522 191.6400 5.2181
1 200.1934 188.2657 5.3116
2 196.7917 184.7827 5.4117
3 193.2402 181.1931 5.5189
4 189.5356 177.5000 5.6338
5 185.6737 173.7047 5.7568
6 181.6504 169.8072 5.8890
7 177.4614 165.8058 6.0311
8 173.1024 161.6965 6.1844
9 168.5694 157.4751 6.3502
10 163.8597 153.1408 6.5299
11 158.9726 148.6972 6.7250
12 153.9099 144.1518 6.9371
13 148.6764 139.5159 7.1676
14 143.2807 134.8037 7.4181
15 137.7353 130.0297 7.6905
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9326 1B
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive
per $1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON OR AFTER:
OCTOBER 1, 1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
16 132.0819 125.2714 7.9826
17 126.3228 120.4840 8.2998
18 120.4885 115.6810 8.6444
19 114.6193 110.8750 9.0191
20 108.7685 106.0804 9.4268
21 103.0065 101.3125 9.8704
22 97.4264 96.5881 10.3532
23 92.1500 91.9241 10.8785
24 87.3376 87.3376 11.4498
25 82.8458 82.8458 0.0000
26 78.4655 78.4655 0.0000
27 74.2135 74.2135 0.0000
28 70.1063 70.1063 0.0000
29 66.1586 66.1586 0.0000
30 62.3764 62.3764 0.0000
31 58.9525 58.9525 0.0000
32 55.7028 55.7028 0.0000
33 52.6101 52.6101 0.0000
34 49.6496 49.6496 0.0000
35 46.7882 46.7882 0.0000
36 43.9834 43.9834 0.0000
37 41.1801 41.1801 0.0000
38 38.3067 38.3067 0.0000
39 35.2973 35.2973 0.0000
40 32.0851 32.0851 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9326 1C
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive
per $1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON OR AFTER:
OCTOBER 1, 1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
41 30.0168 30.0168 0.0000
42 27.9334 27.9334 0.0000
43 25.8440 25.8440 0.0000
44 23.7625 23.7625 0.0000
45 21.7058 21.7058 0.0000
46 19.6915 19.6915 0.0000
47 17.7367 17.7367 0.0000
48 15.8564 15.8564 0.0000
49 14.0629 14.0629 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9326 1D
<PAGE>
DEFINITIONS
When we use the following words, this is what we mean:
ANNUITANT
The person named on page one of the contract who may receive lifetime benefits
under the contract. Except in the event of the death of either annuitant prior
to the annuity payment commencement date, joint annuitants will be considered a
single entity.
YOU, YOUR
The owner of this contract. The owner may be the annuitant or someone else.
The owner shall be that person or entity named as owner in the application.
JOINT OWNER
The person designated to share equally in the rights and privileges provided to
the owner of this contract. Only you and your spouse may be named as joint
owners.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
the contract in the event of the annuitant's death.
WRITTEN REQUEST
A request in writing signed by you. In the case of joint owners, the signatures
of both owners will be required to complete a written request. In some cases,
we may provide a form for your use. We may also require that this contract be
sent to us with your written request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
PURCHASE PAYMENT DATE
The date we receive a purchase payment in our home office.
CONTRACT DATE
The effective date of this contract.
ANNUITY PAYMENT DATE
Each day indicated by the annuity payment commencement date and the annuity
payment frequency for an annuity payment to be determined. This is shown on
page one of this contract.
ANNUITY PAYMENT COMMENCEMENT DATE
The first annuity payment date as specified on page one.
ANNUITIZATION ANNIVERSARY
The same day and month as the annuity payment commencement date for each
succeeding year of this contract.
95-9326 2
<PAGE>
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ANNUITY UNIT
The standard of value for the variable annuity payment amount.
CASH VALUE UNIT
The measure of your interest in the separate account that is available for
withdrawal under this contract during the cash value period.
CASH VALUE PERIOD
The time during which a cash value exists under the contract. The cash value
period begins on the annuity payment commencement date and ends on the cash
value end date shown on page one.
CASH VALUE
The dollar amount available for withdrawal under this contract during the cash
value period. A cash value exists only as long as both the number of cash value
units and the applicable factor from the cash value factor table are greater
than zero.
TOTAL ANNUITY VALUE
The total annuity value represents your total interest in the separate account.
SURRENDER VALUE
The surrender value of this contract shall be the total annuity value as of the
date of surrender plus the amounts deducted from your purchase payments. Those
include deductions for sales charges, risk charges, and state premium taxes
where applicable.
SEPARATE ACCOUNT
A separate investment account entitled Minnesota Mutual Variable Annuity
Account. This separate account was established by us under Minnesota law. The
separate account is composed of several sub-accounts. The assets of the
separate account are ours. Those assets are not subject to claims arising out
of any other business which we may conduct.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
ANNUITY PAYMENTS
Payments made at regular intervals to the annuitant or any other payee. The
annuity payments will increase or decrease in amount. The changes will reflect
the investment experience of the sub-account of the separate account.
95-9326 3
<PAGE>
GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT
The amount which is guaranteed as the minimum annuity payment amount. This
amount is payable without regard to the performance of the sub-account of the
separate account. Purchase payments, cash value withdrawals, and surrenders
will cause this guaranteed minimum annuity payment amount to be adjusted. The
adjustment will reflect your new interest in the separate account.
AGE
The age of a person at nearest birthday.
GENERAL INFORMATION
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it constitute the
entire contract between you and us. Any statements made in the application
either by you or by the annuitant will, in the absence of fraud, be considered
representations and not warranties. Also, any statement made either by you or
the annuitant will not be used to void this contract unless the statement is
contained in the application.
No change or waiver of any of the provisions of this contract will be valid
unless made in writing by us. This must be signed by our president, a vice
president, secretary or an assistant secretary. No agent or other person has
the authority to change or waive any provision of this contract.
Any additional agreement attached to this contract will become a part of this
contract. The agreement will be subject to all the terms and conditions of this
contract unless we state otherwise in it.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract by giving us a written
request. We will deal with you, unless this contract provides otherwise, on the
basis that you have full ownership and control of this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
Each year we will send you a report. This report will summarize the year's
transactions. It will show the current total annuity value and cash value of
this contract, the current annuity payment amount, and the current guaranteed
minimum annuity payment amount. It will also show the current annuity unit
value. This report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
IS THIS AN IMMEDIATE ANNUITY?
Yes. Annuity payments begin on the annuity payment commencement date. This
date is shown on page one. Annuity payments must begin not later than 12 months
after the contract date. An earlier date may be required by law to qualify this
contract as an immediate annuity in the state in which this contract is
delivered.
MAY YOU MAKE ADDITIONAL PURCHASE PAYMENTS TO THIS CONTRACT AFTER ITS ISSUE?
Yes. You may make additional purchase payments to this contract after its issue
as long as we are accepting purchase payments for this class of contract. Each
additional purchase payment must be in an amount of at least $5,000. Total
purchase payments made by you may not exceed $1,000,000, except with our prior
consent. We may discontinue accepting purchase payments for this class of
contract. We can do
95-9326 4
<PAGE>
this at any time. We may then terminate your ability to make additional
purchase payments into the contract.
DO YOU CHOOSE WHEN TO MAKE ADDITIONAL PURCHASE PAYMENTS?
Yes. You may choose when to make any additional purchase payments to this
contract at any time before the end of the cash value period. Purchase payments
may be made only while the annuitant is alive and we are accepting purchase
payments for this class of contract. No purchase payments are allowed after the
annuitant's death or after the cash value period has expired.
WHERE DO YOU MAKE ADDITIONAL PURCHASE PAYMENTS?
Your purchase payments must be made at our home office. Our home office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098. When we receive a
purchase payment from you, we will send you a confirmation and an updated page
one for this contract.
WILL PURCHASE PAYMENTS AFFECT FUTURE ANNUITY PAYMENTS?
Yes. Purchase payments made by you will purchase additional annuity units.
The net amount of each purchase payment, after deductions, will be applied to
purchase an additional initial annuity payment amount. This will be determined
as of the purchase payment date. This amount will be at least as great as that
determined by using the guaranteed annuity payment purchase rate table for new
purchase payments. This table is included in this contract.
The new number of annuity units after a purchase payment will be equal to the
number of annuity units prior to the purchase payment plus the additional
annuity units resulting from the current purchase payment. These annuity units
shall equal a number which is equal to the initial annuity payment amount
attributable to the new purchase payment, divided by the annuity unit value on
the purchase payment date.
When you make a purchase payment, we will inform you of the number of annuity
units in your contract. Annuity units will be recorded separately whenever a
different annuity payment purchase rate table is used.
WHAT ARE THE GUARANTEED ANNUITY PAYMENT PURCHASE RATES TO BE USED IN DETERMINING
THE ADDITIONAL ANNUITY PAYMENT AMOUNT ATTRIBUTABLE TO A NEW PURCHASE PAYMENT?
The guaranteed annuity payment purchase rates used for new purchase payments are
given in the guaranteed annuity payment purchase rate table. This table is
included in this contract. The rates are based on a 4.5% assumed interest rate
and Individual Annuity 1983 Table A mortality rates projected to the terminal
age of the table using projection scale G.
WILL THE GUARANTEED TABLE ALWAYS BE USED FOR NEW PURCHASE PAYMENTS?
Not always. At the time of a purchase payment, we may be using a table of
annuity payment purchase rates for this contract which would result in a larger
initial annuity payment. If we are, we will use that table instead.
WILL PURCHASE PAYMENTS AFFECT THE CASH VALUE?
