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File Number 33-12333
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment Number
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Post-Effective Amendment Number X 12
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment Number
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VARIABLE ANNUITY ACCOUNT
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(Exact Name of Registrant)
MINNESOTA LIFE INSURANCE COMPANY
(formerly 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)
<TABLE>
<S> <C>
Dennis E. Prohofsky Copy to:
Senior Vice President, General Counsel and Secretary J. Sumner Jones, Esq.
Minnesota Life Insurance Company Jones & Blouch L.L.P.
400 Robert Street North 1025 Thomas Jefferson Street, N.W.
St. Paul, Minnesota 55101-2098 Suite 405 West
(Name and Address of Agent for Service) Washington, D.C. 20007
</TABLE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
--- immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b) of Rule 485
---
--- 60 days after filing pursuant to paragraph (a)(i)
X on May 3, 1999 pursuant to paragraph (a)(i)
---
--- 75 days after filing pursuant to paragraph (a)(ii)
--- on (date) pursuant to paragraph (a)(ii).
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED
Variable Annuity Contracts
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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Variable Annuity Account
Cross Reference Sheet to Prospectus
Form N-4
Item Number Caption in Prospectus
1. Cover Page
2. Special Terms
3. Questions and Answers About the Variable Annuity Contracts
4. Condensed Financial Information; Performance Data - Appendix
5. General Descriptions
6. Contract Charges
7. Description of the Contracts; General
8. Description of the Contracts; Annuity Payments and Options
9. Description of the Contracts; Death Benefits
10. Description of the Contracts; Purchase Payments and Value of
the Contract
11. Description of the Contracts; Redemptions
12. Federal Tax Status
13. Not Applicable
14. Table of Contents of the Statement of Additional Information
<PAGE>
FLEXIBLE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
This Prospectus describes an individual, flexible payment, variable annuity
contract ("the contract") offered by Minnesota Life Insurance Company. The
contract may be used in connection with certain types of retirement plans.
Your contract values are invested in our Variable Annuity Account. The Variable
Annuity Account invests in shares of Advantus Series Fund, Inc. and Class 2 of
the Templeton Developing Markets Funds (the "Funds"). Your contract's
accumulation value and the amount of each variable annuity payment will vary in
accordance with the performance of the Fund investment portfolio(s)
("Portfolio(s)") you select. You bear the entire investment risk for any amounts
you allocate to those Portfolios.
This Prospectus includes the information you should know before purchasing a
contract. You should read it and keep it 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 ("SEC")
and is incorporated by reference into this Prospectus. A copy of the Statement
of Additional Information may be obtained without charge by calling (651)
665-3500, or by writing to us at our office at 400 Robert Street North, St.
Paul, Minnesota 55101-2098.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS OF THE
ADVANTUS SERIES FUND, INC. AND THE TEMPLETON DEVELOPING MARKETS FUND.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE CONTRACTS OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THE
PROSPECTUS, AND, IF GIVEN OR MADE, SHOULD NOT BE RELIED UPON.
The date of this Prospectus and of the Statement of Additional Information is:
May 3, 1999
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (651) 665-3500
http://www.minnesotamutual.com
<PAGE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THE PROSPECTUS, AND, IF GIVEN
OR MADE, SHOULD NOT BE RELIED UPON.
TABLE OF CONTENTS
SPECIAL TERMS 1
QUESTIONS AND ANSWERS ABOUT THE VARIABLE ANNUITY CONTRACT 2
EXPENSE TABLE 5
GENERAL DESCRIPTIONS 8
Minnesota Life Insurance Company 8
Variable Annuity Account 8
Advantus Series Fund, Inc. 9
Templeton Variable Products Series Fund 9
Additions, Deletions or Substitutions 9
CONTRACT CHARGES 10
Administrative Charge 10
Premium Taxes 10
VOTING RIGHTS 11
DESCRIPTION OF THE CONTRACT 11
General Provisions 11
Annuity Payments and Options 14
Death Benefits 19
Purchase Payments and Value of the Contract 20
Redemptions 23
FEDERAL TAX STATUS 24
PERFORMANCE DATA 29
YEAR 2000 COMPUTER PROBLEM 30
STATEMENT OF ADDITIONAL INFORMATION 30
APPENDIX A -- ILLUSTRATION OF VARIABLE ANNUITY VALUES A-1
APPENDIX B -- CONDENSED FINANCIAL INFORMATION B-1
APPENDIX C -- TYPES OF QUALIFIED PLANS C-1
<PAGE>
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: an accounting device used to determine the value of a
contract before annuity payments begin.
ACCUMULATION VALUE: your interest in this contract composed of your interest in
one or more Sub-Accounts of the Variable Annuity Account.
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 guaranteed; for the joint lifetime of the annuitant and another person
and thereafter during the lifetime of the survivor; or for a period certain.
ANNUITY UNIT: an accounting device used to determine the amount of annuity
payments.
CODE: the Internal Revenue Code of 1986, as amended.
CONTRACT OWNER: the owner of the contract, which could be the annuitant, his
employer, or a trustee acting on behalf of the employer.
CONTRACT YEAR: a period of one year beginning with the contract date or a
contract anniversary.
FIXED ANNUITY: an annuity providing for payments of guaranteed amounts
throughout 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 Annuity
Account, namely, Advantus Series Fund, Inc. and its Portfolios and in class 2 of
the Templeton Developing Markets Fund.
PLAN: a tax-qualified employer pension, profit-sharing, or annuity purchase
plan under which benefits are to be provided by the variable annuity contracts
described herein.
PURCHASE PAYMENTS: amounts paid to us under a contract.
VALUATION DATE: each date on which a Fund Portfolio is valued.
VARIABLE ANNUITY ACCOUNT: a separate investment account called the Variable
Annuity Account, where the investment experience of its assets is kept separate
from our other assets.
VARIABLE ANNUITY: an annuity providing for payments varying in amount in
accordance with the investment experience of the Fund.
WE, OUR, US: Minnesota Life Insurance Company.
YOU, YOUR: the Contract Owner.
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QUESTIONS AND ANSWERS ABOUT
THE VARIABLE ANNUITY CONTRACTS
WHAT IS AN ANNUITY?
An annuity is a series of payments by an insurance company to an "annuitant".
These payments may be made for the life of the annuitant; 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
specified period of time. 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 CONTRACT IS OFFERED BY THIS PROSPECTUS?
The contract is a variable annuity contract which provides for monthly annuity
payments. These payments may begin immediately or at a future date you specify.
We allocate your purchase payments under your contract to the Variable Annuity
Account. The Variable Annuity Account invests in one or more Portfolios of the
Fund according to your instructions. There are no interest or principal
guarantees.
The contracts are offered for use in connection with certain retirement plans
and other circumstances including:
- members of the faculty and employees of the University of Minnesota;
- officers, directors, full-time and part-time employees, sales
representatives and their employees, and retirees of Minnesota Life or
any of Minnesota Life's other affiliated companies; any trust, pension or
other benefit plan for such persons, the spouses, siblings, direct
ancestors and direct descendants of such persons;
- groups consisting of individuals employed by an employer or associated
with a program established or maintained by an entity which:
- provides an exclusive or partially exclusive sales arrangement with
Minnesota Life or its affiliates; and
- allows for the purchase of annuities under section 403(b) or 403
(b)(9) of the Code; and
- has more than 1000 individuals who are eligible for participation
by annuity purchase.
- individuals purchasing one or more of these contracts wherein the
aggregate purchase payments total $5,000,000 or more, other than as part
of a qualified pension or profit sharing plan;
- individuals solicited by registered investment advisers who charge
clients a fee for their services and where initial contract purchase
payment is at least $25,000.
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- in connection with retirement plans under sections 401, 403 or 408 of the
Internal Revenue Code.
WHAT INVESTMENT OPTIONS ARE AVAILABLE?
Any purchase payments you allocate to the Variable Annuity Account are invested
exclusively in shares of one or more Fund Portfolios. Certain plans may restrict
which Portfolios are available. We reserve the right to add, combine or remove
other eligible Funds and Portfolios.
The available Portfolios of Advantus Series Fund are:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond Portfolios
Value Stock Portfolio
Small Company Value Portfolio
Global Bond Portfolio
Index 400 Mid-Cap Portfolio
Macro-Cap Value Portfolio
Micro-Cap Growth Portfolio
Real Estate Securities Portfolio
The Variable Annuity Account also invests in Class 2 shares of the Templeton
Developing Markets Fund.
There is no assurance that any Portfolio will meet its objectives. Detailed
information about the investment objectives and policies of the Portfolios can
be found in the current prospectus for each Fund, which are attached to this
Prospectus. You should carefully read each Fund prospectus before purchasing in
the contract.
CAN YOU CHANGE THE PORTFOLIO SELECTED?
Yes. You may change your allocation of future purchase payments by giving us
written notice or a telephone call notifying us of the change. Before annuity
payments begin, you may transfer all or a part of your accumulation value among
the Portfolios. Under some contracts, transfers may be restricted dependent upon
the source of purchase payments. Additional information can be found in this
Prospectus. After annuity payments begin, you may instruct us to transfer
amounts held as annuity reserves among the variable annuity sub-accounts subject
to some restrictions. Annuity reserves may be transferred only from a variable
annuity to a fixed annuity during the annuity period.
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WHAT CHARGES ARE ASSOCIATED WITH THE CONTRACTS?
We deduct a daily charge equal to an annual rate of .15% of the net asset value
of the Variable Annuity Account for contract administration. We reserve the
right to increase the charge to not more than .35% of the net asset value of the
Variable Annuity Account.
Deductions for any applicable premium taxes may also be made (currently such
taxes range from 0.0% to 3.5%) depending upon applicable law.
The Portfolios pay investment advisory and other expenses. Total expenses of the
Portfolios range from .40% to 1.83% of average daily net assets of the
Portfolios on an annual basis.
We reserve the right to make a charge of up to $25 for transfers among sub-
accounts occurring more frequently than once a month. We also reserve the right
to assess a one time administrative charge of $50 if you exchange this contract
for another of our variable annuity contracts. Currently we do not impose such
charges.
CAN YOU MAKE PARTIAL WITHDRAWALS FROM THE CONTRACT?
Yes. You may make partial withdrawals of the accumulation value of your contract
before an annuity begins. Your requests for withdrawals must be in writing. A
penalty tax may be assessed upon withdrawals from annuity contracts in certain
circumstances including distributions made prior to the owner's attainment of
age 59 1/2.
DO YOU HAVE A RIGHT TO CANCEL THE CONTRACT?
Yes. You may cancel the contract any time within ten days of receiving it by
returning it to us or your agent. In some states, the free look period may be
longer than ten days. For example, in California, the free look period is thirty
days. These rights are subject to change and may vary among the states.
WHAT IF THE OWNER OR ANNUITANT DIES?
If the contract owner dies before annuity payments begin, we will pay the death
benefit to the beneficiary named in the contract application. In the case of
joint owners, this amount would be payable at the death of the second owner. The
death benefit payable to the beneficiary upon the death of the contract owner
during the accumulation period is equal to the greater of:
- the amount of the accumulation value payable at death;
- the total amount of your purchase, less all partial withdrawals.
If the annuitant dies after annuity payments have begun, we will pay whatever
death benefit may be called for by the terms of the annuity option selected. If
the owner of this contract is other than a natural person, such as a trust or
other similar entity, we will pay a death benefit of the accumulation value to
the named beneficiary on the death of the annuitant if death occurs prior to the
commencement of annuity payments.
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WHAT ANNUITY OPTIONS ARE AVAILABLE?
The annuity options available are:
- a life annuity;
- a life annuity with a period certain of either 120 months, 180 months or
240 months;
- a joint and last survivor annuity and
- a period certain annuity.
Each annuity option may be elected as either a variable annuity of fixed annuity
or a combination of the two. Other annuity options may be available from us on
request.
WHAT VOTING RIGHTS DO YOU HAVE?
Contract owners and annuitants will be able to direct us as to how to vote
shares of the underlying Funds held for their contracts where shareholder
approval is required by law in the affairs of the Funds.
EXPENSE TABLE
The tables shown below are to assist you in understanding the costs and expenses
that you 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 following contract expense information is intended to illustrate the expense
of a MultiOption variable annuity contract. All expenses shown are rounded to
the nearest dollar. The information contained in the tables must be considered
with the narrative information which immediately follows them in this heading.
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
<TABLE>
<S> <C>
Administrative Charge .15%
----
Total Separate Account Annual Expense .15%
----
----
</TABLE>
PAGE 5
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FUND ANNUAL EXPENSES
(As a percentage of average net assets for the described Advantus Series Fund,
Inc. Portfolios and the Templeton Variable Product Series).
<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
OTHER EXPENSES EXPENSES (AFTER
INVESTMENT (AFTER EXPENSE DISTRIBUTION EXPENSE
MANAGEMENT FEES REIMBURSEMENTS) EXPENSES REIMBURSEMENTS)
----------------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond 2002 Portfolio (1)
Maturing Government Bond 2006 Portfolio (1)
Maturing Government Bond 2010 Portfolio (1)
Value Stock Portfolio
Small Company Value Portfolio (1)
Global Bond Portfolio
Index 400 Mid-Cap Portfolio (1)
Macro-Cap Value Portfolio (1)
Micro-Cap Growth Portfolio (1)
Real Estate Securities Portfolio (2)
Templeton Variable Products Series:
Developing Markets Fund Class 2
</TABLE>
(1) Minnesota Life 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
Life'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 Life 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 Life 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>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Growth Portfolio
Maturing Government Bond 2002
Portfolio (1)
Maturing Government Bond 2006
Portfolio (1)
Maturing Government Bond 2010
Portfolio (1)
Value Stock Portfolio
Small Company Value Portfolio (1)
Global Bond Portfolio
Index 400 Mid-Cap Portfolio (1)
Macro-Cap Value Portfolio (1)
Micro-Cap Growth Portfolio (1)
Real Estate Securities Portfolio (2)
Templeton Variable Products Series:
Developing Markets Fund Class 2
</TABLE>
The table does not reflect deductions for any applicable premium taxes which may
be made from each purchase payment depending upon the applicable law.
CONDENSED FINANCIAL INFORMATION
The financial history of each sub-account may be found in the Appendix entitled
"Condensed Financial Information."
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(SIDEBAR)
We are a life insurance company.
The Variable Annuity Account is one of our separate accounts.
Each of the 20 sub-accounts of the Variable Annuity Account invests in a
different Fund Portfolio.
(END SIDEBAR)
GENERAL DESCRIPTIONS
A. MINNESOTA LIFE INSURANCE COMPANY
We are Minnesota Life Insurance Company ("Minnesota Life"), a life insurance
company organized under the laws of Minnesota. Minnesota Life was formerly known
as The Minnesota Mutual Life Insurance Company ("Minnesota Mutual"), a mutual
life insurance company organized in 1880 under the laws of Minnesota. On October
1, 1998, a plan of reorganization created a mutual insurance holding company
named Minnesota Mutual Companies, Inc. Minnesota Mutual reorganized as stock
insurance company subsidiary of the new holding company and took the new name
Minnesota Life. Our home office is at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, telephone: (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 ANNUITY ACCOUNT
We established the Variable Annuity Account on September 10, 1984, in accordance
with Minnesota law. The name changed from Minnesota Mutual Variable Annuity
Account on October 1, 1998. The separate account is registered as a "unit
investment trust" with the Securities and Exchange Commission under the
Investment Company Act of 1940, but that registration does not mean that the
Securities and Exchange Commission supervises the management, or the investment
practices or policies, of the Variable Annuity Account.
The assets of the Variable Annuity Account are not chargeable with liabilities
arising out of any other business which we may conduct. The investment
performance of the Variable Annuity Account is entirely independent of both the
investment performance of our General Account and our separate accounts. All
obligations under the contracts are general corporate obligations of Minnesota
Life.
The Variable Annuity Account currently has twenty sub-accounts to which you may
allocate purchase payments. Each sub-account invests in shares of a
corresponding Portfolio of the Funds. Additional sub-accounts may be added at
our discretion.
The University of Minnesota provides tax-deferred annuities and custodial funds
in accordance with section 403(b) as amended by section 415, of the Code. The
University of Minnesota has separated its plan into two sections: The Basic
Plan, which is that portion of the plan that relates to the Faculty Retirement
Plan; and the Optional Plan, which is that portion of the plan which relates to
the purchase of optional annuities and mutual funds.
When this contract is used in association with the University of Minnesota Basic
Plan, purchase payments may be allocated only to the following Sub-Accounts:
Money Market Account and Bond Account. When this contract is used in
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(SIDEBAR)
We may change the Portfolios offered under the contract.
(END SIDEBAR)
association with the Optional Plan, purchase payments may be allocated to any
Sub-Account offered under the contract. In addition, contracts issued in
association with the Basic Plan and Optional Plan do not allow amounts to be
transferred between the two Plans.
C. THE FUNDS
The Advantus Series Fund, Inc. ("Series Fund") is a mutual fund advised by
Advantus Capital Management, Inc. ("Advantus Capital"). The Series Fund issues
its shares only to us and our separate accounts. It may be offered to separate
accounts of insurance companies affiliated with us in the future. Advantus
Capital is a wholly-owned subsidiary of Minnesota Life.
Advantus Capital has retained investment sub-advisers to manage the investment
of certain Portfolios of the Series Fund. Those sub-advisers are:
<TABLE>
<CAPTION>
SERIES FUND PORTFOLIO SUB-ADVISER
- --------------------- --------------------------------------
<S> <C>
Capital Appreciation Winslow Capital Management, Inc.
International Stock Templeton Investment Counsel, Inc.
Macro-Cap Value J.P. Morgan Investment Management Inc.
Micro-Cap Growth Wall Street Associates
Global Bond Julius Baer Investment Management Inc.
</TABLE>
The Variable Annuity Account also invests in Class 2 shares of Templeton
Developing Markets Fund, a diversified portfolio of Templeton Fund. The
investment adviser of Templeton Developing Markets Fund is Templeton Asset
Management Ltd.
Prospectuses for Series Fund and Templeton Fund are attached to this prospectus.
You should carefully read those prospectuses before investing in the contract.
D. ADDITIONS, DELETIONS OR SUBSTITUTIONS
We retain the right, subject to any applicable law, to make substitutions with
respect to the investments of the sub-accounts of the Variable Annuity Account.
If investment in a Fund should no longer be possible or if we determine it
becomes inappropriate these contracts, 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.
We may also establish additional sub-accounts in the Variable Annuity Account.
We reserve the right to add, combine or remove any sub-accounts of the Variable
Annuity Account. Each additional sub-account will purchase shares in a new
Portfolio or mutual fund. Sub-accounts may be established when, in our sole
discretion, marketing, tax, investment or other conditions warrant. We will use
similar considerations in determining whether to eliminate one or more of the
sub-accounts of the Variable Annuity Account. The addition of any investment
option will be made available to existing contract owners on any basis we may
determine.
PAGE 9
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(SIDEBAR)
There is an administrative charge of .15%, but we may increase it to .35%.
(END SIDEBAR)
We also reserve the right, when permitted by law, to de-register the Variable
Annuity Account under the Investment Company Act of 1940, to restrict or
eliminate any voting rights of the contract owners, and to combine the Variable
Annuity Contract with one or more of our other separate accounts.
Shares of the Portfolios of the Funds are also sold to some of our other
separate accounts, which may invest premiums under variable life policies. It is
conceivable that in the future it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the Fund simultaneously. Although neither we nor the Funds currently foresee any
such disadvantages either to variable life insurance policy owners or to
variable annuity contract owners, the Funds' Boards of Directors intend 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. An action could include the sale of Fund shares by one or
more of the separate accounts, which could have adverse consequences. Material
conflicts could result from, for example,
- changes in state insurance laws,
- changes in Federal income tax laws
- changes in the investment management of any of the Portfolios of the
Fund, or
- differences in voting instructions between those given by policy owners
and those given by contract owners.
CONTRACT CHARGES
A. 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 Fund for investment, the preparation and mailing of periodic
reports and the performance of other services.
We currently make a deduction from the Variable Annuity Account at the annual
rate of .15% for these services. We reserve the right to increase this
administrative charge to not more than .35%.
The administrative charge is designed to cover the administrative expenses
incurred by us under the contract. We do not expect to recover from the charge
any amount in excess of our accumulated expenses associated with the
administration of the contract.
B. 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
PAGE 10
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(SIDEBAR)
You can instruct us how to vote Fund shares.
The contract is a flexible payment deferred variable annuity.
(END SIDEBAR)
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.
