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File Number 333-12629
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment Number 2
Post-Effective 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)
(651) 665-3500
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(Depositor's Telephone Number, Including Area Code)
Dennis E. Prohofsky, Esq. Copy to:
Senior Vice President, General Counsel J. Sumner Jones, Esq.
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 West
St. Paul, Minnesota 55101-2098 Washington, D.C. 20007
(Name and Address of Agent for Service)
The Registrant hereby amends this Registration Statement on such 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 Contract
4. Condensed Financial Information; Performance Data
5. General Descriptions
6. Contract Charges
7. Description of the Contract
8. Description of the Contract; Annuity Payments and Options
9. Description of the Contract; Death Benefits
10. Description of the Contract; Purchase Payments and Value of
the Contract
11. Description of the Contract; Redemptions
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional Information
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NUVEEN PREMIER ADVISER ANNUITY PROSPECTUS
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
("VARIABLE ACCOUNT"), A SEPARATE ACCOUNT OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY ("MINNESOTA MUTUAL")
The individual 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 contract is a Flexible Payment Deferred Variable Annuity Contract (the
"Contract"). The initial purchase payment made to the Contract must be in an
amount of at least $2,000 and any subsequent purchase payment must be in an
amount of at least $500. Other minimums exist for certain automatic payment
plans.
The owner of a Contract may elect to have contract values accumulated on a
completely variable basis, on a completely fixed basis (as part of Minnesota
Mutual's Fixed Account) or on a combination fixed and variable basis. To the
extent that contract values are accumulated on a variable basis, they will be a
part of the Variable Account. The Variable Account invests its assets in shares
of Advantus Series Fund, Inc. (the "Advantus Fund") and the Nuveen Tax-Deferred
Investment Trust ("Nuveen Trust"). The variable accumulation value of the
Contract and the amount of each variable annuity payment will vary in accordance
with the performance of the Portfolio of the Advantus Fund or the Nuveen Trust
selected by the contract owner. The contract owner bears the entire investment
risk for any amounts allocated to the Portfolios of the Advantus Fund or Nuveen
Trust. Except as specifically noted herein and as set forth under the caption
"Fixed Account Guarantee Period Options" in this Prospectus, this Prospectus
describes only the variable portion of the Contract.
This Prospectus sets forth concisely the information that a prospective
investor should know before investing in the Variable Account, and it should be
read and kept for future reference. A Statement of Additional Information,
bearing the same date, which contains further Contract 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) 665-3500, or after
September 1, 1998, (651) 665-3500, or by writing Minnesota Mutual at its
principal office at 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 34.
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 651/665-3500
http://www.minnesotamutual.com
The date of this document and the Statement of Additional Information is:
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Special Terms............................................... 3
Questions and Answers about the Contract.................... 5
Expense Table............................................... 8
Condensed Financial Information............................. 10
Performance Data............................................ 10
General Descriptions........................................ 11
The Minnesota Mutual Life Insurance Company............. 11
Variable Account........................................ 11
Advantus Series Fund, Inc............................... 11
Nuveen Tax-Deferred Investment Trust.................... 12
Additions, Deletions or Substitutions................... 13
Contract Charges............................................ 14
Sales Charges........................................... 14
Mortality and Expense Risk Charges...................... 15
Administrative Charge................................... 16
Contract Fee............................................ 16
Premium Taxes........................................... 16
Transaction Charges..................................... 16
Voting Rights............................................... 17
Description of the Contract................................. 17
General Provisions...................................... 17
Annuity Payments and Annuity Payment Options............ 19
Death Benefits.......................................... 22
Purchase Payments, Transfers and Value of the
Contract............................................... 23
Redemptions............................................. 25
Fixed Account Guarantee Period Options...................... 27
Federal Tax Status.......................................... 29
Year 2000 Computer Problem.................................. 34
Statement of Additional Information......................... 34
Appendix A--Illustration of Variable Annuity Payment
Values.................................................... 35
Appendix B--Illustration of Market Value Adjustments........ 37
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALES PERSON, 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:
ACCUMULATION UNIT: a measure of the Contract's value in each sub-account of the
Variable Account.
ACCUMULATION VALUE: the sum of values under a Contract in the Fixed Account
and/or in the Variable Account. In the Fixed Account, the value is the sum of
the values in each guarantee period. In the Variable Account, it is the total
value of the accumulation units in each sub-account. The value in each
sub-account shall be determined separately.
AGE: the age of a person at nearest birthday.
ANNUITANT: the person who may receive lifetime benefits under the Contract.
ANNUITY: a series of payments for life; for life with a minimum number of
payments; for the joint lifetime of the annuitant and another person and
thereafter during the lifetime of the survivor; or for a period certain. Annuity
payments will be due and payable only on the first day of a calendar month.
ANNUITY UNIT: a unit of measurement used to calculate variable annuity payments.
BENEFICIARY: the person or persons or entity designated to receive death
benefits payable under the Contract. Prior to the commencement of annuity
payments, the beneficiary is the first person on the following list who is alive
on the date of the contract owner's death: the joint owner, the primary (Class
1) beneficiary, the secondary (Class 2) beneficiary, or, if none of the above is
alive, to the executor or administrator of the owner's estate.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT OWNER: the owner of the Contract, which could be the annuitant, a
corporation or trust, or any other person acting on behalf of the annuitant.
CONTRACT YEAR: a period of one year beginning with the Contract date or a
Contract anniversary.
FIXED ACCOUNT: an established non-unitized separate account of ours. Amounts
allocated to the guarantee periods of the Fixed Account are credited with
interest rates guaranteed by us for the several guarantee period durations.
FIXED ANNUITY PAYMENTS: annuity payments payable from the General Account, with
guaranteed payments of pre-established dollar amounts during the payment period.
FUND: the mutual fund or separate investment portfolio within a series mutual
fund which we have designated as an eligible investment for the Variable
Account.
GENERAL ACCOUNT: all of our assets other than those in the Variable Account, the
Fixed Account or in other separate accounts established by us.
GUARANTEE PERIOD: a period, of one or more years, for which the current interest
rate is guaranteed.
JOINT OWNER: persons who have equal ownership right in the Contract, both of
which must authorize any exercising of those ownership rights unless otherwise
allowed by us. Any joint owner must be the spouse of the other joint owner.
MARKET VALUE ADJUSTMENT: a positive or negative adjustment in the Fixed Account
value that we may make if such value is paid out, transferred or applied to
provide annuity payments more than 30 days before or after the renewal date of
the guarantee period in which it was being held.
PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase plan
under which benefits are to be provided by the variable annuity Contract
described herein.
PURCHASE PAYMENTS: amounts paid to us as consideration for the benefits provided
by the Contract.
RENEWAL DATE: the first day following the last day of any guarantee period in
the Fixed Account.
SURRENDER VALUE: the amount payable to the owner on surrender of this Contract.
It is equal to the accumulation value after the application of all applicable
adjustments and deduction of all applicable charges.
TREASURY RATE: the yield to maturity (generic "mid" quote) for the current U.S.
Treasury benchmark notes as reported each day as of 2:00 p.m. Central Standard
Time by BLOOMBERG FINANCIAL SERVICES.
VALUATION DATE: each 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 ACCOUNT: a separate investment account called the Minnesota Mutual
Variable Annuity Account (herein the "Variable Account"). This separate account
was established by us for this class of Contract under Minnesota law. The
separate account is composed of several sub-accounts. The assets of this account
are not subject to claims arising out of any other business of ours.
VARIABLE ANNUITY PAYMENTS: annuity payments payable from the Variable Account
with payments which may increase or decrease in dollar amount to reflect the
investment experience of the sub-accounts of the Variable Account. The dollar
amount of each annuity payment is not guaranteed.
WE, OUR, US: The Minnesota Mutual Life Insurance Company.
YOU, YOUR: the Contract Owner.
4
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QUESTIONS AND ANSWERS ABOUT THE CONTRACT
WHAT IS AN ANNUITY?
An annuity is a series of payments for life; for life with a minimum number of
payments guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain. 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 is called a variable annuity.
WHAT IS THE CONTRACT OFFERED BY THIS PROSPECTUS?
The Contract is an individual, combination fixed and variable, deferred annuity
contract issued by us which provides for monthly annuity payments. These
payments may begin at a future date elected by the owner of the Contract.
Purchase payments received by us under a Contract are allocated either to our
Variable Account or to the Fixed Account, as specified by the owner of the
Contract. In the Fixed Account, purchase payments receive interest, which may be
increased or decreased by a market value adjustment in the event that amounts
are transferred, withdrawn or applied to provide annuity payments; in the
Variable Account, purchase payments are invested in shares of one or more
Portfolios of the Advantus Fund or the Nuveen Trust. In the Variable Account
amounts receive no interest or principal guarantees and the owner of the
Contract bears the entire investment risk.
This Prospectus describes only the variable aspects of the Contract, except
where fixed aspects are specifically mentioned. Please look to the language of
the Contract for a description of the fixed portion of the Contract and to the
heading "Fixed Account Guarantee Period Options" in this Prospectus. For more
information on the Contract, see the heading "Description of the Contract" in
this Prospectus.
WHAT TYPE OF ANNUITY IS THE CONTRACT?
We offer a single type of contract which is a flexible payment, deferred
variable annuity contract.
WHAT INVESTMENT OPTIONS ARE AVAILABLE FOR THE VARIABLE ACCOUNT?
Purchase payments allocated to the Variable Account are directed to one or more
of the sub-accounts of the Variable Account.
The sub-accounts currently invest in shares of the Advantus Series Fund, Inc.
and the Nuveen Tax-Deferred Investment Trust. In the Advantus Series Fund, Inc.,
the following Portfolios are available:
The Money Market Portfolio
The Mortgage Securities Portfolio
The Index 500 Portfolio
The Small Company Portfolio
The Value Stock Portfolio
The Small Company Value Portfolio
The Global Bond Portfolio
The Real Estate Securities Portfolio
And, with respect to the Nuveen Tax-Deferred Investment Trust the following
Portfolios are available:
The Strategic Income Portfolio
The Balanced Portfolio
The Growth and Income Portfolio
The Blue Chip Growth Portfolio
The European Value Portfolio
The International Equity Portfolio
A brief explanation of the objectives of each investment option may be found
in this Prospectus under the heading "Advantus Series Fund, Inc." and "Nuveen
Tax-Deferred Investment Trust". Additional information concerning the investment
objectives and policies of the Advantus Fund and the Nuveen Trust can be found
in the current prospectuses which accompany this Prospectus. The Advantus Fund
and the Nuveen Trust collectively referred to herein as the Funds may have
portfolios that are not available under the Contract.
CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes. The owner may change the allocation of future purchase payments by giving
us written notice or a telephone call notifying us of the change. Before annuity
payments begin, the owner may transfer all or a part of the accumulation value
from one sub-account to another or among the sub-accounts of the Variable
Account. After annuity payments begin, subject to some restrictions, amounts
held as annuity reserves may be transferred among the variable annuity
sub-accounts. Annuity reserves may also be transferred from a variable annuity
to a fixed annuity during the annuity period. Annuity reserves cannot be
transferred from a fixed annuity to a variable annuity.
5
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WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACT?
There may be a deferred sales charge, an annual contract fee and a transaction
charge. There are also certain charges which are made directly to the Variable
Account.
WHAT IS THE DEFERRED SALES CHARGE?
A deferred sales charge may be assessed upon the withdrawal or surrender of
purchase payments. The deferred sales charge is applied only to withdrawals or
surrenders of purchase payments received by us within seven years of the date of
the withdrawal or surrender. The deferred sales charge decreases during the
seven year period from the time that each purchase payment was made beginning at
6% and decreasing to 0% after the end of seven years. For the purpose of
determining the amount of the deferred sales charge, purchase payments are
deemed withdrawn on a first-in, first-out basis.
ARE THERE CIRCUMSTANCES WHERE THE DEFERRED SALES CHARGE WILL NOT APPLY?
Yes. The deferred sales charge will not apply to: (a) amounts withdrawn in any
calendar year that are less than or equal to the greater of: (1) accumulation
value less purchase payments not previously withdrawn; or (2) 10% of the sum of
purchase payments not previously withdrawn that have been received by us within
seven years of the date of withdrawal; (b) amounts withdrawn to pay the contract
fee; (c) amounts payable as a death benefit upon the death of the owner or the
annuitant, if applicable; (d) amounts are applied to provide annuity payments
under an annuity option; (e) a surrender or withdrawal requested any time after
the first contract anniversary when benefits are payable due to a confinement in
a hospital or medical care facility; or (f) a surrender or withdrawal requested
any time after the first contract anniversary in the event that benefits are
payable because of the diagnosis of a terminal illness. For more information,
including a definition of terms, see the heading "Sales Charges," in this
Prospectus.
WHAT IS THE ANNUAL CONTRACT FEE?
The contract fee is an annual charge deducted from the accumulation value of the
Contract. It is taken only in contract years where the greater of: (a)
accumulation value of the Contract; or (b) purchase payments less withdrawals,
is less than $50,000 on the Contract anniversary. The charge applied will be
equal to the lesser of $30 or 2% of the Accumulation Value at the end of the
Contract Year. The charge applied will be equal to the lesser of $30 or 2% of
the Accumulation Value at the end of the Contract Year. The charge applied will
be deducted on the contract anniversary from the first available sub-account or
Fixed Account Guarantee Period accumulation value in the following order: (1)
Money Market sub-account; (2) pro-rata among the remaining variable sub-
accounts; (3) first in, first out from the largest accumulation value of the
Fixed Account Guarantee Periods.
ARE THERE ANY OTHER CHARGES IN THE CONTRACT?
Yes. We reserve the right to make a transaction charge, not to exceed $10, for
each transfer when the frequency of transfer requests exceeds one in any
calendar month. Currently, we do not apply this charge.
In addition, deductions for any applicable premium taxes may also be made
(currently such taxes range from 0.0% to 3.5%) depending upon applicable law.
WHAT ARE THE VARIABLE ACCOUNT CHARGES?
The charges taken from the Variable Account are the mortality risk charge, the
expense risk charge and the administrative charge.
We deduct from the net asset value of the Variable Account an amount, computed
daily, equal to an annual rate of 1.25% for mortality and expense risk
guarantees. This total represents a charge of .80% for our assumption of
mortality risks and .45% for our assumption of expense risks. We reserve the
right to increase the charge for the assumption of expense risks to not more
than .60%. If this charge is increased to this maximum amount, then the total of
the mortality risk and expense risk charge would be 1.40% at an annual rate.
The administrative charge is to compensate us for the administrative expenses
incurred by us for contracts of this class. This amount, computed daily, is
equal to an annual rate of .15% of the net asset value of the Variable Account
for contract administration. We reserve the right to increase the charge to not
more than an annual rate of .40%.
For more information on charges, see the heading "Contract Charges," in this
Prospectus.
CAN YOU MAKE WITHDRAWALS FROM THE CONTRACT?
Yes. The owner may make withdrawals of the accumulation value of the Contract
before
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annuity payments begin. Withdrawals must be pursuant to the written request of
the owner or telephone instructions. A withdrawal must be in an amount of at
least $250.
Withdrawals are generally subject to the deferred sales charge. However, there
are some exceptions. They are defined in this summary and under the heading
"Sales Charges," in this Prospectus. In addition, an income and penalty tax may
be incurred upon withdrawals from the Contract in certain circumstances. For
more information, see the heading "Federal Tax Status" in this Prospectus.
Systematic withdrawal plans of a fixed amount, a fixed period, or to satisfy the
minimum distribution requirements of the Code may also be available. For
additional information on withdrawals and surrenders, please see the heading
"Redemptions" in this Prospectus.
DO YOU HAVE A RIGHT TO CANCEL THE CONTRACT?
Yes. The owner may cancel the Contract at any time within ten days of receipt of
the Contract by returning it to us. In some states, such as California, the free
look period is extended to 30 days' time. These rights are subject to change and
may vary among the states.
IS THERE A GUARANTEED DEATH BENEFIT?
If the owner dies before annuity payments have started, we will pay the death
benefit of the Contract to the beneficiary. If the owner of this Contract is
other than a natural person, such as a trust or other similar entity, we will
pay the death benefit to the beneficiary on the death of the annuitant, if death
occurs prior to the date that annuity payments have started.
If the owner or the annuitant, if applicable, dies prior to his or her 75th
birthday, the death benefit is the greater of: (a) accumulation value plus any
positive market value adjustment applicable to the fixed account; (b) the sum of
purchase payments adjusted for any amounts previously withdrawn; or (c) the last
"stepped-up value" prior to the date of death, adjusted for any purchase
payments and withdrawals occurring thereafter. The method of determination of
the "stepped-up value" is described below.
If the owner or the annuitant, if applicable, dies on or after his or her 75th
birthday, the death benefit is the greater of: (a) accumulation value plus any
positive market value adjustment applicable to the fixed account; or (b) the
last stepped-up value prior to the date of death, adjusted for any withdrawals
occurring thereafter.
The "stepped-up value" will be determined on each contract anniversary that is
an exact multiple of five and is prior to the 75th birthday of the owner or the
annuitant, if applicable. The stepped-up value is the greater of: (a)
accumulation value on that contract anniversary; or (b) the previous stepped-up
value. Where joint owners exist, there will be no further stepped-up values
after the 75th birthday of the oldest joint owner. After the death of the first
joint owner, stepped-up values may resume on the next contract anniversary that
is an exact multiple of five providing the surviving joint owner continues the
Contract and has not yet reached his or her 75th birthday. For examples of the
calculation of the guaranteed death benefit, see the heading "Death Benefits,"
in this Prospectus.
The value of the death benefit will be determined as of the valuation date
coincident with or next following the day we receive due proof of death and all
related information necessary to make payment at our home office.
If the annuitant dies after annuity payments have started, we will pay
whatever amount may be required by the terms of the annuity payment option
selected. The remaining value in the Contract must be distributed at least as
rapidly as under the option in effect at the annuitant's death.
WHAT ANNUITY OPTIONS ARE AVAILABLE?
The Contract specifies several annuity options. Each annuity option may be
elected as either a variable annuity or fixed annuity or a combination of the
two. The specified annuity options are: a life annuity; a life annuity with a
period certain of either 120 months, 180 months or 240 months; and, a joint and
last survivor annuity. Other annuity options may be available as may be agreed
between the owner and us.
WHAT VOTING RIGHTS DO YOU HAVE?
Contract owners and variable annuitants will be able to direct us as to how to
vote shares of the underlying Portfolios of the Fund held for their Contracts.
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EXPENSE TABLE
The tables shown below 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 the applicable law. Surrender amounts in years shown
reflect the contract owner's ability to withdraw, without the imposition of the
deferred sales charge, an amount in any calendar year which is less than or
equal to the greater of: (a) accumulation value less purchase payments; or (b)
10% of the sum of purchase payments not previously withdrawn that have been
received by us within seven years of the date of withdrawal. The tables show the
expenses of the Funds after expense reimbursement and reflects expenses to the
separate account as well as the portfolio company.
The following Contract expense information is intended to illustrate the
expenses of the variable annuity contracts. 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.
CONTRACT OWNER EXPENSE EXAMPLE
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
<TABLE>
<S> <C>
Deferred Sales Charge (as a percentage of amount
surrendered)..................................... 6%
decreasing by
increments applied
to each purchase
payment over a
period of seven
years from the date
of each purchase
payment
Contract Fee: lesser of $30 or 2% of accumulation
value............................................ $30
(applied only to a
Contract where the
greater of the
accumulation value
or purchase
payments, less
withdrawals, is
less than $50,000)*
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Administrative Charge.............................. .15%
Mortality and Expense Risk Fees.................... 1.25%
------
Total Separate Account Annual Expenses......... 1.40%
------
------
</TABLE>
* Minnesota Mutual reserves the right, not currently imposed, to make a
transaction charge, not to exceed $10, on transfer requests exceeding one per
month.
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ADVANTUS FUND AND NUVEEN TRUST ANNUAL EXPENSES
(As a percentage of average net assets for the described fund.)
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT OTHER FUND OPERATING TOTAL FUND ANNUAL
FEES EXPENSES EXPENSES
(AFTER EXPENSE (AFTER EXPENSE (AFTER EXPENSE
REIMBURSEMENTS) REIMBURSEMENTS) REIMBURSEMENTS)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Advantus Series Fund, Inc.:
Money Market Portfolio.................... % % %
Mortgage Securities Portfolio............. % % %
Index 500 Portfolio....................... % % %
Small Company Portfolio................... % % %
Value Stock Portfolio (1)................. % % %
Small Company Value Portfolio (2)......... % % %
Global Bond Portfolio (2)................. % % %
Real Estate Securities Portfolio.......... % % %
Nuveen Tax-Deferred Investment Trust:
Strategic Income Portfolio................ % % %
Balanced Portfolio........................ % % %
Growth and Income Portfolio............... % % %
Blue Chip Growth Portfolio................ % % %
European Value Portfolio.................. % % %
International Equity Portfolio............ % % %
</TABLE>
(1) Minnesota Mutual voluntarily absorbed certain other fund operating expenses
of the Value Stock Portfolio for the year ended December 31, 1997. If this
portfolio had been charged for these expenses, the ratio of total annual
fund expenses to average daily net assets would have been .00%. It is
Minnesota Mutual's present intention to waive other fund operating expenses
during the current fiscal year which exceed, as a percentage of average
daily net assets, .00%. Minnesota Mutual also reserves the option to reduce
the level of other fund operating expenses which it will voluntarily absorb.
(2) Because the portfolio has only recently commenced operations, the figure for
other fund operating expenses has been based on estimates for the current
fiscal year. Minnesota Mutual has voluntarily agreed to absorb certain other
fund operating expense for the Small Company Value and Global Bond
Portfolios for the year ending December 31, 1997. If the Small Company Value
and Global Bond Portfolios were to be charged for these expenses, it is
estimated that the ratio of total fund annual expenses to average daily net
assets would be .00% and .00%, respectively.
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CONTRACT OWNER EXPENSE EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
IF YOU
ANNUITIZE FOR A
IF YOU LIFETIME INCOME
SURRENDERED AT THE END OF
YOUR CONTRACT THE APPLICABLE
AT THE END OF TIME PERIOD OR YOU
THE APPLICABLE DO NOT SURRENDER
TIME PERIOD YOUR CONTRACT*
---------------- ------------------
1 YEAR 3 YEARS 1 YEAR 3 YEARS
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<S> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Money Market Portfolio................... $ $ $ $
Mortgage Securities Portfolio............ $ $ $ $
Index 500 Portfolio...................... $ $ $ $
Small Company Portfolio.................. $ $ $ $
Value Stock Portfolio.................... $ $ $ $
Small Company Value Portfolio............ $ $ $ $
Global Bond Portfolio.................... $ $ $ $
Real Estate Securities Portfolio......... $ $ $ $
Nuveen Tax-Deferred Investment Trust:
Strategic Income Portfolio............... $ $ $ $
Balanced Portfolio....................... $ $ $ $
Growth and Income Portfolio.............. $ $ $ $
Blue Chip Growth Portfolio............... $ $ $ $
European Value Portfolio................. $ $ $ $
International Equity Portfolio........... $ $ $ $
</TABLE>
*If you annuitize for a fixed period of less than ten years, the expenses you
would pay would be the same as if you surrendered your contract.
The examples contained in the table should not be considered a representation
of past or future expenses. Actual expenses may be greater or less than those
shown.
- ------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
No condensed financial information is included in this Prospectus for the
Variable Account because no variable annuity contracts of this class utilizing
that account have been sold prior to the date of this Prospectus.
- ------------------------------------------------------------------------
PERFORMANCE DATA
From time to time the Variable Account
may publish advertisements containing performance data relating to its
sub-accounts. In the case of the Advantus Fund Money Market sub-account, the
Variable Account will publish yield or effective yield quotations for a seven-
day or other specified period. In the case of the other sub-accounts,
performance data will consist of average annual total return quotations for one,
five and ten year periods or, if less, for the period since the sub-account
first became available pursuant to this or other variable annuity contracts
offered by us. The Money Market sub-account may also quote such average annual
total return figures. Performance figures used by the Variable Account are based
on historical information of the sub-accounts for specified periods, and the
figures are not intended to suggest that such performance will continue in the
future. Performance figures of the Variable Account will reflect only charges
pursuant to the terms of the Contract offered by this Prospectus. The various
performance figures used in Variable Account advertisements relating to the
Contract described in this Prospectus are summarized below. More detailed
information on the computations is set forth in the Statement of Additional
Information.
MONEY MARKET SUB-ACCOUNT YIELD. Yield quotations for the Advantus Fund Money
Market sub-account are based on the income generated by an investment in the
sub-account over a specified period, usually seven days. The figures are
"annualized," that is, the amount of
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income generated by the investment during the period is assumed to be generated
over a 52-week period and is shown as a percentage of the investment. Effective
yield quotations are calculated similarly, but when annualized the income earned
by an investment in the sub-account is assumed to be reinvested. Effective yield
quotations will be slightly higher than yield quotations because of the
compounding effect of this assumed reinvestment. Yield and effective yield
figures quoted by the sub-account will not reflect the deduction of any
applicable deferred sales charges.
TOTAL RETURN FIGURES. Average annual total return figures will show for the
specified period the average annual rate of return required for an initial
investment of $1,000 to equal the surrender value of that investment at the end
of the period. The surrender value will reflect the deduction of the deferred
sales charge applicable to the Contract and to the length of the period
advertised. Such average annual total return figures may also be accompanied by
average annual total return figures, for the same or other periods, which do not
reflect the deduction of any applicable deferred sales charges.
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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) 665-3500, after September 1, 1998, (651) 665-3500.
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, Puerto Rico and Guam.
B. VARIABLE 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 under the Investment Company Act of 1940, but such registration does
not signify that the Securities and Exchange Commission supervises the
management, or the investment practices or policies, of the Variable Account.
The separate account meets the definition of a "separate account" under the
federal securities laws.
The Minnesota law under which the Variable Account was established provides
that the assets of the Variable 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 Variable 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
Contract are general corporate obligations of Minnesota Mutual.
The Variable Account currently has a number of sub-accounts to which contract
owners may allocate purchase payments. Each sub-account invests in shares of the
Funds. Additional sub-accounts may be added at our discretion. Not all of the
sub-accounts of the Variable Account are available to the Contract.
C. ADVANTUS SERIES FUND, INC.
The Variable Account currently invests in Advantus Series Fund, Inc. (the
"Advantus Fund"), a mutual fund of the series type which is advised by Advantus
Capital Management, Inc. The Advantus Fund is registered with the Securities and
Exchange Commission as a diversified, open-end management investment company,
(with the exception of the Global Bond Portfolio), but such registration does
not signify that the Commission supervises the management, or the investment
practices or policies, of the Advantus Fund. The Advantus Fund issues its
shares, continually and without sales charge, only to us and our separate
accounts. The Advantus Fund may also be used as the underlying investment medium
for separate accounts of the Northstar Life Insurance Company, a wholly-owned
life insurance subsidiary of ours which is domiciled in the State of New York.
Shares are sold and redeemed at net asset value. Not all of the Portfolios of
the Advantus Fund are available for use in the Contract.
Advantus Capital Management, Inc. ("Advantus Capital"), a subsidiary of
Minnesota
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Mutual, acts as investment adviser for the Advantus Fund and its Portfolios.