Yes. Purchase payments will affect the cash value. The purchase payment will
increase the number of cash value units. The new number of cash value units
after a purchase payment will be equal to the number of cash value units prior
to the purchase payment plus the number of annuity units attributable to the new
purchase payment.
95-9326 5
<PAGE>
We will inform you of the number of cash value units in your contract when you
make a purchase payment. Cash value units attributable to a purchase payment
will be recorded separately if a different annuity purchase rate table was used
to determine the additional annuity units purchased.
WILL PURCHASE PAYMENTS AFFECT THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. The guaranteed minimum annuity payment amount will be increased. This
increase will reflect your additional interest in the separate account after the
additional purchase payment. The new guaranteed minimum annuity payment amount
after an additional purchase payment will be equal to: the guaranteed minimum
annuity payment amount prior to the purchase payment, plus 85% of the additional
initial annuity payment amount attributable to the new purchase payment. This
will be determined on the date we receive the purchase payment.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a purchase payment.
HOW ARE YOUR PURCHASE PAYMENTS INVESTED?
The net amount of your purchase payments, after deductions, is invested
exclusively in the Index 500 Account sub-account of the separate account.
ARE THERE ANY OTHER INVESTMENT OPTIONS?
No.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
The separate account is divided into sub-accounts. For each sub-account, there
is a fund for the investment of that sub-account's assets. Net purchase
payments are invested in the funds at their net asset value.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing total annuity values, cash
values, future annuity payments, or future purchase payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts. We will make that determination. If this type of transfer is made,
the term separate account, as used in this contract, shall then mean the
separate account to which the assets were transferred.
We also reserve the right, when permitted by law, to:
(a) deregister the separate account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. This contract makes certain deductions from purchase payments. There are
also certain charges which are made directly to the separate account.
95-9326 6
<PAGE>
WHAT DEDUCTIONS ARE MADE FROM YOUR PURCHASE PAYMENTS?
Deductions from your purchase payments are made for sales charges, risk charges,
and state premium taxes where applicable.
WHAT SALES CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
The sales charge is deducted from your purchase payments using the percentages
shown in the table below:
Cumulative Sales Charge as a Percentage
Total Purchase Payments of Purchase Payments
----------------------- --------------------
$ 0 - 499,999.99 4.500%
500,000 - 749,999.99 4.125%
750,000 - 1,000,000.00 3.750%
The applicable percentage from the chart will be based on the total cumulative
purchase payments to date, including the new purchase payment.
WHAT RISK CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
A risk charge is deducted from each purchase payment when paid. This is for our
guaranteeing the minimum annuity payment amount shown on page one. This risk
charge may be as much as 2% of each purchase payment.
WHAT ARE THE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. These are the
expense risk charge, the mortality risk charge, and the administrative charge.
All of these charges are deducted from the separate account on each valuation
date.
WHAT IS THE EXPENSE RISK CHARGE?
This is a charge to compensate us for the guarantee that the deductions provided
for in this contract will be sufficient to cover our actual expenses incurred.
Actual expense results incurred by us shall not adversely affect any payments or
values under this contract. On an annual basis, this charge may be as much as
0.60% of the net asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE ASSOCIATED DIRECTLY WITH THE SEPARATE ACCOUNT?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, this charge may
be as much as 0.80% of the net asset value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
This is a charge to compensate us for the administrative expenses we incur under
this contract. On an annual basis, this charge will not exceed 0.40% of the net
asset value of the separate account.
VALUATION
HOW IS THE CASH VALUE DETERMINED?
The cash value is equal to: the number of cash value units in the contract,
multiplied by the current annuity unit value, multiplied by the appropriate cash
value factor. The cash value factor comes from the table included in this
contract.
95-9326 7
<PAGE>
HOW IS THE TOTAL ANNUITY VALUE DETERMINED?
While the annuitant is alive, the total annuity value is equal to: the sum of
the number of cash value units, multiplied by the annuity unit value, multiplied
by the appropriate factor from the total annuity value factor table(s) included
in this contract; plus the number of annuity units in excess of the number of
cash value units, multiplied by the annuity unit value, multiplied by the
annuity value factor. The total annuity value factor comes from the table(s)
included in this contract.
After the annuitant's death, the beneficiary may elect to continue annuity
payments. The payments will continue for the remainder of the cash value
period. If the beneficiary does so elect, the total annuity value will be equal
to the cash value at all times during the cash value period.
WHAT IS THE ANNUITY UNIT VALUE AND HOW IS IT DETERMINED?
The annuity unit value reflects the net investment experience of the sub-account
of the separate account. The annuity unit value was originally set at $1.00 on
the first valuation date. For any subsequent valuation date, its value is equal
to: the value on the preceding valuation date, multiplied by the net investment
factor for the sub-account for the valuation period ending on the current
valuation date, and multiplied by a factor adjusting out the effect for the
valuation period of the 4.5% annual assumed interest rate. This rate has been
built into this contract's total annuity value, cash value, and annuity payment
calculations.
WHAT IS THE NET INVESTMENT FACTOR FOR THE SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the expense and mortality risk
charges and administrative charges. These charges shall be at a rate of not
more than 1.80% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account
of the separate account determined at the end of the current valuation
period; plus
(b) the per share amount of any dividend or capital gain distributions by
the fund if the "ex-dividend" date occurs during the current valuation
period; divided by
(c) the net asset value per share of that fund share held in the sub-
account determined at the end of the preceding valuation period.
WITHDRAWAL AND SURRENDER
MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time during the cash value period of this contract you may request
a withdrawal from its cash value. Each withdrawal must be in the amount of at
least $500. However, if the cash value of the contract is less than that
amount, all of the remaining cash value in the contract must be withdrawn. You
must make a written request for any withdrawal.
IS A NEW NUMBER OF CASH VALUE UNITS DETERMINED AFTER A CASH VALUE WITHDRAWAL?
Yes. A cash value withdrawal reduces the number of cash value units of this
contract. The new number of cash value units after a withdrawal is equal to the
number of cash value units just prior to withdrawal, multiplied by the cash
value prior to withdrawal less the cash value withdrawn, divided by the cash
value prior to withdrawal. Cash value units are reduced on a last in, first out
basis.
When you make a withdrawal of cash value, we will inform you of the number of
cash value units remaining in your contract.
95-9326 8
<PAGE>
IS THE CASH VALUE GUARANTEED?
No. The cash value decreases as annuity payments are made under the contract.
The cash value will also increase or decrease based on the performance of the
separate account sub-account given by the relative change in the annuity unit
value.
WILL FUTURE ANNUITY PAYMENTS BE AFFECTED BY A CASH VALUE WITHDRAWAL?
Yes. The number of annuity units used to calculate each future annuity payment
will be reduced to reflect the cash value withdrawal. The calculation of the
new number of annuity units will be based on whether or not the annuitant is
alive at the time the cash value withdrawal is made.
We will inform you of the number of annuity units remaining in your contract
whenever you make a cash value withdrawal.
HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
WHILE THE ANNUITANT IS ALIVE?
The new number of annuity units will be the new initial annuity payment amount
after a cash value withdrawal, as described in the next paragraph, divided by
the annuity unit value at the time of the withdrawal. The new initial annuity
payment amount is determined separately for purchase payments which used
different annuity payment purchase rates at the purchase payment date. The
number of annuity units is reduced, treating the number of annuity units and
cash value units derived from purchase payments using different annuity payment
purchase rates separately, on a last in, first out basis.
The new initial annuity payment amount after a cash value withdrawal will be
based on the remaining total annuity value immediately following the cash value
withdrawal. The new initial annuity payment amount will be the sum of the
following three values shown in the paragraph below. Annuity payment amounts
will be determined separately for purchase payments which used different annuity
payment purchase rates at the purchase payment date.
The new initial annuity payment amount after a cash value withdrawal will be
equal to the sum of:
(a) The number of cash value units remaining after the withdrawal
multiplied by the annuity unit value; plus
(b) The number of annuity units just prior to withdrawal minus the cash
value units just prior to withdrawal, multiplied by the annuity unit
value; plus
(c) The amount determined by steps 1 through 4,
(1) the total annuity value just prior to withdrawal; less
(2) the cash value just prior to withdrawal; and less
(3) the value in (b) multiplied by the appropriate total annuity
value factor for annuity units in excess of cash value units, as
of the withdrawal date, from the total annuity value factor
table(s) included in this contract; this sum then multiplied by
(4) the ratio of the cash value withdrawn divided by the cash value
just prior to withdrawal; applied to the appropriate annuity
payment purchase rate factor from table(s) included in this
contract for use at a cash value withdrawal while the annuitant
is alive.
The actual annuity payment amount payable for the next annuity payment date will
differ from this new initial annuity payment amount determined on the date of
the withdrawal. It will be based on the performance of the separate account
sub-account between the date of withdrawal and the valuation date for the next
annuity payment date as given by the relative change in the annuity unit value.
95-9326 9
<PAGE>
HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
BY THE BENEFICIARY WHO ELECTED TO CONTINUE RECEIVING ANNUITY PAYMENTS FOR THE
REMAINDER OF THE CASH VALUE PERIOD AFTER THE ANNUITANT'S DEATH?
Whenever the beneficiary has elected to continue receiving annuity payments and
a withdrawal of cash value is made, the number of annuity units is set equal to
the number of cash value units as determined after the withdrawal of cash value.
WILL THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT BE AFFECTED BY A CASH VALUE
WITHDRAWAL?