VOTING RIGHTS
We will vote the Fund shares held in the Variable Annuity Account at shareholder
meetings of the Funds. We will vote shares attributable to contracts in
accordance with instructions received from contract owners with voting interests
in each sub-account of the Variable Annuity Account. We will vote shares for
which no instructions are received and shares not attributable to contracts in
the same proportion as shares for which instructions have been received. The
number of votes for which a contract owner may provide instructions will be
calculated separately for each sub-account of the Variable Annuity Account. If
applicable laws should change so that we were 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 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 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 annuitant of a 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 you
can instruct us with respect to voting.
DESCRIPTION OF THE CONTRACT
A. GENERAL PROVISIONS
1. Type of Contract Offered
Flexible Payment Deferred Variable Annuity Contract
The contract may be used in connection with all types of plans, 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 a
variable annuity or a fixed annuity to begin at some future date. Purchase
payments are flexible with respect to timing and amount.
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(SIDEBAR)
We issue the contract to you and you select the annuitant.
We may cancel your contract if you stop making payments and have a small
accumulation value.
(END SIDEBAR)
2. Issuance of Contracts
The contract is issued to you, the contract owner named in the application. You
may be the annuitant or may specify someone else to be the annuitant.
3. Modification of the Contracts
Your contract may be modified at any time by written agreement between you and
us. However, no such modification will adversely affect the rights of an
annuitant under the contract unless the modification is made to comply with a
law or government regulation. You will have the right to accept or reject the
modification. This right of acceptance or rejection is 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) then:
- your or the annuitant's interest may not 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, and;
- to the maximum extent permitted by law, benefits payable under the
contract shall be exempt from the claims of creditors.
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 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 payments 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.
5. Limitations on Purchase Payments
You choose when to make purchase payments. There is no minimum amount which is
to be allocated to any Sub-Account of the Variable Annuity Account.
In the Variable Annuity Account, your purchase payments are invested in the
Funds according to your instructions. We will return your initial payment within
five business days if:
- your application fails to specify which Portfolios you desire, or is
otherwise incomplete, and
- you do not consent to our retention of your initial payment until the
application is made complete.
PAGE 12
<PAGE>
(SIDEBAR)
We normally pay lump sum payments within 7 days, but may delay payments in
certain circumstances.
The contract is non-participating.
(END SIDEBAR)
The contract permits us to cancel your contract, and pay you its accumulation
value if:
- no purchase payments are made for a period of two or more full contract
years and
- the total purchase payments made, less any withdrawals and associated
charges are less than $2,000, and
- the accumulation value of the contract is less than $2,000.
We will notify you, in advance, of our intent to exercise this right in our
annual report to you about the status of your contract. We will cancel the
contract ninety days after the contract anniversary unless we receive an
additional purchase payment before the end of that ninety day period. Contracts
issued in some states (for example, New Jersey) do not contain such a
cancellation because the laws of those states do not permit it.
There may be limits on the maximum contributions to retirement plans that
qualify for special tax treatment.
6. Deferment of Payment
We will pay any single sum payment within seven days after the date the payment
is called for by terms of the contract; unless the payment is postponed for:
- any period during which the New York Stock Exchange is closed other than
customary weekend and holiday closings, or during which trading on the
New York Stock Exchange is restricted, as determined by the Securities
and Exchange Commission;
- any period during which an emergency exists as determined by the
Commission as a result of which it is not reasonably practical to dispose
of securities in the Fund or to fairly determine the value of the assets
of the Fund; or
- such other periods as the Commission may by order permit for the
protection of the contract owners.
7. Participation
The contract is non-participating. Contracts issued before October 1, 1998 were
participating.
No assurance can be given as to the amounts, if any, that will be distributable
under participating contracts in the future. When we make any distribution of
dividends, it may take the form of additional payments to annuitants or the
crediting of additional accumulation units. We do not anticipate making dividend
payments under this contract.
PAGE 13
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(SIDEBAR)
Each of the annuity options is available on a fixed, variable or combination
fixed and variable basis.
You tell us when to begin making annuity payments to the annuitant, unless your
retirement plan requires them to commence by a certain age.
(END SIDEBAR)
B. ANNUITY PAYMENTS AND OPTIONS
1. Annuity Payments
Variable annuity payments are determined on the basis of:
- a mortality table at least as favorable as the mortality table specified
in the contract, which reflects the age of the annuitant,
- the type of annuity payment option selected, and
- the investment performance of the Fund Portfolios 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 maximum
expense deductions provided for in the contract. The annuitant will receive the
value of a fixed number of annuity units each month. The value of such units,
and thus the amounts of the monthly annuity payments will, however, reflect
investment gains and losses and investment income of Funds and thus the annuity
payments will vary with the investment experience of the assets of the Portfolio
of the Fund selected by the contract owner.
2. Electing the Retirement Date and Form of Annuity
The contracts provide for four optional annuity forms. Any one of them may be
elected if permitted by law. Each annuity option may be elected on either a
variable annuity or a fixed annuity basis, or a combination of the two. We may
make other annuity options available on request.
While the contracts require that we receive your notice of election to begin
annuity payments at least 30 days prior to the annuity commencement date, we are
currently waiving that requirement for such variable annuity elections received
at least three valuation days prior to the 15th of the month. We reserve the
right to enforce the 30 day notice requirement at our option at any time in the
future.
The contract permits an annuity payment to begin on the first day of any month
after the 50th birthday of the annuitant. Contract payments must begin before
the 75th birthday of the annuitant. We are currently waiving this restriction.
If an election has not been made otherwise, and the plan does not specify to the
contrary, annuity payments will begin on the later of:
- the first day of the month immediately following the 65th birthday of the
annuitant, or
- the first day of the month immediately following the fifth contract
anniversary.
A variable annuity will be provided and the annuity option shall be Option 2A, a
life annuity with a period of 120 months. The minimum first monthly annuity
payment on either a variable or fixed dollar basis is $20. If such first monthly
PAGE 14
<PAGE>
payment would be less than $20, we may fulfill our obligation by paying in a
single sum the accumulation value of the contract which would otherwise have
been applied to provide annuity payments.
Once annuity payments have commenced, you cannot surrender an annuity benefit
and receive a single sum settlement in lieu thereof.
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. Optional Annuity Forms
OPTION 1 - LIFE ANNUITY This is an annuity payable monthly during the lifetime
of the annuitant and terminating with the last monthly payment preceding the
death of the annuitant. This option offers 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 died prior to the due date
of the second annuity payment, two if he 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
monthly 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 so elects at any time during the remainder of the
period certain, the present value of the remaining guaranteed number of
payments, based on the then current 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.
OPTION 4 - PERIOD CERTAIN ANNUITY This is an annuity payable monthly for a
period certain of from 1 to 20 years, as elected. 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 fixed period. In the event of the
death of the annuitant, the beneficiary may, at any time during the payment
period, elect that (1) the present value of the remaining guaranteed number of
PAGE 15
<PAGE>
(SIDEBAR)
The amount of your first annuity payment depends on the age of the annuitant and
the annuity option you select.
(END SIDEBAR)
payments, based on the then current 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, or (2) such commuted amount shall be applied to effect a life
annuity under Option 1 or Option 2.
4. Determination of Amount of First Monthly Annuity Payment
The first monthly annuity payment is determined by the available value of the
contract when an annuity begins. In addition, many states impose a premium tax
on the amount used to purchase an annuity benefit, depending on the type of plan
involved. These taxes currently range from 0.0% to 3.5% and are deducted from
the contract value applied to provide annuity payments. We reserve the right to
make such deductions from purchase payments as they are received.
The amount of the first monthly payment depends on the optional annuity form
elected and the adjusted age of the annuitant. A formula for determining the
adjusted age is contained in the contract.
The contracts contain tables indicating the dollar amount of the first monthly
payment under each optional annuity form for each $1,000 of value applied. The
tables are determined from the Progressive Annuity Table with interest at the
rate of 3.5% per annum, assuming births in the year 1900 and an age setback of
eight years. If, when annuity payments are elected, we are using tables of
annuity rates for these contracts which result in larger annuity payments, we
will use those tables instead.
The 3.5% interest rate assumed in the annuity tables would produce level annuity
payments if the net investment rate remained constant at 3.5% per year.
Subsequent payments will be less than, equal to, or greater than the first
payment depending upon whether the actual net investment rate is less than,
equal to, or greater than 3.5%. A higher interest rate would mean a higher
initial payment, but a more slowly rising (or more rapidly falling) series of
subsequent payments. A lower assumption would have the opposite effect.
The dollar amount of the first monthly variable annuity payment is determined by
applying the available value (after deduction of any premium taxes not
previously deducted) to the table using the adjusted age of the annuitant and
any joint annuitant. A number of annuity units is then determined by dividing
this dollar amount by the then current annuity unit value. Thereafter, the
number of annuity units remains unchanged during the period of annuity payments.
This determination is made separately for each Sub-Account of the separate
account. The number of annuity units is determined for each Sub-Account and is
based upon the available value in each Sub-Account as of the date annuity
payments are to begin.
The dollar amount determined for each Sub-Account will then be aggregated for
purposes of making payment.
PAGE 16
<PAGE>
Annuity payments are always made as of the first day of a month. The contracts
require that notice of election to begin annuity payments must be received by us
at least 30 days prior to the annuity commencement date. We currently waive this
requirement, but reserve the right to enforce it 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 coincident with the first valuation date
following the 14th day of the month preceding the date on which the annuity is
to begin.
If a request for a fixed annuity is received between the first valuation date
following the 14th day of the month and the second to last valuation date of the
month prior to commencement, the transfer will occur on the valuation date
coincident with or next following the date on which the request is received. If
a fixed annuity request is received after the third to the last valuation day of
the month prior to commencement, it will be treated as a request received the
following month, and the commencement date will be changed to the first of the
month following the requested commencement date. The account value used to
determine fixed annuity payments will be the value as of the last valuation date
of the month preceding the date the fixed annuity is to begin.
If a variable annuity request is received after the third valuation date
preceding the first valuation date following the 14th day of the month prior to
the commencement date, it will be treated as a request received the following
month, and the commencement date will be changed to the first of the month
following the requested commencement date. The account value used to determine
the initial variable annuity payment will be the value as of the first valuation
date following the 14th day of the month prior to the variable annuity begin
date.
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 times 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.
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 each month by multiplying the value on the first day of the
preceding month by the product of:
- .997137, and,
- the ratio of the value of the accumulation unit for that Sub-Account for
the valuation date next following the fourteenth day of the preceding
month to the value of the accumulation unit for the valuation date next
following the fourteenth day of the second preceding month (.997137 is a
factor to neutralize the assumed net investment rate, discussed in
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<PAGE>
Section 4 above, of 3.5% per annum built into the annuity rate tables contained
in the contract and which is not applicable because the actual net investment
rate is credited instead).
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.
(SIDEBAR)
You may change Portfolios in the annuity period, subject to some restrictions.
(END SIDEBAR)
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. The change must be
made by a written request. The annuitant and joint annuitant, if any, must make
such an election.
There are restrictions to such a transfer.
- 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.
- 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.
- We must receive the written request for an annuity transfer more than
thirty 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 Sub-Account amount
information.
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 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 on 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
funds actually transferred in the middle of the month 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. However, if your
annuity is based upon annuity units in a sub-Account which matures on a date
other than the stated annuity valuation date, then your annuity units will be
adjusted to reflect sub-Account performance in the maturing sub-Account and the
sub-Account to which reserves are transferred for the period between annuity
valuation dates.
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<PAGE>
(SIDEBAR)
If you die prior to commencement of annuity payments, there is a death benefit
that is guaranteed not to be less than your purchase payments.
(END SIDEBAR)
Amounts held as reserves to pay a variable annuity may also be transferred to a
fixed annuity during the annuity period. However, the restrictions which apply
to annuity Sub-Account transfers will apply in this case as well. The amount
transferred will then be based upon the adjusted age of the annuitant and any
joint annuitant at the time of the transfer. The annuity payment option will
remain the same. Amounts paid as a fixed annuity may not be transferred to a
variable annuity.
Contracts with this transfer feature may not be available in all states.
C. DEATH BENEFITS
If the owner dies before annuity payments begin, the amount payable at death
will be the accumulation value next determined after we receive due proof of
death at our home office. Death proceeds will be paid in a single sum to the
beneficiary designated unless an annuity option is elected. Payment will be made
within seven days after we receive due proof of death. Except as noted below,
the entire interest in the contract must be distributed within five years of the
owner's death.
The contract has a guaranteed death benefit if you die before annuity payments
have started. The death benefit shall be equal to the greater of:
- the amount of the accumulation value payable at death; or
- the amount of the total purchase payments paid to us as consideration for
this contract, less all contract withdrawals.
If the owner dies on or before the date on which annuity payments begin and 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 if annuity payments begin not later than
one year after the owner's death. If there is no designated beneficiary, then
the entire interest in a contract must be distributed within five years after
the owner's death. If the annuitant dies after annuity payments have begun, any
payments received by a non-spouse 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 contract interest is payable to the owner's designated
beneficiary who is also the surviving spouse of the owner, that spouse shall be
treated as the contract owner for purposes of determining:
- when payments must begin, and
- the time of distribution in the event of that spouse's death.
Payments must be made in substantially equal installments.
If the owner of this contract is other than a natural person, such as a trust or
other similar entity, we will pay a death benefit of the accumulation value to
the named beneficiary on the death of the annuitant, if death occurs prior to
the date for annuity payments to begin.
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<PAGE>
(SIDEBAR)
Initial purchase payments are credited within 2 business days of our receipt of
a complete application.
(END SIDEBAR)
D. PURCHASE PAYMENTS 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 contracts are originally issued, application forms are 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 your initial purchase payment is accompanied by an incomplete application,
your purchase payment will not be credited until the valuation date coincident
with or next following the date we receive a completed application. We will
offer to return your initial purchase payment accompanying an incomplete
application if it appears that the application cannot be completed within five
business days.
We will credit your purchase payments to your 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 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 Portfolios of the Fund.
We will determine the value of accumulation units on each day on which the
Portfolios of the Funds are valued. The net asset value of the Fund's 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) on each day, Monday through Friday,
except:
- 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,
- 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
- customary national business holidays on which the New York Stock Exchange
is closed for trading.
Accordingly, the value of accumulation units so determined 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.
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<PAGE>
(SIDEBAR)
Systematic transfers and telephone transfers are available.
(END SIDEBAR)
2. Transfers
Upon your written request, values under the contract may be transferred among
the Sub-Accounts of the Variable Annuity 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. There is no
dollar amount limitation which is applied to transfers.
You may effect transfers, cancel automatic premium plans, or a change in the
allocation of future premiums, by means of a telephone call. Transfers or
requests made pursuant to such a call are subject to the same conditions and
procedures as are outlined above for written transfer requests.
This service 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 a person authorized by you 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 to
restrict the frequency of -- or otherwise modify, condition, terminate or impose
charges upon -- telephone transfer privileges. For more information on telephone
transfers, contact us.
Contracts held through the University of Minnesota also permit participants to
effect transfers or change allocation of future premiums by means of the
internet. We reserve the right to restrict the frequency of -- or otherwise
modify, condition, terminate or impose changes upon -- internet transaction
privileges. For more information contact us.
For contracts where this is available, contract owners in any Sub-Account of the
Variable Annuity Account may elect to have accumulation unit values of that Sub-
Account systematically transferred to any of the other Sub-Accounts of the
Variable Annuity Account on a monthly, quarterly, semi-annual or annual basis.
Should the amount remaining in such a Sub-Account be less than the amount you
previously indicated as a transfer amount, we will then transfer the balance
remaining as well as allocating that amount pro rata in accordance with your
prior instructions. The terms and conditions otherwise applicable to transfers
generally, as described above, also apply to such systematic transfer plans.
Systematic transfer arrangements are limited to the use of a maximum of twenty
sub-accounts.
As a type of systematic transfer arrangement, for certain contracts, we offer
automatic portfolio rebalancing ("APR") on a quarterly, semi-annual and annual
basis. Instructions to us must be in whole percentages totaling 100%. They will
be treated as instructions for transfers to and from the various sub-accounts.
Rebalancing instructions will not affect the current allocation of future
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<PAGE>
(SIDEBAR)
Your contract's accumulation value varies with the performance of the Portfolios
you select and is not guaranteed.
(END SIDEBAR)
contributions; they may differ from those future allocations and are not limited
to any minimum or maximum number of sub-accounts. There will be no charge for
APR transfers and this feature will be available after August 1, 1999. APR is
not available for values in the General Account or in the Series Fund Maturing
Government Bond Portfolios. Please call us for additional information.
3. Value of the Contract
The accumulation value of the contract at any time prior to the commencement of
annuity payments can be determined by multiplying the total number of
accumulation units credited to the contract by the current value of an
accumulation unit. There is no assurance that such value will equal or exceed
the purchase payments made. The contract owner will be advised periodically of
the number of accumulation units credited to the contract, the current value of
an accumulation unit, and the total value of the contract.
4. Accumulation Unit Value
The value of an accumulation unit for each Sub-Account of the Variable Annuity
Account was set at $1.000000 on the first valuation date of the Variable Annuity
Account for this class of contract. 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
administrative charge at the current rate of .15% per annum.
The gross investment rate is equal to:
- the net asset value per share of a Portfolio share held in a Sub-Account
of the Variable Annuity Account determined at the end of the current
valuation period, plus
- 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
- 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.
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<PAGE>
E. REDEMPTIONS
1. Partial Withdrawals and Surrender
Prior to the date annuity payments begin you may make partial withdrawals from
your contract for amounts of at least $250. You must make a written request for
any withdrawal. Your accumulation value will be reduced by the amount of the
withdrawal. Unless you instruct us otherwise, withdrawals will be made from the
Sub-Accounts on a pro rata basis. 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.
For systematic withdrawals, the maximum number of sub-accounts which may be used
is twenty. Unless you instruct us otherwise, systematic withdrawals will be made
from the sub-accounts on a pro rata basis if accumulation values are in no more
than twenty sub-accounts. If more than twenty sub-accounts have accumulation
values, we will need instructions as to those sub-accounts from which systematic
withdrawals are to be made.
The contract provides that prior to the commencement of annuity payments, you
may elect to surrender the contract for its accumulation value. You will receive
in a single cash sum the accumulation value computed as of the valuation date
coincident with or next following the date of surrender, or you may elect an
annuity.
Once annuity payments have commenced for an annuitant, the annuitant cannot
surrender his/her annuity benefit and receive a single sum settlement in lieu
thereof.
You may also submit your signed written withdrawal or surrender requests to us
by facsimile (FAX) transmission. Our FAX number is (651) 665-7942. Transfer
instructions or changes as to future allocations of premium payments may be
communicated to us by the same means. Payment of a partial withdrawal or
surrender will be made to you within 7 days after we receive your completed
request.
(SIDEBAR)
You can cancel your contract within 10 days of receiving it and we will refund
you the greater of your accumulation value or your purchase payments.
(END SIDEBAR)
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 you the greater of:
- the accumulation value of the contract or
- the amount of purchase payments paid under the contract.
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<PAGE>
(SIDEBAR)
We are not offering tax advice. You should consult your own tax adviser.
Taxes on gains under the contract are normally deferred until there is a
distribution of contract values.
(END SIDEBAR)
Payment of the requested refund will be made to you within seven days after we
receive notice of cancellation. In some states, such as California, the free
look period may be extended. For example, in California, the free look period is
30 days. These rights are subject to change and may vary among the states.
The liability of the Variable Annuity Account under the foregoing is limited to
the accumulation value of the contract at the time it is returned for
cancellation. We will pay for any amounts necessary to make our refund to you
equal to your purchase payments.
FEDERAL TAX STATUS
INTRODUCTION
Our tax discussion in this prospectus is general in nature and is not intended
as tax advice. You should consult a competent tax adviser. We make no attempt 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. We make no representation regarding the likelihood of continuation
of current income tax laws or the current interpretations of the Internal
Revenue Service ("IRS"). The contract may be purchased on a non-tax qualified
basis 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. 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(s) 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 Annuity Account form a part of, and are taxed with,
our other business activities. Currently, we pay no federal income tax on income
dividends received by the Variable Annuity Account or on capital gains arising
from the Variable Annuity Account's activities. The Variable Annuity Account is
not taxed as a "regulated investment company" under the Code and we do not
anticipate any change in that tax status.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Section 72 of the Code governs taxation of non-qualified annuities in general
and some aspects of tax qualified programs. No taxes are generally 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 by the
owner of the contract during the taxable year.
PAGE 24
<PAGE>
(SIDEBAR)
Ordinary income tax rates apply to amounts distributed in excess of purchase
payments. Gains are assumed to be distributed before return of purchase
payments.