The investment objectives and certain policies of the Portfolios of the
Advantus Fund which are available in the Contract are as follows:
The Money Market Portfolio seeks maximum current income to the extent
consistent with liquidity and the stability of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuation in short-term interest rates.
The Mortgage Securities Portfolio seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective the
Mortgage Securities Portfolio will follow a policy of investment primarily
in mortgage-related securities. Prices of mortgage-related securities will
tend to rise and fall inversely with the rise and fall of the general level
of interest rates.
The Index 500 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.
The Small Company Portfolio seeks long-term accumulation of capital. In
pursuit of this objective, the Small Company Portfolio will follow a policy
of investing primarily in common or preferred stocks issued by small
companies, defined in terms of either market capitalization or gross
revenues. Investments in small companies usually involve greater investment
risks than fixed income securities or corporate equity securities generally.
Small companies will typically have a market capitalization of less than
$1.5 billion or annual gross revenues of less than $1.5 billion.
The Value Stock Portfolio seeks the long-term accumulation of capital. In
pursuit of this objective, the Value Stock Portfolio will follow a policy of
investing primarily in the equity securities of companies which, in the
opinion of the adviser, have market values which appear low relative to
their underlying value or future earnings and growth potential. As it is
anticipated that the Portfolio will consist in large part of dividend-paying
common stocks, the production of income will be a secondary objective of the
Portfolio.
The Small Company Value Portfolio seeks the long-term accumulation of
capital. In pursuit of this objective, the Portfolio will follow a policy of
investing primarily in the equity securities of small companies, defined in
terms of their market capitalization or gross revenues, which appear to have
market values which are low relative to their underlying value or future
earning and growth potential.
The Global Bond Portfolio seeks to maximize total return, consistent with
preservation of capital and prudent investment management. In pursuit of
this objective, the Portfolio will attempt to achieve its investment
objective by investing primarily in debt securities issued by issuers
located anywhere in the world.
The Real Estate Securities Portfolio seeks above-average income and
long-term growth of capital. The Portfolio intends to pursue its objective
by investing primarily in equity securities of companies in the real estate
industry. The Portfolio seeks to provide a yield in excess of the yield of
the Standard & Poor's Corporation 500 Composite Stock Price Index.
A prospectus for the Advantus Fund is attached to this Prospectus. A person
should carefully read the Advantus Fund's prospectus before investing in the
Contract.
D. NUVEEN TAX-DEFERRED INVESTMENT TRUST
In addition to the investments in the Advantus Fund, the Variable Account
invests in the Nuveen Tax-Deferred Investment Trust ("Nuveen Trust"), a mutual
fund of the series type. The Nuveen Trust is registered with the Securities and
Exchange Commission as a diversified open-end management investment company, but
such registration does not signify
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that the Commission supervises the management, or the investment practices or
policies of the Nuveen Trust. The Nuveen Trust issues its shares, continually
without sales charge, only to insurance company separate accounts. Shares are
sold and redeemed at net asset value.
The Nuveen Institutional Advisory Corporation ("NIAC") has overall
responsibility for management of the Trust. NIAC oversees the management of the
Portfolios of the Nuveen Trust, manages its business affairs and provides
day-to-day administrative services. NIAC is a wholly owned subsidiary of John
Nuveen & Co., Incorporated ("Nuveen"), which is the sponsor and principal
underwriter of the Nuveen Trust. NIAC manages the Portfolio investments of the
Strategic Income Portfolio. Institutional Capital Corporation manages the
Portfolio investments of the Balanced Portfolio, the Growth and Income Portfolio
and the European Value Portfolio through a sub-advisory agreement with NIAC.
Rittenhouse Financial Services, Inc., a subsidiary of a Nuveen affiliate,
manages the Portfolio investments of the Blue Chip Growth Portfolio through a
sub-advisory agreement with NIAC. To Be Decided manages the Portfolio
investments of the International Equity Portfolio through a sub-advisory
agreement with NIAC.
The Investment objectives and certain policies of the Portfolios of the Nuveen
Trust which are available under the Contract are as follows:
The Strategic Income Portfolio seeks to provide current income and long-term
growth of income and capital by investing in a diversified portfolio
consisting primarily of income producing securities, including equity and
fixed-income securities.
The Balanced Portfolio seeks to provide over time an attractive total return
by investing in a diversified portfolio of equity securities, taxable
fixed-income securities, and cash equivalents by emphasizing capital
appreciation in favorable markets and capital preservation in adverse
markets.
The Growth and Income Portfolio seeks to provide over time a superior total
return with moderated risk by investing in a diversified portfolio
consisting primarily of equity securities of domestic companies with market
capitalizations of at least $500 million. Under normal market conditions, in
seeking to reduce volatility and preserve capital, the Portfolio may also
invest up to 35% of its net assets in short-term fixed-income securities.
The Blue Chip Growth Portfolio seeks to provide long-term growth of capital
by investment in a diversified portfolio consisting primarily of equity
securities traded in U.S. securities markets of large capitalization
companies that have a history of consistent earnings and dividend growth.
The European Value Portfolio seeks to provide a superior total return, with
moderated risk, by investing in a diversified portfolio consisting primarily
of equity securities of established, well-known European companies with
market capitalizations of at least $1 billion. Under normal market
conditions, in seeking to reduce volatility and preserve capital, the
Portfolio may invest up to 35% of its net assets in short-term fixed-income
securities.
The International Equity Portfolio seeks to provide a high level of total
return by investing in a diversified portfolio consisting primarily of
foreign equity securities.
A prospectus for the Nuveen Trust in attached to this Prospectus. A person
should carefully read the Nuveen Trust prospectus before investing in the
Contract.
E. 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 Variable 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 accumulation values,
future purchase payments and future annuity payments.
While we have the right to make certain changes to the Variable Account,
assets in any separate account may not be transferred by sale, exchange,
substitution or otherwise from one account to another except, where required,
with the approval of the Commissioner of Insurance of the state where the
Contract is delivered.
We may also establish additional sub-accounts in the Variable Account and we
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<PAGE>
reserve the right to add, combine or remove any sub-accounts of the Variable
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 Variable 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 Variable
Account under the Investment Company Act of 1940, to restrict or eliminate any
voting rights of the contract owners, and to combine the Variable Account with
one or more of our other separate accounts.
Shares of the Portfolios of the Advantus Fund are also sold to other of our
separate accounts, which are used to receive and invest premiums paid under our
variable life policies, a practice known as mixed funding. 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
Advantus Fund simultaneously. Although neither Minnesota Mutual nor the Advantus
Fund currently foresees any such disadvantages either to variable life insurance
policy owners or to variable annuity contract owners, the Advantus 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 Advantus 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
Advantus Fund, or (4) differences in voting instructions between those given by
policy owners and those given by contract owners.
The Board of Trustees of the Nuveen Trust will also monitor events to identify
any material conflicts which may arise between owners of variable annuity
contracts and variable life insurance policies. In addition to the
considerations arising from mixed funding described above, the Nuveen Trust must
consider any special risks attributable to its Nuveen Trust offering of shares
to separate accounts of a number of unaffiliated life insurance companies. In
that situation, material conflict could also arise from a decision by a life
insurance company holding shares of the Nuveen Trust making a determination to
disregard voting instructions from its variable policy and contract owners,
particularly if that decision represented a minority position or precluded a
majority vote.
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CONTRACT CHARGES
A. SALES CHARGES
No sales charge is deducted from the purchase payments for the Contract.
However, a deferred sales charge may be assessed upon the withdrawal or
surrender of purchase payments. The deferred sales charge is applied only to
withdrawals or surrenders of purchase payments received by us within seven years
of the date of the withdrawal or surrender. The deferred sales charge decreases
during the seven year period from the time that each purchase payment was made
beginning at 6% and decreasing to 0% after the end of seven years. For the
purpose of determining the amount of the deferred sales charge, purchase
payments are deemed withdrawn on a first-in, first-out basis.
The deferred sales charge will not apply to: (a) amounts withdrawn in any
calendar year that are less than or equal to the greater of: (1) accumulation
value less purchase payments not previously withdrawn; or (2) 10% of the sum of
purchase payments not previously withdrawn that have been received by us within
seven years of the date of withdrawal; (b) amounts withdrawn to pay the contract
fee; (c) amounts payable as a death benefit upon the death of the owner or the
annuitant, if applicable; (d) amounts are applied to provide annuity payments
under an annuity option; (e) a surrender or withdrawal requested any time after
the first contract anniversary when benefits are payable due to a confinement in
a hospital or medical care facility; or (f) a surrender or withdrawal requested
any time after the first contract anniversary in the event that benefits are
payable because of the diagnosis of a terminal illness.
The deferred sales charge is deducted from the remaining accumulation value in
the Contract except in the case of a surrender, where it reduces the amount
distributed.
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The amount of the deferred sales charge, expressed as a percentage of the
amount taken out of the Contract and subject to the deferred sales charge, is
shown in the following table. Percentages are shown for the number of years
since the purchase payment was received by us from 0 to the end of seven years.
In no event will the sum of the deferred sales charges exceed 6% of the purchase
payments made under a Contract.
<TABLE>
<CAPTION>
CONTRACT YEARS
SINCE PAYMENT CHARGE
--------------------- ---------
<S> <C>
0-1 6%
1-2 6%
2-3 5%
3-4 5%
4-5 4%
5-6 3%
6-7 2%
7 and thereafter 0%
</TABLE>
The amount of the deferred sales charge is determined by: (a) calculating the
number of years each purchase payment being withdrawn has been in the Contract;
(b) multiplying each purchase payment withdrawn, after the deduction of any free
withdrawal amount, by the appropriate sales charge percentage in the table; and
(c) adding the deferred sales charge from all purchase payments as calculated in
(b).
A surrender or withdrawal requested any time after the first contract
anniversary due to the owner's confinement in a hospital or medical care
facility for at least 90 consecutive days will not be subject to a deferred
sales charge. The request must be made while the owner is still confined or
within 60 days after the discharge from a hospital or medical care facility
after a confinement of at least 90 consecutive days. A medical care facility for
this purpose means a facility operated pursuant to law or any state licensed
facility providing medically necessary in-patient care which is: (a) prescribed
by a licensed Physician in writing; and (b) based on physical limitations which
prohibit daily living in a non-institutional setting.
A surrender or withdrawal requested any time after the first contract
anniversary in the event the owner is diagnosed with a terminal illness will
also not be subject to a deferred sales charge. A terminal illness for this
purpose is a condition which: (a) is diagnosed by a licensed Physician; and (b)
is expected to result in death within 12 months for 80% of diagnosed cases.
For purposes of these provisions, we must receive due proof, satisfactory to
us, of the owner's confinement or terminal illness in writing. Physician for
this purpose means: (a) a licensed medical doctor (MD) or a licensed doctor of
osteopathy (DO) practicing within the scope of his or her license; and (b) not
the owner, the annuitant or a member of either the owner's nor the annuitant's
immediate families. If the owner of this Contract is other than a natural
person, such as a trust or other similar entity, benefits payable due to nursing
home confinement or terminal illness will be based upon the annuitant. If the
owner, or annuitant in the case of a Contract owned by a non-natural person, is
changed subject to the provisions of this Contract, a one year waiting period
will apply before the new owner or annuitant is eligible for these benefits.
The deferred sales charge is designed to compensate us for distribution
expenses incurred with respect to the Contract. To the extent that sales
expenses are not recovered from the sales load, we will recover them from our
other assets or surplus including profits from mortality and expense risk
charges. As a percentage of purchase payments paid to the Contract, John Nuveen
& Co., Incorporated ("Nuveen"), the principal underwriter, may pay up to 7.0% of
the amount of those purchase payments to broker-dealers responsible for the
sales of the Contract.
B. MORTALITY AND EXPENSE RISK CHARGES
We assume the mortality risk under the Contract by our obligation to continue to
make monthly annuity payments, determined in accordance with the annuity rate
tables and other provisions contained in the Contract, 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
monthly annuity payments received under the Contract.
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<PAGE>
We assume an expense risk by assuming the risk that deductions provided for in
the Contract for the sales and administrative expenses will be adequate to cover
the expenses incurred.
For assuming these risks, we currently make a deduction from the Variable
Account at the annual rate of .80% for the mortality risk and .45% for the
expense risk. We reserve the right to increase the charge for the assumption of
expense risks to not more than .60%. If this charge is increased to this maximum
amount, then the total of the mortality risk and expense risk charge would be
1.40% on an annual basis.
For a discussion of how these charges are applied in the calculation of the
accumulation unit value, please see the discussion entitled "Purchase Payments,
Transfers and Value of the Contract" in this Prospectus.
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 Variable 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 to us. Some or all of such
profit may be used to cover any distribution costs not recovered through the
deferred sales charge.
C. ADMINISTRATIVE 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 Contracts, the receipt of purchase payments, forwarding
amounts to the Funds for investment, 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 Variable Account at the annual rate of .15% of the net asset value of
the Variable Account. We reserve the right to increase this administrative
charge to an annual rate of not more than .40%.
The administrative charge is designed to cover the administrative expenses
incurred by us under the Contract. As a deduction from the Variable Account, the
charge is then taken during both the accumulation period and the annuity period
of a Contract. Since the administrative charge is taken from a Contract on each
valuation date, there is no return of any part of the charge in the event that
the Contract is redeemed. As the charge is made as a percentage of assets in the
Variable Account, there is no necessary relationship between the amount of
administrative charge imposed on a given contract and the amount of expenses
that may be attributable to that contract.
D. CONTRACT FEE
For maintaining the records and documents associated with each particular
Contract, we charge a contract fee. This fee is in an amount which is the lesser
of $30 or 2% of accumulation value at the end of the contract year. The contract
fee is applied only when the greater of: (a) accumulation value; or (b) purchase
payments less withdrawals in any particular Contract is less than $50,000 on the
contract anniversary. We do not expect to recover from the charge any amount in
excess of our accumulated expenses associated with the administration of the
contract. The fee is deducted on the contract anniversary from the first
available sub-account or Fixed Account Guarantee Period accumulation value in
the following order: (1) Money Market sub-account; (2) pro-rata among the
remaining variable sub-accounts; (3) first in, first out from the largest
accumulation value of the Fixed Account Guarantee Periods.
E. PREMIUM TAXES
Deduction for any applicable state premium taxes may be made from each purchase
payment or at the commencement of annuity payments. (Currently, such taxes range
from 0.0% to 3.5%, depending on the applicable law.) Any amount withdrawn from
the Contract may be reduced by any premium taxes not previously deducted from
purchase payments.
F. TRANSACTION CHARGES
We reserve the right under the Contract to impose a transaction charge, not to
exceed $10, for each transfer when the frequency of transfer requests exceeds
one every calendar month. Currently, we do not impose such a charge. If we apply
such a charge in the future, this charge will reduce the amount of your
transfer.
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VOTING RIGHTS
The Advantus Fund shares held in the Variable Account will be voted by us at the
regular and special meetings of the Advantus Fund. Shares attributable to
Contracts will be voted by us in accordance with instructions received from
contract owners with voting interests in each sub-account of the Variable
Account. In the event no instructions are received from a contract owner with
respect to shares of a Portfolio of the Advantus Fund held by a sub-account, we
will vote such shares of the Portfolio and shares not attributable to Contracts
in the same proportion as shares of the Portfolio held by such sub-account for
which instructions have been received. The number of votes which are available
to a contract owner will be calculated separately for each sub-account of the
Variable Account. If, however, the Investment Company Act of 1940 or any
regulation under that Act should change so that we may be allowed to vote shares
in our own right, then we may elect to do so.
During the accumulation period of each Contract, the contract owner holds the
voting interest in each Contract. The number of votes will be determined by
dividing the accumulation value of the Contract attributable to each sub-account
by the net asset value per share of the underlying Advantus Fund shares held by
that sub-account.
During the annuity period of each Contract, the annuitant holds the voting
interest in each Contract. The number of votes will be determined by dividing
the reserve for each Contract allocated to each sub-account by the net asset
value per share of the underlying Advantus Fund shares held by that sub-account.
After an annuity begins, the votes attributable to any particular Contract will
decrease as the reserves decrease. In determining any voting interest,
fractional shares will be recognized.
We shall notify each contract owner or variable annuitant of a Advantus Fund
shareholders' meeting if the shares held for the contract owner's Contract may
be voted at such meeting. We will also send proxy materials and a form of
instruction so that the owner can instruct us with respect to voting.
The Nuveen Tax-Deferred Investment Trust also serves as a mixed and shared
funding vehicle for variable annuity and variable life insurance contracts
offered by various insurance companies. The procedures described above will be
available to shares attributable to the Contract and voted by Minnesota Mutual
in accordance with instructions received from contract interests in each
sub-account of the Variable Account holding interests in the Nuveen Trust.
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DESCRIPTION OF THE CONTRACT
A. GENERAL PROVISIONS
1. FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
This type of individual Contract may be used in connection with all types of
qualified plans, tax-sheltered annuities or individual retirement annuities
adopted by or on behalf of individuals. It may also be purchased by individuals
not as a part of any plan. The Contract provides for variable or fixed annuity
payments to begin at some future date with the purchase payments for the
Contract to be paid prior to the maturity date in a series of payments flexible
in respect to the date and amount of payment.
2. ISSUANCE OF CONTRACT
The Contract is issued to the contract owner named in the application. The owner
of the Contract may be the annuitant or someone else.
3. MODIFICATION OF THE CONTRACT
A Contract may be modified at any time by written agreement between the owner
and us. No representative, agent or other person has the authority to change or
waive any provision of this Contract. However, no such modification will
adversely affect the rights of an owner under the Contract unless the
modification is made to comply with a law or government regulation. The owner
will have the right to accept or reject the modification. This right of
acceptance or rejection may be limited for Contracts used as individual
retirement annuities.
4. 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,) neither the owner's nor the annuitant's
interest may be assigned, sold, transferred, discounted or pledged as collateral
for a loan or as security for the performance of an obligation or for any other
purpose, except under such conditions as may be allowed under applicable law.
If the Contract is not issued in connection with a tax-qualified program, the
interest of any person in the Contract may be assigned during the lifetime of
the annuitant. We will not be
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<PAGE>
bound by any assignment until we have recorded written notice 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 made by us before it was recorded. Any
proceeds which become payable to an assignee will be payable in a single sum.
Any claim made by an assignee will be subject to proof of the assignee's
interest and the extent of the assignment. To the extent permitted by law, no
benefit provided by this Contract will be subject to any creditor's claim or
process of law.
5. LIMITATIONS ON PURCHASE PAYMENTS
You may choose when to make purchase payments under the Contract. There is no
minimum amount which must be allocated to any sub-account of the Variable
Account or to the Fixed Account.
Total purchase payments under the Contract may not exceed $1,000,000, except
with our consent. The amount of any initial purchase payment must be at least
$2,000 and any subsequent purchase payments must be in the amount of at least
$500. These minimums may be waived by us under certain automatic or group
payment plans which may be established and agreed to by us in advance. Purchase
Payment amounts in such plans will generally be required to be in an amount of
at least $50. There may be limits on the maximum contributions to retirement
plans that qualify for special tax treatment.
You may stop making purchase payments at any time. If the owner stops making
purchase payments, the Contract remains in force as a paid-up annuity according
to its terms. Its value may be applied to provide annuity payments at a later
date.
We may, at our discretion, cancel a Contract if no purchase payments are made
for a period of two or more full contract years and both (a) the total purchase
payments made, less any withdrawals and associated charges, and (b) the
accumulation value of the Contract, are less than $2,000. If such a cancellation
takes place, we will pay the accumulation value to the owner.
We will notify the owner of our intention to exercise these rights in the
annual report. We will act 90 days after the contract anniversary unless an
additional purchase payment is received before the end of that 90 day period.
6. DEFERMENT OF PAYMENT
Usually, we will make payment within seven days after payment is called for by
the terms of the Contract. However, in the case of payment from the Fixed
Account or the General Account, we reserve the right to defer payment of
withdrawal or surrender benefits for up to six months. In the case of payments
from the Variable 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 the Securities and Exchange Commission has
determined that a state of emergency exists which may make such determination
and payment impractical.
7. CONTRACT LOANS
A Contract which satisfies the requirements of Code Section 403 as a
tax-sheltered annuity (a "TSA Contract") and under a plan which provides for
loans and which is not subject to Title I of ERISA may take a loan from us, to
the extent that such loans are permitted by applicable state law, the contract
forms have been approved by the appropriate state insurance authorities and as
administratively feasible. The Contract will be the only security for the loan.
The maximum loan available is the lesser of (a) or (b), where (a) is $50,000
and (b) is the greater of: (i) one-half of the Surrender Value; or (ii) the
Surrender Value up to the amount of $10,000, less the amount of interest that
would be charged during the first quarter that the loan would be outstanding and
less any applicable deferred sales charge. Such a loan taken from, or secured
by, a TSA Contract may have income tax consequences. See the heading "Federal
Tax Status," in this Prospectus. The maximum loan amount is determined as of the
date we receive a request for a loan. The minimum loan amount is $1,000.
Upon receiving a written request for a loan, we will send a loan application
and agreement. We will charge interest in arrears. Restrictions other than the
maximum loan amount which apply to loans are: (a) only one loan may be
outstanding at any time; (b) a period of at least three months is required
between the repayment of a loan and the application for a new loan; (c) if there
is an outstanding loan on the Contract, then any withdrawals will be limited to
surrender value, less the outstanding loan principal, less any interest due; (d)
a loan is not available if annuity payments have begun; and (e) the TSA loan
account portion of a Contract may not be transferred to the Variable Account
when a loan is outstanding, provided, however, that a single transfer from the
TSA
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loan account will be allowed each calendar year in an amount no more than the
TSA loan account value less the outstanding loan principal, less the outstanding
interest, and less any applicable deferred sales charge.
The loan amount requested, plus the first quarter's interest, plus any
applicable deferred sales charge, will be transferred from the portion of the
accumulation value allocated to the Variable Account or the Fixed Account
Guarantee Period of more than one year to the Fixed Account Guarantee Period of
a one-year duration. Amounts available for a TSA Loan may only come from the
Fixed Account Guarantee Period option for a one-year duration. Unless we are
directed otherwise, amounts will be transferred from sub-accounts of the
Variable Account and the Fixed Account Guarantee Option for other than a
one-year period in the same proportion that the allocations to each sub-account
bears to his or her total allocations to the Variable Account and the guarantee
options prior to the loan.
LOAN INTEREST AND TSA LOAN ACCOUNT INTEREST
The interest rate charged on a loan is variable and will be set on the first day
of each calendar quarter. It will apply to the outstanding loan principal in
that calendar quarter. The loan interest rate will not exceed the greater of the
"published monthly average" for the calendar month ending two months before the
beginning of the calendar quarter or the "interest rate in effect on the
Contract" plus 1%. The "published monthly average" means the MOODY'S COMPOSITE
AVERAGE OF YIELDS ON BONDS as published by the MOODY'S INVESTORS SERVICE. The
"interest rate in effect on the Contract" is the interest rate credited on the
Fixed Account Guarantee Period of a one-year duration, including amounts held in
the TSA loan account.
The interest rate credited to allocations of accumulation value to the one
year Fixed Account Guarantee Period will also be credited to the TSA loan
account, which will have the effect of reducing the effective interest rate to
be paid on the loan to the difference between the interest rate paid on the loan
and that credited on the TSA loan account. A loan will have a permanent effect
on the Contract's accumulation value. The effect could be either positive or
negative, depending upon whether the investment results of the sub-accounts and
Fixed Account Guarantee Period options of other durations are greater or lesser
than the interest rate credited on the TSA loan account.
LOAN REPAYMENT
Repayment must be made in substantially equal quarterly payments over a period
of five years or less. Early repayment may be made without penalty at any time.
When the loan is repaid, then the TSA loan account terminates, and the amounts
remain in the Fixed Account Guarantee Period of a one year duration. A
reallocation of these amounts among the Fixed Account and the sub-accounts of
the Variable Account may be made by exercising the Contract's transfer rights.
If there is a surrender while a loan is outstanding, then the loan is due at
that time. If the loan is not repaid at that time, the payment on surrender will
be the surrender value, less the outstanding loan principal, less any interest
due. In addition, depending upon the circumstances, such a surrender may result
in income taxation, tax penalties and disqualification of the participant's
interest in the Contract as a tax-sheltered annuity.
Failure to meet the requirements of the loan agreement will result in its
termination. Loan amounts will then be treated as distributions under the
Contract. Treatment of a loan as a distribution will result in taxable income
under applicable tax rules. In addition, depending upon the circumstances, it
may result in income taxation, tax penalties, and disqualification of the
Contract as a tax-sheltered annuity. If there is a distribution, the
accumulation value will be reduced by the amount of the outstanding loan
principal, reduced by any interest due, and reduced by any applicable deferred
sales charge on that amount.
B. ANNUITY PAYMENTS AND ANNUITY PAYMENT OPTIONS
1. ANNUITY PAYMENTS
Both fixed and variable annuity payments are available under the Contract. If
the owner fails to elect an annuity payment option or an annuity form, then a
variable annuity will be provided using the Money Market sub-account and the
annuity option shall be Option 2A, a life annuity with a period certain of 120
months. We restrict the maximum amount which may be applied to provide a fixed
annuity payment under the Contract. Without our prior consent, the maximum
amount which may be applied under the Contract for a fixed annuity payment is
$1,000,000. The minimum first monthly annuity payment on either a variable or
fixed dollar
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basis is $20. If such first monthly payment would be less than $20, or if a
smaller minimum amount would be required by law, we may fulfill our obligation
by paying in a single sum the surrender value of the Contract. This payment
would be in lieu of all other rights under the Contract.
Variable annuity payments are determined on the basis of (a) the mortality
table specified in the Contract, which is based upon the age of the annuitant
and any joint annuitant, if applicable, (b) the type of annuity payment option
selected, and (c) the investment performance of the Funds selected by the
contract owner. 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 each month, or such other period as
may be agreed upon between the owner and us. The value of such units, and thus
the amounts of the annuity payments will, however, reflect investment gains and
losses and investment income of the Funds, and thus the annuity payments will
vary with the investment experience of the assets of the Funds selected by the
contract owner.
2. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
The Contract provides for three annuity payment options, any one of which may be
elected if permitted by law. Other annuity payment options may be available from
us on request. Each annuity payment option may be elected in the form of either
a variable annuity or a fixed annuity payment basis, or a combination of the
two.
Annuity payments begin on the annuity commencement date. The annuity
commencement date may be the maturity date or an earlier date selected by the
owner. Annuity payments are always made as of the first day of a month. If the
maturity date is not specified in the application, it will be the later of the
first of the month following the annuitant's 85th birthday or ten years after
issue. If the owner wishes to change the annuity commencement date, he or she
must notify us in writing: (a) that annuity payments are to be made to the
annuitant or other designated payee; (b) when these payments are to begin; (c)
the form of the annuity; and (d) what annuity payment option has been selected.
We must receive this notice at least 30 days before annuity payments are to
begin.
While the Contract requires that notice of election to begin annuity payments
must be received by us at least 30 days prior to the annuity commencement date,
we are currently waiving that requirement for such variable annuity elections
received at least seven valuation days prior to the annuity commencement date.
We reserve the right to enforce the 30 day notice requirement at our option at
any time in the future.
Money will be transferred to the General Account for the purpose of electing
fixed annuity payments, or to the appropriate variable sub-accounts for variable
annuity payments, on the valuation date which is the fifth valuation date
preceding the annuity commencement date.