Yes. The guaranteed minimum annuity payment amount will be reduced to reflect
your reduced interest in the separate account, after the cash value withdrawal,
as represented by the number of annuity units. The new guaranteed minimum
annuity payment amount will be equal to: the guaranteed minimum annuity payment
amount just prior to the withdrawal, multiplied by the number of annuity units
after the withdrawal divided by the number of annuity units prior to the
withdrawal.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a cash value withdrawal.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before the annuity payment commencement date you may surrender
this contract for its surrender value. You must make a written request for any
surrender. The surrender value will be determined as of the valuation date
coincident with or next following the date your written request is received at
our home office.
HOW WILL WITHDRAWAL OR SURRENDER PROCEEDS BE PAID?
We will pay those benefits in a single sum within seven days of receiving your
written request.
DIVIDENDS
WILL THIS CONTRACT RECEIVE DIVIDENDS?
Each year we will determine if we will pay a dividend on this contract.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, will be applied to the purchase of additional annuity
units.
ANNUITY PROVISIONS
WHAT ANNUITY OPTIONS ARE ALLOWED?
This contract provides for lifetime annuity payments which are based on the
survival of a single annuitant or based on the combined survival of joint
annuitants. On the contract date you elected between the single life or joint
life option as shown on page one of this contract. That election, once made,
cannot be changed under this contract.
WHEN DO ANNUITY PAYMENTS BEGIN?
Annuity payments begin on the annuity payment commencement date.
95-9326 10
<PAGE>
WHEN ARE ANNUITY PAYMENTS MADE?
Annuity payments are withdrawn from the sub-account on the valuation date on or
next following each annuity payment date. Each annuity payment is then paid as
directed immediately after its withdrawal from the sub-account.
HOW LONG ARE ANNUITY PAYMENTS PAID?
Annuity payments are paid during the lifetime of the annuitant. In the event of
the annuitant's death, the beneficiary may elect to continue annuity payments
for the remainder of the cash value period.
TO WHOM ARE THE ANNUITY PAYMENTS PAID?
Annuity payments will be paid to the person or persons named as an annuitant on
page one of this contract. Any annuity payments payable as a death benefit
elected by the beneficiary will be paid to the beneficiary.
CAN THE ANNUITANT DIRECT OR ASSIGN ANNUITY PAYMENTS TO BE PAID TO SOMEONE ELSE?
Yes. The annuitant, or the joint annuitants, can direct or assign annuity
payments to be made under the contract. Those payments will then be paid to
someone else. However, we will not be bound by any assignment until we have
recorded a written request of it at our home office. We are not responsible for
the validity of any direction or assignment. A direction to pay someone other
than the annuitant will not apply to any payment made by us before it was
recorded. Any claim made by an assignee will be subject to proof of the
assignee's interest and the extent of the assignment.
MAY WE REQUIRE ADDITIONAL INFORMATION?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant. We may also require proof that a person
is alive before making any annuity payment which is based on the survival of
that person.
HOW IS THE AMOUNT OF AN ANNUITY PAYMENT DETERMINED?
The dollar amount of annuity payments is equal to the number of annuity units
remaining for this contract multiplied by the annuity unit value as of the
valuation date of the payment. The amount may increase or decrease from one
annuity payment date to the next.
IS THERE A GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. Each annuity payment date we will pay the annuitant the greater of: (a)
the annuity payment amount determined by multiplying the number of annuity units
times the annuity unit value; or (b) the guaranteed minimum annuity payment
amount currently in force for this contract.
AMOUNT PAYABLE AT DEATH
IS THERE A DEATH BENEFIT IF THE ANNUITANT OR JOINT ANNUITANT DIES BEFORE THE
ANNUITY PAYMENT COMMENCEMENT DATE?
Yes. When we receive due proof at our home office, satisfactory to us, of
either annuitant's death before the annuity payment commencement date, a death
benefit will be paid to you, or your beneficiary, if applicable. This death
benefit will be the sum of: the total annuity value plus the amounts deducted
from your purchase payments for sales charges, risk charges, and state premium
taxes where applicable.
IS THERE A DEATH BENEFIT WHEN THE ANNUITANT DIES AFTER THE ANNUITY PAYMENT
COMMENCEMENT DATE?
Yes. However, this death benefit is payable only so long as the contract has a
cash value. When we receive due proof, satisfactory to us, of the annuitant's
death after the annuity payment commencement date, we will pay the cash value of
the contract as a lump sum death benefit. The beneficiary will be the
95-9326 11
<PAGE>
person or persons named in the application for this contract unless you
subsequently change the beneficiary. In that event, we will pay the death
benefit to the beneficiary named in your last change of beneficiary request as
provided for in this contract.
MAY A BENEFICIARY, IN THE EVENT OF THE ANNUITANT'S DEATH AFTER ANNUITY PAYMENTS
HAVE BEGUN, ELECT TO CONTINUE ANNUITY PAYMENTS UNTIL THE END OF THE CASH VALUE
PERIOD INSTEAD OF RECEIVING THE LUMP SUM DEATH BENEFIT?
Yes. A beneficiary may elect to continue annuity payments. However, the number
of annuity units will be set equal to the number of cash value units at the time
of the annuitant's death, the annuity payments to the beneficiary will terminate
at the end of the cash value period, and the guaranteed minimum annuity payment
amount will be adjusted in proportion to any change in the number of annuity
units. The new guaranteed minimum annuity payment amount will be equal to the
guaranteed minimum annuity payment amount just prior to the annuitant's death,
multiplied by the number of annuity units after the annuitant's death divided by
the number of annuity units prior to the annuitant's death.
If the beneficiary elects to continue the annuity payments, the cash value will
also continue on the beneficiary's behalf as part of the death benefit. This
allows the beneficiary to withdraw any or all of the cash value at any time
during the remaining cash value period. As with cash value withdrawals while
the annuitant is alive, cash value withdrawals by the beneficiary after the
annuitant's death will reduce future annuity payments and the guaranteed minimum
annuity payment amount. This reduction will be based on the reduced interest in
the separate account as described in the "Withdrawal and Surrender" section of
this contract.
WHEN MUST DEATH BENEFITS PAID AS AN ANNUITY BE PAID?
Death benefits payable after the annuitant's death must be distributed at least
as rapidly as under the method elected by the annuitant.
WHAT HAPPENS IF A BENEFICIARY DIES BEFORE THE ANNUITANT DIES?
If a beneficiary dies, that beneficiary's interest in this contract ends with
his or her death. Only those beneficiaries who survive will be eligible to
share in the amount payable to the beneficiary at the annuitant's death. If
there is no surviving beneficiary upon the death of the annuitant, any remaining
value of death benefit payable to the beneficiary will be paid to the
annuitant's estate.
ARE THERE ANY OTHER CIRCUMSTANCES WHERE DEATH BENEFITS WILL BE PAID?
Yes. If you are not an annuitant and you die, or if any joint owner who is
not an annuitant dies, a death benefit will be paid. This death benefit will
be the same amount as the amount that would be paid on the death of the
annuitant or joint annuitant and will be paid out in the same manner, except
that if death occurs before the annuity payment commencement date, such death
benefit will be paid out within five years of the date of death. On the
payment of such a death benefit in the event of the death of the owner, no
other contract benefits are then payable.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You can file a written request with us to change the beneficiary. Your
written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date you
signed the request. However, if death occurs before the request has been
recorded, the request will not be effective as to any death proceeds we have
paid before the request was recorded in our home office.
ADDITIONAL INFORMATION
ARE THE CONTRACT BENEFITS PROTECTED?
Yes. To the extent permitted by law, no benefit provided by this contract will
be subject to any creditor's claim or process of law.
HOW WILL BENEFITS BE DETERMINED?
Any benefit described by this contract shall be calculated as of the date the
provisions of the contract are exercised.
95-9326 12
<PAGE>
WILL THERE BE AN ADJUSTMENT IF THE ANNUITANT'S AGE OR SEX IS MISSTATED?
Yes. If the annuitant's age or sex has been misstated, the amount payable under
this contract as an annuity will be that amount which would have been paid based
upon the annuitant's correct age and sex. In the case of an overpayment, we may
either deduct the required amount from future contract payments or, we may
require you to pay us in cash. We may do both until we are fully repaid. In
the case of an underpayment, we will pay the required amount with the next
payment.
MUST YOU PROVIDE ANY ADDITIONAL INFORMATION?
Yes. You must provide us with any other information we need to administer this
contract. If you cannot do so, we may ask the person concerned for that
information. We shall not be liable for any payment based upon information
given to us in error or not given to us.
DO CONTRACT VALUES COMPLY WITH STATE REQUIREMENTS?
Yes. All values and benefits described by this contract are not less than the
minimum values and benefits required by any statute of the state in which this
contract is delivered.
WILL WE HOLD ANNUITY RESERVES UNDER THIS CONTRACT?
Yes. Reserves held by us for annuity payments under this contract shall not be
less than those reserves required by the state law. We will refer to the laws
of the state in which this contract is delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This contract may be modified at any time. It may be modified only by
written agreement between you and us. However, no such modification will
adversely affect the rights of an annuitant under this contract unless made to
comply with a law or government regulation. A modification must be in writing.
You will have the right to accept or reject a modification.
WHEN WILL LUMP SUM PAYMENTS BE MADE?
Usually, we will make payment within seven days after payment is called for by
the terms of the contract. In the case of payments from the separate account,
we reserve the right to defer payment for any period during which the New York
Stock Exchange is closed for trading (except for normal holiday closing), or
when trading on the Exchange is restricted when the Securities and Exchange
Commission has determined that a state of emergency exists which may make such
determination and payment impractical or such other periods as the Commission
may by order permit for the protection of contract owners.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account annuity units under this contract you may
direct us with respect to the voting rights of fund shares held by us and
attributable to this contract.