A penalty tax may apply to distributions prior to age 59 1/2.
Transfers, assignments and certain designations of annuitants can have tax
consequences.
(END SIDEBAR)
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 of (i.e., purchase
payments) the contract. Amounts withdrawn upon a partial surrender from the
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. All taxable amounts received under an
annuity contract are subject to tax at ordinary rather than capital gains rates.
In the case of a withdrawal under an annuity that is part of a tax-qualified
retirement program, a portion of the amount received is taxable based on the
ratio of the "investment in the contract" to the individual's balance in the
retirement plan, generally the value of the annuity. The "investment in the
contract" generally equals the portion of any deposits made by or on behalf of
an individual under an annuity which was not excluded from the gross income of
the individual. For annuities issued in connection with qualified plans, the
"investment in the contract" can be zero.
For annuity payments, the taxable portion is generally determined by a formula
that establishes 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.
The Code imposes a 10% penalty tax on the taxable portion of certain
distributions from annuity contracts. 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 the death of the owner, and
- in certain other circumstances.
The Code also provides an exception to the penalty tax for distributions, in
periodic payments, of substantially equal installments, 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, a pledge of any interest in a contract as
security for a loan, 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,
pledge, 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 non-qualified deferred annuity contracts issued by the same company (or
its affiliates) to the same contract owner during any calendar year shall be
treated
PAGE 25
<PAGE>
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 Annuity Account to
be "adequately diversified" in order for the contract to be treated as an
annuity contract for Federal tax purposes. The Variable Annuity Account, through
the Fund, intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Fund's assets may be invested.
Although the investment adviser is an affiliate of Minnesota Life, Minnesota
Life does not have control over the Fund or its investments. Nonetheless,
Minnesota Life believes that each Portfolio of the Fund in which the Variable
Annuity Account owns shares will be operated in compliance with the requirements
prescribed by the Treasury.
Prior to the enactment of Section 817(h), the IRS published several rulings
under which owners of certain variable annuity contracts were treated as owners,
for federal income tax purposes, of the assets held in a 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. However, the continued effectiveness of the pre-Section
817(h) published rulings is somewhat uncertain. In connection with its issuance
of proposed regulations under Section 817(h) in 1986, the Treasury Department
announced that those regulations did not "provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the contract owner), rather than the
insurance company to be treated as the owner of the assets in the account".
While the Treasury's 1986 announcement stated that guidance would be issued on
the "extent to which the policyholders may direct their investments to
particular sub-accounts without being treated as owners of the underlying
assets", no such guidance has been forthcoming.
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. Minnesota Life does not
believe that the ownership rights of a contract owner under the Contract would
result in any contract owner being treated as the owner of the assets of the
Variable Account. However, Minnesota Life does not know what standards would be
applied if the Treasury Department should proceed to issue regulations or
rulings on this issue. Minnesota Life 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.
PAGE 26
<PAGE>
(SIDEBAR)
Congress may change the tax laws and reduce or eliminate any tax advantages of
the contract.
(END SIDEBAR)
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for Federal income tax purposes,
Section 72(s) of the Code requires any non-qualified contract issued after
January 18, 1985 to provide that (a) if any 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" who
must be a natural person, is the person designated by such owner as a
beneficiary and to whom ownership of the contract passes by reason of death.
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.
Non-qualified contracts issued after January 18, 1985, contain provisions which
are intended to comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have yet been issued.
Minnesota Life intends to review such provisions and modify them if necessary to
assure that they comply with the requirements of Code Section 72(s) when
clarified by regulation or otherwise.
Other rules may apply to qualified contracts.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of the owner.
Generally, such amounts are includable in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender of the contract, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity payments,
as described above.
POSSIBLE CHANGES IN TAXATION
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.
PAGE 27
<PAGE>
TAX QUALIFIED PROGRAMS
The annuity is designed for use with several types of retirement plans that
qualify for special tax treatment. The tax rules applicable to participants and
beneficiaries in retirement plans vary according to the type of plan and the
terms and conditions of the plan. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from:
- contributions in excess of specified limits;
- distributions prior to age 59 1/2 (subject to certain exceptions);
- distributions that do not conform to specified minimum distribution
rules; and
- other specified circumstances.
We make no attempt to provide more than general information about use of
annuities with the various types of retirement plans. The rights of any person
to benefits under annuity contracts 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. If you
intend to purchase a contract for use with any retirement plan you should
consult your 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 calendar year following the calendar year in which the Owner (or 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 calendar year following the calendar 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
calendar year following the calendar year in which the Owner (or plan
participant) reaches age 70 1/2. Roth IRAs under Section 408A do not require
distributions at any time prior to the Owner's death.
PAGE 28
<PAGE>
(SIDEBAR)
Distributions are subject to income tax withholding requirements unless you take
steps to prevent it.
(END SIDEBAR)
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:
- one of a series of substantially equal annual (or more frequent) payments
made over the life or life expectancy of the employee, the joint lives or
joint expectancies of the employee and the employee's designated
beneficiary, or for a specified period of ten years or more;
- a required minimum distribution; or
- 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 sixty days after the distribution
has been received. Such a taxpayer must replace withheld amounts with other
funds to avoid taxation on the amount previously withheld.
SEE YOUR OWN TAX ADVISER
It should be understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that special rules are
provided with respect to situations not discussed herein. It should also be
understood that should a plan lose its qualified status, employees will lose
some of the tax benefits described. Statutory changes in the Internal Revenue
Code with varying effective dates, and regulations adopted thereunder may also
alter the tax consequences of specific factual situations. Due to the complexity
of the applicable laws, tax advice may be needed by a person contemplating the
purchase of a variable annuity contract or exercising elections under such a
contract. For further information a qualified tax adviser should be consulted.
PERFORMANCE DATA
From time to time the Variable Annuity Account may publish advertisements
containing performance data relating to its Sub-Accounts. In the case of the
Money Market Sub-Account, the Variable Annuity Account will publish yield or
effective yield quotations for a seven-day or other specified period. In the
case of
PAGE 29
<PAGE>
the other Sub-Accounts, performance data will consist of average annual total
return quotations for a one-year period and for the period since the Sub-Account
became available pursuant to the Variable Annuity Account's registration
statement. It may also include cumulative total return quotations for the period
since the Sub-Account became available pursuant to such registration statement.
The Money Market Sub-Account may also quote such average annual and cumulative
total return figures. Performance figures used by the Variable Annuity 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 Annuity Account will reflect
only charges made against the net asset value of the Variable Annuity Account
pursuant to the terms of the variable annuity contracts offered by this
Prospectus. The various performance figures used in Variable Annuity Account
advertisements relating to the contracts described in this Prospectus are
summarized below. More detailed information on the computations is set forth in
the Statement of Additional Information.
YEAR 2000 COMPUTER PROBLEM
The services we provide to the Variable Annuity Account and contract owners
depend on the smooth functioning of our 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 our ability to provide services to contract owners. We
have been actively working on necessary changes to our computer systems to deal
with the year 2000. Although there can be no assurance of complete success, we
believe that we will be able to resolve these issues on a timely basis and that
there will be no material adverse impact on our ability to provide services to
the Variable Annuity Account.
In addition, our operations could be impacted by our service providers' or
suppliers' year 2000 efforts. We have undertaken an initiative to assess the
efforts of organizations where there is a significant business relationship.
There is no assurance, however, that we 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 Life
at your request. The Table of Contents for that Statement of Additional
Information is as follows:
Directors and Principal Management Officers of Minnesota Life
Distribution of Contract
Performance Data
Auditors
Registration Statement
Financial Statements
PAGE 30
<PAGE>
APPENDIX A
ILLUSTRATION OF VARIABLE ANNUITY 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%, 4.44% and 12.00%.
For illustration purposes, an average annual expense equal to .92% 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 .92%
includes: .15% for contract administration and an average of .77% 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 Annuity 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 3.50%. 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 male, 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%).
PAGE A-1
<PAGE>
ACTUAL 1998 VARIABLE ANNUITY SEPARATE ACCOUNT CHARGES AND
FUND EXPENSES
<TABLE>
<CAPTION>
FUND
ADMINISTRATIVE MANAGEMENT OTHER FUND
SEPARATE ACCOUNT SUB-ACCOUNT NAME CHARGE FEE EXPENSES TOTAL
- ------------------------------------------------ --------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Growth.......................................... .15% .50% .05% .70%
Bond............................................ .15% .50% .07% .72%
Money Market.................................... .15% .50% .09% .74%
Asset Allocation................................ .15% .50% .05% .70%
Mortgage Securities............................. .15% .50% .09% .74%
Index 500....................................... .15% .40% .05% .60%
Capital Appreciation............................ .15% .75% .05% .95%
International Stock............................. .15% .71% .26% 1.12%
Small Company Growth............................ .15% .75% .07% .97%
Maturing Government Bond 2002................... .15% .25% .15% .55%
Maturing Government Bond 2006................... .15% .25% .15% .55%
Maturing Government Bond 2010................... .15% .25% .15% .55%
Value Stock..................................... .15% .75% .05% .95%
Small Company Value............................. .15% .75% .15% 1.05%
Global Bond..................................... .15% .60% 1.00% 1.75%
Index 400 Mid-Cap............................... .15% .40% .15% .70%
Macro-Cap Value................................. .15% .70% .15% 1.00%
Micro-Cap Growth................................ .15% 1.10% .15% 1.40%
Real Estate Securities.......................... .15% .75% .15% 1.05%
Templeton Developing Markets Class 2............ .15% 1.25% .58%* 1.98%
------- ------------- ----------- ---------
Average....................................... .15% .59% .18% .92%
</TABLE>
* For the purpose of this illustration, the term "Other Fund Expenses" includes
a distribution fee in this Fund of .25%.
PAGE A-2
<PAGE>
VARIABLE ANNUITY PAYOUT ILLUSTRATION
<TABLE>
<S> <C>
PREPARED FOR: Prospect ANNUITIZATION OPTION: 10 Year Certain
with Life Contingency
PREPARED BY: Minnesota Life QUOTATION DATE: 05/03/1999
SEX: Male DATE OF BIRTH: 05/01/1934 COMMENCEMENT DATE: 06/03/1999
STATE: MN SINGLE PAYMENT RECEIVED: $100,000.00
LIFE EXPECTANCY: 20.0(IRS) 17.3(MML) FUNDS: Non-Qualified
INITIAL MONTHLY INCOME: $624
</TABLE>
The monthly variable annuity income amount shown below assumes a constant annual
investment return. The initial interest rate of 3.50% 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 results.
<TABLE>
<CAPTION>
ANNUAL RATE OF RETURN
--------------------------------------------------
0% GROSS 4.42% GROSS 12.00% GROSS
DATE AGE (-.92% NET) (3.50% NET) (11.08% NET)
- ----------------------------------------- --------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
June 1, 1998............................. 65 $ 624 $ 624 $ 624
June 1, 1999............................. 66 597 624 670
June 1, 2000............................. 67 572 624 719
June 1, 2001............................. 68 547 624 771
June 1, 2002............................. 69 524 624 828
June 1, 2007............................. 74 421 624 l,179
June 1, 2012............................. 79 339 624 1,678
June 1, 2017............................. 84 272 624 2,389
June 1, 2022............................. 89 219 624 3,402
June 1, 2027............................. 94 176 624 4,844
June 1, 2032............................. 99 141 624 6,898
June 1, 2033............................. 100 135 624 7,403
</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 $754.
Net rates of return reflect expenses totaling .92%, which consist of the .15%
Variable Account administrative charge and .77% for the Fund management fee and
other Fund expenses (this is an average with the actual varying from .40% to
1.83%).
Minnesota Life MultiOption variable annuities are available through registered
representatives of Ascend Financial Services, Inc.
This is an illustration only and not a contract.
PAGE A-3
<PAGE>
APPENDIX B
CONDENSED FINANCIAL INFORMATION
The financial statements of the Variable Annuity Account and the Consolidated
Financial Statements of Minnesota Life Insurance Company may be found in the
Statement of Additional Information. The table below gives per unit information
about the financial history of each sub-account from the inception of each to
December 31, 1998. This information should be ready in conjunction with the
financial statements and related notes of the Variable Annuity Account included
in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account:
Unit value at beginning of Period.......... $2.35 $2.01 $1.62 $1.61
Unit value at end of period................ $3.14 $2.35 $2.01 $1.62
Number of units outstanding at end of
period.................................... 1,394,064 1,448,982 1,534,005 1,477,118
Bond Sub-Account:
Unit value at beginning of Period.......... $2.18 $2.12 $1.77 $1.86
Unit value at end of period................ $2.38 $2.18 $2.12 $1.77
Number of units outstanding at end of
period.................................... 1,545,276 1,506,859 1,525,791 1,480,397
Money Market Sub-Account:
Unit value at beginning of Period.......... $1.62 $1.55 $1.47 $1.42
Unit value at end of period................ $1.70 $1.62 $1.55 $1.47
Number of units outstanding at end of
period.................................... 625,617 750,434 726,235 669,925
Asset Allocation Sub-Account:
Unit value at beginning of Period.......... $2.53 $2.25 $1.80 $1.83
Unit value at end of period................ $3.00 $2.53 $2.25 $1.80
Number of units outstanding at end of
period.................................... 1,806,441 2,029,532 1,871,136 2,307,972
Mortgage Securities Sub-Account:
Unit value at beginning of Period.......... $2.20 $2.09 $1.78 $1.84
Unit value at end of period................ $2.40 $2.20 $2.09 $1.78
Number of units outstanding at end of
period.................................... 484,707 450,065 485,533 477,367
Index 500 Sub-Account:
Unit value at beginning of Period.......... $2.81 $2.32 $1.70 $1.68
Unit value at end of period................ $3.72 $2.81 $2.32 $1.70
Number of units outstanding at end of
period.................................... 2,786,221 2,364,949 2,056,365 1,345,845
Capital Appreciation Sub-Account:
Unit value at beginning of Period.......... $2.84 $2.42 $1.97 $1.93
Unit value at end of period................ $3.64 $2.84 $2.42 $1.97
Number of units outstanding at end of
period.................................... 1,768,498 1,668,256 1,869,447 1,659,517
International Stock Sub-Account:
Unit value at beginning of Period.......... $1.79 $1.50 $1.31 $1.32
Unit value at end of period................ $2.00 $1.79 $1.50 $1.31
Number of units outstanding at end of
period.................................... 2,966,962 2,418,015 2,254,079 2,153,847
Small Company Growth Sub-Account:
Unit value at beginning of Period.......... $1.71 $1.60 $1.22 $1.15
Unit value at end of period................ $1.84 $1.71 $1.60 $1.22
Number of units outstanding at end of
period.................................... 1,504,543 1,237,091 1,581,035 1,091,852
Maturing Government Bond 2002 Sub-Account:
Unit value at beginning of Period.......... $1.24 $1.22 $0.98 $1.00(c)
Unit value at end of period................ $1.35 $1.24 $1.22 $0.98
Number of units outstanding at end of
period.................................... 272,962 269,553 121,397 120,595
Maturing Government Bond 2006 Sub-Account:
Unit value at beginning of Period.......... $1.29 $1.31 $0.97 $1.00(c)
Unit value at end of period................ $1.45 $1.29 $1.31 $0.97
Number of units outstanding at end of
period.................................... 117,035 117,035 124,592 121,565
Maturing Government Bond 2010 Sub-Account:
Unit value at beginning of Period.......... $1.30 $1.35 $0.96 $1.00(c)
Unit value at end of period................ $1.53 $1.30 $1.35 $0.96
Number of units outstanding at end of
period.................................... 109,462 141,772 116,635 211,596
<CAPTION>
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account:
Unit value at beginning of Period.......... $1.54 $1.47 $1.10 $1.10 $0.87
Unit value at end of period................ $1.61 $1.54 $1.47 $1.10 $1.10
Number of units outstanding at end of
period.................................... 1,145,632 879,694 532,298 239,250 156,253
Bond Sub-Account:
Unit value at beginning of Period.......... $1.69 $1.59 $1.35 $1.26 $1.12
Unit value at end of period................ $1.86 $1.69 $1.59 $1.35 $1.26
Number of units outstanding at end of
period.................................... 1,452,616 1,414,784 1,028,316 800,284 707,399
Money Market Sub-Account:
Unit value at beginning of Period.......... $1.38 $1.34 $1.28 $1.19 $1.10
Unit value at end of period................ $1.42 $1.38 $1.34 $1.28 $1.19
Number of units outstanding at end of
period.................................... 758,519 854,376 1,089,711 748,839 541,490
Asset Allocation Sub-Account:
Unit value at beginning of Period.......... $1.72 $1.61 $1.25 $1.21 $1.01
Unit value at end of period................ $1.83 $1.72 $1.61 $1.25 $1.21
Number of units outstanding at end of
period.................................... 2,610,010 1,843,236 659,538 316,973 216,005
Mortgage Securities Sub-Account:
Unit value at beginning of Period.......... $1.69 $1.59 $1.37 $1.25 $1.11
Unit value at end of period................ $1.84 $1.69 $1.59 $1.37 $1.25
Number of units outstanding at end of
period.................................... 632,499 753,204 363,294 187,645 172,295
Index 500 Sub-Account:
Unit value at beginning of Period.......... $1.53 $1.43 $1.10 $1.15 $0.88
Unit value at end of period................ $1.68 $1.53 $1.43 $1.10 $1.15
Number of units outstanding at end of
period.................................... 1,208,415 1,046,000 832,514 547,781 436,533
Capital Appreciation Sub-Account:
Unit value at beginning of Period.......... $1.75 $1.67 $1.18 $1.21 $0.87
Unit value at end of period................ $1.93 $1.75 $1.67 $1.18 $1.21
Number of units outstanding at end of
period.................................... 1,193,412 913,174 582,915 339,404 180,206
International Stock Sub-Account:
Unit value at beginning of Period.......... $0.92 $1.00(a)
Unit value at end of period................ $1.32 $0.92
Number of units outstanding at end of
period.................................... 1,330,940 441,041
Small Company Growth Sub-Account:
Unit value at beginning of Period.......... $1.00(b)
Unit value at end of period................ $1.15
Number of units outstanding at end of
period.................................... 387,337
Maturing Government Bond 2002 Sub-Account:
Unit value at beginning of Period..........
Unit value at end of period................
Number of units outstanding at end of
period....................................
Maturing Government Bond 2006 Sub-Account:
Unit value at beginning of Period..........
Unit value at end of period................
Number of units outstanding at end of
period....................................
Maturing Government Bond 2010 Sub-Account:
Unit value at beginning of Period..........
Unit value at end of period................
Number of units outstanding at end of
period....................................
</TABLE>
PAGE B-1
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Value Stock Sub-Account:
Unit value at beginning of Period..... $1.83 $1.40 $1.06 $1.00(c)
Unit value at end of period........... $2.22 $1.83 $1.40 $1.06
Number of units outstanding at end of
period............................... 1,500,040 798,596 426,836 183,180
Small Company Value Sub-Account:
Unit value at beginning of Period..... $1.00(d)
Unit value at end of period........... $1.01
Number of units outstanding at end of
period............................... 215,169
Global Bond Sub-Account:
Unit value at beginning of Period..... $1.00(d)
Unit value at end of period........... $0.99
Number of units outstanding at end of
period............................... 15,173
Index 400 Mid-Cap Sub-Account:
Unit value at beginning of Period..... $1.00(d)
Unit value at end of period........... $0.99
Number of units outstanding at end of
period............................... 9,788
Macro-Cap Value Sub-Account:
Unit value at beginning of Period..... $1.00(e)
Unit value at end of period........... $0.99
Number of units outstanding at end of
period............................... 39,998
Micro-Cap Growth Sub-Account:
Unit value at beginning of Period..... $1.00(d)
Unit value at end of period........... $0.84
Number of units outstanding at end of
period............................... 18,000
Templeton Developing Markets
Sub-Account:
Unit value at beginning of Period..... $1.00(d)
Unit value at end of period........... $0.70
Number of units outstanding at end of
period............................... 33,388
</TABLE>
(a) The information for the sub-account is shown for the period May 1, 1992 to
December 31, 1992. May 1, 1992 was the effective date of the 1933 Act
Registration Statement for the sub-account.
(b) The information for the sub-account is shown for the period May 3, 1993 to
December 31, 1993. May 3, 1993 was the effective date of the 1933 Act
Registration Statement for the sub-account.
(c) The information for the sub-account is shown for the period May 2, 1994 to
December 31, 1994. May 2, 1994 was the effective date of the 1933 Act
Registration Statement for the sub-account.
(d) The information for the sub-account is shown for the period from October 1,
1997 (date the sub-account became available) to December 31, 1997.
