<PAGE>
As filed with the Securities and Exchange Commission on April 26, 1995
Registration No. 2-98410
811-4328
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
Post-Effective Amendment No. 14
To
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF A UNIT INVESTMENT TRUST
REGISTERED ON FORM N-8B-2
PURSUANT TO THE INVESTMENT
COMPANY ACT OF 1940
FIRST INVESTORS LIFE LEVEL PREMIUM
VARIABLE LIFE INSURANCE
(Name of Trust)
FIRST INVESTORS LIFE INSURANCE COMPANY
(Name of Depositor)
95 Wall Street
New York, New York 10005
(Complete address of depositor's principal
executive offices)
Richard H. Gaebler
President
First Investors Life Insurance Company
95 Wall Street
New York, New York 10005
(Name and complete address of agent for service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective on May 1, 1995 pursuant to
paragraph (b) of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of securities under the
Securities Act of 1933. Registrant filed a Rule 24f-2 Notice for its fiscal
year ending December 31, 1994 on February 21, 1995.
<PAGE>
TABLE OF CONTENTS
-----------------
TO FORM S-6
Contents of Post-Effective Amendment No. 14 to Registration Statement of First
Investors Life Level Premium Variable Life Insurance.
1. The Facing Page
2. The Prospectus consisting of 48 pages
3. The Signature Page
4. Written consent of Independent Public Accountants
5. Powers of Attorney
<PAGE>
FIRST INVESTORS
LIFE LEVEL PREMIUM
VARIABLE LIFE INSURANCE
Cross-Reference Sheet
---------------------
N-8B-2
Item No.Location
- -------------------
1-8 Organizational and General Front Cover; The Separate
Information Account; Summary of The Policy
9 Material Litigation General Description
10 General Information Summary of The Policy; The
Concerning the Separate Account; Investments
Securities of the of the Account; The Variable
Trust and the Rights of Life Policy
Holders
11-12 Information Concerning the Investments of the Account;
Securities Underlying the The Separate Account
Trust's Securities
13 Information Concerning Charges and Expenses
Loads, Fees, Charges and
Expenses
14-24 Information Concerning the Summary of the Policy; The
Operations of the Trust Separate Account; Investments
of the Account; Charges and
Expenses
25-27 Organization and Operations First Investors Life Insurance
of Depositor Company
28 Officials and Affiliated Officers and Directors of
Persons of Depositor First Investors Life Insurance
Company
29 Companies Owning Securities First Investors Life Insurance
of Depositor Company
30 Controlling Persons Not Applicable
31-34 Compensation of Officers First Investors Life Insurance
and Directors of Depositor Company
35-38 Distribution of Securities First Investors Life Insurance
Company; Investments of the
Account
41-43 Information Concerning Distribution of Policies
Principal Underwriter
<PAGE>
44-45 Offering Price or Pertinent Provisions of the
Acquisition Valuation of Prospectus of First Investors
Securities of the Trust Life Series Fund (File No.
2-98409) incorporated herein
by reference
46 Redemption Valuation of Pertinent Provisions of the
Securities of the Trust Prospectus of First Investors
Life Series Fund (File No.
2-98409) incorporated herein
by reference
47 Purchase and Sale of Inter- The Separate Account; Charges
ests in Underlying and Expenses; The Variable
Securities from and to Life Policy
Security Holders
48-50 Information Concerning the Custodian
Trustee or Custodian
51 Information Concerning Appendix I - Other Provisions
Insurance of Holders of
Securities
52 Policy of Registrant Investments of the Account
53 Regulated Investment Company Federal Income Tax Status
54-59 Financial and Statistical The Variable Life Policy;
Information Illustrations of Death
Benefits, Cash Values and
Accumulated Premiums; Appendix
II - Additional Illustration
of Death Benefits, Cash Values
and Accumulated Premiums;
Financial Statements and
Auditors' Reports
<PAGE>
LEVEL PREMIUM VARIABLE LIFE INSURANCE POLICIES
ISSUED BY
FIRST INVESTORS LIFE INSURANCE COMPANY
95 Wall Street, New York, N.Y. 10005/(212) 858-8200
INVESTORS ARE ADVISED TO READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
This Prospectus describes the Level Premium Variable Life Insurance Policy
(the "Policy") offered by First Investors Life Insurance Company ("First
Investors Life"). The purpose of the Policy is to provide life insurance
coverage and to lessen the economic loss resulting from the death of the
Insured.
Policy premiums net of certain expenses ("net annual premiums") are paid into
a unit investment trust, First Investors Life Insurance Company Separate Account
B ("Separate Account B"). A Policyowner elects to have his or her net annual
premiums paid into one or more of the nine subaccounts of Separate Account B
("Subaccounts"). Target Maturity 2007 Series is not offered to Policyowners of
Separate Account B. The assets of each Subaccount are invested at net asset
value in shares of a related series of First Investors Life Series Fund (the
"Fund"), an open-end diversified management investment company.
The Policy is like a limited payment life insurance policy with a death
benefit, level premiums, loan privileges and other features that are usually
associated with a limited payment insurance policy. Unlike the usual life
insurance policy, the Policy is "variable" because the amount of the insurance
coverage and the cash values may increase or decrease depending on the
investment performance of the chosen Subaccount or Subaccounts of Separate
Account B.
The death benefit during the first Policy year will be the face amount shown
on the Policy (the "Guaranteed Insurance Amount"). On each Policy anniversary,
the amount of coverage may increase or decrease depending on the investment
results of the designated Subaccount or Subaccounts, but it will never be less
than the Guaranteed Insurance Amount as long as there is no outstanding Policy
loan and premiums are paid when due.