95-9326 13
<PAGE>
IMMEDIATE
VARIABLE ANNUITY CONTRACT
GUARANTEED MINIMUM
ANNUITY PAYMENT AMOUNT
A PARTICIPATING CONTRACT
MINNESOTA MUTUAL
<PAGE>
Exhibit 4(b)
READ YOUR CONTRACT CAREFULLY
THIS IS A LEGAL CONTRACT
We promise to pay, subject to the provisions of this
contract, the benefits described by this contract.
We make this promise and issue this contract in
consideration of the application for this contract and
the payment of the purchase payments.
The owner and beneficiary are as named in the
application unless they are changed as provided for in
this contract.
You are a member of The Minnesota Mutual Life
Insurance Company. Our annual meetings are held at
our home office on the first Tuesday in March of each
year. The meetings begin at three o'clock in the afternoon.
Signed for The Minnesota Mutual Life Insurance
Company at St. Paul, Minnesota, on the contract date.
/s/ Robert L. Senkler
President
/s/ Dennis E. Prohofsky
Secretary
Registrar
NOTICE OF YOUR RIGHT TO EXAMINE THIS
CONTRACT FOR 10 DAYS.
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
CONTRACT. IF YOU ARE NOT SATISFIED, YOU MAY RETURN
THE CONTRACT TO US OR TO YOUR AGENT WITHIN 10 DAYS
OF ITS RECEIPT. IF YOU EXERCISE THIS RIGHT, YOU WILL
RECEIVE THE GREATER OF: (A) THE TOTAL ANNUITY VALUE
OF THIS CONTRACT ATTRIBUTABLE TO YOUR PURCHASE PAYMENTS
PLUS THE AMOUNTS DEDUCTED FROM YOUR PURCHASE PAYMENTS;
OR (B) THE AMOUNT OF PURCHASE PAYMENTS PAID UNDER THIS
CONTRACT. WE WILL PAY THIS REFUND WITHIN 7 DAYS AFTER WE IMMEDIATE
RECEIVE YOUR NOTICE OF CANCELLATION. VARIABLE ANNUITY
CONTRACT
ALL PAYMENTS AND VALUES PROVIDED BY GUARANTEED MINIMUM
THIS CONTRACT ARE VARIABLE. A MINIMUM ANNUITY PAYMENT
ANNUITY PAYMENT AMOUNT IS GUARANTEED AMOUNT
TO YOU. OTHER PAYMENTS AND VALUES ARE
NOT GUARANTEED. A PARTICIPATING
CONTRACT
MINNESOTA MUTUAL
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
95-9327
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provisions of Your Contract
Page
----
Additional Information
Amount Payable at Death
Annuity Provisions
Assignment
Beneficiary
Contract Charges
Definitions
Dividends
General Information
Misstatement
Purchase Payments
Valuation
Withdrawal and Surrender
95-9327
<PAGE>
YOUR CONTRACT INFORMATION - EFFECTIVE OCTOBER 1, 1995
This page one supersedes any previously dated page one for this contract.
Please replace any prior page one of your contract with this new page.
Owner: Jane M. Doe
Contract Number: 1-234-567
Contract Date: October 1, 1995
Jurisdiction: Minnesota
Annuity Option: Single Life
Annuitant: Jane M. Doe
Annuitant's Date of Birth: October 1, 1935
Annuitant's Sex: Female
Joint Annuitant: not applicable
Joint Annuitant's Date of Birth: not applicable
Joint Annuitant's Sex: not applicable
Annuity Payment Commencement Date: October 1, 1995
Annuity Payment Frequency: Monthly
End of Cash Value Period: September 30, 2019
Annuity Unit Value on October 1, 1995: 1.012345
<TABLE>
<CAPTION>
Prior to Effect of
Purchase Payment Purchase Payment As of
October 1, 1995 October 1, 1995 October 1, 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Cumulative Purchase Payments: 0.00 100,000.00 100,000.00
Total Annuity Value: 0.00 93,789.44 93,789.44
Cash Value: 0.00 81,667.70 81,667.70
* Initial Annuity Payment Amount: 0.00 460.99 460.99
** Guaranteed Minimum
Annuity Payment Amount: 0.00 391.84 391.84
** Number of Annuity Units: 0.00 455.3685 455.3685
** Number of Cash Value Units: 0.00 455.3685 455.3685
<FN>
* The annuity payment amount shown here is annuity units multiplied by
the annuity unit value as of the effective date of this page one. The
actual annuity payment amount at the next annuity payment date will
differ from this amount. It will be based on the net separate account
sub-account performance from the effective date to the next annuity
payment date.
** These values will change each time you make a cash value withdrawal or
an additional purchase payment. You will be notified of the new
values.
</TABLE>
95-9327 1
<PAGE>
CASH VALUE FACTORS AND GUARANTEED ANNUITY PAYMENT PURCHASE RATES FOR
CALCULATING THE INITIAL ANNUITY PAYMENT AMOUNT WHICH IS PURCHASED WITH
EACH $1,000 OF VALUE APPLIED FOR A NEW PURCHASE PAYMENT
Annuitant: Jane M. Doe
Contract Number: 1-234-567
Guaranteed Annuity Payment
Amount per $1,000 of Value Applied
Cash Value Factor for a New Purchase Payment
----------------- --------------------------
Contract Date: not applicable 4.8911
Annuitization
Anniversary
-----------
0 177.1572 4.8911
1 172.8837 4.9703
2 168.4179 5.0558
3 163.7512 5.1482
4 158.8745 5.2483
5 153.7783 5.3569
6 148.4528 5.4749
7 142.8876 5.6034
8 137.0720 5.7437
9 130.9947 5.8972
10 124.6440 6.0657
11 118.0074 6.2510
12 111.0722 6.4553
13 103.8249 6.6810
14 96.2515 6.9309
15 88.3373 7.2079
16 80.0670 7.5141
17 71.4244 7.8540
18 62.3930 8.2312
19 52.9552 8.6490
20 43.0926 9.1100
21 32.7862 9.6147
22 22.0161 10.1598
23 10.7613 10.7353
24 0.0000 11.3202
over 24 0.0000 not applicable
This table provides factors to determine cash values and the guaranteed annuity
payment amount per $1,000 of value applied for a new purchase payment at the
contract date and each annuitization anniversary. The applicable factor at
times between these dates will be determined consistently with the mortality and
interest rates used to determine the factors shown here.
95-9327 1A
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive per
$1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON OR AFTER:
OCTOBER 1, 1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Cash Value in excess of Annuitant is alive
Units Cash Value Units per $1,000 Applied
----- ---------------- ------------------
Contract Date: 203.4522 191.6400 not applicable
Annuitization
Anniversary
-----------
0 203.4522 191.6400 5.2181
1 200.1934 188.2657 5.3116
2 196.7917 184.7827 5.4117
3 193.2402 181.1931 5.5189
4 189.5356 177.5000 5.6338
5 185.6737 173.7047 5.7568
6 181.6504 169.8072 5.8890
7 177.4614 165.8058 6.0311
8 173.1024 161.6965 6.1844
9 168.5694 157.4751 6.3502
10 163.8597 153.1408 6.5299
11 158.9726 148.6972 6.7250
12 153.9099 144.1518 6.9371
13 148.6764 139.5159 7.1676
14 143.2807 134.8037 7.4181
15 137.7353 130.0297 7.6905
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
95-9327 1B
<PAGE>
Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive per
$1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON OR AFTER:
OCTOBER 1, 1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
16 132.0819 125.2714 7.9826
17 126.3228 120.4840 8.2998
18 120.4885 115.6810 8.6444
19 114.6193 110.8750 9.0191
20 108.7685 106.0804 9.4268
21 103.0065 101.3125 9.8704
22 97.4264 96.5881 10.3532
23 92.1500 91.9241 10.8785
24 87.3376 87.3376 11.4498
25 82.8458 82.8458 0.0000
26 78.4655 78.4655 0.0000
27 74.2135 74.2135 0.0000
28 70.1063 70.1063 0.0000
29 66.1586 66.1586 0.0000
30 62.3764 62.3764 0.0000
31 58.9525 58.9525 0.0000
32 55.7028 55.7028 0.0000
33 52.6101 52.6101 0.0000
34 49.6496 49.6496 0.0000
35 46.7882 46.7882 0.0000
36 43.9834 43.9834 0.0000
37 41.1801 41.1801 0.0000
38 38.3067 38.3067 0.0000
39 35.2973 35.2973 0.0000
40 32.0851 32.0851 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
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Total Annuity Value Factors and Annuity Payment Purchase Rates Applicable
at a Cash Value Withdrawal while the Annuitant is Alive per
$1,000 Applied - Single Life Issue
Annuitant: Jane M. Doe
Contract Number: 1-234-567
FOR CASH VALUE AND ANNUITY UNITS ATTRIBUTABLE TO TRANSACTIONS ON OR AFTER:
OCTOBER 1, 1995
Annuity Payment
Factor Purchase Rate
Factor Applicable to at a Cash Value
Applicable to Annuity Units Withdrawal while
Annuitization Cash Value in excess of Annuitant is alive
Anniversary Units Cash Value Units per $1,000 Applied
----------- ----- ---------------- ------------------
41 30.0168 30.0168 0.0000
42 27.9334 27.9334 0.0000
43 25.8440 25.8440 0.0000
44 23.7625 23.7625 0.0000
45 21.7058 21.7058 0.0000
46 19.6915 19.6915 0.0000
47 17.7367 17.7367 0.0000
48 15.8564 15.8564 0.0000
49 14.0629 14.0629 0.0000
This table provides factors to determine the total annuity value and the annuity
payment purchase rates applicable at a cash value withdrawal while the annuitant
is alive, at the contract date and each annuitization anniversary. The
applicable factor at times between these dates will be determined consistently
with the mortality and interest rates used to determine the factors shown here.