Once annuity payments have commenced, the owner cannot surrender an annuity
benefit and receive a single sum instead.
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 PAYMENT OPTIONS
OPTION 1--LIFE ANNUITY
This is an annuity payable during the lifetime of the annuitant and terminating
with the last payment preceding the death of the annuitant. This option usually
provides the maximum monthly payment since there is no guarantee of a minimum
number of payments or provision for a death benefit for beneficiaries. It would
be possible under this option for the annuitant to receive only one annuity
payment if he or she died prior to the due date of the second annuity payment,
two if he or she died before the due date of the third annuity payment, etc.
OPTION 2--LIFE ANNUITY WITH A PERIOD CERTAIN OF 120 MONTHS (OPTION 2A), 180
MONTHS (OPTION 2B), OR 240 MONTHS (OPTION 2C)
This is an annuity payable during the lifetime of the annuitant, with the
guarantee that if the annuitant dies before payments have been made for the
period certain elected, payments will continue to the beneficiary during the
remainder of the period certain. If the beneficiary elects at the annuitant's
death, the present value of the remaining guaranteed number of payments, based
on the then current
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dollar amount of one such payment and using the same interest rate which served
as a basis for the annuity shall be paid in a single sum to the beneficiary.
OPTION 3--JOINT AND LAST SURVIVOR ANNUITY
This is an annuity payable monthly during the joint lifetime of the annuitant
and a designated joint annuitant and continuing thereafter during the remaining
lifetime of the survivor. Under this option there is no guarantee of a minimum
number of payments or provision for a death benefit for beneficiaries. If this
option is elected, the Contract and payments shall then be the joint property of
the annuitant and the designated joint annuitant. It would be possible under
this option for both annuitants to receive only one annuity payment if they both
died prior to the due date of the second annuity payment, two if they died
before the due date of the third annuity payment, etc.
4. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
Under the Contracts described in this Prospectus, the first monthly annuity
payment is determined by the available value of the Contract when an annuity
begins. The available value is the Contract's accumulation value, adjusted for
any applicable market value adjustment from the Fixed Account, as of the fifth
valuation date preceding the annuity commencement date.
In addition, we may deduct premium tax, where applicable, from the amount
applied to purchase annuity payments. Where applicable, these taxes currently
range from 0% to 3.5%, depending on state and the type of plan involved.
The amount of the first monthly payment depends on the annuity payment option
elected, whether the annuity payments are to be made on a fixed or variable
basis, and sex and adjusted age of the annuitant and the joint annuitant, if
any.
For both fixed and variable annuity payments, an age adjustment is made
depending on when annuity payments begin. If the year in which such payments
begin is within years 2000 to 2009, the annuitant's (and joint annuitant's, if
any) age is reduced by one year. If the annuity commencement date is between
years 2010 to 2019, 2020 to 2029, or 2030 and later, the age reduction is two,
three, or four years, respectively. Persons selecting an annuity commencement
date at a time an age adjustment takes place should consider annuitizing prior
to the occurrence of the age adjustment in order to avoid a reduction in the
amount of all annuity payments that would otherwise occur.
The Contract contains tables indicating the dollar amount of the monthly fixed
annuity payments under each annuity payment option for each $1,000 of value
applied. The tables are determined using Individual Annuity 1983 Table A
mortality with an age setback of one year and interest rate of 3%, compounded
annually.
The dollar amount of the first monthly variable annuity payment is determined
by applying the available value to a rate per $1,000 which is based on the
Individual Annuity 1983 Table A female mortality rates with an age setback of
one year and an interest rate of 4.5%, compounded annually. A number of annuity
units is determined by dividing the dollar amount of the first variable annuity
payment by the then current annuity unit value. The dollar amount determined for
each sub-account will be aggregated for purposes of making payment. Except under
certain joint annuity payment options which provide for decreased payments after
the first death, or where a transfer occurs, the number of annuity units remains
unchanged during the period of annuity payments.
If, when annuity payments begin, we are using mortality or interest
assumptions which are more favorable than those listed above, resulting in
larger annuity payments, we will use those assumptions instead.
5. AMOUNT OF SECOND AND SUBSEQUENT MONTHLY ANNUITY PAYMENTS
The dollar amount of the second and later variable annuity payments is equal to
the number of annuity units determined for each sub-account multiplied by the
annuity unit value for that sub-account as of the due date of the payment. This
amount may increase or decrease from month to month. The dollar amount
determined for each sub-account will be aggregated for the purpose of making an
annuity payment.
The dollar amount of the second and later fixed annuity payments, except under
certain joint annuity payment options which provide for decreased payments after
the first death, will be equal to the initial payment.
6. VALUE OF THE ANNUITY UNIT
The value of an annuity unit for a sub-account is determined monthly as of the
first day of the month. For purposes of determining the annuity unit value, the
accumulation unit value will be as of the fifth valuation date preceding the
first day
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of the calendar month. The annuity unit value is equal to the annuity unit value
for that sub-account as of the first day of the preceding month multiplied by
the product of: (a) .996338 (.996338 is a factor to neutralize the assumed net
investment rate, discussed in Section 3 above, of 4.5% per annum built into the
first payment calculation which is not applicable because the actual net
investment rate is credited instead); and (b) a sub-account investment factor.
The investment factor is the accumulation unit value for that sub-account for
the preceding month divided by the accumulation unit value for the second
preceding month. The value of an annuity unit for a sub-account as of any date
other than the first day of a month is equal to its value as of the first day of
the next succeeding month.
7. TRANSFER OF ANNUITY RESERVES
Amounts held as annuity reserves may be transferred among the variable annuity
sub-accounts during the annuity period. Annuity reserves may also be transferred
from a variable annuity to a fixed annuity during this time. Amounts paid as a
fixed annuity may not be transferred to a variable annuity. The change must be
made by a written request. The annuitant and joint annuitant, if any, must make
such an election.
There may be restrictions on a transfer. We reserve the right to require that
a transfer of an annuity reserve amount from any sub-account be at least equal
to $5,000 or the entire amount of the reserve remaining in that sub-account. In
addition, annuity payments must have been in effect for a period of 12 months
before a change may be made. Such transfers can be made only once every 12
months. The written request for an annuity transfer must be received by us more
than 30 days in advance of the due date of the annuity payment subject to the
transfer. Upon request, we will make available to you annuity reserve amount
sub-account information.
A transfer to another sub-account will be made on the basis of annuity unit
values. The number of annuity units from the sub-account being transferred will
be converted to a number of annuity units in the new sub-account. The annuity
payment option will remain the same and cannot be changed. After this
conversion, a number of annuity units in the new sub-account will be payable
under the elected option. The first payment after conversion will be of the same
amount as it would have been without the transfer. The number of annuity units
will be set at that number of units which are needed to pay that same amount as
of the transfer date.
When we receive a request for the transfer of variable annuity reserves, it
will be effective for future annuity payments. The transfer will be effective
and amounts actually transferred as of the fifth valuation date prior to the
next annuity payment affected by your request. We will use the same valuation
procedures to determine your variable annuity payment that we used initially.
If you request a transfer to a fixed annuity, the amount transferred will then
be applied to provide a fixed annuity payment amount. We will use the then
current fixed annuity rate at the time of transfer for the remaining period of
the annuity payment option (which shall remain unchanged) and the attained age
of the annuitant and joint annuitant, if any. The request for such a transfer to
a fixed annuity will be effective only for future annuity payments. The transfer
will be effective and amounts will actually be transferred as of the fifth
valuation date prior to the next annuity payment affected by your request.
C. DEATH BENEFITS
If the owner dies before annuity payments have started, we will pay the death
benefit of the Contract to the beneficiary. If the owner of this Contract is
other than a natural person, such as a trust or other similar entity, we will
pay the death benefit to the beneficiary on the death of the annuitant, if it
occurs prior to the date that annuity payments have started. The death benefit
will be paid in a single sum to the beneficiary designated unless an annuity
payment option is elected.
If the owner or the annuitant, if applicable, dies prior to his or her 75th
birthday, the death benefit is the greater of: (a) accumulation value, plus any
positive market value adjustment applicable to the fixed account; (b) the sum of
purchase payments adjusted for any amounts previously withdrawn; or (c) the last
"stepped-up value" prior to the date of death, adjusted for any purchase
payments and withdrawals occurring thereafter. The definition of this
"stepped-up value" is described in this section, immediately below.
If the owner or the annuitant, if applicable, dies on or after his or her 75th
birthday, the death benefit is the greater of: (a) accumulation value, plus any
positive market value adjustment applicable to the fixed account; or (b) the
last stepped-up value prior to the date of
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death, adjusted for any withdrawals occurring thereafter.
The stepped-up value will be determined on each contract anniversary that is
an exact multiple of five and is prior to the 75th birthday of the owner or the
annuitant, if applicable. The stepped-up value is the greater of: (a)
accumulation value on that contract anniversary; or (b) the previous stepped-up
value. Where joint owners exist, there will be no further stepped-up values
after the 75th birthday of the oldest joint owner. After the death of the first
joint owner, stepped-up values may resume on the next contract anniversary that
is an exact multiple of five providing the surviving joint owner continues the
Contract and has not yet reached his or her 75th birthday.
The value of the death benefit will be determined as of the valuation date
coincident with or next following the day we receive due proof of death and all
related information necessary to make payment at our home office.
If the designated beneficiary is a person other than the owner's spouse, that
beneficiary may elect an annuity option measured by a period not longer than
that beneficiary's life expectancy only so long as annuity payments begin not
later than one year after the death. If there is no designated beneficiary, then
the entire value in the Contract must be distributed within five years after the
death.
If any portion of the death benefit is payable to the designated beneficiary
who is also the surviving spouse, that spouse shall be treated as the contract
owner for purposes of: (1) when payments must begin, and (2) the time of
distribution in the event of that spouse's death. Payments must be made in
substantially equal installments.
If the annuitant dies after annuity payments have started, we will pay
whatever amount may be required by the terms of the annuity payment option
selected. The remaining value in the Contract must be distributed at least as
rapidly as under the option in effect at the annuitant's death.
To illustrate the death benefit, assume a Contract is issued to joint owners,
age 69 and 62. A single purchase payment of $50,000 is made and no withdrawals
are assumed to occur. On the fifth contract anniversary (owners age 74 and 67),
the accumulation value has increased to $62,500. Both owners are under age 75 so
the death benefit is "stepped-up" to $62,500. In the 8th contract year, the
oldest owner (now age 77) dies. The current accumulation value has decreased to
$61,000. The death benefit available to the joint owner is the greater of the
accumulation value less withdrawals or the previous stepped-up value of $62,500.
Assume further that the joint owner, being the spouse, chooses to continue the
Contract. On the tenth contract anniversary the accumulation value has increased
to $75,000 and the surviving owner is now age 72. The death benefit is again
stepped-up to the current value of $75,000. On the fifteenth contract
anniversary, the owner is now age 77 and is no longer eligible for further
step-ups. At age 80, the remaining owner dies with an accumulation value of
$78,000. The amount payable to the beneficiary is then the amount of $78,000.
D. PURCHASE PAYMENTS, TRANSFERS AND VALUE OF THE CONTRACT
1. CREDITING ACCUMULATION UNITS
During the accumulation period--the period before annuity payments begin--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.
When the Contract is originally issued, an application form is completed by the
applicant and forwarded to our home office. 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.
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. 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 may be allocated to one or more of the sub-accounts of the
Variable Account or to one or more of the guarantee periods of the Fixed Account
for accumulation at a fixed rate of interest. See the heading, "Fixed Account
Guarantee Period Options," in this Prospectus. Initially, the allocation will be
as the owner directs in the application, and such instructions will apply to
further purchase payments until changed by the owner. An application received
without allocation instructions will be treated as incomplete.
During the 20-day period (or, if longer, the free-look period applicable in
the state of purchase, plus 10 days) following receipt of the first purchase
payment into the Contract, we will allocate purchase payments directed to the
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variable sub-accounts first to the Money Market sub-account of the Variable
Account. At the end of this period, these purchase payments will be transferred
as the owner directs.
Purchase payments allocated to the Variable Account will be credited to the
Contract in the form of accumulation units. The number of accumulation units
credited with respect to each purchase payment is determined by dividing the
portion of the purchase payment allocated to each sub-account by the then
current accumulation unit value for that sub-account. The sub-accounts invest in
shares of the Funds.
The number of accumulation units so determined shall not be changed by any
subsequent change in the value of an accumulation unit, but the value of an
accumulation unit will vary from valuation date to valuation date to reflect the
investment experience of the Funds.
We will determine the value of accumulation units on each day on which the
Funds are valued. The net asset value of the Funds' shares shall be computed
once daily, and, in the case of Money Market Portfolio, after the declaration of
the daily dividend, as of the primary closing time for business on the New York
Stock Exchange (as of the date hereof the primary close of trading is 3:00 p.m.
(Central Time), but this time may be changed) on each day, Monday through
Friday, except (i) days on which changes in the value of such Fund's portfolio
securities will not materially affect the current net asset value of such Fund's
shares, (ii) days during which no such Fund's shares are tendered for redemption
and no order to purchase or sell such Fund's shares is received by such Fund and
(iii) customary national business holidays on which the New York Stock Exchange
is closed for trading (as of the date hereof, New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day). The value of accumulation units
determined on a valuation date will be applicable to all purchase payments
received by us at our home office on that day prior to the close of business of
the Exchange. The value of accumulation units applicable to purchase payments
received after the close of business of the Exchange will be the value
determined on the next valuation date.
2. TRANSFERS
Upon the owner's written request, values under the Contract may be transferred
among our Fixed Account Guaranteed Options and the sub-accounts of the Variable
Account prior to the commencement of annuity payments. For the sub-accounts of
the Variable Account, we will make the transfer on the basis of accumulation
unit values on the valuation date coincident with or next following the day we
receive the request at our home office. No deferred sales charge will be imposed
on such transfers, though we reserve the right to impose a transaction fee on
such transfers in the future. There is no dollar amount limitation, such as a
minimum amount, which is applied to transfers. A market value adjustment may be
imposed on transfers from the guarantee periods of the Fixed Account to the
Variable Account or among those guarantee period options. See the heading "Fixed
Account Guarantee Period Options" in this Prospectus.
You may establish a systematic transfer arrangement with us. Transfers
pursuant to such an arrangement will be made on the day the owner selects. If a
transfer cannot be effected on the day selected, it will be made on the next
available transfer date. In the event the next available transfer date would
occur in the next calendar month, the systematic transfer will take place as of
the last available day in the current calendar month. In the absence of specific
instructions, transfers will be made on a monthly basis and will remain active
until the appropriate Fixed Account or variable sub-account value is depleted.
As a type of systematic transfer arrangement, for Contracts with accumulation
values of $10,000 or more, we will offer rebalancing of amounts in the Variable
Account on a quarterly, semi-annual or annual basis. Instructions to us for
rebalancing must be in whole percentages totaling 100% and will be treated as
instructions for transfer to and from the various sub-accounts of the Variable
Account. Rebalancing instructions will be without regard to the current
allocation of future contributions, they may differ from those future
allocations and are not limited to any minimum or maximum number of sub-accounts
affected by the rebalancing instructions.
Also, the owner or persons authorized by the owner may effect transfers, or a
change in the allocation of future purchase payments, by means of a telephone
call. Transfers or allocation changes made pursuant to such a call are subject
to the same conditions and procedures as are outlined above for written transfer
requests. During periods of marked economic or market changes, contract owners
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may experience difficulty in implementing a telephone transfer due to a heavy
volume of telephone calls. In such a circumstance, contract owners should
consider submitting a written transfer request while continuing to attempt a
telephone transfer. We reserve the right to restrict the frequency of telephone
transfers or otherwise modify, condition, terminate or impose charges upon
telephone transfer privileges. For more information on telephone transfers,
contact Minnesota Mutual.
We make telephone transactions automatically available to all contract owners.
We will employ reasonable procedures to satisfy ourselves that instructions
received from contract owners are genuine and, to the extent that we do not, we
may be liable for any losses due to unauthorized or fraudulent instructions. We
require contract owners or persons authorized by them to personally identify
themselves in those telephone conversations through contract numbers, social
security numbers and such other information as we may deem to be reasonable. We
record telephone transfer instruction conversations and we provide the contract
owners with a written confirmation of the telephone transfer.
We reserve the right under the Contract to impose a transaction charge, not to
exceed $10, for each transfer when the frequency of transfer requests exceeds
one every calendar month. Currently, we do not impose such a charge. If we apply
such a charge in the future, this charge will reduce the amount of your
transfer.
3. VALUE OF THE CONTRACT
The accumulation value of the Contract is the sum of the values under the
Contract. It is determined separately for each sub-account of the Variable
Account and each entry in the guarantee periods of the Fixed Account. For each
sub-account of the Variable Account, it is the number of accumulation units
credited for that sub-account multiplied by the applicable current accumulation
unit value.
4. ACCUMULATION UNIT VALUE
The value of an accumulation unit for each sub-account of the Variable Account
was set at $1.000000 on the first valuation date of the Variable Account. The
value of an accumulation unit on any subsequent valuation date is determined by
multiplying the value of an accumulation unit on the immediately preceding
valuation date by the net investment factor for the applicable sub-account
(described below) for the valuation period just ended. The value of an
accumulation unit as of any date other than a valuation date is equal to its
value on the next succeeding valuation date.
5. 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 any sub-account, the
net investment factor for a valuation period is the gross investment rate for
such sub-account for the valuation period, less a deduction for the mortality
and expense risk charge at the current rate of 1.25% per annum and a deduction
for the administration charge at the current rate of .15% per annum.
The gross investment rate is equal to: (1) the net asset value per share of a
Portfolio share held in a sub-account of the Variable Account 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
per share of that Portfolio share determined at the end of the preceding
valuation period. The gross investment rate may be positive or negative.
6. PRINCIPAL UNDERWRITER
The principal underwriter for the Contract is John Nuveen & Co., Incorporated
("Nuveen"), 333 West Wacker Drive, Chicago, Illinois, 60606, which has sponsored
or underwritten more than $60 billion of investment company securities. Nuveen
is a subsidiary of The John Nuveen Company, which is approximately 78% owned by
the St. Paul Companies, Inc. It is located in St. Paul, Minnesota, and is
principally engaged in providing property-liability insurance through its
subsidiaries.
E. REDEMPTIONS
1. WITHDRAWALS AND SURRENDER
The Contract provides that prior to the date annuity payments begin withdrawals
may be made by the owner from the Contract for cash amounts of at least $250.
You must make a written request for any withdrawal. In this event, the
accumulation value will be adjusted for the amount of the withdrawal and any
applicable market value adjustment and the deferred sales charge.
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Withdrawals requested to be processed net of all applicable charges may have a
slightly different effect on the remaining accumulation values than withdrawals
with applicable charges deducted from the amount payable. Unless instructed
otherwise by the owner, withdrawals will be made from the value in each
guarantee period of the Fixed Account and each sub-account of the Variable
Account in the same proportion that the value in each guarantee period of the
Fixed Account and each variable sub-account bears to the total accumulation
value. Withdrawal values will be determined as of the valuation date coincident
with or next following the date a written request is received at our home
office. Withdrawals from the Fixed Account may be subject to a market value
adjustment. See the heading "Fixed Account Guarantee Period Options" in this
Prospectus.
Systematic withdrawal plans of a fixed amount, a fixed period, or to satisfy
the minimum distribution requirements of the Code may also be available.
Withdrawals requested to be processed net of all applicable charges may have a
slightly different effect on the remaining accumulation value than withdrawals
with applicable charges deducted from the amount payable.
We will waive the applicable dollar amount limitation on withdrawals where a
systematic withdrawal program is in place and such a smaller amount satisfies
the minimum distribution requirements of the Code.
The Contract provides that prior to the commencement of annuity payments, the
owner may elect to surrender the Contract for its surrender value. The surrender
value is equal to the accumulation value after the application of all applicable
adjustments and deduction of all applicable charges. Amounts surrendered may be
subject to a deferred sales charge and, in addition, amounts surrendered from
the Fixed Account may be subject to a market value adjustment. See the heading
"Fixed Account Guarantee Period Options" in this Prospectus.
Payment of any surrender or withdrawal amount may be deferred as described
under "General Provisions, 6. Deferment of Payment" above. In addition, payment
may be delayed if the accumulation units to be canceled in connection with the
surrender or withdrawal are attributable to a purchase payment check which has
not cleared. Such a delay can be avoided by use of certified checks in making
purchase payments.
For more information on the application of the deferred sales charge, see
"Sales Charges," in this Prospectus.
Once annuity payments have commenced for an annuitant, the annuitant cannot
surrender the annuity benefit and receive a single sum settlement in lieu
thereof. For a discussion of commutation rights of beneficiaries subsequent to
the annuity commencement date, see "Annuity Payment Options," in this
Prospectus.
Contract owners may also submit their signed written withdrawal or surrender
requests to Minnesota Mutual by facsimile (FAX) transmission. Our FAX number is
(612) 665-7942, or after September 1, 1998, (651) 665-7942. Transfer
instructions or changes as to future allocations of purchase payments may be
communicated to us by the same means.
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 an intention to cancel. If the Contract is canceled and returned,
we will refund to the owner the greater of (a) the Accumulation Value of the
Contract, or (b) the amount of Purchase Payments paid under the Contract.
Payment of the requested refund will be made to the owner within seven days
after we receive notice of cancellation.
In some states, such as California, the free look period may be extended. In
California, the free look period is extended to thirty days' time for all
Contracts. Those rights are subject to change and may vary among the states.
The liability of the Variable Account under the foregoing is limited to the
accumulation value of the Contract at the time it is returned for cancellation.
Any additional amounts necessary to make our refund to the owner equal to the
purchase payments will be made by Minnesota Mutual.
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FIXED ACCOUNT GUARANTEE PERIOD OPTIONS
Due to certain exemptive and exclusionary provisions, interests in the Fixed
Account investment options under the Contract are not registered under the
Securities Act of 1933 ("the '33 Act") and neither our General Account nor its
Fixed Account, which is a separate account of Minnesota Mutual, is registered as
an investment company under the Investment Company Act of 1940 ("the '40 Act").
Accordingly, neither interests in the Fixed Account investment options nor the
General Account are subject to the provisions or restrictions of the '33 Act or
the '40 Act and the staff of the Commission has not reviewed the disclosures in
the Prospectus relating thereto. Disclosures relating to interests in the Fixed
Account options and the General Account, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy of statements made in a registration statement.
FIXED ACCOUNT GUARANTEE PERIODS. Currently, there are five Fixed Account
Guarantee Periods under the Contract; these provide for the accumulation of
interest at a guaranteed interest rate when held for one, three, five, seven and
ten year periods. Minnesota Mutual may offer additional Fixed Account Guarantee
Period options for any yearly period from two to ten years. It also may at any
time stop accepting new purchase payments, transfers or renewals for a
particular guarantee period. The guaranteed interest rate on new amounts
allocated or transferred to a Fixed Account Guarantee Period option are
determined from time-to-time by Minnesota Mutual in accordance with existing
market conditions. In no event will the guaranteed rate of interest be less than
3%, compounded annually. Once an interest rate is established for a Fixed
Account Guarantee Period option, it is guaranteed for the duration of the stated
period and may not be changed by Minnesota Mutual.
Contract owners may allocate purchase payments, or make transfers from the
Variable Account options, to the Fixed Account Guarantee Period options at any
time prior to the annuity commencement date. Minnesota Mutual establishes a
separate entry in the Fixed Account for accounting and interest rate purposes
each time the contract owner allocates or transfers amounts to a Fixed Account
Guarantee Period option, except that amounts allocated or transferred to the
same Fixed Account Guarantee Period option on the same day will establish a
single fixed account entry.
RENEWALS. At the end of a guarantee period, the contract owner may establish
a new Fixed Account Guarantee Period with the same guarantee period at the then
current interest rate, select a different Fixed Account Guarantee Period option
or transfer the amounts to a Variable Account option or those amounts may be
withdrawn from the Contract (though such amounts withdrawn may be subject to a
deferred sales charge). A period of 30 days prior to or immediately following
the renewal date of each guarantee period is allowed for this purpose.
If the contract owner does not specify the Fixed Account Guarantee Period
option desired at the time of renewal, Minnesota Mutual will automatically renew
the funds held in that guarantee period option for the same duration at the
newly established interest rate, provided, however, that we will select a period
which does not extend beyond the maturity date elected in the Contract. The
interest rate applicable to the new guarantee period may be higher or lower than
the interest rate which was credited to the expired guarantee period. If, at the
time of renewal, a guarantee period of the same duration is no longer available,
Minnesota Mutual will select the next shortest available guarantee period.
MARKET VALUE ADJUSTMENT. Amounts surrendered, withdrawn, transferred or
applied to provide annuity payments from the guarantee period of the Fixed
Account prior to the renewal date may be subject to a market value adjustment.
The market value adjustment may increase or decrease the amount of the Fixed
Account value which is being transferred, withdrawn or surrendered. This
adjustment does not apply to amounts held in the one year Guarantee Period Fixed
Account.
The market value adjustment will be calculated by multiplying the amount
transferred, withdrawn, or surrendered by the
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market value adjustment factor. The market value adjustment factor is equal to:
(n/12)
(1 + i) - 1
--------------
(1 + j + .0025)
where i = Treasury Rate as of the date of the allocation into the
Fixed Account for the original Guarantee Period.
j = Calculated interest rate for the number of whole months
remaining in the Guarantee Period as of the date of the
withdrawal, surrender or transfer. The calculated
interest rate will be determined by linear interpolation
based on current Treasury Rates for benchmark notes with
maturities closest to the period being measured. If the
remaining Guarantee Period is less than one year, the
calculated interest rate will equal the one year
Treasury Rate.
n = the number of whole months remaining in the Guarantee
Period.
If Treasury Rates are no longer available we will use an appropriate rate
approved by the Insurance Department of the state which has jurisdiction over
the Contract.
We guarantee that the application of the market value adjustment will not
reduce the accumulation value of each Fixed Account Guarantee Period to an
amount less than allocations to that Fixed Account Guarantee Period, less
withdrawals or transfers, accumulated at a rate of 3%, compounded annually.
There will be no market value adjustment in the following situations: (a)
transfers, withdrawals, surrenders and amounts applied to provide annuity
payments from the one year guarantee period of the Fixed Account; (b) transfers,
withdrawals, surrenders and amounts applied to provide annuity payments
occurring within 30 days prior to or immediately following the renewal date of
each guarantee period; and (c) amounts withdrawn from the Fixed Account to pay
the contract fee. However, amounts withdrawn or surrendered may be subject to
the deferred sales charge.
It should be noted that the market value adjustment can, depending upon
interest rates, be either positive or negative. However, there will be no
negative market value adjustment applied to withdrawals or surrenders from the
Fixed Account Guarantee Period options when: (a) amounts are payable as a death
benefit; (b) a surrender or withdrawal is requested any time after the first
contract anniversary due to confinement in a hospital or medical care facility,
as defined in the "Sales Charges" section of this Prospectus; and (c) a
surrender or withdrawal is requested any time after the first contract
anniversary in the event of the diagnosis of a terminal illness, as defined in
the "Sales Charges" section of this Prospectus.
TRANSFERS. Prior to the annuity commencement date, the contract owner may
transfer amounts among the Fixed Account Guarantee Period options and from the
Fixed Account Guarantee Period options to the Variable Account options. The
market value adjustment, if applicable, will be applied or deducted from the
amount remaining in the accumulation value. For further information, see the
heading "Purchase Payments, Transfers and Value of the Contract" in this
Prospectus.