(e) The information for the sub-account is shown for the period from October 15,
1997 (date the sub-account became available) to December 31, 1997.
PAGE B-2
<PAGE>
APPENDIX C -- TYPES OF QUALIFIED PLANS
PUBLIC SCHOOL SYSTEMS AND CERTAIN TAX EXEMPT ORGANIZATIONS
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to FICA (Social Security)
taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of: (1) elective contributions made in years beginning after
December 31, 1988; (2) earnings on those contributions; and (3) earnings in such
years on amounts held as of the last year beginning before January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
INDIVIDUAL RETIREMENT ANNUITIES
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.
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.
PAGE C-1
<PAGE>
SIMPLE IRAS
Beginning January 1, 1997, certain small employers may establish Simple IRAs as
provided by Section 408(p) of the Code, 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 make nondeductible contributions to an individual retirement
program known as a Roth IRA. Contributions to a Roth IRA, which are subject to
certain limitations, must be made in cash or as a rollover or conversion from
another Roth IRA or a traditional IRA. A rollover from, or conversion of, a
traditional IRA to a Roth IRA may be subject to tax, contingent deferred sales
charge and other special rules may apply.
Qualified distributions from a Roth IRA, as defined by the Code, generally are
excluded from gross income. Qualified distributions include those distributions
made more than five years after the taxable year of the first contribution to
the Roth IRA, but only if : (1) the annuity owner has reached age 59 1/2; (2)
the distribution is paid to a beneficiary after the owner's death; (3) the
annuity owner becomes disabled; or (4) the distribution will be used for a first
time home purchase and does not exceed $10,000. Non-qualified distributions are
includable in gross income only to the extent they exceed contributions made to
the Roth IRA. The taxable portion of a non-qualified distribution may be subject
to a 10% penalty tax.
In addition, state laws may not completely follow the federal tax treatment of
Roth IRAs. You should consult your tax adviser for further information regarding
Roth IRAs.
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.
PAGE C-2
<PAGE>
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. With
respect to non-governmental Section 457 Plans, all investments are owned by the
sponsoring employer and are subject to the claims of the general creditors of
the employer and 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.
PAGE C-3
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
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. Directors and Principal Management Officers of Minnesota Life
18. Not Applicable
19. Not Applicable
20. Distribution of Contracts
21. Performance Data
22. Not Applicable
23. Financial Statements
<PAGE>
Variable Annuity Account
("Variable Annuity Account"), a Separate Account of
Minnesota Life Insurance Company
("Minnesota Life")
400 Robert Street North
St. Paul, Minnesota 55101-2098
Telephone: (651) 665-3500
Statement of Additional Information
The date of this document and the Prospectus is: May 3, 1999
This Statement of Additional Information is not a prospectus. Much of the
information contained in this Statement of Additional Information expands
upon subjects discussed in the Prospectus. Therefore, this Statement should
be read in conjunction with the Fund's current Prospectus, bearing the same
date, which may be obtained by calling Minnesota Life Insurance Company at
(651) 665-3500; or writing to Minnesota Life at Minnesota Mutual Life Center,
400 Robert Street North, St. Paul, Minnesota 55101-2098.
Directors and Principal Management Officers of Minnesota Life
Distribution of Contract
Performance Data
Auditors
Registration Statement
Financial Statements
<PAGE>
DIRECTORS AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA LIFE
<TABLE>
<CAPTION>
DIRECTORS PRINCIPAL OCCUPATION
--------- --------------------
<S> <C>
Giulio Agostini Senior Vice President, Finance and Administrative
Services, 3M, St. Paul, 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 Vice Chairman and Chief Operating Officer, Wells
Fargo & Company, San Francisco, California (Banking)
John F. Grundhofer President, Chairman and Chief Executive Officer, U.S.
Bancorp, Minneapolis, Minnesota (Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L. Carlson
School of Management, University of Minnesota,
Minneapolis, Minnesota
Reatha C. King, Ph.D. President and Executive Director, General Mills
Foundation, Minneapolis, Minnesota
William B. Lawson, Sr. Chairman and Chief Executive Officer, Lawson
Software, Minneapolis, Minnesota
Thomas E. Rohricht Of Counsel, Doherty, Rumble & Butler Professional
Association, St. Paul, Minnesota (Attorneys)
Robert L. Senkler Chairman of the Board, President and Chief Executive
Officer, Minnesota Life Insurance Company, since
August 1995; prior thereto for more than five years
Vice President and Actuary, Minnesota Life Insurance
Company
Michael E. Shannon Chairman, 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,
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
</TABLE>
PRINCIPAL OFFICERS (OTHER THAN DIRECTORS)
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
John F. Bruder Senior Vice President
Keith M. Campbell Senior Vice President
Robert E. Hunstad Executive Vice President
James E. Johnson Senior Vice President and Actuary
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
</TABLE>
All Directors who are not also officers of Minnesota Life have had the principal
occupation (or employers) shown for at least five years. All officers of
Minnesota Life have been employed by Minnesota Life for at least five years with
the exception of Mr. Westhoff. Mr. Westhoff has been employed by Minnesota Life
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.
DISTRIBUTION OF CONTRACT
The contract will be sold in a continuous offering. Ascend Financial
Services, Inc. ("Ascend Financial") acts as principal underwriter of the
contracts. Ascend Financial is a wholly-owned subsidiary of Advantus Capital
Management, Inc. which in turn is a wholly-owned subsidiary of Minnesota
Mutual Life. Advantus Capital Management, Inc. is a registered investment
adviser and the investment adviser to the Advantus Series Fund, Inc. Ascend
Financial is registered as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of the National Association of Securities Dealers,
Inc. Amounts paid by Minnesota Life to the underwriter for 1998, 1997 and
1996 respectively, were $15,989,724, $15,067,613 and $13,034,146,
respectively, and for payments to associated dealers on the sale of the
contracts, which include other contracts issued through the Variable Annuity
Account. Agents of Minnesota Life who are also registered representatives of
Ascend Financial are compensated directly by Minnesota Life.
-2-
<PAGE>
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, 1998 were 4.89% and
5.01%, respectively.
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
Annuity Account's registration statement. 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.
Prior to May 3, 1993, several of the Sub-Accounts were known by different names.
The Growth Sub-Account was the Stock Sub-Account, the Asset Allocation Sub-
Account was the Managed Sub-Account, the Index 500 Sub-Account was the Index
Sub-Account and the Capital Appreciation Sub-Account was the Aggressive Growth
Sub-Account.
The cumulative total return figures published by the Variable Annuity Account
relating to the contracts described in the Prospectus will reflect Minnesota
Life's voluntary absorption of certain Fund expenses described below. The
cumulative total returns for the Sub-Accounts for the specified periods ended
December 31, 1997 are shown in the table below. The figures in parentheses show
what the cumulative total returns would have been had Minnesota Life not
absorbed Fund expenses as described below.
<TABLE>
<CAPTION>
From Inception Date of
to 12/31/98 Inception
--------------- ---------
<S> <C> <C>
Growth Sub-Account 213.56% (210.93%) 6/3/87
-3-
<PAGE>
Bond Sub-Account 137.94% (136.68%) 6/3/87
Money Market Sub-Account 70.08% (67.68%) 6/3/87
Asset Allocation Sub-Account 200.39% (199.85%) 6/3/87
Mortgage Securities Sub-Account 139.51% (139.04%) 6/3/87
Index 500 Sub-Account 271.78% (270.66%) 6/3/87
Capital Appreciation Sub-Account 263.97% (260.09%) 6/3/87
International Stock Sub-Account 99.86% (99.81%) 5/1/92
Small Company Growth Sub-Account 83.45% (83.32%) 5/3/93
Maturing Government Bond
2002 Sub-Account 37.62% (36.23%) 5/2/94
Maturing Government Bond
2006 Sub-Account 49.27% (46.94%) 5/2/94
Maturing Government Bond
2010 Sub-Account 59.40% (54.21%) 5/2/94
Value Stock Sub-Account 119.43% (119.05%) 5/2/94
Small Company Value 1.19% (.31%) 10/1/97
Sub-Account
Global Bond -.75% (-.75%) 10/1/97
Sub-Account
Index 400 Mid-Cap -.94% (-2.09%) 10/1/97
Sub-Account
Macro-Cap Value -1.41% (-1.41%) 10/15/97
Sub-Account
Micro-Cap Growth -16.06% (-16.84%) 10/1/97
Sub-Account
Real Estate Securities
Sub-Account
Templeton Developing -30.12% (-30.12%) 10/1/97
Markets Class 2
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 for the period since the Sub-Account became available pursuant to the
Variable Annuity Account's registration statement. Average annual total
return figures are the average annual compounded rates of return required for
an initial investment of $1,000 to equal the accumulation value of that same
investment at the end of the period. The average annual total return figures
published by the Variable Annuity Account will reflect Minnesota Life's
voluntary absorption of certain Fund expenses. For the period subsequent to
March 9, 1987, Minnesota Life is voluntarily absorbing the fees and
expenses that exceed .65% of the average daily net assets of the Growth,
Bond, Money Market, Asset Allocation and Mortgage Securities Portfolios of
the Fund, .55% of the average daily net assets of the Index 500 Portfolio of
the Fund, .90% of the average daily net assets of the Capital Appreciation
and Small Company Portfolios of the Fund and expenses that exceed 1.00% of
the average daily net assets of the International Stock Portfolio exclusive
of the advisory fee. And, for the period subsequent to May 2, 1994,
Minnesota Life has voluntarily absorbed fees and expenses that exceed .90%
of the average daily net assets of the Value Stock Portfolio and fees and
expenses that exceed
-4-
<PAGE>
.40% of the average daily net assets of the Maturing Government Bond
Portfolios maturing in 2006 and 2010 and fees and expenses that exceed .20%
of the average daily net assets of the Maturing Government Bond Portfolios
maturing in 1998 and 2002. For the period subsequent to May 1, 1998,
Minnesota Mutual has voluntarily agreed to absorb fees and expenses that
exceed .40% of the average daily net assets of the Maturing Government Bond
1998 and 2002 Portfolios. Minnesota Life has voluntarily agreed to absorb
fees and expenses that exceed .55% of the average daily net assets of the
Index 400 Mid-Cap Portfolio, .90% of the average daily net assets of the
Small Company Value Portfolio, 1.25% of the average daily net assets of the
Micro-Cap Growth Portfolio, .85% of the average daily net assets of the
Macro-Cap Value Portfolio and expenses that exceed 1.00% of the average daily
net assets of the Global Bond Portfolio exclusive of the advisory fee. For
the period subsequent to May 1, 1998, Minnesota Life has voluntarily agreed
to absorb fees and expenses that exceed .90% of the average daily net assets
of the Real Estate Securities Portfolio. There is no specified or minimum
period of time during which Minnesota Life has agreed to continue its
voluntary absorption of these expenses, and Minnesota Life may in its
discretion cease its absorption of expenses at any time. Should Minnesota
Life cease absorbing expenses the effect would be to increase substantially
Fund expenses and thereby reduce investment return.
The average annual rates of return for the Sub-Accounts of the contracts
described in the Prospectus for the specified periods ended December 31, 1998
are shown in the table below. The figures in parentheses show what the average
annual rates of return would have been had Minnesota Life not absorbed Fund
expenses as described above.
-5-
<PAGE>
<TABLE>
<CAPTION>
Year Ended Five Years Ten Years From Inception Date of
12/31/98 Ended 12/31/98 Ended 12/31/98 to 12/31/98 Inception
---------------- --------------- ----------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Growth Sub-Account 33.21% (33.21%) 15.26% (15.26%) 15.27% (15.23%) N/A (N/A) 6/3/87
Bond Sub-Account 9.26% (9.26%) 7.10% (7.05%) 8.53% (8.47%) N/A (N/A) 6/3/87
Money Market Sub-Account 4.98% (4.98%) 4.22% (4.03%) 5.18% (4.95%) N/A (N/A) 6/3/87
Asset Allocation
Sub-Account 18.81% (18.81%) 11.76% (11.76%) 12.69% (12.68%) N/A (N/A) 6/3/87
Mortgage Securities
Sub-Account 8.98% (8.98%) 7.27% (7.27%) 8.93% (8.90%) N/A (N/A) 6/3/87
Index 500 Sub-Account 32.17% (32.17%) 19.42% (19.42%) 17.19% (17.16%) N/A (N/A) 6/3/87
Capital Appreciation
Sub-Account 28.07% (28.07%) 15.73% (15.72%) 16.17% (16.07%) N/A (N/A) 6/3/87
International Stock
Sub-Account 11.77% (11.77%) 16.91% (16.91%) N/A (N/A) 12.99% (12.98%) 5/1/92
Small Company Growth
Sub-Account 7.59% (7.59%) N/A (N/A) N/A (N/A) 13.89% (13.86%) 5/3/93
Maturing Government Bond
2002 Sub-Account 8.34% (7.39%) N/A (N/A) N/A (N/A) 9.09% (8.17%) 5/2/94
Maturing Government Bond
2006 Sub-Account 12.46% (11.39%) N/A (N/A) N/A (N/A) 11.54% (10.36%) 5/2/94
-6-
<PAGE>
Maturing Government Bond
2010 Sub-Account 17.69% (15.84%) N/A (N/A) N/A (N/A) 13.55% (11.37%) 5/2/94
Value Stock Sub-Account 21.01% (21.01%) N/A (N/A) N/A (N/A) 23.89% (23.81%) 5/2/94
Small Company Value N/A (N/A) N/A (N/A) N/A (N/A) 1.19% (.31%) 10/1/97
Sub-Account
Global Bond N/A (N/A) N/A (N/A) N/A (N/A) -.75% (-.75%) 10/1/97
Sub-Account
Index 400 Mid-Cap N/A (N/A) N/A (N/A) N/A (N/A) -.94% (-2.09%) 10/1/97
Sub-Account
Macro-Cap Value N/A (N/A) N/A (N/A) N/A (N/A) -1.41% (-1.41%) 10/15/97
Sub-Account
Micro-Cap Growth N/A (N/A) N/A (N/A) N/A (N/A) -16.06% (-16.84%) 10/1/97
Sub-Account
Real Estate Securities
Sub-Account
Templeton Developing N/A (N/A) N/A (N/A) N/A (N/A) -30.12% (-30.12%) 10/1/97
Markets Class 2
Sub-Account
</TABLE>
-7-
<PAGE>
PREDICTABILITY OF RETURN
ANTICIPATED VALUE AT MATURITY. The maturity values of zero-coupon bonds are
specified at the time the bonds are issued, and this feature, combined with the
ability to calculate yield to maturity, has made these instruments popular
investment vehicles for investors seeking reliable investments to meet long-term
financial goals.
Each Maturing Government Bond Portfolio of the Fund consists primarily of zero-
coupon bonds but is actively managed to accommodate contract owner activity and
to take advantage of perceived market opportunities. Because of this active
management approach, there is no guarantee that a certain price per share of a
Maturing Government Bond Portfolio, or a certain price per unit of the
corresponding Sub-Account, will be attained by the time a Portfolio is
liquidated. Instead, the Fund attempts to track the price behavior of a
directly held zero-coupon bond by:
(1) Maintaining a weighted average maturity within each Maturing Government
Bond Portfolio's target maturity year;
(2) Investing at least 90% of assets in securities that mature within one
year of that Portfolio's target maturity year;
(3) Investing a substantial portion of assets in Treasury STRIPS (the most
liquid Treasury zero);
(4) Under normal conditions, maintaining a nominal cash balance;
(5) Executing portfolio transactions necessary to accommodate net contract
owner purchases or redemptions on a daily basis; and
(6) Whenever feasible, contacting several U.S. government securities
dealers for each intended transaction in an effort to obtain the best
price on each transaction.
These measures enable the Company to calculate an anticipated value at maturity
(AVM) for each unit of a Maturing Government Bond Sub-Account, calculated as of
the date of purchase of such unit, that approximates the price per unit that
such unit will achieve by the weighted average maturity date of the underlying
Portfolio. The AVM calculation for each Maturing Government Bond Sub-Account is
as follows:
AVM = P(1 + AGR/2)2T
where P = the Sub-Account's current price per unit; T = the Sub-Account's
weighted average term to maturity in years; and AGR = the anticipated growth
rate.
This calculation assumes an expense ratio and a portfolio composition for the
underlying Maturing Government Bond Portfolio that remain constant for the life
of such Portfolio. Because the Portfolio's expenses and composition do not
remain constant, however, the
-8-
<PAGE>
Company may calculate AVM for each Maturing Government Bond Sub-Account on any
day on which the underlying Maturing Government Bond Portfolio is valued. Such
an AVM is applicable only to units purchased on that date.
In addition to the measures described above, which the adviser believes are
adequate to assure close correspondence between the price behavior of each
Portfolio and the price behavior of directly held zero-coupon bonds with
comparable maturities, the Fund expects that each Portfolio will invest at least
90% of its net assets in zero-coupon bonds until it is within four years of its
target maturity year and at least 80% of its net assets in zero-coupon
securities within two to four years of its target maturity year. This
expectation may be altered if the market supply of zero-coupon securities
diminishes unexpectedly.
ANTICIPATED GROWTH RATE. The Company calculates an anticipated growth rate
(AGR) for each Maturing Government Bond Sub-Account on each day on which the
underlying Portfolio is valued. AGR is a calculation of the anticipated
annualized rate of growth for a Sub-Account unit, calculated from the date of
purchase of such unit to the Sub-Account's target maturity date. As is the case
with calculations of AVM, the AGR calculation assumes that each underlying
Maturing Government Bond Portfolio expense ratio and portfolio composition will
remain constant. Each Maturing Government Bond Sub-Account AGR changes from day
to day (i.e., a particular AGR calculation is applicable only to units purchased
on that date), due primarily to changes in interest rates and, to a lesser
extent, to changes in portfolio composition and other factors that affect the
value of the underlying Portfolio.
The Company expects that a contract owner who holds specific units until the
underlying Portfolio's weighted average maturity date will realize an investment
return and maturity value on those units that do not differ substantially from
the AGR and AVM calculated on the day such units were purchased. The AGR and
AVM calculated with respect to units purchased on any other date, however, may
be materially different.
AUDITORS
The consolidated financial statements of Minnesota Life and the financial
statements of the Variable Annuity Account 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
contracts offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and amendments thereto and the exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Variable Annuity Account, Minnesota Life, and the
contracts. Statements contained in this Prospectus as to the contents of
contracts and other legal instruments are summaries, and reference is made to
such instruments as filed.
-9-
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
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. Indemnifications
29. Principal Underwriters
30. Location of Accountrsa and Records
31. Management Services
32. Undertakings
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of Variable Annuity Account for the fiscal
year ended December 31, 1998, are included in Part B of this filing and
consist of the following:
To be Filed by Subsequent Amendment
(b) Audited Financial Statements of the Depositor, Minnesota
Life Insurance Company, for the fiscal year ended December 31, 1998
and 1997, are included in Part B of this filing and consist of the
following:
To be Filed by Subsequent Amendment
(c) Exhibits
1. The Resolution of The Minnesota Mutual Life Insurance
Company's Executive Committee of its Board of Trustees
establishing the Variable Annuity Account previously filed as
this exhibit to Registrant's Form N-4, File Number 33-12333,
Post-Effective Amendment Number 10, is hereby incorporated by
reference.
2. Not applicable.
<PAGE>
3. (a) The Distribution Agreement between The Minnesota Mutual Life
Insurance Company and Ascend Financial Services, Inc.
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10,
is hereby incorporated by reference.
(b) Schedule A previously filed as this exhibit to Registrant's
Form N-4, File Number 33-12333, Post-Effective Amendment
Number 10, is hereby incorporated by reference.
4. (a) Flexible Payment Deferred Variable Annuity Contract, form
MHC-87-9154
(b) Individual Retirement Annuity Agreement, form 83-9058 Rev.
3-1997 previously filed as this exhibit to Registrant's Form
N-4, File Number 33-12333, Post-Effective Amendment Number
10, is hereby incorporated by reference.
(c) Endorsement, form 87-9157 previously filed as this exhibit
to Registrant's Form N-4, File Number 33-12333,
Post-Effective Amendment Number 10, is hereby incorporated by
reference.
(d) Endorsement, form 87-9164 previously filed as this exhibit
to Registrant's Form N-4, File Number 33-12333,
Post-Effective Amendment Number 10, is hereby incorporated by
reference.
(e) Flexible Payment Deferred Variable Annuity Contract, form
87-9154 Rev. 2-88 previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(f) Endorsement, form 87-9172 previously filed as this exhibit
to Registrant's Form N-4, File Number 33-12333,
Post-Effective Amendment Number 10, is hereby incorporated by
reference.