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DEFINITIONS
When we use the following words, this is what we mean:
ANNUITANT
The person named on page one of the contract who may receive lifetime benefits
under the contract. Except in the event of the death of either annuitant prior
to the annuity payment commencement date, joint annuitants will be considered a
single entity.
YOU, YOUR
The owner of this contract. The owner may be the annuitant or someone else.
The owner shall be that person or entity named as owner in the application.
JOINT OWNER
The person designated to share equally in the rights and privileges provided to
the owner of this contract. Only you and your spouse may be named as joint
owners.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
BENEFICIARY
The person, persons or entity designated to receive death benefits payable under
the contract in the event of the annuitant's death.
WRITTEN REQUEST
A request in writing signed by you. In the case of joint owners, the signatures
of both owners will be required to complete a written request. In some cases,
we may provide a form for your use. We may also require that this contract be
sent to us with your written request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
PURCHASE PAYMENT DATE
The date we receive a purchase payment in our home office.
CONTRACT DATE
The effective date of this contract.
ANNUITY PAYMENT DATE
Each day indicated by the annuity payment commencement date and the annuity
payment frequency for an annuity payment to be determined. This is shown on
page one of this contract.
ANNUITY PAYMENT COMMENCEMENT DATE
The first annuity payment date as specified on page one.
ANNUITIZATION ANNIVERSARY
The same day and month as the annuity payment commencement date for each
succeeding year of this contract.
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FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ANNUITY UNIT
The standard of value for the variable annuity payment amount.
CASH VALUE UNIT
The measure of your interest in the separate account that is available for
withdrawal under this contract during the cash value period.
CASH VALUE PERIOD
The time during which a cash value exists under the contract. The cash value
period begins on the annuity payment commencement date and ends on the cash
value end date shown on page one.
CASH VALUE
The dollar amount available for withdrawal under this contract during the cash
value period. A cash value exists only as long as both the number of cash value
units and the applicable factor from the cash value factor table are greater
than zero.
TOTAL ANNUITY VALUE
The total annuity value represents your total interest in the separate account.
SURRENDER VALUE
The surrender value of this contract shall be the total annuity value as of the
date of surrender plus the amounts deducted from your purchase payments. Those
include deductions for sales charges, risk charges, and state premium taxes
where applicable.
SEPARATE ACCOUNT
A separate investment account entitled Minnesota Mutual Variable Annuity
Account. This separate account was established by us under Minnesota law. The
separate account is composed of several sub-accounts. The assets of the
separate account are ours. Those assets are not subject to claims arising out
of any other business which we may conduct.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
ANNUITY PAYMENTS
Payments made at regular intervals to the annuitant or any other payee. The
annuity payments will increase or decrease in amount. The changes will reflect
the investment experience of the sub-account of the separate account.
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GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT
The amount which is guaranteed as the minimum annuity payment amount. This
amount is payable without regard to the performance of the sub-account of the
separate account. Purchase payments, cash value withdrawals, and surrenders
will cause this guaranteed minimum annuity payment amount to be adjusted. The
adjustment will reflect your new interest in the separate account.
AGE
The age of a person at nearest birthday.
GENERAL INFORMATION
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it constitute the
entire contract between you and us. Any statements made in the application
either by you or by the annuitant will, in the absence of fraud, be considered
representations and not warranties. Also, any statement made either by you or
the annuitant will not be used to void this contract unless the statement is
contained in the application.
No change or waiver of any of the provisions of this contract will be valid
unless made in writing by us. This must be signed by our president, a vice
president, secretary or an assistant secretary. No agent or other person has
the authority to change or waive any provision of this contract.
Any additional agreement attached to this contract will become a part of this
contract. The agreement will be subject to all the terms and conditions of this
contract unless we state otherwise in it.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract by giving us a written
request. We will deal with you, unless this contract provides otherwise, on the
basis that you have full ownership and control of this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
Each year we will send you a report. This report will summarize the year's
transactions. It will show the current total annuity value and cash value of
this contract, the current annuity payment amount, and the current guaranteed
minimum annuity payment amount. It will also show the current annuity unit
value. This report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
IS THIS AN IMMEDIATE ANNUITY?
Yes. Annuity payments begin on the annuity payment commencement date. This
date is shown on page one. Annuity payments must begin not later than 12 months
after the contract date. An earlier date may be required by law to qualify this
contract as an immediate annuity in the state in which this contract is
delivered.
MAY YOU MAKE ADDITIONAL PURCHASE PAYMENTS TO THIS CONTRACT AFTER ITS ISSUE?
Yes. You may make additional purchase payments to this contract after its issue
as long as we are accepting purchase payments for this class of contract. Each
additional purchase payment must be in an amount of at least $5,000. Total
purchase payments made by you may not exceed $1,000,000, except with our prior
consent. We may discontinue accepting purchase payments for this class of
contract. We can do
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this at any time. We may then terminate your ability to make additional
purchase payments into the contract.
DO YOU CHOOSE WHEN TO MAKE ADDITIONAL PURCHASE PAYMENTS?
Yes. You may choose when to make any additional purchase payments to this
contract at any time before the end of the cash value period. Purchase payments
may be made only while the annuitant is alive and we are accepting purchase
payments for this class of contract. No purchase payments are allowed after the
annuitant's death or after the cash value period has expired.
WHERE DO YOU MAKE ADDITIONAL PURCHASE PAYMENTS?
Your purchase payments must be made at our home office. Our home office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098. When we receive a
purchase payment from you, we will send you a confirmation and an updated page
one for this contract.
WILL PURCHASE PAYMENTS AFFECT FUTURE ANNUITY PAYMENTS?
Yes. Purchase payments made by you will purchase additional annuity units.
The net amount of each purchase payment, after deductions, will be applied to
purchase an additional initial annuity payment amount. This will be determined
as of the purchase payment date. This amount will be at least as great as that
determined by using the guaranteed annuity payment purchase rate table for new
purchase payments. This table is included in this contract.
The new number of annuity units after a purchase payment will be equal to the
number of annuity units prior to the purchase payment plus the additional
annuity units resulting from the current purchase payment. These annuity units
shall equal a number which is equal to the initial annuity payment amount
attributable to the new purchase payment, divided by the annuity unit value on
the purchase payment date.
When you make a purchase payment, we will inform you of the number of annuity
units in your contract. Annuity units will be recorded separately whenever a
different annuity payment purchase rate table is used.
WHAT ARE THE GUARANTEED ANNUITY PAYMENT PURCHASE RATES TO BE USED IN DETERMINING
THE ADDITIONAL ANNUITY PAYMENT AMOUNT ATTRIBUTABLE TO A NEW PURCHASE PAYMENT?
The guaranteed annuity payment purchase rates used for new purchase payments are
given in the guaranteed annuity payment purchase rate table. This table is
included in this contract. The rates are based on a 4.5% assumed interest rate
and Individual Annuity 1983 Table A female mortality rates projected to the
terminal age of the table using projection scale G.
WILL THE GUARANTEED TABLE ALWAYS BE USED FOR NEW PURCHASE PAYMENTS?
Not always. At the time of a purchase payment, we may be using a table of
annuity payment purchase rates for this contract which would result in a larger
initial annuity payment. If we are, we will use that table instead.
WILL PURCHASE PAYMENTS AFFECT THE CASH VALUE?
Yes. Purchase payments will affect the cash value. The purchase payment will
increase the number of cash value units. The new number of cash value units
after a purchase payment will be equal to the number of cash value units prior
to the purchase payment plus the number of annuity units attributable to the new
purchase payment.
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We will inform you of the number of cash value units in your contract when you
make a purchase payment. Cash value units attributable to a purchase payment
will be recorded separately if a different annuity purchase rate table was used
to determine the additional annuity units purchased.
WILL PURCHASE PAYMENTS AFFECT THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. The guaranteed minimum annuity payment amount will be increased. This
increase will reflect your additional interest in the separate account after the
additional purchase payment. The new guaranteed minimum annuity payment amount
after an additional purchase payment will be equal to: the guaranteed minimum
annuity payment amount prior to the purchase payment, plus 85% of the additional
initial annuity payment amount attributable to the new purchase payment. This
will be determined on the date we receive the purchase payment.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a purchase payment.
HOW ARE YOUR PURCHASE PAYMENTS INVESTED?
The net amount of your purchase payments, after deductions, is invested
exclusively in the Index 500 Account sub-account of the separate account.
ARE THERE ANY OTHER INVESTMENT OPTIONS?
No.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
The separate account is divided into sub-accounts. For each sub-account, there
is a fund for the investment of that sub-account's assets. Net purchase
payments are invested in the funds at their net asset value.
If investment in a fund should no longer be possible or if we determine it
becomes inappropriate for contracts of this class, we may substitute another
fund. Substitution may be with respect to existing total annuity values, cash
values, future annuity payments, or future purchase payments.
MAY WE MAKE CHANGES TO THE SEPARATE ACCOUNT?