The contract owner must specify the Fixed Account Guarantee Period options
from or to which a transfer is to be made.
WITHDRAWALS. The contract owner may make withdrawals of or may surrender
amounts held in the Fixed Account Guarantee Period options at any time prior to
death and prior to the start of annuity payments. Withdrawals from Fixed Account
Guarantee Period options will be made in the same manner and be subject to the
same limitations as set forth under the heading "Withdrawals and Surrender" in
this Prospectus. In addition, the following provisions apply to withdrawals from
the Fixed Account Guarantee Period options: (1) Minnesota Mutual reserves the
right to defer payment of amounts withdrawn from Fixed Account investment
options for up to six months from the date it receives the written withdrawal
request (if a withdrawal is deferred for more than 30 days pursuant to this
right, Minnesota Mutual will pay interest on the amount deferred at a rate not
less than 3%, compounded annually); (2) if there are multiple investment entries
under a Fixed Account Guarantee Period option, amounts will be withdrawn from
such accounts on a first-in-first-out basis and (3) the market value adjustment
described above may apply to withdrawals from any investment option except the
Fixed Account Guarantee Period option with a duration of one year. In the case
of a Contract
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surrender, the market value adjustment to each guarantee period option, if
applicable, will be calculated using the full amount in that guarantee period
option, and the amount of the adjustment will be added to or subtracted from
such amount and paid to the owner. In the case of a withdrawal, the market value
adjustment to each guarantee period option affected by the withdrawal will be
calculated using the full amount to be taken from that guarantee period in order
to provide the amount requested, after application of the adjustment and
deduction of applicable charges, and the amount of the adjustment will be added
to or subtracted from the accumulation value remaining after payment of the
requested amount.
Withdrawals from the Contract may be subject to income tax and a 10% penalty
tax. Withdrawals are permitted from a Contract issued in connection with Section
403(b) qualified plans only under limited circumstances. Withdrawals may also be
limited in other types of employee benefit plans. See the heading "Federal Tax
Status," in this Prospectus.
LOANS. We may offer a loan privilege only to owners of Contracts issued in
connection with Section 403(b) qualified plans that are not subject to Title I
of ERISA. Owners of such a Contract may obtain loans using the Contract as the
only security for a loan. Owners of such a Contract may borrow amounts allocated
to Fixed Account Guarantee Period options of a one-year duration in the same
manner and subject to the same limitations as set forth under "Contract Loans"
in this Prospectus. Loans may be taken only from the one year guarantee period
of the Fixed Account.
FIXED ANNUITY OPTIONS. Subject to the death benefit provisions, at death,
withdrawal or at the annuity commencement date of the Contract, the proceeds may
be applied to provide a fixed annuity. The amount of each fixed annuity payment
is determined by applying the portion of the proceeds, adjusted for any
applicable market value adjustment or premium taxes, to the appropriate table in
the Contract. If the table in use by Minnesota Mutual is more favorable to the
contract owner, Minnesota Mutual will use that table. Minnesota Mutual
guarantees the dollar amount of fixed annuity payments.
Variable annuity options are also possible. See the section titled "Annuity
Payments and Annuity Payment Options" in this prospectus.
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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. The Contract may be purchased on a non-tax qualified
basis ("Non-Qualified Contract") or purchased and used in connection with
certain retirement arrangements entitled to special income tax treatment under
section 401(a), 403(b), 408(b), 408A or 457 of the Code ("Qualified Contract").
The ultimate effect of federal income taxes on the amounts held under a
Contract, on annuity payments, and on the economic benefit to the Contract
Owner, the Annuitant, or the beneficiary may depend on the tax status of the
individual concerned.
We are taxed as a "life insurance company" under the Internal Revenue Code.
The operations of the Variable 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 Variable Account or on capital gains arising
from the Variable Account's activities. The Variable 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, deferred 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
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by the owner of the contract during the taxable year.
For payments made in the event of a full surrender of an annuity, the taxable
portion is generally the amount in excess of the cost basis (i.e., purchase
payments) of the Contract. Amounts withdrawn from variable annuity contracts not
part of a qualified program are treated first as taxable income to the extent of
the excess of the contract value over the purchase payments made under the
Contract. The taxable portion is taxed at ordinary income tax rates.
In the case of a withdrawal under an annuity that is part of a tax-qualified
retirement plan, 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 premium payments 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. The contract value may have
to be increased by any positive market value adjustment which could result from
a withdrawal. There is, however, no definitive guidance on the proper tax
treatment of market value adjustments and the owner should contact a competent
tax adviser with respect to the potential tax consequences of a market value
adjustment.
For annuity payments, the taxable portion is generally determined by a formula
that establishes the ratio that the cost basis of the contract bears to the
expected return under the contract. Such taxable part is taxed at ordinary
income rates.
If a taxable distribution is made under the variable annuity contracts, a
penalty tax of 10% of the amount of the taxable distribution may apply. This
additional tax does not apply 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 death.
The Code also provides an exception to the penalty tax for distributions in
periodic payments of substantially equal installments 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.
For purposes of determining a contract owner's gross income, the Code provides
that all nonqualified deferred annuity contracts issued by the same company (or
its affiliates) to the same contract owner during any calendar year shall be
treated as one annuity contract. Additional rules may be promulgated under this
provision to prevent avoidance of its effect through serial contracts or
otherwise. For further information on these rules, see your 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 Variable Account to be
"adequately diversified" in order for the contract to be treated as an annuity
contract for federal tax purposes. The Variable Account, through the Funds,
intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Funds' assets may be invested.
Minnesota Mutual does not have control over the Funds or their investments.
Nonetheless, Minnesota Mutual believes that each Portfolio of the Funds in which
the Variable 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 includable 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
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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."
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. For
example, the owner of a Contract has the choice of several sub-accounts in which
to allocate net purchase payments and Contract values, and may be able to
transfer among sub-accounts more frequently than in such rulings. These
differences could result in a contract owner being treated as the owner of the
assets of the Variable 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 Variable 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 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 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 death. 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.
POSSIBLE CHANGES IN TAXATION
Legislation has been proposed in 1998 that, if enacted, would adversely modify
the federal taxation of certain insurance and annuity contracts. For example,
one proposal would tax transfers among investment options and tax exchanges
involving variable contracts. A second proposal would reduce the "investment in
the contract" under cash value life insurance and certain annuity contracts by
certain amounts, thereby increasing the amount of income for purposes of
computing gain. Although the likelihood of there being any change is uncertain,
there is always the possibility that the tax treatment of the Contracts could
change by legislation or other means. Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change). You should consult a tax adviser with respect to legislative
developments and their effect on the Contract.
TAX QUALIFIED PROGRAMS
The contract 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
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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 actual age 59 1/2 (subject to certain exceptions);
distributions that do not conform to specified minimum distribution rules; 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. 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 transfer
restrictions, distribution and other requirements that are not incorporated into
the annuity or 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.
For qualified plans under Section 401(a), 403(b), and 457, the Code requires
that distributions generally must commence no later than the later of April 1 of
the calender year following the calender year in which the Owner (or a plan
participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a
specified form or manner. If the plan participant is a "5 percent owner" (as
defined in the Code), distributions generally must begin no later than April 1
of the calender year following the calender year in which the Owner (or plan
participant) reaches age 70 1/2. For IRAs described in Section 408,
distributions generally must commence no later than the later of April 1 of the
calender year following the calender year in which the Owner (or plan
participant) reaches the age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to the Owner's death.
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 actual 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
Section 408 of the Code permits eligible individuals to contribute to an
Individual Retirement Annuity, hereinafter referred to as an "IRA". Also,
distributions from certain other types of qualified plans may be "rolled over"
on a tax-deferred basis into an IRA. The sale of a Contract for use with an IRA
may be subject to special disclosure requirements of the Internal Revenue
Service. Purchasers of a Contract for use with IRAs will be provided with
supplemental information required by the Internal Revenue Services or other
appropriate agency. Such purchasers will have the right to revoke their purchase
within 7 days of the earlier of the establishment of the IRA or their purchase.
A Qualified Contract issued in connection with an IRA will be amended as
necessary to conform to the requirements of the Code. Purchasers should seek
competent advice as to the suitability of the Contract for use with IRAs.
Earnings in an IRA are not taxed until distribution. IRA contributions are
limited each year to the lesser of $2,000 of 100% of the Owner's adjusted gross
income and may be deductible in whole or in part depending on the individual's
income. The limit on the amount contributed to an IRA does not apply to
distributions from certain other types of qualified plans that are "rolled over"
on a tax-deferred basis into an IRA. Amounts in the IRA (other than
nondeductible contributions) are taxed when distributed from the IRA.
Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject
to a 10% penalty tax.
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SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS
Employers may establish Simplified Employee Pension (SEP) IRAs under Code
section 408(k) to provide IRA contributions on behalf of their employees. In
addition to all of the general Code rules governing IRAs, such plans are subject
to certain Code requirements regarding participation and amounts of
contributions.
SIMPLE IRAS
Beginning January 1, 1997, certain small employers may establish Simple IRAs, as
provided by the Code, section 408(p), under which employees may elect to defer
up to $6,000 (as increased for cost of living adjustments) as a percentage of
compensation. The sponsoring employer is required to make a matching
contribution on behalf of contributing employees. Distributions from a Simple
IRA are subject to the same restrictions that apply to IRA distributions and are
taxed as ordinary income. Subject to certain exceptions, premature distributions
prior to age 59 1/2 are subject to a 10% penalty tax, which is increased to 25%
if the distribution occurs within the first two years after the commencement of
the employee's participation in the plan.
ROTH IRAS
Effective January 1, 1998, section 408A of the Code permits certain eligible
individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are
subject to certain limitations, are not deductible and must be made in cash or
as a rollover or transfer from another Roth IRA or other IRA. A rollover from or
conversion of an IRA to a Roth IRA may be subject to tax and other special rules
may apply. You should consult a tax adviser before combining any converted
amounts with any other Roth IRA contributions, including any other conversion
amounts from other tax years. Distributions from a Roth IRA generally are not
taxed, except that, once aggregate distributions exceed contributions to the
Roth IRA, income tax and a 10% penalty tax may apply to distributions made (1)
before age 59 1/2 (subject to certain exceptions) or (2) during the five taxable
years starting with the year in which the first contribution is made to the Roth
IRA.
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. A governmental plan maintained by an eligible employer
as a Section 457 plan must have, under the provisions of the Small Business Job
Protection Act of 1996, all of the assets and income of the plan held in trust
or in a qualifying custodial account or annuity contract held for the exclusive
benefit of plan participants and beneficiaries. For such plans in effect at the
time of the 1996 enactment, those plans must come into compliance with this
requirement before January 1, 1999.
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)
33
<PAGE>
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 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 the 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.
- ------------------------------------------------------------------------
YEAR 2000 COMPUTER PROBLEM
The services provided by Minnesota Mutual to the Variable Account and its
contract owners depend on the smooth functioning of its computer systems. Many
computer software systems in use today cannot distinguish the year 2000 from the
year 1900 because of the way that dates are encoded, stored and calculated. That
failure could have a negative impact on the ability of Minnesota Mutual to
provide services to contract owners. Minnesota Mutual has been actively working
on necessary changes to its computer systems to deal with the year 2000.
Although there can be no assurance of complete success, Minnesota Mutual
believes that it will be able to resolve these issues on a timely basis and that
there will be no material adverse impact on its ability to provide services to
the Variable Account.
In addition, Minnesota Mutual's operations could be impacted by its service
providers' or suppliers' year 2000 efforts. Minnesota Mutual has undertaken an
initiative to assess the efforts of organizations where there is a significant
business relationship; however there is no assurance that Minnesota Mutual will
not be affected by year 2000 problems of other organizations.
- ------------------------------------------------------------------------
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 the Contract
Performance Data
Auditors
Registration Statement
Financial Statements
34
<PAGE>
APPENDIX A--
ILLUSTRATION OF VARIABLE ANNUITY PAYMENT VALUES
The illustration included in this appendix shows the effect of investment
performance on the monthly variable annuity income. The illustration assumes a
gross investment return, after tax, of: 0%, 0% and 0%.
For illustration purposes, an average annual expense equal to 0% of the
average daily net assets is deducted from the gross investment return to
determine the net investment return. The net investment return is then used to
project the monthly variable annuity incomes. The expense charge of 0% includes:
0% for mortality and expense risk, 0% for administrative charge, and an average
of 0% for investment management and other fund expenses. These expenses are
listed for each portfolio in the table following.
The gross and net investment rates are for illustrative purposes only and are
not a reflection of past or future performance. Actual variable annuity income
will be more or less than shown if the actual returns are different than those
illustrated.
The illustration assumes 100% of the assets are invested in sub-account(s) of
the Variable Account. For comparison purposes, a current fixed annuity income,
available through the General Account is also provided. The illustration assumes
an initial interest rate, used to determine the first variable payment of 0%.
After the first variable annuity payment, future payments will increase if the
annualized net rate of return exceeds the initial interest rate, and will
decrease if the annualized net rate of return is less than the initial interest
rate.
The illustration provided is for a female, age 65, selecting a life and 10
year certain annuity option with $100,000 of non-qualified funds, residing in
the State of Minnesota. Upon request, we will provide a comparable illustration
based upon the proposed annuitant's date of birth, sex, annuity option, state of
residence, type of funds, value of funds, and selected gross annual rate of
return (not to exceed 12%).
<TABLE>
<CAPTION>
FUND OTHER
MORTALITY & ADMINISTRATIVE MANAGEMENT FUND
EXPENSE RISK CHARGE FEE EXPENSE TOTAL
----------------- ------------------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Advantus Series Fund, Inc.
Money Market..................... % % % % %
Mortgage Securities.............. % % % % %
Index 500........................ % % % % %
Small Company.................... % % % % %
Value Stock...................... % % % % %
Small Company Value.............. % % % % %
Global Bond...................... % % % % %
Real Estate Securities........... % % % % %
Nuveen Tax-Deferred Investment
Trust:
Strategic Income................. % % % % %
Balanced......................... % % % % %
Growth and Income................ % % % % %
Blue Chip Growth................. % % % % %
European Value................... % % % % %
International Equity............. % % % % %
--- --- --- --- ---
Average........................ 0% 0% 0% 0% 0%
</TABLE>
35
<PAGE>
<TABLE>
<S> <C>
VARIABLE ANNUITY PAYOUT ILLUSTRATION
PREPARED FOR: Prospect PREPARED BY: Minnesota Mutual
ANNUITY PAYMENT OPTION: 10 Year w/Life PORTFOLIO: International Stock
Contingency FUNDS: Non-Qualified
DATE OF BIRTH: 09/01/1933 SEX: Male COMMENCEMENT DATE: 09/01/1998
STATE: MN SINGLE PAYMENT RECEIVED: $100,000.00
LIFE EXPECTANCY: 20.0 (IRS)
INITIAL MONTHLY INCOME: $593
</TABLE>
The monthly variable annuity income amount shown below assumes a constant
annual investment return. The initial interest rate of 4.50% is the assumed rate
used to calculate the first monthly payment. Thereafter, monthly payments will
increase or decrease based upon the relationship between the initial interest
rate and the performance of the sub-account(s) selected. The investment returns
shown are hypothetical and not a representation of future returns.
<TABLE>
<CAPTION>
ANNUAL RATE OF RETURN
-----------------------------------------------------------
0% GROSS 6.67% GROSS 12.00% GROSS
DATE AGE (-2.17% NET) (4.50% NET) (9.83% NET)
- ------------------------------------------------------ --------- ------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
September 1, 1998..................................... 65 $ 0 $ 0 $ 0
September 1, 1999..................................... 66 $ 0 $ 0 $ 0
September 1, 2000..................................... 67 $ 0 $ 0 $ 0
September 1, 2001..................................... 68 $ 0 $ 0 $ 0
September 1, 2002..................................... 69 $ 0 $ 0 $ 0
September 1, 2007..................................... 74 $ 0 $ 0 $ 0
September 1, 2012..................................... 79 $ 0 $ 0 $ 0
September 1, 2017..................................... 84 $ 0 $ 0 $ 0
September 1, 2022..................................... 89 $ 0 $ 0 $ 0
September 1, 2027..................................... 94 $ 0 $ 0 $ 0
September 1, 2032..................................... 99 $ 0 $ 0 $ 0
September 1, 2033..................................... 100 $ 0 $ 0 $ 0
</TABLE>
IF 100% OF YOUR PURCHASE WAS APPLIED TO PROVIDE A FIXED ANNUITY ON THE
QUOTATION DATE OF THIS ILLUSTRATION, THE FIXED ANNUITY INCOME AMOUNT WOULD BE
$699.
Net rate of return reflects expenses totaling 0%, which consist of the 0%
Variable Account mortality and expense risk charge, 0% administrative charge,
and 0% for the fund management and other fund expenses (this is an average with
the actual varying from 0% to 0%).
Minnesota Mutual Nuveen Premier Adviser Annuities are offered through John
Nuveen & Co., Incorporated, its selling group and their registered
representatives and is issued by The Minnesota Mutual Life Insurance Company.
This illustration must be accompanied or preceded by the current prospectuses
for the Minnesota Mutual Variable Annuity Account, Advantus Series Fund, Inc.
and the Nuveen Tax-Deferred Investment Trust.
This is an illustration only and not a Contract.
36
<PAGE>
APPENDIX B--
ILLUSTRATION OF MARKET VALUE ADJUSTMENTS
The following are examples of market value adjustment (MVA) calculations using
hypothetical guarantee period interest rates. These examples do not include the
effect of any deferred sales charge that may be assessed under the contract upon
withdrawal.
EXAMPLE I
Assumptions:
Allocation to the three year Guarantee Period of the Fixed Account.
Withdrawal requested 16 months after the date of allocation
i = the Treasury rate on the date of allocation into the Fixed Account for the
original Guarantee Period
j = the calculated interest rate for the number of whole months remaining in the
Guarantee Period as of the date of withdrawal, surrender or transfer; based on
linear interpolation from current Treasury Rates for benchmark notes
n = the number of months remaining (rounded to the nearest whole month)
i = 8%
1 year Treasury Rate at withdrawal = 9.00%
2 year Treasury Rate at withdrawal = 10.50%
j = (.0900) + (8/12) x (.1050 - .0900) = 10.00%
n = 36 - 16 = 20
n/12
MVA factor = (1 + i) - 1
--------------
(1 + j + .0025)
20/12
= (1.08) - 1 = -.0338
--------------
(1.1025)
In this example, the current Treasury rate is higher than the original rate,
therefore there is a negative market value adjustment, that is, the market value
is less than the accumulation value. This factor is applied to the amount
withdrawn from the accumulation value and the resultant payment is reduced by
that amount.
In the above example, if the withdrawal from the accumulation value was
$5,000, the dollar amount of the market value adjustment would be -.0338 x
$5,000 = ($169) and the amount of the payment would be $5,000 - $169 = $4,831.
The market value adjustment is guaranteed to never be less than an amount
which would cause the market value to be reduced below the allocation to the
Fixed Account Guarantee Period accumulated at 3%. For example, in the above
example, if the original allocation was $4,700, the accumulation of the
allocation at 3% from the time of the allocation to the time of withdrawal, 16
months later, would be (1.03)16/12 x $4,700 = $4,888.93, which is greater than
the above calculated market value. The amount of the payment would be the
greater amount of $4,888.93.
If, in the above example, the original allocation was $4,600, the accumulation
of the allocation at 3% from the time of the allocation to the time of
withdrawal, 16 months later, would be (1.03)16/12 x $4,600 = $4,784.91, which is
less than the above calculated market value. The amount of the payment would be
the greater amount of $4,831.
In addition to the market value adjustment, withdrawals may be subject to a
deferred sales charge as described in the contract. The market value adjustment
is done before application of any deferred sales charge.
37
<PAGE>
EXAMPLE II
Assumptions:
Allocation to the three year Guarantee Period of the Fixed Account.
Withdrawal requested 16 months after the date of allocation
i = the Treasury rate on the date of allocation into the Fixed Account for the
original Guarantee Period
j = the calculated interest rate for the number of whole months remaining in the
Guarantee Period as of the date of withdrawal, surrender or transfer; based on
linear interpolation from current Treasury Rates for benchmark notes
n = the number of months remaining (rounded to the nearest whole month)
i = 8%
1 year Treasury Rate at withdrawal = 5.00%
2 year Treasury Rate at withdrawal = 6.50%
j = (.0500) + (8/12) x (0.650 - .0500) = 6.00%
n = 36 - 16 = 20
n/12
MVA factor = (1 + i) - 1
--------------
(1 + j + .0025)
20/12
= (1.08) - 1 = .0276
--------------
(1.0625)
In this example, the current Treasury rate is lower than the original rate,
therefore there is a positive market value adjustment, that is, the market value
is greater than the accumulation value. This factor is applied to the amount
withdrawn from the accumulation value and the resultant payment is increased by
that amount.
In the above example, if the withdrawal from the accumulation value was
$5,000, the dollar amount of the market value adjustment would be .0276 x $5,000
= $138 and the amount of the payment would be $5,000 + $138 = $5,138.
In addition to the market value adjustment, withdrawals may be subject to a
deferred sales charge as described in the contract. The market value adjustment
is done before application of any deferred sales charge.
38
<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) 665-3500
The date of this document and the Prospectus is: September 1, 1998
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 Variable Account's Prospectus, bearing the same
date, which may be obtained by calling The Minnesota Mutual Life Insurance
Company at (612) 665-3500, after September 1, 1998, (651) 665-3500, 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 Administrative
Services, Minnesota Mining and Manufacturing
Company, Maplewood, Minnesota
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)
Leslie S. Biller President and Chief Operating Officer, Norwest
Corporation, Minneapolis, Minnesota (Banking)
John F. Grundhofer President and Chief Executive Officer,
U.S. Bancorp, 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)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L.
Carlson School of Management, University of
Minnesota
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 Tinson Saario, Ph.D. Prior to March 1996, for more than five years,
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
2
<PAGE>
Michael E. Shannon Chairman and Chief Financial and Administrative
Officer, Ecolab Inc., St. Paul, Minnesota
(Develops and Markets Cleaning and Sanitizing
Products)
Frederick T. Weyerhaeuser Retired since April 1998, prior thereto Chairman
and Treasurer, Clearwater Investment Trust since
May 1996, prior thereto for more than five years
Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
Principal Officers (other than Trustees)
Name Position
John F. Bruder Senior Vice President
Keith M. Campbell Senior Vice President
Fredrick P. Feuerherm Vice President
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
Michael T. Kellett Vice President
Richard D. Lee Vice President
Robert M. Olafson Vice President
Dennis E. Prohofsky Senior Vice President, General Counsel and
Secretary
Gregory S. Strong Senior Vice President and Chief Financial
Officer
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
William N. Westhoff Senior Vice President and Treasurer
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for the last five years. All officers
of Minnesota Mutual have been employed by Minnesota Mutual for at least five
years with the exception of Mr. Westhoff. Mr. Westhoff has been employed by
Minnesota Mutual since April 1998. Prior thereto, Mr. Westhoff was employed
by American Express Financial Corporation, Minneapolis, Minnesota, from
August 1994 to October 1997 as Senior Vice President, Global Investments and
from November 1989 to July 1994 as Senior Vice President, Fixed Income
Management.
3
<PAGE>
DISTRIBUTION OF CONTRACTS
The Contract will be sold in a continuous offering by persons who are life
insurance agents of Minnesota Mutual and who are also registered
representatives of John Nuveen & Co., Incorporated, ("Nuveen"), or other
broker-dealers who have entered into selling agreements with Nuveen. Nuveen
acts as principal underwriter of the Contract.
PERFORMANCE DATA
CURRENT YIELD FIGURES FOR MONEY MARKET SUB-ACCOUNT
Current annualized yield quotations for the Money Market Sub-Account are based
on the Sub-Account's net investment income for a seven-day or other specified
period and exclude any realized or unrealized gains or losses on sub-account
securities. Current annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical account
having a balance of one accumulation unit at the beginning of the specified
period, dividing such net change in account value by the value of the account at
the beginning of the period, and annualizing this quotient on a 365-day basis.
The Variable Annuity Account may also quote the effective yield of the Money
Market Sub-Account for a seven-day or other specified period for which the
current annualized yield is computed by expressing the unannualized return on a
compounded, annualized basis. The yield and effective yield of the Money Market
Sub-Account for the seven-day period ended December 31, 1997 were 0% and
0%, respectively. Yield figures quoted by the Money Market Sub-Account will
not reflect the deduction of any applicable deferred sales charges (the deferred
sales charges, as a percentage of the purchase payments applied to amounts
transferred, surrendered or withdrawn, begin from the date such payments are at
0% and decrease to 0% after the completion of seven contract years).
TOTAL RETURN FIGURES FOR ALL SUB-ACCOUNTS
Cumulative total return quotations for Sub-Accounts represent the total return
for the period since the Sub-Account became available pursuant to the Variable
Account's registration statement. Therefore, for periods prior to the date of
this Prospectus the quotations will be based on the assumption that the
contracts described herein were issued when the underlying Portfolios first
commenced operations. Cumulative total return is equal to the percentage change
between the net asset value of a hypothetical $1,000 investment at the beginning
of the period and the net asset value of that same investment at the end of the
period. Such quotations of cumulative total return will not reflect the
deduction of any applicable deferred sales charges.
The cumulative total return figures published by the Variable Annuity and
the Nuveen Trust relating to the contract described in the prospectus will
reflect Minnesota Mutual's voluntary absorption of certain underlying Fund
expenses described below.
<TABLE>
<CAPTION>
From Inception Date of
to 12/31/97 Inception
------------------ ---------
<S> <C> <C> <C>
Money Market Sub-Account _____% (_____%) 12/3/85
Mortgage Securities Sub-Account _____% (_____%) 6/1/87
Index 500 Sub-Account _____% (_____%) 6/1/87
Small Company Sub-Account _____% (_____%) 5/3/93
Value Stock Sub-Account _____% (_____%) 5/2/94
Small Company Value Sub-Account _____% (_____%) ______
Global Bond Sub-Account _____% (_____%) ______
Real Estate Securities Sub-Account _____% (_____%) ______
Strategic Income Sub-Account _____% (_____%) ______
Balanced Sub-Account _____% (_____%) ______
Growth and Income Sub-Account _____% (_____%) ______
Blue Chip Growth Sub-Account _____% (_____%) ______
European Value Sub-Account _____% (_____%) ______
International Equity Sub-Account _____% (_____%) ______
</TABLE>
Cumulative total return quotations for Sub-Accounts will be accompanied by
average annual total return figures for a one-year period, five-year period and
ten-year period or for the period since the Sub-Account became available
pursuant to the Variable Account's registration statement if less than ten
years. Average annual total return figures are the average annual compounded
rates of return required for an initial investment of $1,000 to equal the
surrender value of that same investment at the end of the period. The surrender
value will reflect the deduction of the deferred
4
<PAGE>
sales charge applicable to the contract payments and to the length of the
period the payments remain in the contract. The average annual total return
figures published by the Variable Account will reflect Minnesota Mutual's and
Nuveen Trust voluntary absorption of certain Fund expenses. Prior to January
1, 1986, the Advantus Fund incurred no expenses. During 1986 and from
January 1 to March 8, 1987 Minnesota Mutual voluntarily absorbed all fees and
expenses of any Advantus Fund portfolio that exceeded 0% of the average daily
net assets of such Advantus Fund portfolio. For the period subsequent to
March 9, 1987, Minnesota Mutual is voluntarily absorbing the fees and
expenses that exceed 0% of the average daily net assets of the Growth, Bond,
Money Market, Asset Allocation and Mortgage Securities Portfolios of the
Advantus Fund, 0% of the average daily net assets of the Index 500 Portfolio
of the Advantus Fund, 0% of the average daily net assets of the Capital
Appreciation and Small Company Portfolios of the Advantus Fund and expenses
that exceed 0% of the average daily net assets of the International Stock
Portfolio of the Advantus Fund exclusive of the advisory fee. And, for the
period subsequent to May 2, 1994, Minnesota Mutual has voluntarily absorbed
fees and expenses that exceed 0% of the average daily net assets of the Value
Stock Portfolio of the Advantus Fund. For the period from February 2, 1994
to December 31, 1994 and the year ended December 31, 1997, Nuveen's Adviser
voluntarily absorbed all fees and expenses that exceeded .0% and .0%,
respectively, of the average daily net assets of the Federated High Income
Bond II Fund. For the period from February 10, 1994 to December 31, 1994 and
the year ended December 31, 1997 Nuveen's Adviser voluntarily absorbed all
fees and expenses that exceeded .0% and .0%, respectively, of the average
daily net assets of the XX Fund. There is no specified or minimum period of
time during which Minnesota Mutual and Nuveen Trust has agreed to continue
its voluntary absorption of these expenses, and Minnesota Mutual and Nuveen
Trust may in its discretion cease its absorption of expenses at any time.