(g) Tax Sheltered Annuity Amendment, form MHC-88-9213
(h) Endorsement, form 91-9258 previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(i) Flexible Payment Deferred Variable Annuity Contract, form
87-9154 Rev. 3-91 previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(j) Individual Retirement Annuity (IRA) Agreement, SEP,
Traditional IRA and Roth-IRA, form number MHC-97-9418.
(k) Individual Retirement Annuity, SIMPLE - (IRA) Agreement, form
number MHC-98-9431.
5. (a) Application, form 87-9155 Rev. 6-87 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-12333,
Post-Effective Amendment Number 10, is hereby incorporated by
reference.
<PAGE>
(b) Application, form 87-9156 Rev. 6-87 previously filed as this
exhibit to Registrant's Form N-4, File Number 33-12333,
Post-Effective Amendment Number 10, is hereby incorporated
by reference.
(c) Application, form MHC-84-9093 Rev. 7-1998.
6. Certificate of Incorporation and Bylaws.
(a) The Restated Certificate of Incorporation.
(b) The Bylaws of the Depositor.
7. Not applicable.
8. Not applicable.
9. Opinion and consent of Donald F. Gruber, Esq., to be filed by
subsequent amendment.
10. Consent of KPMG Peat Marwick LLP., to be filed by subsequent
amendment.
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Quotation
(a) Stock Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
(b) Bond Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
(c) Money Market Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
<PAGE>
(d) Managed Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
(e) Mortgage Securities Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(f) Index Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
(g) Aggressive Growth Segregated Sub-Account Performance
Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(h) International Stock Segregated Sub-Account Performance
Calculations previously filed as this exhibit to Registrant's
Form N-4, File Number 33-12333, Post-Effective Amendment
Number 10, is hereby incorporated by reference.
(i) Small Company Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
(j) Value Stock Segregated Sub-Account Performance Calculations
previously filed as this exhibit to Registrant's Form N-4,
File Number 33-12333, Post-Effective Amendment Number 10, is
hereby incorporated by reference.
(k) Maturing Government Bond - 1998 Segregated Sub-Account
Performance Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(l) Maturing Government Bond - 2002 Segregated Sub-Account
Performance Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(m) Maturing Government Bond - 2006 Segregated Sub-Account
Performance Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
(n) Maturing Government Bond - 2010 Segregated Sub-Account
Performance Calculations previously filed as this exhibit to
Registrant's Form N-4, File Number 33-12333, Post-Effective
Amendment Number 10, is hereby incorporated by reference.
<PAGE>
15. Minnesota Life Insurance Company Power of Attorney To Sign
Registration Statements.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address With Insurance Company With Registrant
- ------------------ ---------------------- ---------------------
<S> <C> <C>
Giulio Agostini Director None
3M
3M Center -
Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen Director None
H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Director None
Wells Fargo & Company
MAC 0101-121
420 Montgomery Street
San Francisco, CA 94104
John F. Bruder Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Keith M. Campbell Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
John F. Grundhofer Director None
U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Robert E. Hunstad Executive Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
James E. Johnson Senior Vice President None
Minnesota Life Insurance and Actuary
Company
400 Robert Street North
St. Paul, MN 55101
David S. Kidwell, Ph.D. Director None
The Curtis L. Carlson
School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King, Ph.D. Director None
General Mills Foundation
P. O. Box 1113
Minneapolis, MN 55440
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
William B. Lawson, Sr. Director None
Lawson Software
1300 Godward Street
Minneapolis, MN 55413
Dennis E. Prohofsky Senior Vice President, None
Minnesota Life Insurance General Counsel and
Company Secretary
400 Robert Street North
St. Paul, MN 55101
Thomas E. Rohricht Director None
Doherty, Rumble & Butler
Professional Association
2800 Minnesota World Trade
Center
30 East Seventh Street
St. Paul, MN 55101-4999
Robert L. Senkler Chairman, President and None
Minnesota Life Insurance Chief Executive Officer
Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Director None
Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Gregory S. Strong Senior Vice President None
Minnesota Life Insurance and Chief Financial
Company Officer
400 Robert Street North
St. Paul, MN 55101
Terrence M. Sullivan Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
Randy F. Wallake Senior Vice President None
Minnesota Life Insurance
Company
400 Robert Street North
St. Paul, MN 55101
William N. Westhoff Senior Vice President None
Minnesota Life Insurance and Treasurer
Company
400 Robert Street North
St. Paul, MN 55101
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Frederick T. Weyerhaeuser Director None
Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
</TABLE>
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Wholly-owned subsidiary of Minnesota Mutual Companies, Inc.:
Securian Holding Company (Delaware)
Wholly-owned subsidiary of Securian Holding Company:
Securian Financial Group, Inc. (Delaware)
Wholly-owned subsidiary of Securian Financial Group, Inc.
Minnesota Life Insurance Company
Wholly-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Capital Management, Inc.
HomePlus Insurance Company
Northstar Life Insurance Company (New York)
The Ministers Life Insurance Company
MIMLIC Life Insurance Company (Arizona)
Robert Street Energy, Inc.
Capitol City Property Management, Inc.
Personal Finance Company (Delaware)
Enterprise Holding Corporation
Wholly-owned subsidiary of Advantus Capital Management, Inc.:
Ascend Financial Services, Inc.
Wholly-owned subsidiaries of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Massachusetts, Inc. (Massachusetts)
MIMLIC Insurance Agency of Texas, Inc. (Texas)
Ascend Insurance Agency of Nevada, Inc. (Nevada)
Ascend Insurance Agency of Oklahoma, Inc. (Oklahoma)
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Financial Ink Corporation
Oakleaf Service Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Lafayette Litho, Inc.
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MCM Funding 1997-1, Inc.
MCM Funding 1998-1, Inc.
<PAGE>
MIMLIC Venture Corporation
HomePlus Insurance Agency, Inc.
Ministers Life Resources, Inc.
Wedgewood Valley Golf, Inc.
Wholly-owned subsidiary of HomePlus Insurance Agency, Inc.:
HomePlus Insurance Agency of Texas, Inc. (Texas)
Majority-owned subsidiary of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Ohio, Inc. (Ohio)
Open-end registered investment company offering shares solely to separate
accounts of Minnesota Life Insurance Company:
Advantus Series Fund, Inc.
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Majority-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Real Estate Securities Fund, Inc.
Less than majority owned, but greater than 25% owned, subsidiaries of Minnesota
Life Insurance Company:
Advantus Money Market Fund, Inc.
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than 25% owned subsidiaries of Minnesota 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 March 25, 1998, the number of holders of securities of the Registrant
were as follows:
<TABLE>
<CAPTION>
Number of Record
Title of Class Holders
-------------- ----------------
<S> <C>
Variable Annuity Contracts 1,375
</TABLE>
ITEM 28. INDEMNIFICATION
The statement with respect to indemnification. Previously filed.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) The principal underwriter is Ascend Financial Services, Inc.
Ascend Financial Services, Inc. also is the principal
underwriter for twelve mutual funds (Advantus Horizon Fund,
Inc.; Advantus Spectrum Fund, Inc.; Advantus Money Market Fund,
Inc.; Advantus Mortgage Securities Fund, Inc.; Advantus Bond
Fund, Inc.; Advantus Cornerstone Fund, Inc.; Advantus
Enterprise Fund, Inc.; Advantus International Balanced Fund,
Inc.; Advantus Venture Fund, Inc.; Advantus Index 500 Fund,
Inc.; Advantus Real Estate Securities Fund, Inc.; and the MIMLIC
Cash Fund, Inc.) and for four additional registered separate
accounts of Minnesota Life Insurance Company, all of which offer
annual contracts and life insurance policies on a variable basis.
<PAGE>
(b) Directors and Officers of Underwriter.
DIRECTORS AND OFFICERS OF UNDERWRITER
<TABLE>
<CAPTION>
POSITIONS AND POSITIONS AND
NAME AND PRINCIPAL OFFICES OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ ---------------- ---------------
<S> <C> <C>
Robert E. Hunstad Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
George I. Connolly President, Chief None
Ascend Financial Services, Inc. Executive Officer, Chief
400 Robert Street North Compliance Officer and
St. Paul, Minnesota 55101 Director
Margaret Milosevich Vice President, Chief Assistant Secretary
Ascend Financial Services, Inc. Operations Officer,
400 Robert Street North Treasurer and Secretary
St. Paul, Minnesota 55101
Dennis E. Prohofsky Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Treasurer Assistant Secretary
Ascend Financial Services, Inc. and Assistant Secretary
400 Robert Street North
St. Paul, Minnesota 55101
</TABLE>
(c) All commissions and other compensation received by each principal
underwriter, directly or indirectly, from the Registrant during
the Registrant's last fiscal year:
<TABLE>
<CAPTION>
NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE OTHER
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
- ----------- ---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Ascend Financial Services, Inc. $15,989,724
</TABLE>
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 Minnesota Life Insurance Company, St. Paul, Minnesota
55101-2098.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
<PAGE>
(a) Previously filed.
(b) Previously filed.
(c) Previously filed.
(d) Minnesota Life Insurance Company hereby represents that, as to the
variable annuity contract which is the subject of this Registration
Statement, File, No. 33-12333, 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 Minnesota Life Insurance Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of St. Paul and the State of Minnesota on the 3rd day of March, 1999.
VARIABLE ANNUITY ACCOUNT
(Registrant)
By: MINNESOTA LIFE INSURANCE COMPANY
(Depositor)
By__________________________________
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor,
Minnesota Life Insurance Company, has duly caused this Post-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 3rd day of March, 1999.
MINNESOTA LIFE INSURANCE COMPANY
By__________________________________
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in their capacities
with the Depositor and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman, President and March 3, 1999
Robert L. Senkler Chief Executive Officer
* Director
- ----------------------------
Giulio Agostini
* Director
- ----------------------------
Anthony L. Andersen
* Director
- ----------------------------
Leslie S. Biller
* Director
- ----------------------------
John F. Grundhofer
* Director
- ----------------------------
David S. Kidwell, Ph.D.
* Director
- ----------------------------
Reatha C. King, Ph.D.
Director
- ----------------------------
William B. Lawson, Sr.
* Director
- ----------------------------
Thomas E. Rohricht
* Director
- ----------------------------
Michael E. Shannon
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
* Director
- ----------------------------
Frederick T. Weyerhaeuser
Vice President March 3, 1999
- ---------------------------- (chief financial officer)
Gregory S. Strong
Vice President March 3, 1999
- ---------------------------- (chief accounting officer)
Gregory S. Strong
Attorney-in-Fact March 3, 1999
- ----------------------------
Dennis E. Prohofsky
</TABLE>
* Pursuant to power of attorney dated October 19, 1998, a copy of which is filed
herewith.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
<S> <C>
4. (a) The Flexible Payment Deferred Variable Annuity,
form MHC-87-9154
(g) Tax Sheltered Annuity Amendment, form MHC-88-9213
(j) Individual Retirement Annuity (IRA) Agreement,
SEP, Traditional IRA and Roth-IRA form number
MHC-97-9418
(k) Individual Retirement Annuity, SIMPLE - (IRA)
Agreement, form number MHC-98-9431
5. (c) Application, form MHC-84-9093 Rev. 7-1998
6. (a) The Restated Certificate of Incorporation.
(b) The Bylaws of the Depositor
15. Minnesota Life Insurance Company Power of Attorney To Sign
</TABLE>
<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.
Minnesota Life Insurance Company is a subsidiary of Minnesota Mutual
Companies, Inc., a mutual insurance holding company. The owner is a member of
the Minnesota Mutual Companies, Inc., which holds it's annual meetings on the
first Tuesday in March of each year at 3 p.m. local time. The meetings are
held at 400 Robert Street North, St. Paul, Minnesota 55101-2098
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota,
on the contract date.
/s/
President
/s/
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.
- -------------------------------------------------------------------------------
MINNESOTA LIFE
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
- -------------------------------------------------------------------------------
FLEXIBLE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
FIXED OF VARIABLE ANNUITY
BENEFITS
A NONPARTICIPATING CONTRACT
- -------------------------------------------------------------------------------
MHC-87-9154
<PAGE>
CONTRACT INDEX
Alphabetical Index to the Provisions of Your Contract
Page
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Allocation of Purchase Payments. . . . . . . . . . . . . . . . . . . . . . 3
Amount Payable at Death. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Annuity Payment Options. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Annuity Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Contract Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Purchase Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Transfer Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Withdrawal and Surrender . . . . . . . . . . . . . . . . . . . . . . . . . 4
<PAGE>
YOUR CONTRACT INFORMATION
- --------------------------------------------------------------------------------
ANNUITANT: John C. Doe
-----------
DATE OF BIRTH: October 1, 1963
---------------
OWNER: John C. Doe
-----------
JURISDICTION: Your State
----------
CONTRACT NUMBER: 1-234-567
---------
CONTRACT DATE: October 1, 1998
---------------
ANNUITY COMMENCEMENT DATE: November 1, 2063
----------------
ANTICIPATED ANNUAL PURCHASE PAYMENT: $1,000.00
---------
- --------------------------------------------------------------------------------
FLEXIBLE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
FIXED OR VARIABLE ANNUITY
BENEFITS
A NONPARTICIPATING CONTRACT
- --------------------------------------------------------------------------------
MHC-87-9154 Minnesota Life 1
<PAGE>
DEFINITIONS
- --------------------------------------------------------------------------------
When we use the following words, this is what we mean:
THE ANNUITANT
The person named on page 1 who may receive lifetime benefits under the contract.
YOU, YOUR
The owner of this contract. The owner may be the annuitant or someone else.
The owner shall be that person named in the application.
WE, OUR, US
Minnesota Life Insurance Company.
CONTRACT DATE
The effective date of this contract. It is also the date from which we
determine contract anniversaries and contract years.
CONTRACT ANNIVERSARY
The same day and month as the contract date for each succeeding year of this
contract.
CONTRACT YEAR
A period of one year beginning with the contract date or a contract
anniversary.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which is designated as an eligible investment for the separate account.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
ACCUMULATION VALUE
Your interest in this contract. It is composed of your interest in one or more
sub-accounts of the separate account. Your interest in the sub-accounts shall
be valued separately. The total of those values will be the accumulation value.
SEPARATE ACCOUNT
A separate investment account titled Variable Annuity 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 the
separate account are ours. Those assets are not subject to claims arising
out of any other business in which we engage.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
legislation.
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 to our home office
with your written request.
PURCHASE PAYMENTS
Amounts paid to us as consideration for the benefits provided by this contract.
ANNUITY PAYMENTS
Payments 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.
FIXED ANNUITY
Annuity payments of equal amounts during the payment period.
VARIABLE ANNUITY
Annuity payments which increase or decrease in amount to reflect the investment
experience of the separate account and its sub-accounts.
AGE
The age of a person at nearest birthday.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
WHAT IS YOUR AGREEMENT WITH US?
This contract and the copy of the application attached to it 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 agent or other person
has the authority to change or waive any provision of this contract.
Any additional agreement attached to this contract will become a part of this
contract and 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 by making a written request
to us. You have these rights during the annuitant's lifetime and before annuity
payments begin. We will deal with you, unless this contract provides otherwise,
on the basis that you have full ownership and control of this contract.
HOW WILL YOU KNOW THE VALUE OF YOUR CONTRACT?
Each year we will send you a report. This report will
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summarize the year's transactions and will show the current accumulation value
of this contract. It will also show the current accumulation unit values. The
report will be as of a date within two months of its mailing.
PURCHASE PAYMENTS
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WHERE DO YOU MAKE PURCHASE PAYMENTS?
All purchase payments must be made at our home office. Our home office is at
400 Robert Street North, St. Paul, Minnesota 55101-2098.
When we receive a purchase payment from you at our home office, we will send you
a confirmation.
WHEN DO YOU MAKE PURCHASE PAYMENTS?
You may choose when to make purchase payments.
ARE THERE OTHER 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.
WHAT DEDUCTIONS ARE MADE FROM PURCHASE PAYMENTS?
There are usually no deductions made from the purchase payments. However, we do
reserve the right to make a deduction from purchase payments for state premium
taxes, where applicable.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
They are allocated among the sub-accounts of the separate account as you direct.
Initially, you indicate your allocation in the application. Later, you may
change your allocation for future purchase payments by giving us written notice.
We will allocate purchase payments received without allocation instructions to
the money market sub-account.
ARE SEPARATE ACCOUNT OPTIONS AVAILABLE?
The separate account currently is composed of the following sub-accounts:
Growth Portfolio
Bond Portfolio
Money Market Portfolio
Asset Allocation Portfolio
Mortgage Securities Portfolio
Index 500 Portfolio
Capital Appreciation Portfolio
International Stock Portfolio
Small Company Portfolio
Maturing Government Bond 2002 Portfolio
Maturing Government Bond 2006 Portfolio
Maturing Government Bond 2010 Portfolio
Value Stock Portfolio
Small Company Value Portfolio
Global Bond Portfolio
Index 400 Mid-Cap Portfolio
Macro-Cap Value Portfolio
Micro-Cap Growth Portfolio
Real Estate Securities Portfolio
Purchase payments may be applied to one or more of these sub-accounts or any
other which may be established by us under the separate account for contracts of
this class. We reserve the right to add, combine or remove any sub-accounts of
the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
The separate account is divided into sub-accounts. For each sub-account, there
is a fund for the investment of that sub-account's assets. 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.
IS THERE A MINIMUM AMOUNT WHICH MAY BE ALLOCATED TO THE SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT?
No.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right to transfer assets of the separate account, which we
determine to be associated with the class of contracts to which this contract
belongs, to another separate account. If this type of transfer is made, the
term "separate account", as used in this contract, shall then mean the separate
account to which the assets were transferred.
We reserve the right, when permitted by law, to:
(a) deregister the separate account under the Investment Company Act of
1940;
(b) restrict or eliminate any voting rights of contract owners or other
persons who have voting rights as to the separate account; and
(c) combine the separate account with one or more other separate accounts.
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. You may make purchase payments again at any time before annuity payments
start unless the contract has been surrendered.
MAY WE CANCEL THE CONTRACT?
We may, in 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 (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 our 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.
3 Minnesota Life MHC-87-9154
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CONTRACT CHARGES
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WHAT CHARGES MAY BE MADE UNDER THIS CONTRACT?
An administrative charge is made directly to the separate account. On an annual
basis it may be as much as .35% of the net asset value of the separate account.
VALUATION
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HOW IS YOUR ACCUMULATION VALUE DETERMINED?
Your accumulation value is your interest in one or more sub-accounts of the
separate account.
For each sub-account of the separate account, the accumulation value is equal
to the accumulation units multiplied by the accumulation unit value.
WHAT IS AN ACCUMULATION UNIT AND HOW IS ITS VALUE DETERMINED?
An accumulation unit is a measure of your interest in each sub-account of the
separate account. 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 units of
each sub-account will be increased by subsequent purchase payments and
transfers to that sub-account. The units of each sub-account will be
decreased by transfers or withdrawals from that sub-account.
The accumulation unit value will increase or decrease on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of the sub-account of the separate 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
separate account at a rate of not more than .35% per annum.
The gross investment rate is equal to:
(a) the net asset value per share of a fund share held in the sub-account
of the separate account determined at the end of the current valuation
period; plus
(b) the per-share amount of any dividend or capital gain distributions by
the fund if the "ex-dividend" date occurs during the current valuation
period; divided by
(c) the net asset value per share of that fund share held in the
sub-account determined at the end of the preceding valuation period.
TRANSFER PROVISIONS
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WHAT IS A TRANSFER?
A transfer is a reallocation of funds under this contract among the sub-accounts
of the separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THE CONTRACT?
Yes. These transfers may be made on your written request. 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.
DOES A DOLLAR AMOUNT LIMIT APPLY TO TRANSFERS?
No.
MAY TRANSFERS TAKE PLACE ONCE AN ANNUITY BEGINS?
Yes. However, transfers are limited. They may be made only with respect to any
variable annuity payments. See the Annuity Payment Options section of this
contract.
WITHDRAWAL AND SURRENDER
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MAY YOU WITHDRAW FUNDS FROM THIS CONTRACT?
Yes. At any time before annuity payments begin, you may request a partial
withdrawal from the accumulation value. You must make a written request for any
withdrawal, and it must be for at least $250. The accumulation value will be
reduced by the amount withdrawn.
Unless instructed otherwise by you, withdrawals will be made from each
sub-account of the separate account in the same proportion that the value of
your interest in the sub-account bears to your total accumulation value.
Systematic withdrawal plans of a fixed amount or over a fixed period are also
available.