Yes. We reserve the right to transfer assets of the separate account to another
separate account. The transfer will be of assets associated with this class of
contracts. We will make that determination. If this type of transfer is made,
the term separate account, as used in this contract, shall then mean the
separate account to which the assets were transferred.
We also reserve the right, when permitted by law, to:
(a) deregister the separate account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
CONTRACT CHARGES
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. This contract makes certain deductions from purchase payments. There are
also certain charges which are made directly to the separate account.
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WHAT DEDUCTIONS ARE MADE FROM YOUR PURCHASE PAYMENTS?
Deductions from your purchase payments are made for sales charges, risk charges,
and state premium taxes where applicable.
WHAT SALES CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
The sales charge is deducted from your purchase payments using the percentages
shown in the table below:
Cumulative Sales Charge as a Percentage
Total Purchase Payments of Purchase Payments
----------------------- --------------------
$ 0 - 499,999.99 4.500%
500,000 - 749,999.99 4.125%
750,000 - 1,000,000.00 3.750%
The applicable percentage from the chart will be based on the total cumulative
purchase payments to date, including the new purchase payment.
WHAT RISK CHARGES ARE DEDUCTED FROM YOUR PURCHASE PAYMENTS?
A risk charge is deducted from each purchase payment when paid. This is for our
guaranteeing the minimum annuity payment amount shown on page one. This risk
charge may be as much as 2% of each purchase payment.
WHAT ARE THE CHARGES ASSOCIATED WITH THE SEPARATE ACCOUNT?
There are three charges associated with the separate account. These are the
expense risk charge, the mortality risk charge, and the administrative charge.
All of these charges are deducted from the separate account on each valuation
date.
WHAT IS THE EXPENSE RISK CHARGE?
This is a charge to compensate us for the guarantee that the deductions provided
for in this contract will be sufficient to cover our actual expenses incurred.
Actual expense results incurred by us shall not adversely affect any payments or
values under this contract. On an annual basis, this charge may be as much as
0.60% of the net asset value of the separate account.
WHAT IS THE MORTALITY RISK CHARGE ASSOCIATED DIRECTLY WITH THE SEPARATE ACCOUNT?
This is a charge to compensate us for the mortality guarantees we make under the
contract. Actual mortality results incurred by us shall not adversely affect
any payments or values under this contract. On an annual basis, this charge may
be as much as 0.80% of the net asset value of the separate account.
WHAT IS THE ADMINISTRATIVE CHARGE?
This is a charge to compensate us for the administrative expenses we incur under
this contract. On an annual basis, this charge will not exceed 0.40% of the net
asset value of the separate account.
VALUATION
HOW IS THE CASH VALUE DETERMINED?
The cash value is equal to: the number of cash value units in the contract,
multiplied by the current annuity unit value, multiplied by the appropriate cash
value factor. The cash value factor comes from the table included in this
contract.
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HOW IS THE TOTAL ANNUITY VALUE DETERMINED?
While the annuitant is alive, the total annuity value is equal to: the sum of
the number of cash value units, multiplied by the annuity unit value, multiplied
by the appropriate factor from the total annuity value factor table(s) included
in this contract; plus the number of annuity units in excess of the number of
cash value units, multiplied by the annuity unit value, multiplied by the
annuity value factor. The total annuity value factor comes from the table(s)
included in this contract.
After the annuitant's death, the beneficiary may elect to continue annuity
payments. The payments will continue for the remainder of the cash value
period. If the beneficiary does so elect, the total annuity value will be equal
to the cash value at all times during the cash value period.
WHAT IS THE ANNUITY UNIT VALUE AND HOW IS IT DETERMINED?
The annuity unit value reflects the net investment experience of the sub-account
of the separate account. The annuity unit value was originally set at $1.00 on
the first valuation date. For any subsequent valuation date, its value is equal
to: the value on the preceding valuation date, multiplied by the net investment
factor for the sub-account for the valuation period ending on the current
valuation date, and multiplied by a factor adjusting out the effect for the
valuation period of the 4.5% annual assumed interest rate. This rate has been
built into this contract's total annuity value, cash value, and annuity payment
calculations.
WHAT IS THE NET INVESTMENT FACTOR FOR THE SUB-ACCOUNT?
The net investment factor for a valuation period is the gross investment rate
for such valuation period, less a deduction for the expense and mortality risk
charges and administrative charges. These charges shall be at a rate of not
more than 1.80% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account
of the separate account determined at the end of the current valuation
period; plus
(b) the per share amount of any dividend or capital gain distributions by
the fund if the "ex-dividend" date occurs during the current valuation
period; divided by
(c) the net asset value per share of that fund share held in the sub-
account determined at the end of the preceding valuation period.
WITHDRAWAL AND SURRENDER
MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time during the cash value period of this contract you may request
a withdrawal from its cash value. Each withdrawal must be in the amount of at
least $500. However, if the cash value of the contract is less than that
amount, all of the remaining cash value in the contract must be withdrawn. You
must make a written request for any withdrawal.
IS A NEW NUMBER OF CASH VALUE UNITS DETERMINED AFTER A CASH VALUE WITHDRAWAL?
Yes. A cash value withdrawal reduces the number of cash value units of this
contract. The new number of cash value units after a withdrawal is equal to the
number of cash value units just prior to withdrawal, multiplied by the cash
value prior to withdrawal less the cash value withdrawn, divided by the cash
value prior to withdrawal. Cash value units are reduced on a last in, first out
basis.
When you make a withdrawal of cash value, we will inform you of the number of
cash value units remaining in your contract.
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IS THE CASH VALUE GUARANTEED?
No. The cash value decreases as annuity payments are made under the contract.
The cash value will also increase or decrease based on the performance of the
separate account sub-account given by the relative change in the annuity unit
value.
WILL FUTURE ANNUITY PAYMENTS BE AFFECTED BY A CASH VALUE WITHDRAWAL?
Yes. The number of annuity units used to calculate each future annuity payment
will be reduced to reflect the cash value withdrawal. The calculation of the
new number of annuity units will be based on whether or not the annuitant is
alive at the time the cash value withdrawal is made.
We will inform you of the number of annuity units remaining in your contract
whenever you make a cash value withdrawal.
HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
WHILE THE ANNUITANT IS ALIVE?
The new number of annuity units will be the new initial annuity payment amount
after a cash value withdrawal, as described in the next paragraph, divided by
the annuity unit value at the time of the withdrawal. The new initial annuity
payment amount is determined separately for purchase payments which used
different annuity payment purchase rates at the purchase payment date. The
number of annuity units is reduced, treating the number of annuity units and
cash value units derived from purchase payments using different annuity payment
purchase rates separately, on a last in, first out basis.
The new initial annuity payment amount after a cash value withdrawal will be
based on the remaining total annuity value immediately following the cash value
withdrawal. The new initial annuity payment amount will be the sum of the
following three values shown in the paragraph below. Annuity payment amounts
will be determined separately for purchase payments which used different annuity
payment purchase rates at the purchase payment date.
The new initial annuity payment amount after a cash value withdrawal will be
equal to the sum of:
(a) The number of cash value units remaining after the withdrawal
multiplied by the annuity unit value; plus
(b) The number of annuity units just prior to withdrawal minus the cash
value units just prior to withdrawal, multiplied by the annuity unit
value; plus
(c) The amount determined by steps 1 through 4,
(1) the total annuity value just prior to withdrawal; less
(2) the cash value just prior to withdrawal; and less
(3) the value in (b) multiplied by the appropriate total annuity
value factor for annuity units in excess of cash value units, as
of the withdrawal date, from the total annuity value factor
table(s) included in this contract; this sum then multiplied by
(4) the ratio of the cash value withdrawn divided by the cash value
just prior to withdrawal; applied to the appropriate annuity
payment purchase rate factor from table(s) included in this
contract for use at a cash value withdrawal while the annuitant
is alive.
The actual annuity payment amount payable for the next annuity payment date will
differ from this new initial annuity payment amount determined on the date of
the withdrawal. It will be based on the performance of the separate account
sub-account between the date of withdrawal and the valuation date for the next
annuity payment date as given by the relative change in the annuity unit value.
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HOW WILL THE NUMBER OF ANNUITY UNITS BE DETERMINED AFTER A CASH VALUE WITHDRAWAL
BY THE BENEFICIARY WHO ELECTED TO CONTINUE RECEIVING ANNUITY PAYMENTS FOR THE
REMAINDER OF THE CASH VALUE PERIOD AFTER THE ANNUITANT'S DEATH?
Whenever the beneficiary has elected to continue receiving annuity payments and
a withdrawal of cash value is made, the number of annuity units is set equal to
the number of cash value units as determined after the withdrawal of cash value.
WILL THE GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT BE AFFECTED BY A CASH VALUE
WITHDRAWAL?
Yes. The guaranteed minimum annuity payment amount will be reduced to reflect
your reduced interest in the separate account, after the cash value withdrawal,
as represented by the number of annuity units. The new guaranteed minimum
annuity payment amount will be equal to: the guaranteed minimum annuity payment
amount just prior to the withdrawal, multiplied by the number of annuity units
after the withdrawal divided by the number of annuity units prior to the
withdrawal.
We will inform you of the new guaranteed minimum annuity payment amount for your
contract when you make a cash value withdrawal.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before the annuity payment commencement date you may surrender
this contract for its surrender value. You must make a written request for any
surrender. The surrender value will be determined as of the valuation date
coincident with or next following the date your written request is received at
our home office.
HOW WILL WITHDRAWAL OR SURRENDER PROCEEDS BE PAID?
We will pay those benefits in a single sum within seven days of receiving your
written request.