Should Minnesota Mutual and Nuveen Trust cease absorbing expenses the
effect would be to increase substantially underlying Fund expenses and
thereby reduce investment return.
5
<PAGE>
The average annual rates of return for the Sub-Accounts, in connection with the
contract described in the Prospectus, for the specified periods ended December
31, 1997 are shown in the tables below. The figures in parentheses show what
the average annual rates of return would have been had Minnesota Mutual and
the Nuveen Trust not absorbed underlying Fund expenses as described above.
These figures also assume that the contracts described herein were issued at the
inception of the corresponding underlying Fund. This contract only became
available as of the date of this Prospectus.
Flexible Premium Contract
<TABLE>
<CAPTION>
Year Ended Five Years Ten Years From Inception Date of
12/31/97 Ended 12/31/97 Ended 12/31/97 to 12/31/97 Inception
-------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 12/3/85
Mortgage Securities
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 6/1/87
Index 500 Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 6/1/87
Small Company Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 5/3/93
Value Stock Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 5/2/94
Small Company Value
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Global Bond Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Real Estate Securities
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Strategic Income
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Balanced Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Growth and Income
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Blue Chip Growth
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
European Value Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
International Equity
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
</TABLE>
6
<PAGE>
The average annual total return figures described above may be accompanied by
other average annual total return quotations which do not reflect the deduction
of any deferred sales charges. Such other average annual total return figures
will be calculated as described above, except that the initial $1,000 investment
will be equated to that same investment's net asset value, rather than its
surrender value, at the end of the period. The average annual rates of return,
as thus calculated, for the Sub-Accounts of the contracts described in the
Prospectus for the specified periods ended December 31, 1997, are shown in the
table below. The figures in parentheses show what the average annual rates of
return, without the application of applicable deferred sales charges, would have
been had Minnesota Mutual and the Nuveen Trust not absorbed underlying Fund
expenses as described above.
<TABLE>
<CAPTION>
Year Ended Five Years Ten Years From Inception Date of
12/31/97 Ended 12/31/97 Ended 12/31/97 to 12/31/97 Inception
-------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 12/3/85
Mortgage Securities
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 6/1/87
Index 500 Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 6/1/87
Small Company Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 5/3/93
Value Stock Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) 5/2/94
Small Company Value
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Global Bond Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Real Estate Securities
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Strategic Income
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Balanced Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Growth and Income
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
Blue Chip Growth
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
European Value Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
International Equity
Sub-Account _____ (______) ___ (___) ___ (___) _____ (______) ______
</TABLE>
7
<PAGE>
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.
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
Contract 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
Contract. Statements contained in this Prospectus as to the contents of
Contract and other legal instruments are summaries, and reference is made to
such instruments as filed.
8
<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) Not applicable.
(b) Not applicable.
(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 on September 15, 1996,
as this Exhibit to Registrant's Form N-4, File Number 333-12629, is
hereby incorporated by reference.
2. Not applicable.
3. (a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and John Nuveen & Co., Incorporated, to be
provided by subsequent amendment.
(b) Dealer Agreement Specimen, to be provided by subsequent
amendment.
4. (a) Flexible Payment Deferred Variable Annuity Contract, form
97-9423 Rev. 5-1998.
(b) The Qualified Plan Agreement, form 88-9176 Rev. 9-96,
previously filed on September 15, 1996, as Exhibit 4(b) to
Registrant's Form N-4, File Number 333-12629, is hereby
incorporated by reference.
(c) Individual Retirement Annuity (IRA) Agreement, SEP,
Traditional IRA and Roth-IRA, form number 97-9418.
(d) Individual Retirement Annuity, SIMPLE-(IRA) Agreement, form
number 98-9431.
(e) Tax Sheltered Annuity Amendment, form 88-9213, previously filed
on September 15, 1996, as Exhibit 4(d) to Registrant's Form N-
4, File Number 333-12629, is hereby incorporated by reference.
(f) Tax Sheltered Annuity Loan Agreement, form 96-9351, previously
filed on September 15, 1996, as Exhibit 4(e) to Registrant's
Form N-4, File Number 333-12629, is hereby incorporated by
reference.
(g) Annuity Payment Endorsement, form 96-9352, previously filed on
September 15, 1996, as Exhibit 4(f) to Registrant's Form N-4,
File Number 333-12629, is hereby incorporated by reference.
(h) Annuity Payment Endorsement, form 83-9060, previously filed on
September 15, 1996, as Exhibit 4(g) to Registrant's Form N-4,
File Number 333-12629, is hereby incorporated by reference.
5. (a) Variable Annuity Application, form 97-9424.
(b) Variable Annuity Application, form 98-9434.
<PAGE>
6. Certificate of Incorporation and Bylaws.
(a) The Articles of Re-Incorporation of the Depositor, previously
filed on September 15, 1996, as Exhibit 6(a) to Registrant's
Form N-4, File Number 333-12629, is hereby incorporated by
reference.
(b) The Bylaws of the Depositor, previously filed on September 15,
1996, as Exhibit 6(b) to Registrant's Form N-4, File Number
333-12629, is hereby incorporated by reference.
7. Not applicable.
8. Fund Participation Agreement to be provided by subsequent
amendment.
9. Opinion and consent of Donald F. Gruber, Esq.
10. Consent of KPMG Peat Marwick LLP to be provided by subsequent
amendment.
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Quotation
(a) Money Market Segregated Sub-Account Performance Calculations to
be provided by subsequent amendment.
(b) Mortgage Securities Segregated Sub-Account Performance
Calculations to be provided by subsequent amendment.
(c) Index 500 Segregated Sub-Account Performance Calculations to be
provided by subsequent amendment.
(d) Small Company Segregated Sub-Account Performance Calculations to
be provided by subsequent amendment.
(e) Value Stock Segregated Sub-Account Performance Calculations to
be provided by subsequent amendment.
(f) Small Company Value Segregated Sub-Account Performance
Calculations to be provided by subsequent amendment.
(g) Global Bond Segregated Sub-Account Performance Calculations to
be provided by subsequent amendment.
(h) Real Estate Securities Segregated Sub-Account Performance
Calculations to be provided by subsequent amendment.
(i) Strategic Income Segregated Sub-Account Performance Calculations
to be provided by subsequent amendment.
(j) Balanced Segregated Sub-Account Performance Calculations to be
provided by subsequent amendment.
(k) Growth and Income Performance Calculations to be provided by
subsequent amendment.
(l) Blue Chip Growth Performance Calculations to be provided by
subsequent amendment.
(m) European Value Segregated Sub-Account Performance
Calculations to be provided by subsequent amendment.
(n) International Equity Segregated Sub-Account Performance
Calculations to be provided by subsequent amendment.
<PAGE>
15. 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
St. Paul, MN 55144-1000
Anthony L. Andersen Trustee None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Trustee None
Norwest Corporation
Sixth & Marquette
Minneapolis, MN 55479-1052
John F. Bruder Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Senior Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
Frederick P. Feuerherm Vice President None
The Minnesota Mutual Life
Insurance Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Trustee None
U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty Trustee None
Deluxe Corporation
c/o 1 Woodduck Lane
North Oaks, MN 55127
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
Michael T. Kellett Vice President None
The Minnesota Mutual
Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
<PAGE>
David S. Kidwell, Ph.D. Trustee None
The Curtis L. Carlson
School of Management
University of Minnesota
321 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
Robert M. Olafson 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 Tinson Saario, Ph.D. Trustee None
3141 Dean Court, #1202
Minneapolis, MN 55416
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
<PAGE>
Gregory S. Strong Senior Vice President and None
The Minnesota Mutual Life Chief Financial Officer
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 Investment
Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
William N. Westhoff Senior Vice President None
The Minnesota Mutual Life and Treasurer
Insurance Company
400 Robert Street North
St. Paul, MN 55101
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
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
HomePlus Insurance Company
Open-end registered investment company offering shares solely to separate
accounts of The Minnesota Mutual Life Insurance Company:
Advantus Series Fund, Inc.
Wholly-owned subsidiaries of MIMLIC Asset Management Company:
Ascend Financial Services, Inc.
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 Insurance Agency, Inc.
MCM Funding 1997-1, 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
Wholly-owned subsidiary of Ascend Financial Servies Inc.:
MIMLIC Insurance Agency of Massachusetts, Inc. (Massachusetts)
Majority-owned subsidiaries of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation
Consolidated Capital Advisors, Inc.
Majority-owned subsidiary of Ascend Financial Services, Inc.:
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.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than majority-owned, but greater than 25% owned, subsidiaries of The
Minnesota Mutual Life Insurance Company:
Advantus Money Market Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
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.
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of XXX 1, 1998, the number of holders of securities of this class were
as follows:
<TABLE>
<CAPTION>
Number of Record
Title of Class Holders
-------------- ----------------
<S> <C>
Nuveen Premier Adviser -0-
Variable Annuity Contract
</TABLE>
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
<PAGE>
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) John Nuveen & Co. Incorporated ("Nuveen") acts as principal
underwriter to the following open-end management type investment companies:
Nuveen Flagship Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen
Flagship Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen
Flagship Municipal Trust, Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free
Money Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen
Tax-Free Reserves, Inc., Flagship Admiral Funds Inc., Nuveen Investment Trust,
Nuveen Investment Trust II, and the Registrant. Nuveen also acts as depositor
and principal underwriter of the Nuveen Tax-Free Unit Trust and the Nuveen Unit
Trust, registered unit investment trusts. Nuveen has also served or is serving
as co-managing underwriter to the following closed-end management type
investment companies: Nuveen Municipal Value Fund, Inc., Nuveen California
Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen
Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen
Performance Plus Municipal Fund, Inc., Nuveen California Performance Plus
Municipal Fund, Inc., Nuveen New York Performance Plus Municipal Fund, Inc.,
Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund,
Inc., Nuveen California Municipal Market Opportunity Fund, Inc., Nuveen
Investment Quality Municipal Fund, Inc., Nuveen California Investment Quality
Municipal Fund, Inc., Nuveen New York Investment Quality Municipal Fund, Inc.,
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Investment Quality
Municipal Fund, Nuveen New Jersey Investment Quality Municipal Fund, Inc.,
Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen Select Quality
Municipal Fund, Inc., Nuveen California Select Quality Municipal Fund, Inc.,
Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality Income
Municipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Florida Quality Income Municipal Fund, Nuveen Michigan Quality Income Municipal
Fund, Inc., Nuveen Ohio Quality Income Municipal Fund, Inc., Nuveen Texas
Quality Income Municipal Fund, Nuveen California Quality Income Municipal Fund,
Inc., Nuveen New York Quality Income Municipal Fund, Inc., Nuveen Premier
Municipal Income Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc.,
Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Insured California Premium
Income Municipal Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen
Arizona Premium Income Municipal Fund, Inc., Nuveen Insured Florida Premium
Income Municipal Fund, Nuveen Michigan Premium Income Municipal Fund, Inc.,
Nuveen New Jersey Premium Income Municipal Fund, Inc., Nuveen Premium Income
Municipal Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund
2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington Premium
Income Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen
Georgia Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal
Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen California
Premium Income Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2,
Nuveen Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio
2, Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen Insured
New York Select Tax-Free Income Portfolio and Nuveen Select Tax-Free Income
Portfolio 3.
(b) Executive Officers of the Underwriter (who are not also directors of
the Underwriter) and the positions of these individuals with respect to the
Registrant are:
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
Anthony T. Dean President, Chief Operating Chairman and Trustee
333 West Wacker Drive Officer and Director
Chicago, IL 60606
Timothy R. Schwertfeger Chairman of the Board, President and Trustee
333 West Wacker Drive Chief Executive Officer,
Chicago, IL 60606 and Director
John P. Amboian Executive Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bruce P. Bedford Executive Vice President Executive Vice
333 West Wacker Drive President
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Richard P. Davis Vice President None
One South Main Street
Dayton, OH 45402
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President None
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606
(c) Not applicable.
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.
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
variable annuity contracts may be acceptable.
(b) The Registrant hereby undertakes to include as part of any
application to purchase a contract offered by the prospectus a space
that the applicant can check to request a Statement of Additional
Information.
<PAGE>
(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.
(d) The Minnesota Mutual Life Insurance Company hereby represents that,
as to the variable annuity contract which is the subject of this
Registration Statement, File Number 333-12629, that the fees and
charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred and the risks assumed by The Minnesota
Mutual Life Insurance Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, 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 18th day of May, 1998.
MINNESOTA MUTUAL VARIABLE ANNUITY ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By /s/Robert L. Senkler
------------------------------------------------
Robert L. Senkler
Chairman, 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 18th day of May, 1998.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By /s/Robert L. Senkler
------------------------------------------------
Robert L. Senkler
Chairman, President and
Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment to the Registration Statement has been signed below by the following
persons in their capacities with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
- ------------------------- Chairman of the Board, May 18, 1998
Robert L. Senkler President and Chief
Executive Officer
* Trustee
- -------------------------
Giulio Agostini
* Trustee
- -------------------------
Anthony L. Andersen
Trustee
- -------------------------
John F. Grundhofer
* Trustee
- -------------------------
Harold V. Haverty
* Trustee
- -------------------------
David S. Kidwell, Ph.D.
* Trustee
- -------------------------
Reatha C. King, Ph.D.
* Trustee
- -------------------------
Thomas E. Rohricht
* Trustee
- -------------------------
Terry N. Saario, Ph.D.
* Trustee
- -------------------------
Michael E. Shannon
* Trustee
- -------------------------
Frederick T. Weyerhaeuser
- ------------------------- Vice President May 18, 1998
Gregory S. Strong (chief financial officer)
- ------------------------- Vice President May 18, 1998
Gregory S. Strong (chief accounting officer)
- ------------------------- Attorney-in-Fact May 18, 1998
Dennis E. Prohofsky
* Pursuant to power of attorney dated February 9, 1998, filed as Exhibit 15
to this Registration Statement.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
4. (a) Flexible Payment Deferred Variable Annuity Contract,
form 97-9423 Rev. 5-1998.
4. (c) Individual Retirement Annuity (IRA) Agreement, SEP,
Traditional IRA and Roth-IRA, form number 97-9418.
4. (d) Individual Retirement Annuity, SIMPLE-(IRA) Agreement
form number 98-9431.
5. (a) Variable Annuity Application, form 97-9424.
5. (b) Variable Annuity Application, form 98-9434.
9. Opinion and consent of Donald F. Gruber, Esq.
<PAGE>
15. The Minnesota Mutual Life Insurance Company Power of
Attorney to Sign Registration Statements.
<PAGE>
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 the 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
at three o'clock in the afternoon.
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota,
on the contract date.
President
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 ACCUMULATION VALUE OF THIS CONTRACT; OR (b) THE AMOUNT OF PURCHASE PAYMENTS
PAID UNDER THIS CONTRACT. WE WILL PAY THIS REFUND WITHIN 7 DAYS AFTER WE
RECEIVE YOUR NOTICE OF CANCELLATION.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
ALL PAYMENTS AND VALUES PROVIDED UNDER THE FIXED ACCOUNT PRIOR TO RENEWAL DATES
MAY BE SUBJECT TO A MARKET VALUE ADJUSTMENT. THE MARKET VALUE ADJUSTMENT MAY
INCREASE OR DECREASE THE PAYMENT OR VALUES.
FLEXIBLE PAYMENT DEFERRED VARIABLE
ANNUITY CONTRACT
FIXED OR VARIABLE
ANNUITY BENEFITS
A NON-PARTICIPATING CONTRACT
Minnesota Mutual
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
97-9423 Rev. 5-1998
<PAGE>
CONTRACT INDEX
ALPHABETICAL INDEX TO THE PROVISIONS OF YOUR CONTRACT
PAGE
----
ADDITIONAL INFORMATION
AMOUNT PAYABLE AT DEATH
ANNUITY PAYMENT OPTIONS
ANNUITY PAYMENT PROVISIONS
ASSIGNMENT
BENEFICIARY
CONTRACT CHARGES
DEFINITIONS
GENERAL INFORMATION
MISSTATEMENT
PURCHASE PAYMENTS
TRANSFER PROVISIONS
VALUATION
WITHDRAWAL AND SURRENDER
<PAGE>
[NUVEEN PREMIER ADVISER ANNUITY]
YOUR CONTRACT INFORMATION - EFFECTIVE [SEPTEMBER 1, 1998]
<TABLE>
<S> <C> <C>
CONTRACT NUMBER: [1-234-567] CONTRACT DATE: [September 1, 1998]
OWNER: [John Doe] DATE OF BIRTH: [September 1, 1963]
JOINT OWNER: DATE OF BIRTH:
ANNUITANT: [John Doe] SEX: Male DATE OF BIRTH: [September 1, 1963]
JOINT ANNUITANT: SEX: DATE OF BIRTH:
MATURITY DATE: [September 1, 2048]
PLAN: [Non-Qualified] JURISDICTION: [Minnesota]
DEFERRED SALES CHARGE:
</TABLE>
<TABLE>
<CAPTION>
Years Since Purchase Payment
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------
7 and
0-1 1-2 2-3 3-4 4-5 5-6 6-7 thereafter
--- --- --- --- --- --- --- ----------
Charge: 6% 6% 5% 5% 4% 3% 2% 0%
</TABLE>
The deferred sales charge is applied to Purchase Payments withdrawn or
surrendered from this contract.
ANNUAL CONTRACT FEE: Lesser of: $30 or 2% of Accumulation Value applied only
when the greater of: (a) Accumulation Value; or (b)
Purchase Payments less withdrawals, is less than $50,000
on the Contract Anniversary.
CURRENT FIXED ACCOUNT GUARANTEE PERIODS: [1 Year]
[3 Years]
[5 Years]
[7 Years]
[10 Years]
VARIABLE ACCOUNT: [Minnesota Mutual Variable Annuity Account]
CURRENT SUB-ACCOUNTS
Portfolios of:
Advantus Series Fund, Inc. Nuveen Tax-Deferred Investment Trust.
-------------------------- -------------------------------------
[Global Bond] [Balanced]
[Index 500] [Blue Chip Growth]
[Money Market] [European Value]
[Mortgage Securities] [Growth and Income]
[Real Estate Securities] [International Equity]
[Small Company] [Strategic Income]
[Small Company Value]
[Value Stock]
HOME OFFICE: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
ST. PAUL, MINNESOTA 55101-2098
(612) 665-3500
97-9423 Rev. 5-1998 Minnesota Mutual 1
<PAGE>
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DEFINITIONS
- --------------------------------------------------------------------------------
When we use the following words, this is what we mean:
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
ACCUMULATION UNIT
An Accumulation Unit is a measure of your value in each sub-account of the
Variable Account.
ACCUMULATION VALUE
The sum of your values under this contract in the Fixed Account and/or the
Variable Account. In the Fixed Account, your value is the sum of your values in
each Guarantee Period. In the Variable Account, it is the total value of your
Accumulation Units in each sub-account. The value of each sub-account shall be
determined separately.
AGE
The Age of a person at nearest birthday.
ANNUITANT
The person named as Annuitant on Page 1 and upon whose lifetime Annuity Payment
benefits will be paid under this contract. The Annuitant may be changed prior
to the Annuity Commencement Date.
ANNUITY COMMENCEMENT DATE
The date on which Annuity Payments are elected to begin. This may be the
Maturity Date or a date you select prior to the Maturity Date.
ANNUITY PAYMENTS
A series of payments for life, for life with a minimum number of payments, for a
joint lifetime and thereafter during the lifetime of the survivor, or for a
designated period. Payments are made at regular intervals to the Annuitant or
any other payee. Annuity Payments will be due and payable only on the first day
of a calendar month.
ANNUITY UNIT
A unit of measurement used to calculate Variable Annuity Payments.
AUTOMATIC PAYMENT PLAN
An agreement which authorizes your Purchase Payment to be automatically deducted
from your bank or other financial institution account and paid directly to us.
BENEFICIARY
The person, persons or entity designated to receive Death Benefits payable under
the contract. Prior to the commencement of Annuity Payments, the Beneficiary is
the first person on the following list who is alive on the date of your death:
the Joint Owner, the primary (class 1) Beneficiary, the secondary (class 2)
Beneficiary, or if none of the above is alive, to the executor or administrator
of your estate.
97-9423 Rev. 5-1998 Minnesota Mutual 2
<PAGE>
CONTRACT ANNIVERSARY
The same day and month as the Contract Date for each succeeding year of this
contract.
CONTRACT DATE
The effective date of this contract found on Page 1. It is also the date from
which we determine Contract Anniversaries and Contract Years.
CONTRACT YEAR
A period of one year beginning with the Contract Date or a Contract Anniversary.
DEATH BENEFIT
The amount payable to the Beneficiary upon your death.
FIXED ACCOUNT
The Fixed Account is a non-unitized separate account providing Guarantee Periods
of different lengths. Amounts allocated to the Guarantee Periods of the Fixed
Account are credited with interest rates guaranteed by us for the entire
Guarantee Period.
FIXED ANNUITY PAYMENTS
Annuity Payments payable from the General Account, with guaranteed payments of
pre-established dollar amounts during the payment period.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the Variable Account.
GENERAL ACCOUNT
All assets of Minnesota Mutual other than those in the Minnesota Mutual Variable
Annuity Account, Fixed Account or in other separate accounts established by us.
GUARANTEE PERIOD
A period, of one or more years, for which the current interest rate is
guaranteed.
JOINT ANNUITANT
The person named as Joint Annuitant on Page 1 and upon whose lifetime, together
with that of the Annuitant, Annuity Payment benefits may be paid under this
contract.
JOINT OWNER
If more than one owner has been designated, each owner shall be a Joint Owner of
the contract. Joint Owners have equal ownership rights and must both authorize
any exercising of those ownership rights unless otherwise allowed by us. Any
Joint Owner must be the spouse of the other Joint Owner.
97-9423 Rev. 5-1998 Minnesota Mutual 3
<PAGE>
MARKET VALUE ADJUSTMENT
A positive or negative adjustment in the Fixed Account value that we may make if
such value is paid out, Transferred or applied to provide Annuity Payments more
than 30 days before or after the Renewal Date of the Guarantee Period in which
it was being held.
MATURITY DATE
The date specified in the application and shown on Page 1 when this contract
matures. If a date is not specified in the application, it will be the first of
the month following the later of: (a) the Annuitant's 85th birthday; or (b) ten
years after issue.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
Total Purchase Payments may not exceed $1,000,000 without our prior consent.
The amount of any initial Purchase Payment must be at least $2,000 and any
subsequent Purchase Payments must be at least $500. These minimums may not
apply under certain automatic or group payment plans which may be established
and agreed to by us.
RENEWAL DATE
The first day following the last day of any Guarantee Period in the Fixed
Account.
SURRENDER VALUE
The amount payable to you on surrender of this contract is equal to the
Accumulation Value after the application of all applicable adjustments and
deduction of all applicable charges. Amounts surrendered may be subject to a
deferred sales charge and, in addition, amounts surrendered from the Fixed
Account may be subject to a Market Value Adjustment.
TRANSFER
A Transfer is a reallocation of amounts under this contract. It may be among
the available Guarantee Periods of the Fixed Account, the Fixed Account and the
sub-accounts of the Variable Account, and the sub-accounts of the Variable
Account.
TREASURY RATE
Treasury Rate means the yield to maturity (generic "mid" quote) for the current
U.S. Treasury benchmark notes as reported from BLOOMBERG FINANCIAL SERVICES as
of 2:00 Central Standard Time.
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.
VARIABLE ACCOUNT
A separate investment account titled Minnesota Mutual Variable Annuity Account.
This separate account was established by us for this class of contracts under
Minnesota law. The separate account is
97-9423 Rev. 5-1998 Minnesota Mutual 4
<PAGE>
composed of several sub-accounts. The assets of this account are not subject to
claims arising out of any other business of ours.
VARIABLE ANNUITY PAYMENTS
Annuity Payments payable from the Variable Account with payments which may
increase or decrease in dollar amount to reflect the investment experience of
the sub-accounts of the Variable Account. The dollar amount of each Annuity
Payment is not guaranteed.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
WRITTEN REQUEST
A request in writing signed by you. In some cases, we may provide a form for
your use. We also may require that this contract be sent in with your Written
Request.
YOU, YOUR
The person named as the owner or Joint Owner on Page 1. The owner may be the
Annuitant or someone else. The owner shall be that person named as owner in the
application. The owner may be changed; however, this may create adverse income
tax consequences. If Joint Owners are named, all contract references to owner
shall mean the Joint Owners.
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GENERAL INFORMATION
- --------------------------------------------------------------------------------
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it contain the entire
contract between you and us. Any statements made in the application either by
you or 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 or defend against a claim
under 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. It must also be signed by our president, a vice
president, our secretary or an assistant secretary. No representative 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. It will be subject to all the terms and conditions of this contract
unless we state otherwise in the agreement.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THIS CONTRACT?
You can exercise all the rights under this contract. You can do this by making
a Written Request to us. You have these rights during your lifetime and before
Annuity Payments begin. Unless provided otherwise in the contract, you have
full ownership and control of this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
At least annually, we will provide you a report showing the current Accumulation
Value and Surrender Value of this contract. It will also show the current
Accumulation Unit values for each sub-account in which you have value. In
addition, we will provide you with an annual report which summarizes the year's
transactions. The report will be as of a date within two months of its mailing.
97-9423 Rev. 5-1998 Minnesota Mutual 5
<PAGE>
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PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
WHERE DO YOU MAKE PURCHASE PAYMENTS?
All Purchase Payments must be made to our home office at the address shown on
Page 1.
WHEN ARE PURCHASE PAYMENTS MADE?
You may choose when to make Purchase Payments.
ARE THERE SPECIAL METHODS OF MAKING PURCHASE PAYMENTS?