MAY YOU SURRENDER THE CONTRACT?
Yes. At any time before annuity payments begin, you may surrender this contract
for its accumulation value. It will be determined as of the valuation date
coincident with or next following the date your written request is received at
our home office.
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HOW WILL WITHDRAWAL OR SURRENDER BENEFITS BE PAID?
We will pay these benefits in a single sum. However, if this contract is
surrendered you may elect one of the annuity payment options, subject to the
provisions of this contract.
ANNUITY PROVISIONS
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WHEN DO ANNUITY PAYMENTS BEGIN?
You must notify us in writing that annuity payments are to be made to the
annuitant, when these payments are to begin, the form of the annuity and what
annuity payment option has been selected. We must receive this notice at least
30 days in advance of the date annuity payments are to begin. This contract
permits annuity payments to begin on the first day of any month after the 50th
birthday and before the 75th birthday of the annuitant. However, the beginning
date for annuity payments must be consistent with any restrictions applicable to
the plan under which this contract may have been purchased.
WHAT VALUE IS AVAILABLE TO BE APPLIED TO PROVIDE ANNUITY PAYMENTS?
The accumulation value will be applied to provide annuity payments.
WHAT TYPES OF ANNUITIES ARE AVAILABLE?
Both fixed and variable annuities 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 unless 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 accumulation value in a lump sum.
This payment would be in lieu of all other rights under this contract.
WHAT INFORMATION MAY WE NEED?
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.
IF YOU MAKE NO ELECTION, WHEN DO ANNUITY PAYMENTS BEGIN?
If you do not elect another date, annuity payments will begin on the later of:
the first day of the month immediately following the 65th birthday of the
annuitant, or the first day of the month immediately following the fifth
contract anniversary.
IF YOU FAIL TO ELECT AN ANNUITY OPTION, UNDER WHAT OPTION WILL ANNUITY PAYMENTS
BE MADE?
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, HOW WILL ANNUITY PAYMENTS BE MADE?
If you do not elect an annuity payment form, we will make annuity payments in
the form of a variable annuity.
MUST AN ANNUITY PAYMENT OPTION BE ELECTED?
No. You may elect a lump sum payment instead. If you do so, you and the
annuitant shall have no further rights under this contract.
ANNUITY PAYMENT OPTIONS
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WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
The following annuity payment options are available:
Option 1 -- Life Annuity -- annuity payments payable monthly 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
monthly 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
monthly 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.
Option 4 -- Fixed Period Annuity -- annuity payments payable monthly for a
fixed period of from one to twenty years. If the annuitant dies before all
payments for the fixed period are received, payments will continue for the
remainder of the fixed period to the beneficiary.
ARE OTHER ANNUITY PAYMENT OPTIONS AVAILABLE?
Yes. Other options may be available as agreed upon between you and us.
MAY THE BENEFICIARY RECEIVE A LUMP SUM PAYMENT INSTEAD OF THE REMAINING ANNUITY
PAYMENTS?
Yes. The beneficiary may elect to have the present value of the remaining
payments paid in a lump sum. This right exists under Options 2 and 4.
The lump sum payment will be the commuted value of the remaining payments. It
will be based on the then current dollar amount of one payment, using the same
interest rate which served as a basis for the annuity.
HOW IS THE AMOUNT OF A VARIABLE ANNUITY PAYMENT DETERMINED?
The dollar amount of the first monthly variable annuity payment is determined by
applying the available value (after deduction of any premium taxes not
previously deducted) to the table below using the adjusted age of the annuitant
and any joint annuitant. A number of annuity units is then determined by
dividing this dollar amount by
5 Minnesota Life MHC-87-9154
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the then current annuity unit value. Thereafter, the number of annuity units
remains unchanged during the period of annuity payments. This determination is
made separately for each sub-account of the separate account. The number of
annuity units is based upon the available value in each sub-account as of the
date annuity payments are to begin.
The dollar amount determined for each sub-account will then be aggregated for
purposes of making payment.
The dollar amount of the second and later variable annuity payments is equal to
the number of annuity units determined for each sub-account times the annuity
unit value for that sub-account as of the due date of the payment. This amount
may increase or decrease from month to month.
The value of an annuity unit for a sub-account is determined each month as of
the first day of the month. The value is equal to the annuity unit value for
that sub-account as of the first day of the preceding month times the product of
(a) .997137, and (b) a sub-account investment factor. This investment factor is
the accumulation unit value for that sub-account on the valuation date next
following the fourteenth day of the preceding month divided by the accumulation
unit value for that sub-account on the valuation date next following the
fourteenth day of the second preceding month. For any date other than the first
of a month, the annuity unit value is that on the first day of the next month.
HOW IS THE AMOUNT OF A FIXED ANNUITY PAYMENT DETERMINED?
The tables shown below 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, after the deduction of any
applicable premium taxes not previously deducted. Amounts shown here are based
on the Progressive Annuity Table with interest at the rate of 3.5% per annum,
assuming births in the year 1900 and with an age setback of eight years. The
amount of each payment depends upon the adjusted age of the annuitant and any
joint annuitant. The adjusted age is determined from the actual age nearest
birthday at the time the first payment is due in the following manner:
CALENDAR YEAR ADJUSTED AGE IS
OF BIRTH EQUAL TO -
---------------- ------------------
Prior to 1900 Age Plus 1
1900 - 1919 Actual Age
1920 - 1939 Age Minus 1
1940 - 1959 Age Minus 2
1960 and Later Age Minus 3
DOLLAR AMOUNT OF THE FIRST MONTHLY PAYMENT WHICH IS PURCHASED WITH
EACH $1,000 OF VALUE APPLIED
(Rates shown for Options 1, 2 and 3 are for an annuity with the first payment
due immediately. They must be adjusted for any applicable state premium
taxes and the contract fee.)
ADJUSTED AGE
OF ANNUITANT SINGLE LIFE ANNUITIES
------------ ------------------------------------------------------
OPTION 1 OPTION 2A OPTION 2B OPTION 2C
-------- --------- --------- ---------
50 $4.15 $4.14 $4.11 $4.08
51 4.21 4.20 4.17 4.12
52 4.28 4.26 4.22 4.18
53 4.34 4.32 4.28 4.23
54 4.42 4.39 4.35 4.28
55 4.49 4.46 4.41 4.34
56 4.57 4.53 4.48 4.40
57 4.65 4.61 4.55 4.46
58 4.74 4.69 4.62 4.52
59 4.84 4.78 4.70 4.58
60 4.94 4.87 4.78 4.65
61 5.04 4.97 4.87 4.71
62 5.16 5.07 4.95 4.78
63 5.28 5.18 5.04 4.85
64 5.40 5.29 5.13 4.91
65 5.54 5.41 5.23 4.98
66 5.69 5.53 5.33 5.05
67 5.84 5.66 5.43 5.11
68 6.01 5.79 5.53 5.18
69 6.18 5.94 5.63 5.24
70 6.37 6.08 5.74 5.30
71 6.57 6.24 5.84 5.36
72 6.79 6.40 5.95 5.41
73 7.02 6.57 6.05 5.46
74 7.27 6.74 6.15 5.51
75 7.54 6.91 6.26 5.55
6 Minnesota Life MHC-87-9154
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OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY
ADJUSTED AGE OF
JOINT ANNUITANT* ADJUSTED AGE OF ANNUITANT*
---------------- --------------------------------------------------
55 60 62 65 67 70 75
---- ---- ---- ---- ---- ---- ----
54 $3.98 $4.09 $4.13 $4.19 $4.22 $4.26 $4.32
59 4.10 4.27 4.34 4.43 4.48 4.55 4.66
61 4.15 4.34 4.42 4.52 4.59 4.68 4.81
64 4.21 4.44 4.53 4.67 4.76 4.88 5.05
66 4.25 4.50 4.61 4.76 4.87 5.01 5.23
69 4.30 4.59 4.71 4.90 5.03 5.22 5.50
74 4.37 4.71 4.86 5.10 5.27 5.54 5.98
* Dollar amounts of the first monthly payments for ages not shown in this table
will be calculated on the same basis as those shown and may be obtained from us.
OPTION 4 -- FIXED PERIOD ANNUITY
FIXED PERIOD DOLLAR AMOUNT FIXED PERIOD DOLLAR AMOUNT
(YEARS) OF PAYMENT (YEARS) OF PAYMENT
------------ ------------- ------------ -------------
1 $84.65 11 $9.09
2 43.05 12 8.46
3 29.19 13 7.94
4 22.27 14 7.49
5 18.18 15 7.10
6 15.35 16 6.76
7 13.38 17 6.47
8 11.90 18 6.20
9 10.75 19 5.97
10 9.83 20 5.75
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 A FIXED ANNUITY OPTION BE CHANGED?
No.
ONCE ANNUITY PAYMENTS BEGIN, MAY A VARIABLE ANNUITY OPTION BE CHANGED?
No.
MAY AMOUNTS BE TRANSFERRED DURING THE ANNUITY PERIOD?
Yes. 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.
HOW DOES AN ANNUITANT CHANGE SUB-ACCOUNT ELECTIONS OR TRANSFER AMOUNTS TO A
FIXED ANNUITY?
The change must be by written request. The annuitant and joint annuitant, if
any, must make such an election.
HOW WILL A TRANSFER OF VARIABLE ANNUITY SUB-ACCOUNTS BE MADE?
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 the new sub-account. The annuity payment option will
stay the same.
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 on the transfer date.
ARE THERE RESTRICTIONS ON ANNUITY SUB-ACCOUNT TRANSFERS?
Yes. The transfer of an annuity reserve amount from any sub-account must be at
least equal to: 1) $5,000; or, 2) 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. Your 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.
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MAY AMOUNTS HELD AS RESERVES TO PAY A VARIABLE ANNUITY BE TRANSFERRED TO A FIXED
ANNUITY?
Yes. However, the restrictions which apply to annuity sub-account transfers
will apply here as well.
The amount transferred will then be applied to provide a fixed annuity amount.
This amount will be based upon the adjusted age of the annuitant and any joint
annuitant at the time of the transfer. The payment option will remain the same.
MAY AMOUNTS PAID AS A FIXED ANNUITY BE TRANSFERRED TO A VARIABLE ANNUITY?
No.
AMOUNT PAYABLE AT DEATH
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WHAT AMOUNT IS PAYABLE AT DEATH?
If you die before annuity payments have started, we will pay the accumulation
value. The accumulation value will be determined as of the valuation date
coincident with or next following the day we receive due proof of death at
our home office. If the annuitant dies after annuity payments have started,
we will pay whatever amount may be called for by the terms of the annuity
payment option selected.
The remaining interest in the contract must be distributed at least as rapidly
as under the option in effect at the annuitant's death.
IS THERE A GUARANTEED DEATH BENEFIT?
Yes. This contract has a guaranteed death benefit if you die before annuity
payments have started. The death benefit shall be equal to the greater of:
(1) the amount of the accumulation value payable at death; or (2) the amount
of the initial purchase payment paid to us as consideration for this
contract, less all contract withdrawals.
TO WHOM WILL WE PAY THOSE BENEFITS?
When we receive due proof of death satisfactory to us, we will pay the amount
payable at death under this contract to the beneficiary or beneficiaries. The
beneficiary will be the person or persons named in the application for this
contract unless you subsequently change the beneficiary. In that event, we
will pay the amount payable at death to the beneficiary named in your last
change of beneficiary request as provided in this contract.
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 on or 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 only so long as annuity payments begin not later than one year
after your death. If there is no designated beneficiary, then the entire
interest in this contract must be distributed within five years after your
death. If the annuitant dies after annuity payments have begun, any payments
received by a non-spouse beneficiary must be distributed as least as rapidly as
under the method elected by the annuitant as of the date of death.
If any portion of the contract interest is payable to your designated
beneficiary who is your surviving spouse, that spouse shall be treated as the
contract owner for purposes of: (a) when payments must begin; and (2) the time
of distribution in the event of your spouse's death. Payments must be made in
substantially equal installments.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIE BEFORE THE ANNUITANT?
If a beneficiary dies before the annuitant, that beneficiary's interest in this
contract ends with that beneficiary's death. Only those beneficiaries who
survive will be eligible to share in a death benefit. If no beneficiary
survives the annuitant prior to the date an annuity begins we will pay the
accumulation value of this contract to the executors or administrators of the
annuitant's estate.
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 the annuitant dies 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.
ADDITIONAL INFORMATION
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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
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.
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.
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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.
WHAT IF A PERSON'S AGE IS MISSTATED?
If a person's age has been misstated, the amount payable under this contract
as an annuity 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; or, 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 amount with
the next payment.
WHAT INFORMATION MUST YOU PROVIDE?
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?
This contract may be modified at any time by written agreement between you and
us. However, no such modification will adversely affect the rights of an
annuitant under this contract unless the modification is made to 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.
HOW DOES THIS CONTRACT RELATE TO THE OWNERSHIP OF THE SEPARATE ACCOUNT?
We have exclusive and absolute ownership of the separate account.
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, we reserve the right to defer payment for
such period as may be allowed under the 1940 Act.
DO YOU HAVE ADDITIONAL VOTING RIGHTS?
Yes. You may direct us with respect to the voting rights of fund shares held by
us and attributable to this contract.
9 Minnesota Life MHC-87-9154
<PAGE>
[LOGO]
MINNESOTA LIFE
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FLEXIBLE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
FIXED OR VARIABLE ANNUITY
BENEFITS
A NONPARTICIPATING CONTRACT
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<PAGE>
MINNESOTA TAX SHELTERED ANNUITY AMENDMENT
We have made the following changes to your contract. They modify the contract.
They are considered to be a part of it. This agreement is effective as of the
original contract date unless a different effective date is shown here.
WHAT DOES THIS AGREEMENT PROVIDE?
This Agreement modifies your contract. The Agreement is used when the contract
is issued to fund a tax sheltered annuity program. This is as described in
Section 403(b) of the Internal Revenue Code (hereinafter "Code"), as amended.
PURCHASE PAYMENTS
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ARE PURCHASE PAYMENTS LIMITED?
Yes. Where the annuitant has a tax sheltered annuity, purchase payments may be
limited. Elective deferrals which are purchase payments made by salary
reduction are limited to: (a) $9,500; or (b) an indexed amount, if greater.
A special increased limit in the case of an annuitant who has completed 15 years
of service with an educational organization, a hospital, a home health service
agency, a church, a convention or association of churches, or a health and
welfare service agency may be available. The limit for any one year is
increased by the lesser of:
(a) $3,000;
(b) $15,000 reduced by amounts already excluded for prior taxable years by
reason of this special exception; or
(c) the excess of $5,000 multiplied by the number of years of service the
annuitant has with the employer less all prior elective deferrals.
The amount of salary reduction excludable from an annuitant's gross income may
actually be less than the amount permitted under this limit on elective
deferrals. This may be true if the annuitant's exclusion allowance, described
in Section 403(b)(2), of the Code or the overall limit as described in Section
415(c) of the Code is less.
WITHDRAWAL AND SURRENDERS
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ARE THERE RESTRICTIONS ON WHEN WITHDRAWALS FROM THIS CONTRACT MAY BE MADE?
Yes. Contracts issued to fund 403(b) tax sheltered annuity programs must
restrict certain withdrawals. Any purchase payment made after January 1, 1989
pursuant to a salary reduction agreement between you and your employer may be
paid only when:
MHC-88-9213 Minnesota Life Insurance Company
<PAGE>
(a) you attain age 59 1/2;
(b) when you separate from service with your employer;
(c) when you die;
(d) when you become disabled; or
(e) if you qualify for a hardship withdrawal.
WHAT IS MEANT BY A HARDSHIP WITHDRAWAL?
A hardship withdrawal is one that is made on account of an immediate and heavy
financial need and a withdrawal is necessary to satisfy that financial need.
You may be required to provide us with information so that we may be satisfied
that your hardship is one described in the Code and its regulations.
WHAT AMOUNT MAY BE WITHDRAWN UNDER THE HARDSHIP PROVISION?
You may withdraw only the amount represented by your salary reduction
contributions. Any earnings attributable to such contributions may not be
withdrawn.
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:
(a) the annuitant becomes disabled as defined by the Code;
(b) The amount received is in excess of the allowed elective deferral and
returned to the annuitant before the required tax return filing date for
that year, together with any earned interest; or
(c) if the entire amount in the contract is received and reinvested in a
similar plan entitled to similar tax treatment.
We will not be liable for any tax penalties on amounts received or paid by us
under this contract. We also retain the right to treat any transaction treated
by law as a contract distribution as a complete contract surrender.
MHC-88-9213 Minnesota Life Insurance Company
<PAGE>
GENERAL INFORMATION
IS THERE A TIME WHEN DISTRIBUTIONS FROM THIS CONTRACT MUST BE MADE?
Yes. Distributions must begin within 90 days after the end of the year in which
the annuitant reaches age 70 1/2. Distributions may be made as withdrawals or
under one of the available annuity forms. In order to avoid tax penalties, you
will have to meet certain minimum distribution requirements.
IS THIS CONTRACT TRANSFERABLE?
No. This contract is non-transferable. It may not be sold or assigned.
/s/ Dennis E. Prohofsky
Secretary
/s/ Robert L. Senkler
President
MHC-88-9213 Minnesota Life Insurance Company
<PAGE>
Minnesota Life 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
MHC-97-9418 Minnesota Life Insurance Company
<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.
MHC-97-9418 Minnesota Life 2
<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.
MHC-97-9418 Minnesota Life 3
<PAGE>
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.
MHC-97-9418 Minnesota Life 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.
MHC-97-9418 Minnesota Life 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 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
MHC-97-9418 Minnesota Life 6
<PAGE>
MINNESOTA LIFE 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.
MHC-98-9431 Minnesota Life Insurance Company
<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
MHC-98-9431 Minnesota Life 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.