DIVIDENDS
WILL THIS CONTRACT RECEIVE DIVIDENDS?
Each year we will determine if we will pay a dividend on this contract.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, will be applied to the purchase of additional annuity
units.
ANNUITY PROVISIONS
WHAT ANNUITY OPTIONS ARE ALLOWED?
This contract provides for lifetime annuity payments which are based on the
survival of a single annuitant or based on the combined survival of joint
annuitants. On the contract date you elected between the single life or joint
life option as shown on page one of this contract. That election, once made,
cannot be changed under this contract.
WHEN DO ANNUITY PAYMENTS BEGIN?
Annuity payments begin on the annuity payment commencement date.
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WHEN ARE ANNUITY PAYMENTS MADE?
Annuity payments are withdrawn from the sub-account on the valuation date on or
next following each annuity payment date. Each annuity payment is then paid as
directed immediately after its withdrawal from the sub-account.
HOW LONG ARE ANNUITY PAYMENTS PAID?
Annuity payments are paid during the lifetime of the annuitant. In the event of
the annuitant's death, the beneficiary may elect to continue annuity payments
for the remainder of the cash value period.
TO WHOM ARE THE ANNUITY PAYMENTS PAID?
Annuity payments will be paid to the person or persons named as an annuitant on
page one of this contract. Any annuity payments payable as a death benefit
elected by the beneficiary will be paid to the beneficiary.
CAN THE ANNUITANT DIRECT OR ASSIGN ANNUITY PAYMENTS TO BE PAID TO SOMEONE ELSE?
Yes. The annuitant, or the joint annuitants, can direct or assign annuity
payments to be made under the contract. Those payments will then be paid to
someone else. However, we will not be bound by any assignment until we have
recorded a written request of it at our home office. We are not responsible for
the validity of any direction or assignment. A direction to pay someone other
than the annuitant will not apply to any payment made by us before it was
recorded. Any claim made by an assignee will be subject to proof of the
assignee's interest and the extent of the assignment.
MAY WE REQUIRE ADDITIONAL INFORMATION?
Yes. We reserve the right to require proof satisfactory to us of the age of the
annuitant and of any joint annuitant. We may also require proof that a person
is alive before making any annuity payment which is based on the survival of
that person.
HOW IS THE AMOUNT OF AN ANNUITY PAYMENT DETERMINED?
The dollar amount of annuity payments is equal to the number of annuity units
remaining for this contract multiplied by the annuity unit value as of the
valuation date of the payment. The amount may increase or decrease from one
annuity payment date to the next.
IS THERE A GUARANTEED MINIMUM ANNUITY PAYMENT AMOUNT?
Yes. Each annuity payment date we will pay the annuitant the greater of: (a)
the annuity payment amount determined by multiplying the number of annuity units
times the annuity unit value; or (b) the guaranteed minimum annuity payment
amount currently in force for this contract.
AMOUNT PAYABLE AT DEATH
IS THERE A DEATH BENEFIT IF THE ANNUITANT OR JOINT ANNUITANT DIES BEFORE THE
ANNUITY PAYMENT COMMENCEMENT DATE?
Yes. When we receive due proof at our home office, satisfactory to us, of
either annuitant's death before the annuity payment commencement date, a death
benefit will be paid to you, or your beneficiary, if applicable. This death
benefit will be the sum of: the total annuity value plus the amounts deducted
from your purchase payments for sales charges, risk charges, and state premium
taxes where applicable.
IS THERE A DEATH BENEFIT WHEN THE ANNUITANT DIES AFTER THE ANNUITY PAYMENT
COMMENCEMENT DATE?
Yes. However, this death benefit is payable only so long as the contract has a
cash value. When we receive due proof, satisfactory to us, of the annuitant's
death after the annuity payment commencement date, we will pay the cash value of
the contract as a lump sum death benefit. The beneficiary will be the
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person or persons named in the application for this contract unless you
subsequently change the beneficiary. In that event, we will pay the death
benefit to the beneficiary named in your last change of beneficiary request as
provided for in this contract.
MAY A BENEFICIARY, IN THE EVENT OF THE ANNUITANT'S DEATH AFTER ANNUITY PAYMENTS
HAVE BEGUN, ELECT TO CONTINUE ANNUITY PAYMENTS UNTIL THE END OF THE CASH VALUE
PERIOD INSTEAD OF RECEIVING THE LUMP SUM DEATH BENEFIT?
Yes. A beneficiary may elect to continue annuity payments. However, the number
of annuity units will be set equal to the number of cash value units at the time
of the annuitant's death, the annuity payments to the beneficiary will terminate
at the end of the cash value period, and the guaranteed minimum annuity payment
amount will be adjusted in proportion to any change in the number of annuity
units. The new guaranteed minimum annuity payment amount will be equal to the
guaranteed minimum annuity payment amount just prior to the annuitant's death,
multiplied by the number of annuity units after the annuitant's death divided by
the number of annuity units prior to the annuitant's death.
If the beneficiary elects to continue the annuity payments, the cash value will
also continue on the beneficiary's behalf as part of the death benefit. This
allows the beneficiary to withdraw any or all of the cash value at any time
during the remaining cash value period. As with cash value withdrawals while
the annuitant is alive, cash value withdrawals by the beneficiary after the
annuitant's death will reduce future annuity payments and the guaranteed minimum
annuity payment amount. This reduction will be based on the reduced interest in
the separate account as described in the "Withdrawal and Surrender" section of
this contract.
WHEN MUST DEATH BENEFITS PAID AS AN ANNUITY BE PAID?
Death benefits payable after the annuitant's death must be distributed at least
as rapidly as under the method elected by the annuitant.
WHAT HAPPENS IF A BENEFICIARY DIES BEFORE THE ANNUITANT DIES?
If a beneficiary dies, that beneficiary's interest in this contract ends with
his or her death. Only those beneficiaries who survive will be eligible to
share in the amount payable to the beneficiary at the annuitant's death. If
there is no surviving beneficiary upon the death of the annuitant, any remaining
value of death benefit payable to the beneficiary will be paid to the
annuitant's estate.
ARE THERE ANY OTHER CIRCUMSTANCES WHERE DEATH BENEFITS WILL BE PAID?
Yes. If you are not an annuitant and you die, or if any joint owner who is
not an annuitant dies, a death benefit will be paid. This death benefit will
be the same amount as the amount that would be paid on the death of the
annuitant or joint annuitant and will be paid out in the same manner, except
that if death occurs before the annuity payment commencement date, such death
benefit will be paid out within five years of the date of death. On the
payment of such a death benefit in the event of the death of the owner, no
other contract benefits are then payable.
CAN YOU CHANGE THE BENEFICIARY?
Yes. You can file a written request with us to change the beneficiary. Your
written request will not be effective until it is recorded in our home office
records. After it has been recorded, it will take effect as of the date you
signed the request. However, if death occurs before the request has been
recorded, the request will not be effective as to any death proceeds we have
paid before the request was recorded in our home office.
ADDITIONAL INFORMATION
ARE THE CONTRACT BENEFITS PROTECTED?
Yes. To the extent permitted by law, no benefit provided by this contract will
be subject to any creditor's claim or process of law.
HOW WILL BENEFITS BE DETERMINED?
Any benefit described by this contract shall be calculated as of the date the
provisions of the contract are exercised.
95-9327 12
<PAGE>
WILL THERE BE AN ADJUSTMENT IF THE ANNUITANT'S AGE OR SEX IS MISSTATED?
Yes. If the annuitant's age or sex has been misstated, the amount payable under
this contract as an annuity will be that amount which would have been paid based
upon the annuitant's correct age and sex. In the case of an overpayment, we may
either deduct the required amount from future contract payments or, we may
require you to pay us in cash. We may do both until we are fully repaid. In
the case of an underpayment, we will pay the required amount with the next
payment.
MUST YOU PROVIDE ANY ADDITIONAL INFORMATION?
Yes. You must provide us with any other information we need to administer this
contract. If you cannot do so, we may ask the person concerned for that
information. We shall not be liable for any payment based upon information
given to us in error or not given to us.
DO CONTRACT VALUES COMPLY WITH STATE REQUIREMENTS?
Yes. All values and benefits described by this contract are not less than the
minimum values and benefits required by any statute of the state in which this
contract is delivered.
WILL WE HOLD ANNUITY RESERVES UNDER THIS CONTRACT?
Yes. Reserves held by us for annuity payments under this contract shall not be
less than those reserves required by the state law. We will refer to the laws
of the state in which this contract is delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This contract may be modified at any time. It may be modified only by
written agreement between you and us. However, no such modification will
adversely affect the rights of an annuitant under this contract unless made to
comply with a law or government regulation. A modification must be in writing.
You will have the right to accept or reject a modification.
WHEN WILL LUMP SUM PAYMENTS BE MADE?
Usually, we will make payment within seven days after payment is called for by
the terms of the contract. In the case of payments from the separate account,
we reserve the right to defer payment for any period during which the New York
Stock Exchange is closed for trading (except for normal holiday closing), or
when trading on the Exchange is restricted or when the Securities and Exchange
Commission has determined that a state of emergency exists which may make such
determination and payment impractical or such other periods as the Commission
may by order permit for the protection of contract owners.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have separate account annuity units under this contract you may
direct us with respect to the voting rights of fund shares held by us and
attributable to this contract.