Yes. It may be possible for you to arrange with your employer to make your
Purchase Payments by payroll deduction. Or, under some plans, your employer may
make Purchase Payments on your behalf. Also, your bank or other financial
institution may consent to have your Purchase Payments automatically withdrawn
from your account and paid directly to us under an Automatic Payment Plan.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the Purchase Payments. However, we
reserve the right to make a deduction from Purchase Payments for state premium
taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
Purchase Payments may be allocated to one or more of the Guarantee Periods of
the Fixed Account or to the sub-accounts of the Variable Account. Initially,
the allocation will be as you direct in the application. You may change your
allocation for future Purchase Payments by giving us a Written Request or by
telephone, where permitted.
During the 20-day period (or, if longer, the free-look period as defined by your
state plus 10 days) following receipt of the first Purchase Payment into this
contract, we will allocate Purchase Payments directed to the variable
sub-accounts to the Money Market sub-account of the Variable Account. At the
end of this period, these Purchase Payments will be Transferred as directed by
you.
Purchase Payments received without allocation instructions will be treated as
incomplete. We will return such Purchase Payments immediately and in full if we
cannot credit them within five valuation days after receipt. However, if, after
being informed of the reasons for delay, you consent to our retaining the
Purchase Payments, we will credit them as of the end of the Valuation Period in
which the necessary requirements are complete.
WHAT ARE THE FIXED ACCOUNT OPTIONS?
The Fixed Account provides Guarantee Periods of different lengths. The
Guarantee Periods available on the Contract Date are shown on Page 1. All
amounts allocated to the same Guarantee Period on the same day will be
considered one Guarantee Period. Withdrawals, surrenders, amounts applied to
provide Annuity Payments, and Transfers from Guarantee Periods prior to the
Renewal Date may be subject to a Market Value Adjustment in certain situations
(see sections titled "Transfer Provisions" and "Withdrawal and Surrender").
To the extent permitted by law, we reserve the right at any time to offer
Guarantee Periods with durations that differ from those shown on Page 1. We
also reserve the right at any time to stop accepting new Purchase Payments,
Transfers or renewals for a particular Guarantee Period.
At the end of the Guarantee Period, you may elect the same Guarantee Period, if
available, at the then current interest rate, select a different Fixed Account
Guarantee Period, or Transfer to sub-accounts of the Variable Account. The
Guarantee Period for an allocation may not extend beyond the Maturity Date.
97-9423 Rev. 5-1998 Minnesota Mutual 6
<PAGE>
If we do not receive instructions from you prior to the Renewal Date of each
Guarantee Period, we will select a Guarantee Period which will be of the same
duration as the one which has just expired. The interest rate applicable to the
new Guarantee Period may be higher or lower than the interest rate which was
credited to the expired Guarantee Period. If, at the time of renewal, a
Guarantee Period of the same duration is no longer available, we will select the
next shortest available Guarantee Period.
WHAT ARE THE VARIABLE ACCOUNT OPTIONS?
The sub-accounts of the Variable Account available on the Contract Date are as
shown on Page 1.
Purchase Payments may be allocated to one or more of the sub-accounts. They may
also be made to any other sub-account which may be established by us under the
Variable Account for contracts of this class. We reserve the right to add,
combine or remove any sub-accounts of the Variable Account.
WHAT ARE THE INVESTMENTS OF THE VARIABLE ACCOUNT?
The Variable Account is divided into sub-accounts. For each sub-account, there
is a Fund for the investment of that sub-account's assets. 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 Accumulation Values, future
Purchase Payments and future Annuity Payments.
No transfer of assets from one separate account to another affecting owners of
contracts delivered in a given state can be made except, where required, with
the approval of the Commissioner of Insurance of that state.
MAY WE MAKE CHANGES TO THE VARIABLE ACCOUNT?
Yes. We reserve the right to transfer assets of the Variable Account to another
Variable 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 "Variable Account", as used in this contract, shall then mean the
Variable Account to which the assets were transferred.
We reserve the right, when permitted by law, to:
(a) de-register the Variable Account under the 1940 Act;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the Variable Account; and
(c) combine the Variable Account with one or more other Variable Accounts.
WHEN ARE PURCHASE PAYMENTS CREDITED TO THE CONTRACT?
Purchase Payments are credited to the contract on the Valuation Date coincident
with or next following the day they are received in our home office. If they
are received on a day which is not a Valuation Date, those amounts will be
credited on the next Valuation Date.
MAY YOU STOP MAKING PURCHASE PAYMENTS?
Yes. You may stop making Purchase Payments at any time. If you stop making
Purchase Payments, the contract remains in force as a paid-up annuity according
to its terms. Its value may be applied to provide Annuity Payments at a later
date.
97-9423 Rev. 5-1998 Minnesota Mutual 7
<PAGE>
MAY WE CANCEL THE CONTRACT?
Yes. We may, at our discretion, cancel a contract if no Purchase Payments are
made for a period of two or more full Contract Years and both: (a) the total
Purchase Payments made, less any withdrawals and associated charges; and (b) the
Accumulation Value of the contract, are less than $2,000. If such a
cancellation takes place, we will pay the Accumulation Value to you.
We will notify you of our intention to exercise these rights in your annual
report. We will act 90 days after the Contract Anniversary unless an additional
Purchase Payment is received before the end of that 90 day period.
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CONTRACT CHARGES
- --------------------------------------------------------------------------------
ARE THERE CHARGES UNDER THIS CONTRACT?
Yes. There may be a deferred sales charge, an annual contract fee and a
transaction charge. There are also certain charges which are made directly to
the Variable Account.
WHAT IS THE DEFERRED SALES CHARGE?
The deferred sales charge may be assessed upon the withdrawal or surrender of
Purchase Payments. The deferred sales charge percentages are shown below and
are applied only to withdrawals or surrenders of Purchase Payments received by
us within seven years of the date of withdrawal or surrender. For purposes of
determining the amount of deferred sales charge, Purchase Payments are deemed
withdrawn on a first-in, first-out basis.
<TABLE>
<CAPTION>
Years Since Purchase Payment
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------
7 and
0-1 1-2 2-3 3-4 4-5 5-6 6-7 thereafter
--- --- --- --- --- --- --- ----------
Charge: 6% 6% 5% 5% 4% 3% 2% 0%
</TABLE>
The amount of the deferred sales charge is determined from the percentages shown
above by: (a) calculating the number of years each Purchase Payment being
withdrawn has been in the contract; (b) multiplying each Purchase Payment being
withdrawn, after deduction of any free withdrawal amount, by the appropriate
deferred sales charge percentage from Page 1; and (c) adding the deferred sales
charge from all Purchase Payments as calculated in (b).
In no event will the total amount of deferred sales charge exceed 6% of the
Purchase Payments made under this contract.
ARE THERE CIRCUMSTANCES WHERE THE DEFERRED SALES CHARGE WILL NOT APPLY?
Yes. The deferred sales charge will not apply when:
- Amounts are withdrawn in any calendar year that are less than or equal to
the greater of: (a) Accumulation Value less Purchase Payments not
previously withdrawn; or (b) 10% of the sum of Purchase Payments not
previously withdrawn that have been received by us within seven years of
the date of withdrawal.
- Amounts are withdrawn to pay the contract fee.
- Amounts are payable as a Death Benefit upon your death.
- Amounts are applied to provide Annuity Payments under an Annuity Payment
option.
97-9423 Rev. 5-1998 Minnesota Mutual 8
<PAGE>
- A withdrawal or surrender is requested any time after the first Contract
Anniversary due to your confinement in a hospital or medical care facility
as defined in the "Withdrawal and Surrender" section of this contract.
- A withdrawal or surrender is requested any time after the first Contract
Anniversary in the event you are diagnosed with a terminal illness as
defined in the "Withdrawal and Surrender" section of this contract.
WHAT IS THE CONTRACT FEE UNDER THIS CONTRACT?
The contract fee is an annual charge deducted from the Accumulation Value. In
Contract Years where the greater of: (a) Accumulation Value; or (b) Purchase
Payments less withdrawals, is less than $50,000 on the Contract Anniversary, the
charge will be applied. The charge applied will be equal to the lesser of: $30
or 2% of the Accumulation Value at the end of the Contract Year. The contract
fee will be deducted on the Contract Anniversary from the first available sub-
account or Fixed Account Guarantee Period Accumulation Value in the following
order: (1) Money Market sub-account; (2) pro rata among the remaining variable
sub-accounts; (3) first in, first out from the largest Accumulation Value of the
Fixed Account Guarantee Periods.
WHAT IS THE TRANSACTION CHARGE UNDER THIS CONTRACT?
We reserve the right to deduct a transaction charge, not to exceed $10, for each
Transfer when the frequency of such Transfer request exceeds one every calendar
month. If applied, this charge will reduce the amount of your Transfer.
ARE THERE ADJUSTMENTS ASSOCIATED WITH THE FIXED ACCOUNT?
Yes. Amounts withdrawn, surrendered, applied to provide Annuity Payments, or
Transferred from the Guarantee Periods of the Fixed Account prior to their
Renewal Date may be subject to a Market Value Adjustment. The Market Value
Adjustment may increase or decrease the amount of the Fixed Account value being
withdrawn, surrendered or Transferred. This adjustment will not apply to the
one year Guarantee Period.
The Market Value Adjustment will be calculated by multiplying the amount
withdrawn, surrendered or Transferred by the Market Value Adjustment factor.
The Market Value Adjustment factor is equal to:
- -
| (1+i) | (n/12)
|-----------| - 1
|(1+j+.0025)|
- -
where i = Treasury Rate as of the date of the allocation into the Fixed
Account for the original Guarantee Period.
j = calculated interest rate for the number of whole months remaining
in the Guarantee Period as of the date of the withdrawal,
surrender or Transfer. The calculated interest rate will be
determined by linear interpolation based on current Treasury
Rates for benchmark notes with maturities closest to the period
being measured. If the remaining Guarantee Period is less than
one year, the calculated interest rate will equal the one year
Treasury Rate.
n = the number of whole months remaining in the Guarantee Period.
If Treasury Rates are no longer available, we will use an appropriate rate
approved by the Insurance Department of the state which has jurisdiction over
this contract.
We guarantee that the application of the Market Value Adjustment will not reduce
the Accumulation Value of each Fixed Account Guarantee Period to an amount less
than allocations to that Fixed Account Guarantee Period, less withdrawals or
Transfers, accumulated at a rate of 3%, compounded annually.
97-9423 Rev. 5-1998 Minnesota Mutual 9
<PAGE>
ARE THERE CIRCUMSTANCES WHERE THERE WILL BE NO MARKET VALUE ADJUSTMENT?
Yes. There will be no Market Value Adjustment in the following situations:
- - Withdrawals, surrenders, amounts applied to provide Annuity Payments, or
Transfers from the one year Guarantee Period of the Fixed Account.
- - Withdrawals, surrenders, amounts applied to provide Annuity Payments, or
Transfers occurring within 30 days prior to or immediately following the
Renewal Date of each Guarantee Period.
- - Amounts withdrawn from the Fixed Account to pay the contract fee.
However, amounts withdrawn or surrendered may be subject to the deferred sales
charge.
In addition, there will be no negative Market Value Adjustment applied to
withdrawals or surrenders from the Guarantee Periods when:
- - Amounts are payable as a Death Benefit upon your death.
- - A withdrawal or surrender is requested any time after the first Contract
Anniversary due to your confinement in a hospital or medical care facility as
defined in the "Withdrawal and Surrender" section of this contract.
- - A withdrawal or surrender is requested any time after the first Contract
Anniversary in the event you are diagnosed with a terminal illness as defined
in the "Withdrawal and Surrender" section of this contract.
ARE THERE CHARGES ASSOCIATED WITH THE VARIABLE ACCOUNT?
Yes. There are charges associated with the Variable Account. They are the
mortality risk charge, the expense risk charge and the administrative charge.
These charges are deducted on each Valuation Date from the assets of the
Variable Account.
WHAT IS THE MORTALITY RISK CHARGE?
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, it shall not
exceed .80% of the net asset value of the Variable Account.
WHAT IS THE EXPENSE RISK CHARGE?
This charge compensates us for the guarantee that the deductions provided in
this contract will be sufficient to cover our actual expenses. Actual expense
results incurred by us shall not adversely affect any payments or values under
this contract. On an annual basis, it shall not exceed .60% of the net asset
value of the Variable Account.
WHAT IS THE ADMINISTRATIVE CHARGE?
The administrative charge is to compensate us for the administrative expenses
incurred by us. On an annual basis, it shall not exceed .40% of the net asset
value of the Variable Account.
97-9423 Rev. 5-1998 Minnesota Mutual 10
<PAGE>
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VALUATION
- --------------------------------------------------------------------------------
HOW IS YOUR ACCUMULATION VALUE DETERMINED?
Your Accumulation Value is determined separately for each Guarantee Period in
the Fixed Account and for each sub-account of the Variable Account.
In the Fixed Account, it is the sum of all Purchase Payments or Transfers
allocated to each Guarantee Period plus interest, less any previous contract
fees, withdrawals or Transfers out of that Guarantee Period, and any previously
applied deferred sales charge or Market Value Adjustments.
For each sub-account of the Variable Account, it is your Accumulation Units
multiplied by the Accumulation Unit value.
HOW IS THE VALUE OF AN ACCUMULATION UNIT DETERMINED?
The number of Accumulation Units credited with respect to each Purchase Payment
is determined by dividing the portion of the Purchase Payment allocated to each
sub-account by the then current Accumulation Unit value for that sub-account.
This determination is made as of the Valuation Date coincident with or next
following the date on which we receive your Purchase Payment at our home office.
Once determined, the number of Accumulation Units will not be affected by
changes in the Accumulation Unit value. However, the total number of
Accumulation Units under this contract will be affected by future contract
transactions. In addition, the Accumulation Units of each sub-account will be
increased by subsequent Purchase Payments and Transfers to that sub-account.
The Accumulation Units of each sub-account will be decreased by deductions for
contract fees, withdrawals and any associated deferred sales charge, and
Transfers.
The Accumulation Unit value will be recalculated on each Valuation Date. The
new Accumulation Unit value may increase or decrease and will depend on the net
investment experience of each sub-account of the Variable Account. The value of
an Accumulation Unit for each sub-account was originally set at $1.00 on the
first Valuation Date. For any subsequent Valuation Date, its value is equal to
its value on the preceding Valuation Date multiplied by the net investment
factor for that sub-account for the Valuation Period ending on the subsequent
Valuation Date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor for a Valuation Period is the gross investment rate
for such Valuation Period, less a deduction for the charges associated with the
Variable Account at the current rate.
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 Variable 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.
DOES THE CONTRACT CREDIT INTEREST IN THE FIXED ACCOUNT?
Yes. This contract credits interest in each Guarantee Period of the Fixed
Account. Guarantee Periods will not have an interest rate of less than 3%,
compounded annually. You will designate a Guarantee Period for each Purchase
Payment or Transfer which is allocated to the Fixed Account. On the Contract
Date, the available Guarantee Periods are shown on Page 1. The interest rate in
effect on the date each
97-9423 Rev. 5-1998 Minnesota Mutual 11
<PAGE>
Purchase Payment or Transfer is allocated is guaranteed for the duration of the
Guarantee Period. We will periodically determine interest rates which are
applicable to each Guarantee Period.
- --------------------------------------------------------------------------------
TRANSFER PROVISIONS
- --------------------------------------------------------------------------------
MAY TRANSFERS BE MADE UNDER THIS CONTRACT?
Yes. Before Annuity Payments begin, these Transfers may be made by your Written
Request or, where permitted, by telephone. We will make the Transfer on the
basis of Accumulation Unit values on the Valuation Date coincident with or next
following the day we receive the request at our home office.
You may make Transfers among sub-accounts of the Variable Account or from the
Variable Account to any Guarantee Periods of the Fixed Account then being
offered. You may also Transfer from one Guarantee Period to another Guarantee
Period or to sub-accounts of the Variable Account. Transfers to a Guarantee
Period will be credited with interest at the rate then in effect for the
Guarantee Period(s) chosen by you. Except for Transfers from the one year
Guarantee Period, Transfers from Guarantee Periods at times other than the
Renewal Date may be subject to a Market Value Adjustment as described in the
section of this contract titled "Contract Charges".
Systematic Transfer arrangements may also be available for a fixed amount, over
a fixed period, or based on a fixed percentage.
ARE THERE RESTRICTIONS ON TRANSFERS?
Transfers are not limited as to amount. We reserve the right to make a
transaction charge, not to exceed $10, for each Transfer when the frequency of
such Transfer request exceeds one every calendar month. If applied, this charge
will reduce the amount of your Transfer.
MAY TRANSFERS TAKE PLACE ONCE ANNUITY PAYMENTS BEGIN?
Yes. However, Transfers may be limited. They may be made only with respect to
any Variable Annuity Payments. See the "Annuity Payment Provisions" section of
this contract.
- --------------------------------------------------------------------------------
WITHDRAWAL AND SURRENDER
- --------------------------------------------------------------------------------
MAY YOU MAKE WITHDRAWALS FROM THIS CONTRACT?
Yes. At any time before Annuity Payments begin, you may request a withdrawal
from the Accumulation Value. You must make a Written Request for any
withdrawal. The amount of any withdrawal must be for at least $250.
In the event of a withdrawal, the Accumulation Value will be reduced by the
amount requested. The amount requested will be reduced for any applicable
deferred sales charge. In addition, withdrawals from the Fixed Account may be
subject to a Market Value Adjustment which may increase or decrease the amount
of the withdrawal.
Unless instructed otherwise by you, withdrawals will be made from your value in
each Guarantee Period of the Fixed Account and each sub-account of the Variable
Account in the same proportion that your value in each Guarantee Period of the
Fixed Account and each variable sub-account bears to your total Accumulation
Value. Withdrawal values will be determined as of the Valuation Date coincident
with or next following the date your Written Request is received at our home
office.
Systematic withdrawal plans of a fixed amount or over a fixed period may also be
available.
97-9423 Rev. 5-1998 Minnesota Mutual 12
<PAGE>
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before Annuity Payments begin, you may surrender this contract
for its Surrender Value. 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.
ARE THERE SPECIAL WITHDRAWAL OR SURRENDER PROVISIONS?
Yes. Deferred sales charges and negative Market Value Adjustments will not
apply when:
- - A withdrawal or surrender is requested any time after the first Contract
Anniversary due to your confinement in a hospital or medical care facility
for at least 90 consecutive days. The request must be made while you are
still confined or within 60 days after the discharge from a hospital or
medical care facility after a confinement of at least 90 consecutive days.
Medical care facility means a facility operated pursuant to law or any state
licensed facility providing medically necessary in-patient care which is:
(a) prescribed by a licensed Physician in writing; and (b) based on physical
limitations which prohibit daily living in a non-institutional setting.
- - A withdrawal or surrender is requested any time after the first Contract
Anniversary in the event you are diagnosed with a terminal illness. Terminal
illness is a condition: (a) diagnosed by a licensed Physician; and (b) is
expected to result in death within 12 months for 80% of diagnosed cases.
For purposes of these provisions, we must receive due proof, satisfactory to us,
of your confinement or terminal illness in writing. Physician means: (a) a
licensed medical doctor (MD) or a licensed doctor of osteopathy (DO) practicing
within the scope of his or her license; and (b) not you, the Annuitant or a
member of either your or the Annuitant's immediate families. If the owner of
this contract is other than a natural person, such as a trust or other similar
entity, benefits payable due to nursing home confinement or terminal illness
will be based upon the Annuitant. If the owner, or Annuitant in the case of a
contract owned by a non-natural person, is changed subject to the provisions of
this contract, a one year waiting period will apply before the new owner or
Annuitant is eligible for these benefits.
HOW WILL WITHDRAWAL OR SURRENDER BENEFITS BE PAID?
We will pay these benefits in a single sum unless another method has been
requested and approved by us. If this contract is surrendered you may elect one
of the Annuity Payment options. This election is subject to the provisions of
this contract.
- --------------------------------------------------------------------------------
AMOUNT PAYABLE AT DEATH
- --------------------------------------------------------------------------------
WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before Annuity Payments have started, we will pay the Death Benefit
of the contract to the Beneficiary. If the owner of this contract is other than
a natural person, such as a trust or other similar entity, we will pay the Death
Benefit to the Beneficiary on the death of the Annuitant, if death occurs prior
to the date that Annuity Payments have started.
If you die prior to your 75th birthday, the Death Benefit is the greater of:
(a) the Accumulation Value increased by any positive Market Value Adjustment
applicable to values in the Fixed Account; (b) the sum of Purchase Payments
adjusted for any amounts previously withdrawn; or (c) the last stepped-up value
prior to the date of death, adjusted for any Purchase Payments and withdrawals
occurring thereafter.
If you die on or after your 75th birthday, the Death Benefit is the greater of:
(a) the Accumulation Value increased by any positive Market Value Adjustment
applicable to values in the Fixed Account; or (b) the last stepped-up value
prior to the date of death, adjusted for any withdrawals occurring thereafter.
97-9423 Rev. 5-1998 Minnesota Mutual 13
<PAGE>
The stepped-up value will be determined on each Contract Anniversary that is an
exact multiple of five and is prior to your 75th birthday. The stepped-up value
is the greater of: (a) the Accumulation Value on that Contract Anniversary; or
(b) the previous stepped-up value. Where Joint Owners exist, there will be no
further stepped-up values after the 75th birthday of the oldest Joint Owner.
After the death of the first Joint Owner, stepped-up values may resume on the
next Contract Anniversary that is an exact multiple of five providing the
surviving Joint Owner continues the contract and has not yet reached his or her
75th birthday.
The value of the Death Benefit will be determined as of the Valuation Date
coincident with or next following the day we receive, at our home office, due
proof of death and all related information necessary to make payment.
If the Annuitant dies after Annuity Payments have started, we will pay whatever
amount may be required by the terms of the Annuity Payment option selected. The
remaining value in the contract must be distributed at least as rapidly as under
the option in effect at the Annuitant's death.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death, satisfactory to us, we will pay the Death
Benefit under this contract to the Beneficiary or Beneficiaries.
HOW WILL THE AMOUNT PAYABLE AT DEATH BE PAID?
We will pay that amount in a single sum unless another form of settlement has
been requested and agreed to by us. All payments by us are payable at our home
office. Proof of any claim under this contract must be submitted in writing to
us at our home office.
WHEN MUST DEATH BENEFITS BE PAID?
If you die before the date on which Annuity Payments begin and if the designated
Beneficiary is a person other than your spouse, that Beneficiary may elect an
annuity option measured by a period not longer than that Beneficiary's life
expectancy. Annuity Payments must begin not later than one year after your
death. If there is no designated Beneficiary, or if an annuity option is not
elected within one year of your death, then the entire value in this contract
must be distributed within five years after your death. If the Annuitant dies
on or after Annuity Payments have begun, any payments received by a Beneficiary
must be distributed at least as rapidly as under the method elected by the
Annuitant as of the date of death.
If any portion of the Death Benefit is payable to your designated Beneficiary
who is your surviving spouse, that spouse shall be treated as the contract owner
for purposes of: (1) when payments must begin; and (2) the time of distribution
in the event of your spouse's death.
Where Joint Owners exist, at the death of the first Joint Owner, the surviving
Joint Owner will become the sole Owner of the contract.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE?
If a Beneficiary dies, that Beneficiary's interest in this contract ends with
that Beneficiary's death. Only those Beneficiaries who survive you will be
eligible to share in a Death Benefit.
After Annuity Payments have begun, if there is no Beneficiary surviving at the
death of the Annuitant, any remaining value under the Annuity Payment option
will be paid to the Annuitant's estate.
97-9423 Rev. 5-1998 Minnesota Mutual 14
<PAGE>
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 you die before the request has been
recorded, the request will not be effective as to those death proceeds we have
paid before the request was recorded in our home office records.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
WHEN DO ANNUITY PAYMENTS BEGIN?
Annuity Payments begin on the Maturity Date specified in the application and
shown on Page 1 of this contract, or on the Annuity Commencement Date if that
date is earlier. If a date is not specified in the application, it will be the
later of the first of the month following the Annuitant's 85th birthday or ten
years after issue.
If you wish to change the Annuity Commencement Date, you must notify us in
writing: (a) that Annuity Payments are to be made to the Annuitant or other
designated payee; (b) when these payments are to begin; (c) the form of the
annuity; and (d) what Annuity Payment option has been selected. We must receive
this notice at least 30 days before Annuity Payments are to begin.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
As of the fifth Valuation Date prior to the Annuity Commencement Date, we will
apply the Accumulation Value reduced by any applicable premium tax not
previously deducted and adjusted for any applicable Market Value Adjustment on
the Fixed Account.
WHAT TYPES OF ANNUITY PAYMENTS ARE AVAILABLE?
Both Fixed and Variable Annuity Payments are available under this contract.
ARE THERE RESTRICTIONS ON ANNUITY PAYMENTS?
Yes. We require that the first monthly Fixed or Variable Annuity Payment must
be at least $20. It may be less if a payment of a smaller minimum amount is
required by law. If the first monthly Fixed or Variable Annuity Payment would
be less than that amount, we reserve the right to pay you the Surrender Value in
a lump sum. This payment would be in lieu of all other rights under this
contract.
In addition, we restrict the maximum amount which may be applied to provide a
Fixed Annuity Payment under this contract. Without our prior consent, the
maximum amount which may be applied under this contract for a Fixed Annuity
Payment is $1,000,000.
MAY WE REQUIRE INFORMATION BEFORE MAKING ANNUITY PAYMENTS?
Yes. We reserve the right to require proof satisfactory to us of the Age of the
Annuitant and of any Joint Annuitant before payments begin.
We may also require proof that a person is alive before making any Annuity
Payment which is based on the survival of that person.
97-9423 Rev. 5-1998 Minnesota Mutual 15
<PAGE>
IF YOU FAIL TO ELECT AN ANNUITY PAYMENT OPTION, IS THERE AN OPTION UNDER WHICH
ANNUITY PAYMENTS WILL BE MADE?
Yes. If you do not elect an Annuity Payment option, we will make monthly
payments on the basis of Option 2A, a life annuity with a period certain of 120
months.
IF YOU FAIL TO ELECT AN ANNUITY FORM, IS THERE A FORM UNDER WHICH ANNUITY
PAYMENTS WILL BE MADE?
Yes. If you do not elect an Annuity Payment form, we will make Annuity Payments
in the form of a variable annuity using the Money Market sub-account.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment equal to the Surrender Value instead. If
you do so, you and the Annuitant shall have no further rights under this
contract.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT OPTIONS
- --------------------------------------------------------------------------------
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
The following Annuity Payment options are available:
Option 1 -- Life Annuity -- Annuity Payments payable for the lifetime of the
Annuitant, ending with the last payment due prior to the Annuitant's death.
Option 2 -- Life Annuity with a Period Certain -- Annuity Payments payable for
the lifetime of the Annuitant; provided, if the Annuitant dies before payments
have been made for the entire period certain, those remaining certain payments
will be made to the Beneficiary.
The period certain may be for 120 months (Option 2A); for 180 months (Option
2B); or for 240 months (Option 2C).
Option 3 -- Joint and Last Survivor Annuity -- Annuity Payments payable for the
joint lifetimes of the Annuitant and a designated Joint Annuitant. The payments
end with the last payment due before the survivor's death. If this option is
elected, the contract and payments shall be the joint property of the Annuitant
and the designated Joint Annuitant.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available. They will be as agreed upon between you
and us.
HOW WILL ANNUITY PAYMENTS BE MADE?