MHC-98-9431 Minnesota Life 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 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
MHC-98-9431 Minnesota Life 4
<PAGE>
- -------------------------------------------------------------------------------
MINNESOTA LIFE VARIABLE ANNUITY APPLICATION
- -------------------------------------------------------------------------------
Minnesota Life Insurance Company - Annuity Services - 400 Robert Street North
St. Paul, Minnesota 55101-2098 - Toll Free 1-800-362-3141
- -------------------------------------------------------------------------------
OWNER (PLEASE PRINT)
- -------------------------------------------------------------------------------
NAME
- -------------------------------------------------------------------------------
ADDRESS
- -------------------------------------------------------------------------------
CITY, STATE, ZIP
- -------------------------------------------------------------------------------
DATE OF BIRTH SEX TAXPAYER I.D. (SOC. SEC. # OR EIN)
/ / M / / F
- -------------------------------------------------------------------------------
ANNUITANT (IF OTHER THAN OWNER)
- -------------------------------------------------------------------------------
NAME
- -------------------------------------------------------------------------------
ADDRESS
- -------------------------------------------------------------------------------
CITY, STATE, ZIP
- -------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ / M / / F
- -------------------------------------------------------------------------------
JOINT OWNER (OPTIONAL - MUST BE SPOUSE OF OWNER)
- -------------------------------------------------------------------------------
NAME
- -------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ / M / / F
- -------------------------------------------------------------------------------
JOINT ANNUITANT (OPTIONAL - MUST BE SPOUSE OF ANNUITANT)
- -------------------------------------------------------------------------------
NAME
- -------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ / M / / F
- -------------------------------------------------------------------------------
BENEFICIARY
- -------------------------------------------------------------------------------
CLASS NAME RELATIONSHIP
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY NUMBER
/ / M / / F
- -------------------------------------------------------------------------------
/ / M / / F
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ANNUITANT'S EMPLOYER (IF NOT SELF EMPLOYED)
- -------------------------------------------------------------------------------
NAME ADDRESS CITY, STATE, ZIP
- -------------------------------------------------------------------------------
TYPE OF PLAN (PLEASE CHECK ONLY ONE BOX)
- -------------------------------------------------------------------------------
/ / Non-Qualified $________________
/ / Under the ____ (state) Uniform Transfers To Minor Act
/ / Individual Retirement Annuity (IRA) for tax year _______
/ / IRA Rollover $________________
/ / IRA Transfer from existing IRA $________________
/ / Roth IRA for tax year _______
/ / Simplified Employee Pension (SEP)
/ / SIMPLE
/ / Tax Sheltered Annuity (IRC Section 403(b)
Annual Earned Income $________________
/ / Qualified Retirement Plan (IRC Section 401)
/ / Employee Funded / / Employer Funded
/ / Public Employee Deferred Compensation (IRC Section 457)
/ / Non-Qualified Deferred Compensation
/ / Other ______________________________________________________________
- -------------------------------------------------------------------------------
TYPE OF CONTRACT AND AMOUNT OF PAYMENT
- -------------------------------------------------------------------------------
/ / MultiOption Select Flexible Payment Deferred Variable Annuity
of $______ per _________ OR $______ as a single payment
/ / MultiOption Flexible Payment Deferred Variable Annuity
of $______ per _________ OR $______ as a single payment
/ / MultiOption Single Payment Deferred Variable Annuity
of $______ ($5,000 Minimum)
- -------------------------------------------------------------------------------
The prospectuses for the Variable Annuity Account, Advantus Series Fund and
Templeton Developing Markets Fund each refer to a Statement of Additional
Information. Would you like us to send you a copy? / / Yes / / No
- -------------------------------------------------------------------------------
PURCHASE PAYMENT ACCOUNT ALLOCATION
- -------------------------------------------------------------------------------
_____% General (Not available for MultiOption Select)
_____% Maturing Government Bond - 2002
_____% Maturing Government Bond - 2006
_____% Maturing Government Bond - 2010
_____% Growth
_____% Bond
_____% Money Market
_____% Asset Allocation
_____% Mortgage Securities
_____% Index 500
_____% Capital Appreciation
_____% International Stock
_____% Small Company
_____% Value Stock
_____% Small Company Value
_____% Global Bond
_____% Index 400 Mid-Cap
_____% Templeton Developing Markets
_____% Macro-Cap Value
_____% Micro-Cap Growth
_____% Real Estate Securities
__________
TOTAL 100%
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PAYMENT METHOD
- -------------------------------------------------------------------------------
/ / APP (Automatic Payment Plan) commencing on Month ___________ Day _________
/ / Enclosed APP Authorization form and voided check
/ / Bill employer commencing on Month____ Day___ and continuing Add to existing case #____
/ / Annually (1 ) / / Semi-Annually (2) / / Quarterly (4)
/ / Monthly (12) / / Semi-Monthly (24) / / Bi-Weekly (26)
Individual billing, commencing on the 1st day of Month ____ and continuing
/ / Quarterly / / Semi-Annually / / Annually
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------
REPLACEMENT
- ----------------------------------------------------------------------------------------------------------------------------
Will this contract applied for replace or change an existing contract? / / Yes / / No
If yes please provide: COMPANY NAME________________________ CONTRACT NUMBER(S)____________
Have you completed a State Replacement Form (where required)? (Based on jurisdiction, not state of residence)
/ / Not Required / / Enclosed
- ----------------------------------------------------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS OR REMARKS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT SUMMARY
- ----------------------------------------------------------------------------------------------------------------------------
1. Are you an employee of Minnesota Life or a subsidiary? / /Yes / /No
2. Are you a spouse or dependent child of an employee of Minnesota life or a subsidiary? / /Yes / /No
3. Are you or your spouse an employee or employed by an NASD firm? / /Yes / /No
4. Dependents: / / Spouse / / Children Ages _______________________
5. How was account acquired? / / Known Personally / / Unsolicited / / Solicited / / Referred By_________________________
6. Current Approximate: Annual Income $____________ Assets $____________ Debt $____________ Tax Bracket _______%
7. Other Investments: (Exclusive of personal residence, automobile and this investment.)
Savings $____________________ Balanced/Total Return Funds $____________________
Insurance Cash Values $____________________ Stock Funds $____________________
Real Estate $____________________ Bond Funds $____________________
Business Interests $____________________ Individual Stocks $____________________
Retirement Funds $____________________ Individual Bonds $____________________
Other________________ $____________________
8. Ranking of Investment Objectives (Rank 1-5 in order 9. Ranking of Investment Objectives (Rank 1-5 in order
of importance): of importance):
CURRENT INVESTMENT TOTAL PORTFOLIO
_____ Conservative Income/Capital Preservation _____ Conservative Income/Capital Preservation
_____ Current Income _____ Current Income
_____ Conservative Growth/Total Return _____ Conservative Growth/Total Return
_____ Growth _____ Growth
_____ Aggressive Growth _____ Aggressive Growth
10. Risk tolerance of current investment (Please select 11. Risk tolerance of current investment (Please select
only one): only one):
/ / Low Risk / / Moderate Risk / / High Risk / / Low Risk / / Moderate Risk / / High Risk
- ----------------------------------------------------------------------------------------------------------------------------
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 A CURRENT VARIABLE ANNUITY ACCOUNT PROSPECTUS AND THE CURRENT PROSPECTUSES FOR THE ADVANTUS SERIES
FUND AND TEMPLETON DEVELOPING MARKETS FUND. 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.
- ----------------------------------------------------------------------------------------------------------------------------
SIGNED AT (City, State) DATE SIGNATURE OF OWNER SIGNATURE OF ANNUITANT
X X
- ----------------------------------------------------------------------------------------------------------------------------
AMOUNT REMITTED WITH APPLICATION SIGNATURE OF JOINT OWNER SIGNATURE OF JOINT ANNUITANT
X X
- ----------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY REPRESENTATIVE
- ----------------------------------------------------------------------------------------------------------------------------
To the best of my knowledge this contract / / will / / will not replace or change an existing insurance or annuity contract. I
certify that a current prospectus was delivered. No written sales materials were used other than those furnished by the Home
Office.
- ----------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE NAME (PRINT) REPRESENTATIVE SIGNATURE AGENCY CODE AGENT CODE
X %
- ----------------------------------------------------------------------------------------------------------------------------
X %
- ----------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY DEALER
- ----------------------------------------------------------------------------------------------------------------------------
DEALER NAME DATE SIGNATURE OF AUTHORIZED DEALER
X
- ----------------------------------------------------------------------------------------------------------------------------
THIS APPLICATION BECOMES EFFECTIVE ONLY UPON ITS ACCEPTANCE BY ASCEND FINANCIAL SERVICES, INC.
- ----------------------------------------------------------------------------------------------------------------------------
ACCEPTED BY DATE CONTRACT NUMBER CASE NUMBER
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
o I have received and had an opportunity to read a current copy of the
Variable Annuity Account Prospectus and the current prospectuses for the
Advantus Series Fund and Templeton Developing Markets Fund for this
investment prior to investing.
o I have been informed of all charges and expenses associated with this
investment.
o I realize that this may be a long-term investment which should be held for
a number of years. Due in part to the sales charges involved, selling or
surrendering in the short term may result in a loss.
o I am aware there is no assurance that the initial objective/s of this
investment will be achieved. Thus, when I ultimately sell or surrender
the investment, I may receive more or less than the amount I invested.
o I realize that the element of risk is inherent in any investment - what
varies is the degree of risk. Generally, the greater the expected return,
the greater risk I must be willing to assume.
o I will only make payment by check payable to the entity listed on the
application or in the prospectus and never payable directly to a
representative or an entity to which the representative may gain access
to my funds. I will not loan to or borrow from a representative any
monies of securities.
o Given my personal circumstances, this is a suitable investment.
o Financial data should be updated approximately every two years as
investment activity warrants.
IMPORTANT INSTRUCTIONS
1. COMPLETE ALL ITEMS ON THE APPLICATION
2. IF YOU ARE REQUESTING: PLEASE SUBMIT:
Automatic Payment Plan (AAP) - APP Authorization F.25744.2
- voided check
Direct Rollover (client - Transfer/Rollover/1035 Exchange
initiated distribution) F.52258 (send to existing
institution)
Immediate Annuity Contract - Annuity Service Request F.35264
(includes W-4P. If Deferred
Compensation, submit W-4)
- Proof of age for annuitant(s)
if a life contingency option is
selected (copy of driver's
license or birth certificate)
MultiOption Annuity Exchange - Exchange Authorization F.35079
MultiOption Select Annuity - MOA Select Exchange
Exchange Authorization F.51459
Qualified Retirement Plan - Employee Benefit Plan
Disclosure Statement F.23273
Replacement of another life - Appropriate replacement forms
insurance or annuity contract as required by the state of
jurisdiction
SEP contract - Completed IRS form 5305-SEP or
- Prototype Request and Document
Services Agreement and service
fee
SIMPLE - Completed 5304 SIMPLE or
Adoption Agreement
Systematic Dollar Cost Averaging - Annuity Service Request F.35264
Systematic Withdrawal - Annuity Service Request F.35264
Traditional IRA to Roth Internal - Roth Exchange F.52223
Exchange
Transfer (available for use with - Transfer/Rollover/1035 Exchange
transfers from TSA to TSA or F.52258
IRA/Roth/SEP to IRA/Roth/SEP
only)
TSA contract - TSA Withdrawal Disclosure
F.38754
- Salary Modification Agreement
F.23251
Calculation worksheet if
the contribution is to exceed
maximum exclusion allowance
1035 Exchange (non-qualified) - Transfer/Rollover/10-35
Exchange F.52258
- Original contract
3. IF YOU ARE REPLACING A MUTUAL FUND, - Switch Form F.51821
VARIABLE, OR FIXED PRODUCT FOR AN
ANNUITY:
If more than one beneficiary is specified, indicate the class of each. All
living Class 1 beneficiaries receive an equal share of the death proceeds. If
no Class 1 beneficiaries are living, all living Class 2 beneficiaries receive
an equal share and so on.
Class 1 beneficiaries are considered the primary beneficiaries.
Class 2 beneficiaries and so on, are considered the contingent beneficiaries.
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
MINNESOTA LIFE INSURANCE COMPANY
Robert L. Senkler and Dennis E. Prohofsky, respectively, the President and
Secretary of Minnesota Life Insurance Company, a corporation under and existing
by virtue of the laws of the State of Minnesota, do hereby certify that the
following Restated Certificate of Incorporation was duly adopted by an
affirmative vote of a majority of the stockholders at a special meeting of the
Company on December 10, 1998.
This Restated Certificate of Incorporation of Minnesota Life Insurance Company
supersedes and takes the place of the existing Certificate of Incorporation and
all amendments to it:
ARTICLE I
The name of the Company is Minnesota Life Insurance Company (the "Company").
ARTICLE II
The principal office of the Company shall be located at 400 Robert Street North,
Saint Paul, Minnesota 55101-2098.
ARTICLE III
The Company is incorporated for the purpose of transacting the business of and
making insurance upon the lives of individuals and every assurance pertaining
thereto or connected therewith, to grant, purchase and dispose of annuities and
endowments of every kind and description whatsoever, to provide an indemnity
against death and for weekly or other periodic indemnity for disability
occasioned by accident or sickness to the person of the assured and to have all
the further rights, powers and privileges granted or permitted life insurance
companies organized under the provisions of Minnesota Statutes, Chapter 300, and
all Acts amendatory thereof or additional thereto.
ARTICLE IV
The duration and continuation of the Company shall be perpetual.
ARTICLE V
The authorized capital stock of this Company shall be 5,000,000 shares initially
paid in by operation of Minnesota Statutes Section 60A.077 and subsequently paid
in cash, consisting of shares of Common Stock, with par value of $1.00 per
share. Each share of the Common Stock shall have one vote per share.
No shareholder of the Company shall have any pre-emptive or preferential right,
nor be entitled as such as a matter of right, to subscribe for or purchase any
part of any new or additional issue
<PAGE>
of stock of the Company of any class or series, whether issued for money or for
consideration other than money, or of any issue of securities convertible into
stock of the Company.
ARTICLE VI
The corporate powers of the Company shall be vested in a Board of Directors of
at least five persons and shall be exercised by the Board of Directors and by
such officers, agents, employees and committees as the Board of Directors may,
in its discretion, from time to time appoint and empower. The Board of Directors
shall have the power from time to time to make, amend or repeal such bylaws,
rules and regulations for the transaction of the business of the Company as the
Board of Directors may deem expedient and as are not inconsistent with this
Certificate of Incorporation or the constitution or other laws of the State of
Minnesota.
The directors of the Company shall be divided into three classes, as nearly
equal in number as reasonably possible: the first class, the second class and
the third class. Each such director shall serve for a term ending on the third
annual meeting of stockholders following the annual meeting at which such
director was elected, provided, that the directors first elected to the first
class shall serve for a term ending upon the election of directors at the annual
meeting in 2000, the directors first elected to the second class shall serve for
a term ending upon the election of directors at the annual meeting in 2001, and
the directors first elected to the third class shall serve for a term ending
upon the election of directors at the annual meeting in 2002.
At each annual election, commencing at the annual meeting in 2000, the
successors to the class of directors whose term expires at that time shall be
elected by stockholders to hold office for a term of three years to succeed
those directors whose term expires, so that the term of one class of directors
shall expire each year.
Notwithstanding the requirement that the three classes of directors shall be as
nearly equal in number of directors as reasonably possible, in the event of any
change in the authorized number of directors, each director then continuing to
serve as such shall nevertheless continue as a director of the class of which he
or she is a member until the expiration of his or her current term, or his or
her prior resignation, disqualification, disability or removal. There shall be
no cumulative voting in the election of the directors.
Any vacancy on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, an increase in the number of
directorships or other cause shall be filled only by the affirmative vote of a
majority of directors then in office, although less than a quorum or by the sole
remaining director. A director so chosen shall hold office for a term expiring
at the annual meeting at which the term of the class to which he or she has been
elected expires. If the number of directors is changed, any increase or decrease
shall be apportioned among the three classes by a two-thirds (2/3) vote of the
directors then in office. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
-2-
<PAGE>
ARTICLE VII
The incumbent members of the Board of Directors as of the date of the filing of
this Restated Certificate of Incorporation shall continue to be directors of the
Company until their successors are duly elected and qualified in accordance with
the bylaws. The current members of the Board of Directors who shall continue to
be directors of the Company and their respective addresses are:
<TABLE>
<CAPTION>
NAME OF DIRECTOR ADDRESS
<S> <C>
Giulio Agostini 3M
3M Center - Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Norwest Corporation
Sixth and Marquette
Minneapolis, MN 55479-1052
John F. Grundhofer U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty 701 Fourth Avenue South, Suite 300
Minneapolis, MN 55415
David S. Kidwell The Curtis L. Carlson School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King General Mills Foundation
P O Box 1113
Minneapolis, MN 55440
Thomas E. Rohricht Doherty, Rumble & Butler P.A.
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry T. Saario Bravo!, LLC
900 Hennepin Avenue
Minneapolis, MN 55403
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C>
Robert L. Senkler Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Frederick T. Weyerhaeuser Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
</TABLE>
ARTICLE VIII
A director of the Company shall not be liable to the Company or the stockholders
of the Company for monetary damages for a breach of the fiduciary duty of care
as a director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Minnesota Statutes, Section 300.64, as the
same currently exists or hereafter is amended. Specifically such exemption shall
not apply to:
(a) a breach of the director's duty of loyalty to the Company or its
stockholders;
(b) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of the law;
(c) acts prohibited under Minnesota Statutes, Section 300.60, as the
same currently exists or is hereafter amended;
(d) payment of a dividend when the Company is insolvent;
(e) intentional neglect or refusal to perform a duty imposed by law;
(f) a transaction from which the director derives an improper personal
benefit; or
(g) an act or omission occurring prior to the date when this Restated
Certificate of Incorporation became effective.
ARTICLE IX
In no event shall any funds or investments be held in the name of any individual
who is an officer or employee of the Company. The Board of Directors shall
designate those banks and financial institutions in which the Company funds
shall be deposited. The Board by separate resolution also shall designate the
persons authorized to withdraw or transfer funds held in those accounts. No
funds shall be withdrawn or transferred from those accounts except upon the
authorization of the person or persons so authorized.
-4-
<PAGE>
ARTICLE X
The annual meeting of the Company shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday.
ARTICLE XI
The Company is authorized to issue any or all of its policies with or without
participation in profits, savings or unabsorbed portions of premiums; to
classify such policies issued on a participating or nonparticipating basis; and
to determine the right to participate and the extent of participation of any
class or classes of such policies, at the discretion of the Board of Directors.
The declaration and crediting of any policy dividend shall be subject to
approval by majority vote of the Minnesota Mutual Companies, Inc. Board of
Directors.
ARTICLE XII
This Restated Certificate of Incorporation may be amended at any annual meeting
of the Company, or any special meeting of the Company called for that expressly
stated purpose, by the affirmative vote of a majority of the stockholders.
IN WITNESS WHEREOF, the undersigned have executed this Restated Certificate of
Incorporation.
, 1998
- --------------------------- -------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
, 1998
- --------------------------- -------------------------------------
Dennis E. Prohofsky
Senior Vice President, Secretary
and General Counsel
-5-
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
As adopted on October 1, 1998
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I STOCKHOLDERS.....................................................1
SECTION 1.1 ANNUAL MEETING.................................................1
SECTION 1.2 SPECIAL MEETINGS...............................................1
SECTION 1.3 PLACE AND HOUR OF MEETING......................................1
SECTION 1.4 NOTICE OF MEETINGS; RECORD DATE................................1
SECTION 1.5 QUORUM.........................................................2
SECTION 1.6 VOTING RIGHTS..................................................2
SECTION 1.7 VOTING BY PROXY................................................2
SECTION 1.8 VOTING OF SHARES BY CERTAIN HOLDERS............................2
ARTICLE II BOARD OF DIRECTORS..............................................3
SECTION 2.1 NUMBER.........................................................3
SECTION 2.1 NON-OVERLAPPING DIRECTORS......................................3
SECTION 2.2 FILLING OF VACANCIES...........................................3
SECTION 2.3 PLACE OF MEETING, CORPORATE BOOKS..............................3
SECTION 2.4 REGULAR MEETINGS...............................................3
SECTION 2.5 SPECIAL MEETINGS...............................................3
SECTION 2.6 QUORUM.........................................................4
SECTION 2.7 COMPENSATION OF DIRECTORS......................................4
SECTION 2.8 ACTION BY UNANIMOUS WRITTEN CONSENT OF DIRECTORS...............4
SECTION 2.9 REMOVAL........................................................4
ARTICLE III COMMITTEES OF THE BOARD........................................4
SECTION 3.1 CREATION OF COMMITTEES.........................................4
SECTION 3.2 APPOINTMENTS...................................................5
SECTION 3.3 QUALIFICATIONS.................................................5
SECTION 3.4 COMMITTEE CHAIRS...............................................5
SECTION 3.5 MEETINGS.......................................................5
SECTION 3.6 QUORUM.........................................................5
SECTION 3.7 VACANCIES......................................................5
SECTION 3.8 MINUTES AND REPORTS............................................5
SECTION 3.9 AUDIT COMMITTEE................................................6
SECTION 3.10 INVESTMENT COMMITTEE..........................................6
SECTION 3.11 COMMITTEE OF NON-OVERLAPPING DIRECTORS........................7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV OFFICERS.........................................................7
SECTION 4.1 NUMBER..........................................................7
SECTION 4.2 ELECTION........................................................7
SECTION 4.3 TERM OF OFFICE..................................................7
SECTION 4.4 REMOVAL.........................................................7
SECTION 4.5 VACANCIES.......................................................7
SECTION 4.6 DUTIES OF OFFICERS..............................................7
SECTION 4.7 ABSENCE OR DISABILITY...........................................9
ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES..............9
ARTICLE VI DISPOSITION OF FUNDS AND INVESTMENTS.............................9
SECTION 6.1 FUNDS AND INVESTMENTS...........................................9
SECTION 6.2 DEPOSITS........................................................9
ARTICLE VII CORPORATE STOCK.................................................9
SECTION 7.1 CERTIFICATES FOR SHARES.........................................9
SECTION 7.2 TRANSFER OF SHARES.............................................10
SECTION 7.3 TRANSFER BOOKS.................................................10
ARTICLE VIII AMENDMENTS....................................................10
</TABLE>
<PAGE>
BYLAWS
OF
MINNESOTA LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETING.
The annual meeting of stockholders shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday, when members of the Board of Directors shall be elected to
succeed those whose terms are then expiring and such other business shall be
transacted as may properly be brought before the meeting.
SECTION 1.2 SPECIAL MEETINGS.
Special meetings of stockholders for the transaction of such business as may
properly come before the meeting may be called by order of the Board of
Directors or by stockholders holding together at least a majority of all the
shares of the Company entitled to vote at the meeting. Business transacted at
all special meetings of stockholders shall be confined to the purpose or
purposes stated in the notice of the meeting.
SECTION 1.3 PLACE AND HOUR OF MEETING.
Every annual meeting of stockholders shall commence at such hour as shall be
determined by the Board of Directors. Every meeting of stockholders, whether an
annual or a special meeting, shall be held at the principal office of the
Company at 400 Robert Street North in the City of Saint Paul, in the State of
Minnesota (the "Home Office"), or at such other place as may be selected by the
Board of Directors.
SECTION 1.4 NOTICE OF MEETINGS; RECORD DATE.