95-9327 13
<PAGE>
IMMEDIATE
VARIABLE ANNUITY CONTRACT
GUARANTEED MINIMUM
ANNUITY PAYMENT AMOUNT
A PARTICIPATING CONTRACT
MINNESOTA MUTUAL
<PAGE>
<TABLE>
<CAPTION>
Exhibit 5(a)
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA MUTUAL VARIABLE ANNUITY APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - Annuity Services - 400 Robert Street North - St Paul, Minnesota 55101-2098 -
Toll Free 1-800-362-3141
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER (PLEASE PRINT) ANNUITANT (IF OTHER THAN OWNER)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME NAME
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
CITY, STATE, ZIP CITY, STATE, ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX TAXPAYER I.D. DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
(SOC SECURITY # OR EIN)
/ /M / /F / /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
JOINT OWNER (OPTIONAL - MUST BE SPOUSE OF OWNER) JOINT ANNUITANT (OPTIONAL - MUST BE SPOUSE OF ANNUITANT)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME NAME
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ /M / /F / /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF PLAN (PLEASE CHECK ONLY ONE BOX - SEE REVERSE FOR ADDITIONAL INSTRUCTIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Non-Qualified / / Salary Reduction Simplified Employee Pension (SARSEP)
/ / IRA Rollover / / Tax Sheltered Annuity (IRC Section 403(b))
/ / IRA Transfer from existing IRA / / Qualified Retirement Plan (IRC Section 401)
/ / Simplified Employee Pension (SEP) / / Non-Qualified Deferred Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITY OPTION REPLACEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Single life option commencing on Will this contract applied for replace or change an existing
________ month ___ day insurance or annuity contract?
/ / Joint life option commencing on
________ month ___ day / / Yes* / / No
*If yes, please provide your contract number and the name of
the insurance company under Special Instructions.
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUITY PAYMENT FREQUENCY STATEMENT OF ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
I wish the payment frequency to be The Prospectuses for the Variable Annuity Account and the
/ / Monthly / / Quarterly Fund each refer to a Statement of Additional Information.
/ / Semi-Annually / / Annually Would you like us to send you a copy? / / Yes / / No
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS OR REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT SUITABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
1. Are you an employee of Minnesota Mutual or a subsidiary? / / Yes / / No
2. Are you a spouse or dependent child of an employee of Minnesota Mutual or a subsidiary? / / Yes / / No
3. Are you an employee of an NASD firm? / / Yes / / No
4. Dependents: / / Spouse / / Children Ages_____________________
5. Current Approximate: Annual Income ________________ Assets $_________________ Debt $______________ Tax Bracket _____________%
6. Other Investments:
Savings $________________ Balanced/Total Return Funds $_________________
Insurance Cash Values $________________ Stock Funds $_________________
Real Estate $________________ Bond Funds $_________________
Business Interests $________________ Individual Stocks $_________________
Retirement Funds $________________ Individual Bonds $_________________
Other __________________ $________________
7. Ranking of Investment Objectives (Rank 1 - 5 in order of importance):
_______ Capital Preservation/Conservative Income
_______ Current Income
_______ Total Return/Conservative Growth
_______ Growth
_______ Aggressive Growth
8. Risk Tolerance (check one): / / Low Risk / / Moderate Risk / / High Risk
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURES
- ------------------------------------------------------------------------------------------------------------------------------------
- - I have received and had an opportunity to read a current copy of the Variable Annuity Account Prospectus and the prospectus for
the MIMLIC Series Fund, Inc.
- - I have been informed of all charges and expenses associated with this investment.
- - I understand that all payments and values of any contract issued, when based upon the investment experience of a Separate
Account, are variable and are not guaranteed as to a fixed dollar amount. A contract guarantee for minimum payment amounts will
be applicable in computing variable annuity payments.
- - Given my personal circumstances, this is a suitable investment.
I believe the information provided on this form is true and accurate to the best of my knowledge. I have read and agree with the
above statement.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNED AT (City, State) DATE AMOUNT REMITTED WITH APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE OF OWNER SIGNATURE OF ANNUITANT (if other than owner)
X X
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT (if other than joint owner)
X X
- ------------------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY REPRESENTATIVE
- ------------------------------------------------------------------------------------------------------------------------------------
To the best of my knowledge this contract / / will / / will not replace or change an existing insurance or annuity contract. I
certify that a current prospectus was delivered. No written sales materials were used other than those furnished by the Home
Office.
- ------------------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE NAME (PRINT) REPRESENTATIVE SIGNATURE AGENCY CODE AGENT CODE
X %
- ------------------------------------------------------------------------------------------------------------------------------------
X %
- ------------------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY DEALER
- ------------------------------------------------------------------------------------------------------------------------------------
DEALER NAME DATE SIGNATURE OF AUTHORIZED DEALER
X
- ------------------------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY MIMLIC SALES CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 9
[Letterhead]
April 12, 1996
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Re: Minnesota Mutual Variable Annuity Account
Immediate Variable Annuity Contract
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company (the
"Company"), I have reviewed certain legal matters relating to the Company's
Separate Account entitled Minnesota Mutual Variable Annuity Account (the
"Account") in connection with the filing of a Registration Statement on Form
N-4. This Registration Statement is to be filed by the Company and the Account
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to certain immediate variable annuity contracts.
Based upon that review, I am of the following opinion:
1. The Account is a separate account of the Company duly created and
validly existing pursuant of the laws of the State of Minnesota; and
2. The issuance and sale of these variable annuity contracts funded by
the Account have been duly authorized by the Company and such
contracts, when issued in accordance with and as described in the
current Prospectus contained in the Registration Statement, and upon
compliance with applicable local and federal laws, will be legal and
binding obligations of the Company in accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Donald F. Gruber
Donald F. Gruber
Senior Counsel
<PAGE>
Exhibit 10
[KPMG Peat Marwick Letterhead]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Minnesota Mutual Life Insurance Company:
We consent to the use of our reports included herein and to the reference to our
Firm under the heading "AUDITORS" in Part B of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 19, 1996
<PAGE>
Exhibit 14
The Minnesota Mutual Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, The Minnesota Mutual Life Insurance Company ("Minnesota
Mutual") has established certain separate accounts to fund certain variable
annuity and variable life insurance contracts, and
WHEREAS, Minnesota Mutual Variable Fund D ("Fund D") is a separate
account of Minnesota Mutual registered as a unit investment trust under the
Investment Company Act of 1940 offering variable annuity contracts registered
under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Annuity Account ("Variable
Annuity Account") is a separate account of Minnesota Mutual registered as a
unit investment trust under the Investment Company Act of 1940 offering
variable annuity contracts registered under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Life Account ("Variable Life
Account") is a separate account of Minnesota Mutual registered as a unit
investment trust under the Investment Company Act of 1940 offering variable
adjustable life insurance policies registered under the Securities Act of
1933,
WHEREAS, Minnesota Mutual Group Variable Annuity Account ("Group
Variable Annuity Account") is a separate account of Minnesota Mutual which
has been established for the purpose of issuing group annuity contracts on a
variable basis and which is to be registered as a unit investment trust under
the Investment Company Act of 1940 offering group variable annuity contracts
and certificates to be registered under the Securities Act of 1933;
WHEREAS, Minnesota Mutual Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Mutual which has
been established for the purpose of issuing group and individual variable
universal life insurance policies on a variable basis and which is to be
registered as a unit investment trust under the Investment Company Act of
1940 offering group and individual variable universal life insurance policies
to be registered under the Securities Act of 1933;
NOW THEREFORE, We, the undersigned Trustees of Minnesota Mutual, do
hereby appoint Dennis E. Prohofsky and Garold M. Felland, and each of them
individually, as attorney in fact for the purpose of signing in their names
and on their behalf as Trustees of Minnesota Mutual and filing with the
Securities and Exchange Commission Registration Statements, or any amendment
thereto, for the purpose of: a) registering contracts and policies of Fund
D, the Variable Annuity Account, the Variable Life Account, the Group
Variable Annuity Account and the Variable Universal Life Account for sale by
those entities and Minnesota Mutual under the Securities Act of 1933; and b)
registering Fund D, the Variable Annuity Account, the Variable Life Account,
the Group Variable Annuity Account and the Variable Universal Life Account as
unit investment trusts under the Investment Company Act of 1940.
Signature Title Date
--------- ----- ----
/s/ Robert L. Senkler Chairman of the Board, February 12, 1996
- ----------------------------- President and Chief
Robert L. Senkler Executive Officer
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Giulio Agostini Trustee February 12, 1996
- -----------------------------
Giulio Agostini
/s/ Anthony L. Andersen Trustee February 12, 1996
- -----------------------------
Anthony L. Andersen
/s/ John F. Grundhofer Trustee February 12, 1996
- -----------------------------
John F. Grundhofer
/s/ Harold V. Haverty Trustee February 12, 1996
- -----------------------------
Harold V. Haverty
/s/ Lloyd P. Johnson Trustee February 12, 1996
- -----------------------------
Lloyd P. Johnson
/s/ David S. Kidwell, Ph.D. Trustee February 12, 1996
- -----------------------------
David S. Kidwell, Ph.D.
/s/ Reatha C. King, Ph.D. Trustee February 12, 1996
- -----------------------------
Reatha C. King, Ph.D.
/s/ Thomas E. Rohricht Trustee February 12, 1996
- -----------------------------
Thomas E. Rohricht
/s/ Terry N. Saario, Ph.D. Trustee February 12, 1996
- -----------------------------
Terry N. Saario, Ph.D.
/s/ Michael E. Shannon Trustee February 12, 1996
- -----------------------------
Michael E. Shannon
/s/ Frederick T. Weyerhaeuser Trustee February 12, 1996
- -----------------------------
Frederick T. Weyerhaeuser