Annuity Payments under a Fixed or Variable Annuity Payment option will be made
on a monthly basis to the Annuitant or other designated payee, unless we agree
to a different payment schedule.
AFTER DEATH OF THE ANNUITANT, MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT
INSTEAD OF THE REMAINING ANNUITY PAYMENTS?
Yes. At the time of death the Beneficiary may elect, under Option 2, to have
the present value of the remaining payments (commuted value) paid in a lump sum.
It will be based on the then current dollar amount of one payment. We will use
the same interest rate which served as a basis for the annuity.
97-9423 Rev. 5-1998 Minnesota Mutual 16
<PAGE>
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The dollar amount of the first Variable Annuity Payment is determined by
applying the available value to a rate per $1,000 which is based on the
Individual Annuity 1983 Table A female mortality rates with an age setback of
one year and an interest rate of 4.50%, compounded annually. The amount of the
first Variable Annuity Payment depends upon the Annuity Payment option selected,
the adjusted Age of any Annuitant and Joint Annuitant and the amount applied.
Annuitant and Joint Annuitant Age are determined as of the Annuity Commencement
Date and adjusted based on the year of commencement as follows:
Annuity Commencement Year Age Adjustment
------------------------- --------------
2000 - 2009 -1
2010 - 2019 -2
2020 - 2029 -3
2030 and later -4
A number of Annuity Units is determined by dividing this dollar amount by the
then current Annuity Unit value. This determination is made separately for each
sub-account of the Variable Account. The number of Annuity Units remains
unchanged during the period of Annuity Payments, except for Transfers and in the
case of certain joint Annuity Payment options which provide for a reduction in
payment after the death of an Annuitant.
The dollar amount of the second and later Variable Annuity Payments is equal to
the number of Annuity Units determined for each sub-account multiplied by the
Annuity Unit value for that sub-account as of the due date of the payment. This
amount may increase or decrease.
The value of an Annuity Unit for a sub-account is determined each month as of
the first day of the month. For purposes of determining the Annuity Unit value,
the Accumulation Unit values will be as of the fifth Valuation Date preceding
the first day of the calendar month. The value is equal to the Annuity Unit
value for that sub-account as of the first day of the preceding month multiplied
by the product of: (a) .996338; and (b) a sub-account investment factor. This
investment factor is the Accumulation Unit value for that sub-account for the
preceding month divided by the Accumulation Unit value for the second preceding
month.
The dollar amount determined for each sub-account will be aggregated for
purposes of making payment.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
The tables shown in Appendix A are used to determine the amount of guaranteed
monthly Fixed Annuity Payments. They show the dollar amount of each payment
that can be provided with each $1,000 of available value.
WILL THESE TABLES ALWAYS BE USED FOR ANNUITY PURCHASES?
Not necessarily. If, when Annuity Payments are elected, we are using tables of
annuity purchase rates for this class of contract which would result in larger
Annuity Payments, we will use those tables instead.
ONCE ANNUITY PAYMENTS BEGIN, MAY THE ANNUITY OPTION BE CHANGED?
No.
97-9423 Rev. 5-1998 Minnesota Mutual 17
<PAGE>
MAY AMOUNTS BE TRANSFERRED DURING THE ANNUITY PAYMENT PERIOD?
Yes. Amounts held as annuity reserves may be Transferred among the variable
sub-accounts during the Annuity Payment period. Annuity reserves may also be
Transferred from the variable sub-accounts to the General Account providing a
Fixed Annuity Payment during this time. Amounts payable as Fixed Annuity
Payments may not be Transferred to the variable sub-accounts.
HOW DOES AN ANNUITANT CHANGE SUB-ACCOUNT ELECTIONS OR TRANSFER AMOUNTS TO A
FIXED ANNUITY?
The change must be made by Written Request. The Annuitant and Joint Annuitant,
if any, must make such an election.
HOW WILL WE TRANSFER VARIABLE ANNUITY SUB-ACCOUNT VALUES?
A Transfer will be made on the basis of Annuity Unit values. The number of
Annuity Units from the sub-account being Transferred will be converted to a
number of Annuity Units in a new sub-account. The Annuity Payment option will
stay the same.
When you tell us to make such a Transfer it will be effective for future Annuity
Payments. Your Transfer will be effective and amounts will be actually
Transferred as of the Annuity Payment Valuation Date prior to the next Annuity
Payment affected by your request. We will use the same valuation procedures
that we describe to determine an initial Variable Annuity Payment.
After this conversion, a number of Annuity Units in the new sub-account will be
payable under the elected option. The first payment after conversion will be of
the same amount as it would have been without the Transfer. The number of
Annuity Units will be set at that number of units which are needed to pay that
same amount as of the Transfer date.
HOW WILL WE TRANSFER AMOUNTS HELD AS RESERVES TO PAY VARIABLE ANNUITY PAYMENTS
TO PURCHASE FIXED ANNUITY PAYMENTS?
When you instruct us to make such a Transfer it will be effective for future
Annuity Payments. Your Transfer will be effective and amounts will be actually
Transferred as of the Annuity Payment Valuation Date prior to the next Annuity
Payment. We will use the same method to determine the Fixed Annuity Payment at
the time of Transfer that we describe to determine an initial Fixed Annuity
Payment.
The amount Transferred will then be applied to provide a Fixed Annuity Payment.
This amount will be based upon the Age of the Annuitant and any Joint Annuitant
at the time of the Transfer. The Annuity Payment option will remain the same.
ARE THERE ANY RESTRICTIONS ON ANNUITY SUB-ACCOUNT TRANSFERS?
Yes. We reserve the right to require Transfers during the Annuity Payment
period to meet the following conditions:
- - The Transfer of an annuity reserve amount from any sub-account must be at
least equal to $5,000, or the entire amount of the reserve remaining in that
sub-account, if less.
- - Variable Annuity Payments must be in effect for a period of 12 months before
a change may be made.
- - Transfers are limited to one in any 12 month period.
Your Written Request for an annuity sub-account Transfer must be received by us
at least 30 days in advance of the due date of the Annuity Payment subject to
the Transfer.
97-9423 Rev. 5-1998 Minnesota Mutual 18
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
CAN YOU ASSIGN THIS CONTRACT?
Unless this contract provides otherwise, you may assign all rights to this
contract during the lifetime of the Annuitant. We will not be bound by any
assignment until we have recorded written notice 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 made by us before it was recorded. Any proceeds
payable to an assignee will be paid in a single sum. Any claim made by an
assignee will be subject to proof of the assignee's interest and the extent of
the assignment.
If this contract is issued pursuant to a retirement plan which receives
favorable tax treatment under the provisions of Section 401, 403, 404, 408 or
457 of the Internal Revenue Code, then it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
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 paid-up benefit, withdrawal benefit, surrender benefit, or any other benefit
described by this contract shall be calculated as of the date the provisions of
the contract are exercised. Interest credited on Purchase Payments made to the
Fixed Account shall be calculated on contract amounts from the date they are
credited to the contract to the date the withdrawal value or Surrender Value is
determined.
WILL THERE BE AN ADJUSTMENT IF A PERSON'S AGE IS MISSTATED?
Yes. If a person's Age has been misstated, the amount payable under an Annuity
Payment option will be that amount which would have been paid based upon that
person's correct Age. In the case of an overpayment, we may either deduct the
required amount from that person's payments under this contract; we may require
you to pay us in cash, or we may do both until we are fully repaid. In the case
of an underpayment, we will pay the required additional amount with the next
payment.
MUST YOU PROVIDE ADDITIONAL INFORMATION?
Yes. You must provide 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. Amounts payable at death, withdrawal and surrender benefits, Accumulation
Values and the paid-up annuity benefit described by this contract are not less
than the minimum benefits required by any statute of the state in which this
contract is delivered.
WHAT ANNUITY RESERVES WILL WE HOLD UNDER THIS CONTRACT?
Reserves held by us for Annuity Payments under this contract shall not be less
than those reserves required by the law in the state in which this contract is
delivered.
MAY THIS CONTRACT BE MODIFIED?
Yes. This contract may be modified at any time by written agreement between you
and us. However, no such modification will adversely affect your rights under
this contract unless the modification is made to
97-9423 Rev. 5-1998 Minnesota Mutual 19
<PAGE>
comply with a law or government regulation. Such modification will be in
writing. You will have the right to accept or reject such a modification.
WHO OWNS THE FIXED ACCOUNT, GENERAL ACCOUNT AND VARIABLE ACCOUNTS?
We have exclusive and absolute ownership of the assets of the Fixed Account,
General Account and the Variable Account utilized by this contract.
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. However, in the case of payments from the Fixed
Account or General Account, we reserve the right to defer payment of withdrawal
or surrender benefits for up to six months. In the case of payments from the
Variable 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 the Securities and Exchange Commission has determined
that a state of emergency exists which may make such determination and payment
impractical.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. If you have Variable Account Accumulation or 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.
97-9423 Rev. 5-1998 Minnesota Mutual 20
<PAGE>
APPENDIX A
The following tables show the minimum dollar amount of monthly Fixed Annuity
Payment that can be provided with each $1,000 of available value.
The rates shown are based upon an interest rate of 3% per year, compounded
annually, and Individual Annuity 1983 Table A mortality rates with an age
setback of one year. Dollar amounts for Ages or payment frequencies other than
those shown here will be calculated on the same basis and may be obtained from
us upon request.
Annuitant and Joint Annuitant Age is determined as of the Annuity Commencement
Date and adjusted based on the year of commencement as follows:
Annuity Commencement Year Age Adjustment
------------------------- --------------
2000 - 2009 -1
2010 - 2019 -2
2020 - 2029 -3
2030 and later -4
<TABLE>
<CAPTION>
Life with Life with Life with
Male Annuitant Life 120 Months 180 Months 240 Months
Adjusted Age (Option 1) (Option 2A) (Option 2B) (Option 2C)
------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
50 $4.19 $4.15 $4.10 $4.03
55 4.60 4.54 4.45 4.32
60 5.15 5.03 4.87 4.64
65 5.91 5.66 5.36 4.96
70 6.97 6.44 5.86 5.23
75 8.45 7.32 6.31 5.40
80 10.55 8.17 6.62 5.48
85 13.46 8.86 6.79 5.51
Female Annuitant
Adjusted Age
------------
50 $3.84 $3.83 $3.81 $3.77
55 4.18 4.15 4.11 4.04
60 4.61 4.56 4.48 4.37
65 5.21 5.10 4.95 4.72
70 6.04 5.80 5.49 5.06
75 7.26 6.69 6.04 5.32
80 9.07 7.69 6.48 5.45
85 11.79 8.59 6.74 5.50
</TABLE>
<TABLE>
<CAPTION>
Joint and Last Survivor (Option 3)
Male Annuitant
Adjusted Age Female Annuitant Adjusted Age
-------------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
40 45 50 55 60 65 70 75 80 85
-- -- -- -- -- -- -- -- -- --
50 $3.29 $3.42 $3.56 $3.69 $3.82 $3.93 $4.01 $4.08 $4.12 $4.15
55 3.32 3.47 3.64 3.82 3.99 4.16 4.29 4.40 4.48 4.53
60 3.34 3.51 3.70 3.92 4.15 4.39 4.61 4.79 4.93 5.02
65 3.36 3.54 3.75 4.00 4.29 4.61 4.94 5.24 5.48 5.66
70 3.37 3.56 3.78 4.06 4.40 4.80 5.25 5.70 6.12 6.45
75 3.38 3.57 3.81 4.11 4.48 4.95 5.51 6.15 6.80 7.37
80 3.38 3.58 3.82 4.14 4.54 5.05 5.71 6.52 7.45 8.37
85 3.38 3.58 3.83 4.15 4.57 5.12 5.84 6.80 7.99 9.33
</TABLE>
97-9425 Minnesota Mutual 21
<PAGE>
APPENDIX A
The following tables show the minimum dollar amount of monthly Fixed Annuity
Payment that can be provided with each $1,000 of available value.
The rates shown are based upon an interest rate of 3% per year, compounded
annually, and Individual Annuity 1983 Table A mortality rates with an age
setback of one year, blended to provide genderless rates. Dollar amounts for
ages or payment frequencies other than those shown here will be calculated on
the same basis and may be obtained from Us upon request.
Annuitant and Joint Annuitant Age is determined as of the Annuity Commencement
Date and adjusted based on the year of commencement as follows:
Annuity Commencement Year Age Adjustment
------------------------- --------------
2000 - 2009 -1
2010 - 2019 -2
2020 - 2029 -3
2030 and later -4
<TABLE>
<CAPTION>
Life with Life with Life with
Annuitant Life 120 Months 180 Months 240 Months
Adjusted Age (Option 1) (Option 2A) (Option 2B) (Option 2C)
------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
50 $3.92 $3.90 $3.87 $3.83
55 4.26 4.23 4.18 4.10
60 4.72 4.66 4.56 4.43
65 5.35 5.21 5.03 4.78
70 6.23 5.94 5.57 5.10
75 7.49 6.82 6.10 5.34
80 9.36 7.80 6.52 5.46
85 12.12 8.65 6.75 5.50
</TABLE>
<TABLE>
<CAPTION>
Joint and Last Survivor (Option 3)
Annuitant
Adjusted Age Joint Annuitant Adjusted Age
------------ -------------------------------------------------------------------------
40 45 50 55 60 65 70 75 80 85
-- -- -- -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $3.29 $3.40 $3.52 $3.62 $3.70 $3.77 $3.82 $3.86 $3.88 $3.90
55 3.33 3.47 3.62 3.76 3.89 4.01 4.09 4.16 4.20 4.23
60 3.36 3.52 3.70 3.89 4.09 4.26 4.41 4.52 4.61 4.66
65 3.39 3.56 3.77 4.01 4.26 4.52 4.76 4.96 5.12 5.22
70 3.40 3.59 3.82 4.09 4.41 4.76 5.13 5.46 5.74 5.94
75 3.42 3.61 3.86 4.16 4.52 4.96 5.46 5.99 6.47 6.86
80 3.42 3.63 3.88 4.20 4.61 5.12 5.74 6.47 7.24 7.94
85 3.43 3.64 3.90 4.23 4.66 5.22 5.94 6.86 7.94 9.07
</TABLE>
97-9426 Minnesota Mutual 22
<PAGE>
FLEXIBLE PAYMENT DEFERRED VARIABLE
ANNUITY CONTRACT
FIXED OR VARIABLE
ANNUITY BENEFITS
A NON-PARTICIPATING CONTRACT
<PAGE>
Minnesota Mutual INDIVIDUAL RETIREMENT ANNUITY
(IRA) AGREEMENT
SEP, TRADITIONAL IRA AND ROTH-IRA
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement modifies the contract. Provisions are changed before issue. In
the event of a conflict between the provisions of this agreement and the
contract to which it is attached, the provisions of this agreement will control.
These changes will allow its use: (a) with a Simplified Employee Pension
(herein "SEP"); and/or (b) as a Traditional Individual Retirement Annuity under
the Employee Retirement Income Security Act of 1974, as amended (herein "IRA");
and/or (c) as a Roth Individual Retirement Annuity under section 408A of the
Internal Revenue Code (herein "Roth-IRA"). The provisions that apply for
Traditional IRAs generally apply for SEPs, unless otherwise stated.
PURCHASE PAYMENTS
ARE TRADITIONAL IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has an IRA, purchase payments may be limited. An
annual cash purchase payment may not exceed the lesser of: (a) the amount of
compensation includible in gross income in any taxable year; or (b) $2,000, or
such other maximum amount as may be allowed by law.
Where an annuitant establishes an IRA along with a lower earning spouse,
purchase payments may be limited. They are also limited if the annuitant is the
lower earning spouse. The cash purchase payments for both annuities and
accounts must then be considered together. They may not exceed the lesser of:
(a) the amount of compensation includible in the working spouse's compensation
includible in gross income in any taxable year; or (b) $4,000, or such other
maximum amount as may be allowed by law. In no event may an annuitant's annual
purchase payment exceed the cash amount of: (a) $2,000; or (b) the maximum
annual contribution allowed for an IRA.
The annuitant's employer may make purchase payments under the annuitant's SEP up
to the lesser of 15% of the annuitant's compensation (exclusive of compensation
in excess of $160,000) or $30,000. Other limits will apply if the annuitant's
IRA is used as part of a salary reduction SEP.
The annuitant, or the annuitant and his or her employer, are responsible for
determining the maximum purchase payments that may be made to an IRA.
ARE ROTH-IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has a Roth-IRA, purchase payments may be limited.
Annual purchase payments for all IRAs maintained by the annuitant may not exceed
the lesser of 100% of the annuitant's compensation includible in gross income in
any taxable year or $2,000. The maximum purchase payment that an annuitant may
make to a Roth-IRA will depend on the amount of the annuitant's income. The
maximum annual purchase payment allowed for a Roth-IRA is gradually reduced to
$0 between certain levels of Adjusted Gross Income ("AGI"). Adjusted gross
income is defined in section 408A(c)(3) of the Code and does not include amounts
transferred or rolled over to Traditional IRAs or Roth-IRAs. In accordance with
section 408A(c)(3) of the Code, if an annuitant is single, the $2,000 limit is
phased out between AGI of $95,000 and $110,000; if an annuitant is married and
files a joint federal income tax return, it is phased out between $150,000 and
$160,000; and if an annuitant is married and
97-9418 Minnesota Mutual 1
<PAGE>
files a separate federal income tax return, it is phased out between $0 and
$10,000.
If an annuitant is married, the maximum purchase payment to the lower-earning
spouse's Spousal Roth-IRA may not exceed the lesser of: (a) 100% of both
spouses' combined compensation minus any Roth-IRA or deductible Traditional IRA
contribution for the spouse with the higher compensation; or (b) $2,000. A
maximum of $4,000 may be contributed to both spouses' Spousal Roth-IRAs.
Purchase payments can be divided between the spouses' IRAs as the annuitant and
his spouse wish, but annual purchase payments to either one of the IRAs may not
exceed $2,000.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER TO A ROTH-IRA?
No. However, some individuals are not eligible to make rollover purchase
payments to a Roth-IRA.
A qualified rollover is a rollover contribution from another Roth-IRA or
Traditional individual retirement account or annuity in accordance with sections
408(d)(3), 408A(c)(3)(B), 408A(c)(6) and 408A(e) of the Code. A cash purchase
payment may be the amount received by or on behalf of the annuitant as all or
any portion of a distribution which is a rollover contribution. The
distribution may be one from a Traditional IRA or Roth-IRA, but may not be an
eligible rollover distribution from a tax-exempt employee's trust or a qualified
employee annuity plan.
A rollover or transfer from a Traditional IRA to a Roth-IRA will not be
permitted if the annuitant's AGI for the tax year exceeds $100,000 or if the
annuitant is married and files a separate federal income tax return. A rollover
contribution must be received by us not later than 60 days after the annuitant
receives it.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER?
No. Limits on purchase payments to the contract do not apply with a rollover
contribution. A rollover contribution is one within the meaning of sections
408(d)(3), 402(c), 403(a)(4), 403(b)(8), 408A(c)(3)(B), 408A(c)(6), 408A(d)(3)
or 408A(e) of the Internal Revenue Code (herein "Code") or a purchase payment
made in accordance with the terms of a SEP as described in section 408(k) of the
Code. In that case, a cash purchase payment may be the amount received by or on
behalf of an annuitant as all or any portion of a distribution which is a
rollover contribution. The distribution may be one from an individual
retirement account, annuity or bond plan; or an eligible rollover distribution
from a tax-exempt employee's trust; a qualified employee annuity plan; or such
other plan as may be allowed by law. A Roth-IRA, however, may not receive a
rollover contribution directly from any plan other than a Traditional IRA or
another Roth-IRA. In addition, a rollover or transfer from a Traditional IRA to
a Roth-IRA will not be permitted if the annuitant's AGI for the tax year exceeds
$100,000; or if the annuitant is married and files a separate federal income tax
return. A rollover contribution must be received by us not later than 60 days
after the annuitant receives it. A direct rollover payment may be made to us
from the plan making the distribution. A purchase payment may not include
contributions to a tax-qualified plan made by the annuitant as an employee.
MAY THE ANNUITANT ALWAYS MAKE PURCHASE PAYMENTS?
No. We will not accept purchase payments under this contract as of a date the
annuitant is not eligible for a SEP, IRA or Roth-IRA.
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<PAGE>
In addition, no additional cash contributions or rollover contributions may be
accepted under the contract if: (a) the owner dies before the distribution of
the entire interest in the contract; and (b) the beneficiary is not the
surviving spouse.
Purchase payments which exceed those allowed for an IRA or Roth-IRA may be
returned. We will send them to the annuitant. Return is without regard to the
provisions of this contract dealing with withdrawals. Excess purchase payments
to a SEP may similarly be returned. We will send them to the payer.
The annuitant has the sole responsibility for determining whether any purchase
payments meet applicable income tax requirements.
DISTRIBUTION PROVISIONS
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS FROM AN IRA?
Yes. The distribution of an annuitant's value shall be made in accordance with
the minimum distribution requirements of section 408(b)(3) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
section 1.401(a)(9)-2 of the proposed regulations. All of these rules are
incorporated herein by reference.
The annuitant's accumulation value, or withdrawal value if applicable, must be
distributed or begin to be distributed, by the annuitant's required beginning
date. This is the April 1 following the calendar year in which the annuitant
reaches age 70 1/2. For each succeeding year, a distribution must be made on or
before December 31.
The annuitant or, if applicable, the annuitant's beneficiary, is responsible for
assuring that the required minimum distribution is taken in a timely manner and
that the correct amount is distributed.
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS FROM A ROTH-IRA WHILE THE
ANNUITANT IS ALIVE?
No. The rules that apply to Traditional IRAs regarding required distributions
while an annuitant is alive do not apply to Roth-IRAs.
WHAT FORMS OF DISTRIBUTION ARE AVAILABLE FROM AN IRA?
By the required beginning date the annuitant may elect to have the accumulation
value, or withdrawal value if applicable, distributed. It must be in one of the
following forms:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the annuitant;
(c) equal or substantially equal payments over the joint lives of the annuitant
and spouse;
(d) equal or substantially equal payments over a specified period that may not
be longer than the annuitant's life expectancy;
(e) equal or substantially equal payments over a specified period that may not
be longer than the joint life and last survivor expectancy of the annuitant
and spouse.
97-9418 Minnesota Mutual 3
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Options (b), (c), (d), and (e) can be satisfied by an annuity form elected by
the annuitant or by systematic withdrawal.
Payments must be made in periodic payments at intervals of no longer than one
year. In addition, payments must be either nonincreasing or they may increase
only as provided in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations or such final regulations as adopted.
ARE THERE SPECIAL RULES IF THE ANNUITANT DIES BEFORE THE ENTIRE VALUE IN THE
CONTRACT IS DISTRIBUTED?
Yes. If the annuitant dies on or after the date distributions have begun, the
entire remaining value must be distributed at least as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If
the annuitant dies before distributions have begun, the entire remaining value
must be distributed as elected by the annuitant or, if the annuitant has not so
elected, as elected by the beneficiary or beneficiaries, as follows:
(a) by December 31st of the year containing the fifth anniversary of the
annuitant's death; or
(b) in equal or substantially equal payments over the life or life expectancy
of the designated beneficiary or beneficiaries starting by December 31st of
the year following the year of the annuitant's death. If, however, the
beneficiary is the annuitant's surviving spouse, then this distribution is
not required to begin until later. It must begin by December 31st of the
year in which the annuitant would have turned 70 1/2. Minimum payments to
the surviving spouse will be calculated in accordance with the applicable
regulations.
ARE OTHER OPTIONS AVAILABLE TO A SPOUSE BENEFICIARY?
Yes. In addition to the options discussed above, the spouse beneficiary has
other options. He or she may elect to treat the annuitant's IRA or Roth-IRA as
his or her own. This is done by either: (a) not taking a distribution within
the required time period; or (b) making eligible IRA or Roth-IRA contributions
to it.
If the beneficiary chooses one of these options then he or she is the contract
owner. He or she will assume all rights and privileges under the contract.
This right is available only to the spouse of the annuitant.
HOW ARE LIFE EXPECTANCIES FOR CALCULATING REQUIRED DISTRIBUTIONS DETERMINED?
Life expectancy is computed by use of the expected return multiples in Table V
and VI of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the annuitant prior to the commencement of
distributions or, if applicable, by the surviving spouse where the annuitant
dies before distributions have commenced, life expectancies of an annuitant or
spouse beneficiary shall be recalculated annually for purposes of required
distributions. An election not to recalculate shall be irrevocable and shall
apply to all subsequent years. The life expectancy of a nonspouse beneficiary
shall not be recalculated. Instead, life expectancy will be calculated using
the attained age of such beneficiary during the calendar year in which the
annuitant attains age 70 1/2; and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year life expectancy was first calculated.
97-9418 Minnesota Mutual 4
<PAGE>
In the case of a Roth-IRA, life expectancy will be calculated using the attained
age of such beneficiary in the calendar year distributions are required to
begin; and payments for subsequent years shall be calculated based on such life
expectancy reduced by one for each calendar year which has elapsed since the
calendar year life expectancy was first calculated.
MAY THE ANNUITANT SATISFY MINIMUM DISTRIBUTION REQUIREMENTS BY RECEIVING A
DISTRIBUTION FROM ANOTHER IRA?
Yes. An annuitant may satisfy the minimum distribution requirements under
sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one IRA that is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the owner of two or more
IRAs may use the "alternative method" described in Notice 88-38, to satisfy the
minimum distribution requirements described above.
WITHDRAWAL BENEFITS
ARE THERE LIMITS ON WITHDRAWALS FROM AN IRA?
Yes. These limits apply to a partial withdrawal or a surrender of the contract
before the annuitant's age 59 1/2. In that case, we must receive notice of the
intended disposition of the proceeds. This will not apply if the annuitant dies
or is disabled.
ARE ALL WITHDRAWALS FROM ROTH-IRAS SUBJECT TO FEDERAL INCOME TAX?
No. Purchase payments to Roth-IRAs are not deductible. Any partial withdrawal
or surrender of the contract that includes a return of the annuitant's purchase
payment(s) will not be taxable to the extent it is attributable to the purchase
payment(s). Earnings on the purchase payment(s) that are withdrawn are subject
to income tax if withdrawn within 5 years of the annuitant's first contribution
to a Roth-IRA or within 5 years of a rollover purchase payment. In addition,
earnings will be subject to income tax if withdrawn before the annuitant reaches
age 59 1/2; unless the earnings are being withdrawn because of the annuitant's
death or disability or to pay first-time home buyer expenses. If a withdrawal
is made, we must receive notice of the reason for withdrawal or intended
disposition of the proceeds. Income tax will also not apply to distributions
made if the amount received is in excess of the allowed contribution and
returned to the annuitant before the required tax return filing date for that
year, together with any earned interest; or if the entire contract is received
and reinvested in a similar plan entitled to similar tax treatment.
MAY TAX PENALTIES APPLY FOR WITHDRAWALS FROM AN IRA?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if: (1) the annuitant becomes disabled as defined by
the Code; (2) the amount received is in excess of the allowed deduction and
returned to the annuitant before the required tax return filing date for that
year, together with any earned interest; or (3) if the entire amount in the
contract is received and reinvested in a similar plan entitled to similar tax
treatment. Additional exceptions to tax penalties may be available to the
annuitant.