Notice of each meeting of stockholders shall be mailed to each stockholder of
the Company not less than thirty days previous to such meeting, and every such
notice shall state the day and hour and the place at which the meeting is to be
held and, in the case of any special meeting, shall indicate briefly the purpose
or purposes thereof. The Board of Directors may fix in advance a date, not less
than twenty calendar days preceding the dates of the aforenamed occurrences, as
a record date for the determination of the shareholders entitled to notice of,
and to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
shares. In such case, such stockholders, and only such stockholders as are
stockholders of the Company of record on the record date so fixed, are entitled
to notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Company after such record date so fixed. If the Board
of Directors shall not set a record date for the determination of the
stockholders entitled to notice of, and to vote at, a meeting of stockholders,
only the stockholders who are stockholders
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of record at the close of business on the 20th day preceding the date of the
meeting are entitled to notice of, and to vote at, the meeting and any
adjournment of the meeting.
SECTION 1.5 QUORUM.
A majority of the outstanding shares entitled to notice of and to vote at a
meeting, present in person or by proxy conforming the requirements of Section
1.7 of these bylaws, shall constitute a quorum for the transaction of any
business coming before any regular or special meeting of stockholders duly and
properly called, except as provided by law, the Restated Certificate of
Incorporation of the Company, or these bylaws. If, however, such quorum of
stockholders shall not be present or represented at any meeting of stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a requisite number of stockholders shall be
present. At any such adjourned meeting at which the requisite number of
stockholders shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
SECTION 1.6 VOTING RIGHTS.
Each outstanding share of Common Stock shall be entitled to one vote upon each
matter submitted to a vote at any annual or special meeting of stockholders.
SECTION 1.7 VOTING BY PROXY.
Any stockholder may vote by proxy at any meeting of stockholders. To be valid,
the proxy appointment must be in writing and must be filed with, and received
by, the Secretary at the Home Office of the Company at least five days before
the meeting at which it is to be used, exclusive of the day of the meeting, but
inclusive of the day of receipt and filing of the proxy. A proxy appointment may
be for a specified period of time not to exceed one year. A proxy may be revoked
by a stockholder at any time by written notice to the Secretary of the Company,
or by executing a new proxy appointment and filing it as required herein, or by
personally appearing and exercising his or her rights as a stockholder at any
meeting of the stockholders.
SECTION 1.8 VOTING OF SHARES BY CERTAIN HOLDERS.
(a) Shares of stock in the name of another corporation, foreign or
domestic, are to be voted by such officer, agent, or proxy as the bylaws of such
corporation may determine.
(b) Shares of stock in the name of a deceased person are to be voted by
his executor or administrator in person or by proxy.
(c) Shares of stock in the name of a fiduciary, such as guardian,
curator, or trustee are to be voted by such fiduciary either in person or by
proxy, provided the books of the Company show the stock to be in the name of
such fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to be voted by such
receiver, and shares held by, or in the control of, a receiver are to be voted
by such receiver without the transfer thereof into his name, if such voting
authority is contained in an appropriate order of the court by which such
receiver was appointed.
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(e) Shares of stock which have been pledged are to be voted by the
pledgor until the shares of stock have been transferred into the name of the
pledgee, and thereafter, the pledgee is entitled to vote the shares so
transferred.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER.
The Board of Directors shall consist of such number of Directors, not fewer than
five or more than sixteen, as the Board shall from time to time determine.
SECTION 2.1 NON-OVERLAPPING DIRECTORS.
Commencing with the first annual election of directors, and unless and until
Minnesota Mutual Companies, Inc. (or any successor mutual insurance holding
company) is converted from a mutual insurance holding company to a stock
company, the Board of Directors shall at all times include at least three
directors who are not concurrently serving as directors on the board(s) of
Minnesota Mutual Companies, Inc., Securian Holding Company or Securian Financial
Group, Inc. ("Non-overlapping Directors").
SECTION 2.2 FILLING OF VACANCIES.
If the office of any Director becomes vacant for any reason, a majority of the
remaining Directors may choose a successor. Each Director so chosen shall hold
office until the next regular annual meeting of the shareholders and until his
or her successor has been duly elected and qualified. Not more than one-third of
the maximum number of Directors may be so chosen by the Board between regular
annual meetings of the shareholders.
SECTION 2.3 PLACE OF MEETING, CORPORATE BOOKS.
The Board of Directors may hold its meetings and keep the books of the Company
at the Home Office of the Company, or at such other place or places as they may
from time to time by resolution determine, except as otherwise required by law.
SECTION 2.4 REGULAR MEETINGS.
Regular meetings of the Board shall be held at such times and places as are
fixed from time to time by resolution of the Board. Notice need not be given of
those regular meetings of the Board held at the times and places fixed by
resolution, nor need notice be given of adjourned meetings. If either or both
the time or place of a regular meeting are other than that fixed by resolution,
a telephonic or written notice shall be given to each Director not less than
twenty-four hours prior to the time of that regular meeting.
SECTION 2.5 SPECIAL MEETINGS.
Special meetings of the Board may be held at any time upon call either of the
Chair of the Board, or of the Chief Executive Officer, or upon written request
of any three or more directors. Except as otherwise provided, notice of a
special meeting shall be given to each director either in writing or by
telephone. Notice of at least seventy-two hours prior to the meeting time is
required if written notice is deposited in the United States mail in the City of
Saint Paul. Notice of at least twenty-four hours prior to the meeting time is
required if written notice is left at either the place
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of business or residence of each director. Notice of at least six hours prior to
the meeting time is required if all directors are personally either served with
a written notice or contacted by telephone. Notice need not be given to the
directors of adjourned special meetings. Also, special meetings may be held at
any time without notice if all of the directors are present, or if, before the
meeting, those not present waive such notice in writing. Notice of a special
meeting shall state the purpose of the meeting.
SECTION 2.6 QUORUM.
At all meetings of the Board of Directors, a majority of the directors then in
office shall be necessary and sufficient to constitute a quorum for the
transaction of business, but if, at any meeting, less than a quorum shall be
present, a majority of those present may adjourn the meeting from time to time,
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Restated Certificate of
Incorporation of the Company or by these bylaws.
SECTION 2.7 COMPENSATION OF DIRECTORS.
Members of the Board of Directors, who are not salaried officers of the Company,
shall receive such annual compensation as shall be fixed from time to time by
resolution of the Board of directors; and, in addition, the directors who are
not salaried officers of the Company shall receive a sum in such amount as shall
be fixed from time to time by resolution of the Board of Directors, and the
expenses of attendance, if any, for attendance at each regular or special
meeting of the Board, whether or not an adjournment be had because of the
absence of a quorum.
SECTION 2.8 ACTION BY UNANIMOUS WRITTEN CONSENT OF DIRECTORS.
If all the directors severally or collectively consent in writing to any action
taken or to be taken by the directors, such consents have the same force and
effect as a unanimous vote of the directors at a meeting duly held, and may be
stated as such in any certificate or document filed with the Secretary of State
of Minnesota or any other state in the United States of America or other
Country. The Secretary of the Company shall file such consents with the minutes
of the meetings of the Board of Directors.
SECTION 2.9 REMOVAL.
Any director or the entire Board of Directors may be removed at any time but
only for cause or pursuant to the Company's retirement policy in effect when the
director was first elected.
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1 CREATION OF COMMITTEES.
The following designated standing committees of the Board are hereby authorized
and created: Audit, Investment, and Non-overlapping Directors. In addition, the
Board is authorized to create any other committee or committees of the Board as
the Board from time to time deems necessary. The name, duration and duties of
each other committee and the number of members thereof shall be as prescribed in
the action creating the committee. In the event the Board of Directors creates
an Executive Committee invested with the full powers of the Board of Directors
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between meetings of the Board of Directors, then that Committee must have at
least the same proportion of Non-overlapping Directors as does the full Board of
Directors.
SECTION 3.2 APPOINTMENTS.
The members of each standing Board committee shall consist of those Directors
appointed by the Board of Directors. Each Director appointed to a Board
committee shall continue to serve on that committee at the will and pleasure of
the Board for the period specified in his or her appointment or until his or her
earlier death, resignation or removal.
SECTION 3.3 QUALIFICATIONS.
Each Director is qualified to be appointed and successively reappointed to one
or more committees.
SECTION 3.4 COMMITTEE CHAIRS.
The Board shall appoint one of the members of each of the Board committees to
chair that committee and, in its discretion, may also appoint one of the members
of each of the committees to serve as a vice chair of that committee. If neither
the committee chair nor the committee vice chair is present at a meeting of a
committee, the committee members present at that committee meeting shall elect
another committee member to chair that meeting.
SECTION 3.5 MEETINGS.
Each committee shall meet at such times as the chair of that committee may
designate or as a majority of that committee may determine, subject to a minimum
of not less than two meetings per calendar year.
SECTION 3.6 QUORUM.
A majority of each Board committee shall constitute a quorum at each meeting of
that committee. At any meeting of a committee at which a quorum is present, the
committee may continue to transact business until adjournment, even though
committee member(s) may have left the meeting so that less than a quorum is
present at the meeting. If a quorum is not present for a committee meeting, the
chair of that committee may request the Board to appoint a sufficient number of
other directors to serve as members of the committee only for that meeting, so
as to obtain a quorum. If the Board makes the requested appointments, any action
so taken at the committee meeting shall be valid and binding.
SECTION 3.7 VACANCIES.
In the case of the death, resignation or removal of a member of a committee, the
Board may appoint another Director to fill the vacancy so created on that
committee for the balance of the unexpired appointment. The appointment shall be
subject to the qualifications set forth for that committee.
SECTION 3.8 MINUTES AND REPORTS.
Each committee shall keep a written record of its acts and proceedings and shall
submit that record to the Board of Directors at a regular meeting of the Board
and at such other times as requested by the Board or when a majority of the
committee deems it desirable to do so. Failure to submit a record will not,
however, invalidate any action taken by the committee prior to the
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time the record of the action was, or should have been, submitted to the Board.
The minutes of each committee shall be recorded by the person designated by the
chair of that committee.
SECTION 3.9 AUDIT COMMITTEE.
The Audit Committee shall consist of not fewer than four directors that are not
officers or employees of Minnesota Mutual Companies, Inc. or any of its
subsidiaries. The committee shall have the following powers and duties:
(a) Annually recommend to the Board a firm of independent certified
public accountants to audit the Company's books, records and accounts.
(b) Approve the scope of audits to be conducted by the independent
certified public accountants, taking into account the principal risks inherent
in the Company's business and the recommendations from the independent
accountants as to scope of audit.
(c) Review all recommendations made by the independent certified public
accountants in their audit reports to the Board.
(d) Approve the scope of audits to be conducted by the Company's
internal auditors and review the reports of those audits.
(e) Review the reports which result from the examinations of the
Company conducted by state insurance authorities.
(f) Review corporate litigation involving extra-contractual damages.
(g) Periodically review the Company's plans for data security and
disaster recovery.
(h) Advise the Board of the results of the committee's reviews and
recommendations resulting therefrom.
SECTION 3.10 INVESTMENT COMMITTEE.
The Investment Committee shall consist of not fewer than four directors and
shall have the following powers and duties which shall be exercised not less
than once every twelve months:
(a) Review the written investment policy for the Company investments,
recommend changes thereto, and submit to the Board for its approval and adoption
the policy and procedures for the ensuing twelve months.
(b) Review all investments of Company funds, including their
acquisition and sale and report findings to the Board.
(c) Furnish the Board with summaries of investment transactions.
(d) Review compliance with the written investment policy and valuation
procedures and submit findings to the Board.
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SECTION 3.11 COMMITTEE OF NON-OVERLAPPING DIRECTORS.
The Committee of Non-overlapping Directors shall consist of not fewer than three
Non-overlapping Directors (as described in Section 2.1 of these bylaws) and
shall have the following powers and duties:
(a) Review all agreements and material transactions between and among
the Company, its affiliates and subsidiaries to assure that such agreements and
transactions are fair and reasonable and that they comply with Minnesota
Statutes, Section 60D, and all Acts amendatory thereof or additional thereto.
For purposes of this section, the term "material" shall have the definition set
forth in Minnesota Statutes, Section 60D.19, subd. 4, as it may be amended from
time to time.
(b) Such other powers and duties as determined by the Board of
Directors.
ARTICLE IV
OFFICERS
SECTION 4.1 NUMBER.
The officers of the Company shall be a Chief Executive Officer, a President, one
or more Vice Presidents, a Treasurer, an Actuary, a Controller, a Secretary, and
one or more Assistant Secretaries. In addition, there may be such other officers
as the Board of Directors from time to time may deem necessary. One individual
may hold two or more offices, except those of President and Secretary.
SECTION 4.2 ELECTION.
Officers shall be elected or appointed by the Board of Directors.
SECTION 4.3 TERM OF OFFICE.
Each officer shall serve for the term stated in his or her election or
appointment or until his or her earlier death, resignation or removal.
SECTION 4.4 REMOVAL.
Any officer may be removed from office, with or without cause, at any time by
the affirmative vote of the majority of the Board of Directors then in office.
SECTION 4.5 VACANCIES.
Any vacancy in any office from any cause may be filled by the Board of Directors
at its next meeting.
SECTION 4.6 DUTIES OF OFFICERS.
The duties of the officers shall be as follows:
(a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have
general active management of the business of the Company and, in the absence of
the Chair of the Board, shall preside at all meetings of the members and the
Board of Directors, and shall see that all orders and resolutions of the Board
are carried into effect. Except where, by law, the signature of the
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President is required, the Chief Executive Officer shall possess the same power
as the President to sign and execute all authorized certificates, contracts,
bonds, and other obligations of the Company.
(b) PRESIDENT. The President, in the absence of the Chair of the Board
and the Chief Executive Officer, shall preside at all meetings of the members
and the Board of Directors. The President shall be the chief administrative
officer of the Company and shall have the power to sign and execute all
authorized certificates, contracts, bonds, and other obligations of the Company.
The President also shall perform such other duties as are incident to the office
or are properly required of him or her by the Board or the Chief Executive
Officer.
(c) VICE PRESIDENTS. Each Vice President will perform those duties as
from time to time may be assigned by the Chief Executive Officer. In the absence
of the President, a Vice President designated by the Board of Directors shall
perform the duties of the President. A Vice President shall have the power to
sign and execute all authorized certificates, contracts, bonds and other
obligations of the Company. One or more of the Vice Presidents may be entitled
Executive Vice President, Senior Vice President, Vice President, Second Vice
President, or such other variation thereof as may be designated by the Board.
(d) SECRETARY. The Secretary shall give notice and keep the minutes of
all meetings of the members and of the Board of Directors and shall give and
serve all notices of the Company. The Secretary or an Assistant Secretary shall
have the power to sign with the Chief Executive Officer, President, or any Vice
President in the name of the Company all authorized certificates, contracts,
bonds, or other obligations of the company and may affix the Company Seal
thereto. The Secretary shall have charge and custody of the books and papers of
the Company and in general shall perform all duties incident to the office of
Secretary, except as otherwise specifically provided in these bylaws, and such
other duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Secretaries are elected or appointed, they shall have
those powers and perform those duties as from time to time may be assigned to
them by the Chief Executive Officer and, in the absence of the Secretary, one of
them shall perform the duties of the Secretary.
(e) TREASURER. The Treasurer shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Treasurers are elected or appointed, they shall have those
powers and perform those duties as from time to time may be assigned to them by
the Chief Executive Officer and, in the absence of the Treasurer, one of them
shall perform the duties of the Treasurer.
(f) CONTROLLER. The Controller shall have those powers and shall
perform those duties as from time to time may be assigned by the Chief Executive
Officer.
(g) ACTUARY. The Actuary shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer.
(h) OTHER OFFICERS. Other officers elected or appointed by the Board of
Directors shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
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SECTION 4.7 ABSENCE OR DISABILITY.
In the case of the absence or disability of any officer of the Company or of any
person authorized to act in his or her place during such period of absence or
disability, the Board of Directors from time to time may delegate the powers and
duties of such officer to any other officer, or any Director, or any other
person whom they may select.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The Company shall, to the fullest extent permitted under Minnesota Statutes,
Section 300.083, as the same currently exists or hereafter is amended, indemnify
(and advance expenses to) the directors, officers and employees of this Company.
The provisions of this Article shall not be deemed to limit or preclude
indemnification of a director, officer or employee by the Company for any
liability which has not been eliminated by the provisions of this Article.
ARTICLE VI
DISPOSITION OF FUNDS AND INVESTMENTS
SECTION 6.1 FUNDS AND INVESTMENTS.
All funds and investments of the Company shall be held in the name of "Minnesota
Life Insurance Company" or its nominee or as otherwise provided in accordance
with applicable Minnesota Statutes, as amended from time to time. In no event
shall any funds or investments be held in the name of any individual who is an
officer or employee of the Company.
SECTION 6.2 DEPOSITS.
The Board of Directors shall designate those banks and financial institutions in
which Company funds shall be deposited. The Board by separate resolution also
shall designate the persons authorized to withdraw or transfer funds held in
those accounts. No funds shall be withdrawn or transferred from those accounts
except upon the authorization of the person or persons so authorized.
ARTICLE VII
CORPORATE STOCK
SECTION 7.1 CERTIFICATES FOR SHARES.
The Board of Directors is to prescribe the form of the certificate(s) of stock
of the Company. The certificate is to be signed by the President or Vice
President and by the Secretary, Treasurer, or Assistant Secretary or Assistant
Treasurer, is to be sealed with the seal of the Company and is to be numbered
consecutively. The name of the owner of the certificate, the number of shares of
stock represented thereby, and the date of issue are to be recorded on the books
of the Company. Certificates of stock surrendered to the Company for transfer
are to be canceled, and new certificates of stock representing the transferred
shares issued. New stock certificates may be issued to replace lost, destroyed
or mutilated certificates upon such terms and with such security to the Company
as the Board of Directors may require.
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SECTION 7.2 TRANSFER OF SHARES.
Shares of stock of the Company may be transferred on the books of the Company by
the delivery of the certificates representing such shares to the Company for
cancellation, and with an assignment in writing on the back of the certificate
executed by the person named in the certificates as the owner thereof, or by a
written power of attorney executed for such purpose by such person. The person
registered on the books of the Company as the owner of shares of stock of the
Company is deemed the owner thereof and is entitled to all rights of ownership
with respect to such shares.
SECTION 7.3 TRANSFER BOOKS.
Transfer books are to be maintained under the direction of the Secretary,
showing the ownership and transfer of all certificates of stock issued by the
Company.
ARTICLE VIII
AMENDMENTS
These bylaws may be amended by the Board of Directors or by the stockholders at
a regular meeting, or at a special meeting called for that expressly-stated
purpose, by the affirmative vote of a majority of the stockholders present, in
person or by proxy, at the meeting.
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MINNESOTA LIFE INSURANCE COMPANY
POWER OF ATTORNEY
TO SIGN REGISTRATION STATEMENTS
WHEREAS, Minnesota Life Insurance Company ("Minnesota Life") has
established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Variable Fund D ("Fund D") is a separate account of Minnesota
Life 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, Variable Annuity Account ("Variable Annuity Account") is a
separate account of Minnesota Life 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 Life Variable Life Account ("Variable Life Account")
is a separate account of Minnesota Life 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, Group Variable Annuity Account ("Group Variable Annuity
Account") is a separate account of Minnesota Life 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 Life Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Life 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 Directors and Officers of Minnesota
Life, 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 Directors of Minnesota Life 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 Life 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/Robert L. Senkler Chairman of the Board, October 19, 1998
- ------------------------------- President and Chief
Robert L. Senkler Executive Officer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Giulio Agostini Director October 19, 1998
- ------------------------------
Giulio Agostini
/s/ Anthony L. Andersen Director October 19, 1998
- ------------------------------
Anthony L. Andersen
/s/ Leslie S. Biller Director October 19, 1998
- ------------------------------
Leslie S. Biller
/s/ John F. Grundhofer Director October 19, 1998
- ------------------------------
John F. Grundhofer
/s/ David S. Kidwell Director October 19, 1998
- ------------------------------
David S. Kidwell, Ph.D.
/s/ Reatha C. King, Ph.D. Director October 19, 1998
- ------------------------------
Reatha C. King, Ph.D.
/s/ Thomas E. Rohricht Director October 19, 1998
- ------------------------------
Thomas E. Rohricht
/s/ Michael E. Shannon Director October 19, 1998
- ------------------------------
Michael E. Shannon
/s/ Frederick T. Weyerhaeuser Director October 19, 1998
- ------------------------------
Frederick T. Weyerhaeuser
</TABLE>