We will not be liable for any tax penalties under this contract. We are not
liable for penalties on amounts received or paid by us under this contract.
97-9418 Minnesota Mutual 5
<PAGE>
Any transaction treated by law as a contract distribution may be treated by us
as a complete contract surrender.
MAY TAX PENALTIES APPLY FOR WITHDRAWALS FROM ROTH-IRAS?
Yes. Certain tax penalties are imposed under the Code. If the annuitant owes
income tax on the amount withdrawn, the annuitant will also generally be subject
to a 10% premature withdrawal tax penalty on the amount on which the annuitant
paid income tax. However, the tax penalties will not apply if earnings in the
Roth-IRA are withdrawn within 5 years of the annuitant's first contribution to a
Roth-IRA or within 5 years of a rollover purchase payment from a Traditional IRA
if the distribution is: (1) made on or after the date on which the annuitant
attains age 59 1/2; (2) made because of the annuitant's disability or death; or
(3) made because the amount received was in excess of the allowed contribution
and returned to the annuitant before the required tax return filing date for
that year, together with any earned interest. In addition, the tax penalty will
not apply to a distribution if the entire contract is received and reinvested in
a similar plan entitled to similar tax treatment. Additional exceptions to tax
penalties may be available to the annuitant.
We will not be liable for any tax penalties under this contract. We are not
liable for penalties on amounts received or paid by us under this contract. Any
transaction treated by law as a contract distribution may be treated by us as a
complete contract surrender.
GENERAL INFORMATION
IS THE INTEREST OF THE ANNUITANT IN THIS CONTRACT NONFORFEITABLE?
Yes. The entire interest of the annuitant in this contract is nonforfeitable.
The annuitant shall possess the entire benefit provided by this contract. This
contract is established for the exclusive benefit of the annuitant and his or
her beneficiaries.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, must be added to the accumulation value or applied to
increase annuity payments.
HOW WILL A REFUND OF PREMIUMS BE APPLIED?
Any refund of premiums (other than those attributable to excess purchase
payments) will be applied, before the close of the calendar year following the
year of the refund, toward the payment of future premiums or the purchase of
additional benefits.
MAY THIS AGREEMENT BE AMENDED?
Yes. This contract may be amended as required to reflect any change in the
Code, regulations or published revenue rulings. The annuitant will be deemed to
have consented to any such amendment. We will promptly furnish any such
amendment to the annuitant.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
Secretary
President
97-9418 Minnesota Mutual 6
<PAGE>
Minnesota Mutual INDIVIDUAL RETIREMENT ANNUITY
SIMPLE - (IRA) AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement modifies the contract. Provisions are changed before issue. In
the event of a conflict between the provisions of this agreement and the
contract to which it is attached, the provisions of this agreement will control.
These changes will allow its use with a Savings Incentive Match Plan for
Employees (herein "SIMPLE-IRA").
PURCHASE PAYMENTS
ARE SIMPLE-IRA PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant's employer establishes a SIMPLE-IRA, purchase payments
may be limited. The annual cash purchase payments must be the lesser of: (a)
an amount equal to 100% of the compensation included in gross income in any
taxable year; or (b) $6,000, or such other maximum amount as may be allowed by
law. Mandated employer purchase payments, in addition to your purchase
payments, can range from 0% to 3% of your annual compensation.
DO PURCHASE PAYMENT LIMITATIONS APPLY TO A ROLLOVER?
No. Limits on purchase payments to the contract do not apply with a rollover
contribution. A rollover contribution is one within the meaning of sections
408(d)(3)(G) of the Internal Revenue Code (herein "Code") or a purchase payment
made in accordance with the terms of a SIMPLE-IRA as described in section 408(p)
of the Code. In that case, a cash purchase payment may be the amount received
by or on behalf of an annuitant as all or any portion of a distribution which is
a rollover contribution. The distribution may be one as allowed by law. A
rollover contribution must be received by us not later than 60 days after the
annuitant receives it. A direct rollover payment may be made to us from the
plan making the distribution. A purchase payment may not include contributions
to a tax-qualified plan made by the annuitant as an employee.
MAY THE ANNUITANT ALWAYS MAKE PURCHASE PAYMENTS?
No. We will not accept purchase payments under this contract as of a date the
annuitant is not eligible for a SIMPLE-IRA.
In addition, no additional cash contributions or rollover contributions may be
accepted under the contract if: (a) the owner dies before the distribution of
the entire interest in the contract; and (b) the beneficiary is not the
surviving spouse.
Purchase payments which exceed those allowed for a SIMPLE-IRA may be returned.
We will send them to the payer. Return is without regard to the provisions of
this contract dealing with withdrawals.
DISTRIBUTION PROVISIONS
ARE THERE RULES FOR THE TIMING OF DISTRIBUTIONS?
Yes. The distribution of an annuitant's value shall be made in accordance with
the minimum distribution requirements of section 408(b)(3) of the Code and the
regulations thereunder, including the incidental death benefit provisions of
section 1.401(a)(9)-2 of the proposed regulations. All of these rules are
incorporated herein by reference.
98-9431 Minnesota Mutual 1
<PAGE>
The annuitant's accumulation value, or withdrawal value if applicable, must be
distributed or begin to be distributed, by the annuitant's required beginning
date. This is the April 1 following the calendar year in which the annuitant
reaches age 70 1/2. For each succeeding year, a distribution must be made on or
before December 31.
WHAT FORMS OF DISTRIBUTION ARE AVAILABLE?
By the required beginning date the annuitant may elect to have the accumulation
value, or withdrawal value if applicable, distributed. It must be in one of the
following forms:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the annuitant;
(c) equal or substantially equal payments over the joint lives of the annuitant
and spouse;
(d) equal or substantially equal payments over a specified period that may not
be longer than the annuitant's life expectancy;
(e) equal or substantially equal payments over a specified period that may not
be longer than the joint life and last survivor expectancy of the annuitant
and spouse.
Options (b), (c), (d), and (e) can be satisfied by an annuity form elected by
the annuitant or by systematic withdrawal.
Payments must be made in periodic payments at intervals of no longer than one
year. In addition, payments must be either nonincreasing or they may increase
only as provided in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations or such final regulations as adopted.
ARE THERE SPECIAL RULES IF THE ANNUITANT DIES BEFORE THE ENTIRE VALUE IN THE
CONTRACT IS DISTRIBUTED?
Yes. If the annuitant dies on or after the date distributions have begun, the
entire remaining value must be distributed at least as rapidly as under the
method of distribution being used as of the date of the annuitant's death. If
the annuitant dies before distributions have begun, the entire remaining value
must be distributed as elected by the annuitant or, if the annuitant has not so
elected, as elected by the beneficiary or beneficiaries, as follows:
(a) by December 31st of the year containing the fifth anniversary of the
annuitant's death; or
(b) in equal or substantially equal payments over the life or life expectancy
of the designated beneficiary or beneficiaries starting by December 31st of
the year following the year of the annuitant's death. If, however, the
beneficiary is the annuitant's surviving spouse, then this distribution is
not required to begin until later. It must begin by December 31st of the
year in which the annuitant would have turned 70 1/2.
ARE OTHER OPTIONS AVAILABLE TO A SPOUSE BENEFICIARY?
Yes. In addition to the options discussed above, the spouse beneficiary has
other options. He or she may elect to treat the annuitant's IRA as his or her
98-9431 Minnesota Mutual 2
<PAGE>
own. This is done by either: (a) not taking a distribution within the required
time period; or (b) making eligible IRA contributions to it.
If the beneficiary chooses one of these options then he or she is the contract
owner. He or she will assume all rights and privileges under the contract.
This right is available only to the spouse of the annuitant.
HOW ARE LIFE EXPECTANCIES FOR CALCULATING REQUIRED DISTRIBUTIONS DETERMINED?
Life expectancy is computed by use of the expected return multiples in Table V
and VI of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the annuitant prior to the commencement of
distributions or, if applicable, by the surviving spouse where the annuitant
dies before distributions have commenced, life expectancies of an annuitant or
spouse beneficiary shall be recalculated annually for purposes of required
distributions. An election not to recalculate shall be irrevocable and shall
apply to all subsequent years. The life expectancy of a nonspouse beneficiary
shall not be recalculated. Instead, life expectancy will be calculated using
the attained age of such beneficiary during the calendar year in which the
annuitant attains age 70 1/2, and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year life expectancy was first calculated.
MAY THE ANNUITANT SATISFY MINIMUM DISTRIBUTION REQUIREMENTS BY RECEIVING A
DISTRIBUTION FROM ANOTHER IRA?
Yes. An annuitant may satisfy the minimum distribution requirements under
sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one IRA that is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the owner of two or more
IRAs may use the "alternative method" described in Notice 88-38, to satisfy the
minimum distribution requirements described above.
WITHDRAWAL BENEFITS
ARE THERE LIMITS ON WITHDRAWALS?
Yes. These limits apply to a partial withdrawal or a surrender of the contract
before the annuitant's age 59 1/2. In that case, we must receive notice of the
intended disposition of the proceeds. This will not apply if the annuitant dies
or is disabled.
MAY TAX PENALTIES APPLY?
Yes. If a withdrawal or surrender occurs before the annuitant is age 59 1/2,
the annuitant may be subject to tax penalties. These penalties are imposed
under the Code. The annuitant may not be subject to tax penalties on amounts
received before age 59 1/2 if: (1) the annuitant becomes disabled as defined by
the Code; (2) the amount received is in excess of the allowed deduction and
returned to the annuitant before the required tax return filing date for that
year, together with any earned interest; or (3) if the entire amount in the
contract is received and reinvested in a similar plan entitled to similar tax
treatment. Additional exceptions to tax penalties may be available to the
annuitant.
We will not be liable for any tax penalties under this contract. We are not
liable for penalties on amounts received or paid by us under this contract.
98-9431 Minnesota Mutual 3
<PAGE>
Any transaction treated by law as a contract distribution may be treated by us
as a complete contract surrender.
GENERAL INFORMATION
IS THE INTEREST OF THE ANNUITANT IN THIS CONTRACT NONFORFEITABLE?
Yes. The entire interest of the annuitant in this contract is nonforfeitable.
The annuitant shall possess the entire benefit provided by this contract. This
contract is established for the exclusive benefit of the annuitant and his or
her beneficiaries.
HOW WILL DIVIDENDS BE APPLIED?
Dividends, if received, must be added to the accumulation value or applied to
increase annuity payments.
HOW WILL A REFUND OF PREMIUMS BE APPLIED?
Any refund of premiums (other than those attributable to excess purchase
payments) will be applied, before the close of the calendar year following the
year of the refund, toward the payment of future premiums or the purchase of
additional benefits.
MAY THIS AGREEMENT BE AMENDED?
Yes. This contract may be amended as required to reflect any change in the
Code, regulations or published revenue rulings. The annuitant will be deemed to
have consented to any such amendment. We will promptly furnish any such
amendment to the annuitant.
This agreement is effective as of the original contract date unless a different
effective date is shown here.
/s/ Dennis E. Prohofsky
Secretary
/s/ Robert L. Senkler
President
98-9431 Minnesota Mutual 4
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<TABLE>
<S><C>
MINNESOTA MUTUAL NUVEEN PREMIER ADVISER ANNUITY
VARIABLE ANNUITY APPLICATION
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Distributed by John Nuveen & Co., Incorporated
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Issued by The Minnesota Mutual Life Insurance Company-Nuveen Annuity Services-G6-9000-PO Box 64872-St. Paul, Minnesota 55164-0872
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Toll Free 1-800-924-6277 Fax (651) 665-4747 Local (651) 665-4770
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OWNER (PLEASE PRINT) ANNUITANT (IF OTHER THAN OWNER)
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OWNER NAME ANNUITANT NAME
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ADDRESS ADDRESS
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CITY STATE ZIP CODE CITY STATE ZIP CODE
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DATE OF BIRTH SEX TAXPAYER ID (SSN or TIN) DAYTIME PHONE DATE OF BIRTH SEX TAXPAYER ID (SSN or TIN) DAYTIME PHONE
/ /M / /F / /M / /F
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JOINT OWNER (OPTIONAL-SPOUSE ONLY) JOINT ANNUITANT (OPTIONAL)
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JOINT OWNER NAME JOINT ANNUITANT NAME
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ADDRESS (IF DIFFERENT FROM OWNER'S) ADDRESS
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CITY STATE ZIP CODE CITY STATE ZIP CODE
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DATE OF BIRTH SEX TAXPAYER ID (SSN OR TIN) DAYTIME PHONE DATE OF BIRTH SEX TAXPAYER ID (SSN OR TIN) DAYTIME PHONE
/ /M / /F / /M / /F
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BENEFICIARY (INDICATE CLASS 1 FOR PRIMARY AND CLASS 2 FOR CONTINGENT)
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CLASS % SPLIT NAME RELATIONSHIP DATE OF BIRTH SEX SSN or TIN
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/ /M / /F
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/ /M / /F
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/ /M / /F
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/ /M / /F
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/ /M / /F
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TYPE OF CONTRACT PURCHASE PAYMENT ALLOCATION
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/ / Deferred annuity with a Maturity Date of __/01/___. Purchase Payments may be allocated to one or more of the Fixed
If none selected, the Maturity Date will be the Accounts or sub-accounts of the Variable Account. During the
later of the first of the month following the free-look period, plus ten days, following receipt of the first
annuitant's 85th birthday or ten years after Purchase Payment into this contract, Purchase Payments directed
issue. to the variable sub-accounts will be allocated to the Money
Market sub-account of the Variable Account. At the end of this
/ / Immediate annuity commencing the first of _________ period, the Purchase Payments will be transferred as you have
(month). Fixed immediate will be allocated to the 1 directed below.
year fixed account. (Please attach Annuity Payment
Request.)
- -------------------------------------------------------------- % 1 Year Fixed Account % Index 500
TYPE OF PLAN ------ ------
- -------------------------------------------------------------- % 3 Year Fixed Account % International Equity
/ / Non-Qualified (NQ) ------ ------
/ / 1035 Exchange (attach appropriate forms) % 5 Year Fixed Account % Money Market
/ / Under the ____(state) Uniform Transfers ------ ------
to Minor Act % 7 Year Fixed Account % Mortgage Securities
------ ------
/ / Individual Retirement Annuity (IRA) % 10 Year Fixed Account % Real Estate Securities
/ / Purchase Payment ------ ------
/ / Rollover (attach appropriate forms) % Balanced % Small Company
/ / Transfer (attach appropriate forms) ------ ------
% Blue Chip Growth % Small Company Value
/ / Simplified Employee Pension (SEP) ------ ------
% European Value % Strategic Income
/ / Savings Incentive Match Plans for Employees (SIMPLE) ------ ------
% Global Bond % Value Stock
/ / Tax Sheltered Annuity (IRC Section 403(b)) - (TSA) ------ ------
% Growth and Income 100 % TOTAL
/ / Qualified Retirement Plan (IRC Section 401) ------
- ------------------------------------------------------------------------------------------------------------------------------------
John Nuveen & Co., Incorporated PAGE 1 OF 2 The Minnesota Mutual Life Insurance Company
(NOT VALID WITHOUT BOTH PAGES)
97-9424
</TABLE>
<PAGE>
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT METHOD (CHECK ALL THAT APPLY)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / $_________ remitted with application / / Direct Transfer/1035 Exchange/Rollover
/ / $________ as Cash Rollover / / Automatic Payment Plan (attach authorization and voided check)
Commencing on Month ___________ Day ______
/ / $________ for tax year _________ / / Other _________________________
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT REMINDER NOTICE (CHECK ONE IF APPLICABLE)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Send Individual Purchase Payment Reminder Notice (IRA, / / Send Purchase Payment Reminder Notice to EMPLOYER*
Non-qualified only) on the 1st day of ________ (month) beginning ___________ (month) for $ ________________
for $ ____________ and continuing and continuing
/ / Quarterly / / Semi-Annually / / Annually / / Annually (1) / / Semi-Annually (2) / / Quarterly (4)
/ / Monthly (12) / / Semi-Monthly (24) / / Bi-Weekly (26)
- ------------------------------------------------------------------------------------------------------------------------------------
*EMPLOYER NAME (if other than owner) ADDRESS CITY, STATE, ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
REPLACEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Will this contract replace or change an existing insurance or annuity contract? / /Yes / /No Submit replacement forms if
applicable.
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE COMPANY CONTRACT NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER/ANNUITANT SIGNATURES
- ------------------------------------------------------------------------------------------------------------------------------------
I represent that the statements and answers in this application are full, complete and true to the best of my knowledge. I agree
that they are to be considered the basis of any contract issued to me. I ACKNOWLEDGE RECEIPT OF THE CURRENT VARIABLE ACCOUNT AND
THE FUNDS PROSPECTUSES FOR THE VARIABLE ANNUITY. 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. Amounts payable
under this contract, when part of the Fixed Account with a Guarantee Period of more than one year, may be subject to a Market Value
Adjustment when withdrawals or other payments are made prior to the Renewal Date of the Guarantee Period.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNED AT (City, State) SIGNATURE OF OWNER SIGNATURE OF ANNUITANT (if other than owner)
X X
- ------------------------------------------------------------------------------------------------------------------------------------
DATE SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT (if other than joint owner)
X X
- ------------------------------------------------------------------------------------------------------------------------------------
The Prospectuses for the Variable Account and the Funds refer to a Statement of Additional Information. Would you like us to send
you copies? / / Yes / / No
- ------------------------------------------------------------------------------------------------------------------------------------
BROKER INFORMATION (LICENSING APPOINTMENT WITH MINNESOTA MUTUAL IS REQUIRED)
- ------------------------------------------------------------------------------------------------------------------------------------
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 approved by John Nuveen &
Co., Incorporated.
- ------------------------------------------------------------------------------------------------------------------------------------
BROKER CODE BROKER NAME BROKER SIGNATURE
X
- ------------------------------------------------------------------------------------------------------------------------------------
BRANCH CODE BRANCH NAME CLIENT BROKERAGE ACCOUNT NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
FIRM CODE FIRM NAME AUTHORIZED SIGNATURE OF FIRM
X
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL NOTIFICATION INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Assign contract number and case number (if applicable) immediately and notify broker at fax number ____________,
telephone number _____________, or electronic mail address ____________________________________________________.
- ------------------------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY.
- ------------------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
John Nuveen & Co., Incorporated PAGE 2 OF 2 The Minnesota Mutual Life Insurance Company
(NOT VALID WITHOUT BOTH PAGES)
97-9424
</TABLE>
<PAGE>
<TABLE>
<S><C>
MINNESOTA MUTUAL NUVEEN PREMIER ADVISER ANNUITY
VARIABLE ANNUITY APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
Distributed by John Nuveen & Co., Incorporated
- ------------------------------------------------------------------------------------------------------------------------------------
Issued by The Minnesota Mutual Life Insurance Company-Nuveen Annuity Services-G6-9000-PO Box 64872-St. Paul, Minnesota 55164-0872
- ------------------------------------------------------------------------------------------------------------------------------------
Toll Free 1-800-924-6277 Fax (651) 665-4747 Local (651) 665-4770
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER (PLEASE PRINT) ANNUITANT (IF OTHER THAN OWNER)
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER NAME ANNUITANT NAME
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX TAXPAYER ID (SSN OR TIN) DAYTIME PHONE DATE OF BIRTH SEX TAXPAYER ID (SSN OR TIN) DAYTIME PHONE
/ /M / /F / /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
JOINT OWNER (OPTIONAL-SPOUSE ONLY) JOINT ANNUITANT (OPTIONAL)
- ------------------------------------------------------------------------------------------------------------------------------------
JOINT OWNER NAME JOINT ANNUITANT NAME
- ------------------------------------------------------------------------------------------------------------------------------------
ADDRESS (IF DIFFERENT FROM OWNER'S) ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
DATE OF BIRTH SEX TAXPAYER ID (SSN OR TIN) DAYTIME PHONE DATE OF BIRTH SEX TAXPAYER ID (SSN OR TIN) DAYTIME PHONE
/ /M / /F / /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY (INDICATE CLASS 1 FOR PRIMARY AND CLASS 2 FOR CONTINGENT)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS % SPLIT NAME RELATIONSHIP DATE OF BIRTH SEX SSN or TIN
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
/ /M / /F
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF CONTRACT PURCHASE PAYMENT ALLOCATION
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Deferred annuity with a Maturity Date of ___/01/_____. Purchase Payments may be allocated to one or more of the Fixed
If none selected, the Maturity Date will be the later Accounts or sub-accounts of the Variable Account. During the free-
of the first of the month following the annuitant's look period, plus ten days, following receipt of the first Purchase
85th birthday or ten years after issue. Payment into this contract, Purchase Payments directed to the
variable sub-accounts will be allocated to the Money Market sub-
/ / Immediate annuity commencing the first of _________ account of the Variable Account. At the end of this period, the
(month). Fixed immediate will be allocated to the 1 Purchase Payments will be transferred as you have directed below.
year fixed account. (Please attach Annuity Payment
Request.)
- -------------------------------------------------------------- % 1 Year Fixed Account % Index 500
TYPE OF PLAN ------ ------
- -------------------------------------------------------------- % 3 Year Fixed Account % International Equity
/ / Non-Qualified (NQ) ------ ------
/ / 1035 Exchange (attach appropriate forms) % 5 Year Fixed Account % Money Market
/ / Under the ____(state) Uniform Transfers ------ ------
to Minor Act % 7 Year Fixed Account % Mortgage Securities
------ ------
/ / Individual Retirement Annuity (IRA) % 10 Year Fixed Account % Real Estate Securities
/ / Purchase Payment ------ ------
/ / Rollover (attach appropriate forms) % Balanced % Small Company
/ / Transfer (attach appropriate forms) ------ ------
% Blue Chip Growth % Small Company Value
/ / Roth Individual Retirement Annuity (ROTH) ------ ------
/ / Simplified Employee Pension (SEP) % European Value % Strategic Income
/ / Savings Incentive Match Plans for Employees (SIMPLE) ------ ------
/ / Tax Sheltered Annuity (IRC Section 403(b))-(TSA) % Global Bond % Value Stock
/ / Qualified Retirement Plan (IRC Section 401) ------ ------
% Growth and Income
------ 100 % TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
John Nuveen & Co., Incorporated PAGE 1 OF 2 The Minnesota Mutual Life Insurance Company
98-9434 (NOT VALID WITHOUT BOTH PAGES)
</TABLE>
<PAGE>
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT METHOD (CHECK ALL THAT APPLY)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / $_________ remitted with application / / Direct Transfer/1035 Exchange/Rollover
/ / Automatic Payment Plan (attach authorization and voided check)
/ / $________ as Cash Rollover Commencing on Month ___________ Day ______
/ / Other _________________________
/ / $________ for tax year _________
- ------------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT REMINDER NOTICE (CHECK ONE IF APPLICABLE)
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Send Individual Purchase Payment Reminder Notice (IRA, / / Send Purchase Payment Reminder Notice to EMPLOYER*
Non-qualified only) on the 1st day of ________ (month) beginning ___________ (month) for $ ________________
for $ ____________ and continuing and continuing
/ / Quarterly / / Semi-Annually / / Annually / / Annually (1) / / Semi-Annually (2) / / Quarterly (4)
/ / Monthly (12) / / Semi-Monthly (24) / / Bi-Weekly (26)
- ------------------------------------------------------------------------------------------------------------------------------------
*EMPLOYER NAME (if other than owner) ADDRESS CITY, STATE, ZIP
- ------------------------------------------------------------------------------------------------------------------------------------
REPLACEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Will this contract replace or change an existing insurance or annuity contract? / / Yes / / No Submit replacement forms if
applicable.
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE COMPANY CONTRACT NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OWNER/ANNUITANT SIGNATURES
- ------------------------------------------------------------------------------------------------------------------------------------
I represent that the statements and answers in this application are full, complete and true to the best of my knowledge. I agree
that they are to be considered the basis of any contract issued to me. I ACKNOWLEDGE RECEIPT OF THE CURRENT VARIABLE ACCOUNT AND
THE FUNDS PROSPECTUSES FOR THE VARIABLE ANNUITY. 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. Amounts payable
under this contract, when part of the Fixed Account with a Guarantee Period of more than one year, may be subject to a Market Value
Adjustment when withdrawals or other payments are made prior to the Renewal Date of the Guarantee Period.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNED AT (City, State) SIGNATURE OF OWNER SIGNATURE OF ANNUITANT (if other than owner)
X X
- ------------------------------------------------------------------------------------------------------------------------------------
DATE SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT (if other than joint owner)
X X
- ------------------------------------------------------------------------------------------------------------------------------------
The Prospectuses for the Variable Account and the Funds refer to a Statement of Additional Information. Would you like us to send
you copies? / / Yes / / No
- ------------------------------------------------------------------------------------------------------------------------------------
BROKER INFORMATION (LICENSING APPOINTMENT WITH MINNESOTA MUTUAL IS REQUIRED)
- ------------------------------------------------------------------------------------------------------------------------------------
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 approved by John Nuveen &
Co., Incorporated.
- ------------------------------------------------------------------------------------------------------------------------------------
BROKER CODE BROKER NAME BROKER SIGNATURE
X
- ------------------------------------------------------------------------------------------------------------------------------------
BRANCH CODE BRANCH NAME CLIENT BROKERAGE ACCOUNT NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
FIRM CODE FIRM NAME AUTHORIZED SIGNATURE OF FIRM
X
- ------------------------------------------------------------------------------------------------------------------------------------
SPECIAL NOTIFICATION INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
/ / Assign contract number and case number (if applicable) immediately and notify broker at fax number ____________,
telephone number _____________, or electronic mail address ____________________________________________________.
- ------------------------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY.
- ------------------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
John Nuveen & Co., Incorporated PAGE 2 OF 2 The Minnesota Mutual Life Insurance Company
(NOT VALID WITHOUT BOTH PAGES)
98-9434
</TABLE>
<PAGE>
[LETTERHEAD]
May 18, 1998
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
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 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 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 the 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
Assistant General Counsel
<PAGE>
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.
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Robert L. Senkler Chairman of the Board, February 9, 1998
- ------------------------------- President and Chief
Robert L. Senkler Executive Officer
/s/ Giulio Agostini Trustee February 9, 1998
- -------------------------------
Giulio Agostini
/s/ Anthony L. Andersen Trustee February 9, 1998
- -------------------------------
Anthony L. Andersen
/s/ Leslie S. Biller Trustee February 9, 1998
- -------------------------------
Leslie S. Biller
Trustee
- -------------------------------
John F. Grundhofer
/s/ Harold V. Haverty Trustee February 9, 1998
- -------------------------------
Harold V. Haverty
/s/ David S. Kidwell, Ph.D. Trustee February 9, 1998
- -------------------------------
David S. Kidwell, Ph.D.
/s/ Reatha C. King, Ph.D. Trustee February 9, 1998
- -------------------------------
Reatha C. King, Ph.D.
/s/ Thomas E. Rohricht Trustee February 9, 1998
- -------------------------------
Thomas E. Rohricht
/s/ Terry Tinson Saario, Ph.D. Trustee February 9, 1998
- -------------------------------
Terry Tinson Saario, Ph.D.
<PAGE>
/s/ Michael E. Shannon Trustee February 9, 1998
- -------------------------------
Michael E. Shannon
/s/ Frederick T. Weyerhaeuser Trustee February 9, 1998
- -------------------------------
Frederick T. Weyerhaeuser