The cash value of the Policy will vary from day to day, depending on the
investment results of the designated Subaccount or Subaccounts, but with no
guaranteed minimum. The Policyowner bears the entire investment risk and the
Policy's cash value (not the death benefit) could decline to zero.
Replacing existing insurance with the Policy described in this Prospectus may
not be to your advantage in light of the higher cost of the Policy during the
first few years.
This Prospectus sets forth the information about Separate Account B that a
prospective investor should know before investing and should be kept for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE
CURRENT PROSPECTUS FOR FIRST INVESTORS LIFE SERIES FUND.
The date of this Prospectus is May 1, 1995
<PAGE>
THE PURPOSE OF THE POLICY IS TO PROVIDE LIFE INSURANCE PROTECTION FOR THE
BENEFICIARY NAMED IN THE POLICY. NO CLAIM IS MADE THAT THE POLICY IS IN ANY WAY
SIMILAR OR COMPARABLE TO A SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.
GENERAL DESCRIPTION
FIRST INVESTORS LIFE INSURANCE COMPANY
First Investors Life Insurance Company (TIN 13-1968606), 95 Wall Street, New
York, New York 10005 ("First Investors Life"), a stock life insurance company
incorporated under the laws of the State of New York in 1962, writes life
insurance, annuities and accident and health insurance. First Investors Life is
also the Sponsor of First Investors Life Variable Annuity Fund A and First
Investors Life Variable Annuity Fund C. First Investors Consolidated
Corporation ("FICC") owns all of the voting common stock of First Investors
Management Company, Inc. ("FIMCO" or "Adviser") and all of the outstanding stock
of First Investors Corporation ("FIC" or "Underwriter") and the Transfer Agent.
Mr. Glenn O. Head (and members of his family) and Mrs. Julie W. Grayson (as
executrix of the estate of her deceased husband, David D. Grayson) are
controlling persons of FICC and, therefore, jointly control the Adviser.
First Investors Life assumes all of the insurance risks under the Policy and
its assets support the Policy's benefits. At December 31, 1994, First Investors
Life had assets of over $393 million and over $2.939 billion of life insurance
in force. (See First Investors Life's financial statements under "Financial
Statements.")
SEPARATE ACCOUNT B
First Investors Life Insurance Company Separate Account B, also known by its
proprietary name, "Insured Series Plan" ("Separate Account B"), was
established on June 4, 1985 under the provisions of the New York Insurance Law.
Separate Account B is a separate investment account to which assets are
allocated to support the benefits under the Level Premium Variable Life
Insurance Policy (the "Policy") offered by First Investors Life. Separate
Account B is registered as a unit investment trust under the Investment Company
Act of 1940, as amended (the "1940 Act"), but such registration does not involve
any supervision of the management or investment practices or policies of
Separate Account B.
The assets of each subaccount of Separate Account B (the "Subaccount") are
invested at net asset value in shares of the corresponding Series (the "Series")
of First Investors Life Series Fund (the "Fund"). For example, the Blue Chip
Subaccount invests in the Blue Chip Series, the Government Subaccount invests in
the Government Series, and so on. The Fund's Prospectus describes the risks
attendant to an investment in each Series of the Fund.
Any and all distributions received from a Series will be reinvested to
purchase additional shares of the distributing Series at net asset value for the
corresponding Subaccount. Accordingly, no capital distributions are
anticipated. Deductions and redemptions from any Subaccount of Separate Account
B may be effected by redeeming the number of applicable Series shares, at net
asset value, necessary to satisfy the amount to be deducted or redeemed. Shares
of the Series in the Subaccounts will be valued at their net asset value.
Separate Account B is divided into the following Subaccounts, each of which
corresponds to the following Series of the Fund:
2
<PAGE>
SEPARATE ACCOUNT FUND
B SUBACCOUNT SERIES
-------------------- ----------------
Blue Chip Subaccount Blue Chip Series
Cash Management Subaccount Cash Management Series
Discovery Subaccount Discovery Series
Government Subaccount Government Series
Growth Subaccount Growth Series
High Yield Subaccount High Yield Series
International Securities Subaccount International Securities Series
Investment Grade Subaccount Investment Grade Series
Utilities Income Subaccount Utilities Income Series
The assets of Separate Account B are the property of First Investors Life.
Each Policy provides that the portion of the assets of Separate Account B equal
to the reserves and other liabilities under the Policy with respect to Separate
Account B shall not be chargeable with liabilities arising out of any other
business that First Investors Life may conduct. In addition to the net assets
and other liabilities for the Policies, the assets of Separate Account B include
amounts derived from expenses charged to Separate Account B by First Investors
Life (see "Charges and Expenses"). From time to time these additional amounts
will be transferred in cash by First Investors Life to its General Account.
Before making a transfer, First Investors Life will consider any possible
adverse impact that the transfer may have on Separate Account B.
First Investors Life reserves the right to invest the assets of Separate
Account B in the shares of other investment companies or any other investment
permitted by law. Such substitution would be made in accordance with the
provisions of the 1940 Act.
YOUR CHOICE OF INVESTMENT OBJECTIVE
When a Policy is purchased, the Policyowner decides to place the net annual
premium (premium less certain deductions) into at least one but not more than
five of the Subaccounts of Separate Account B to support the Policy's benefits,
provided the allocation to any one Subaccount is not less than 10% of the net
premium. The allocation is made on the Policy's first day and at the beginning
of each Policy year thereafter. A portion of the allocated amount covers the
cost of insurance protection. That Subaccount in turn invests in the
corresponding Series of the Fund, as set forth above. Twice a year, at any time
during the Policy year, the Policyowner may transfer all or part of the cash
value from one Subaccount to another provided the cash value is not allocated to
more than five of the Subaccounts, and provided the allocation to any one
Subaccount is not less than 10% of the cash value. Each Subaccount corresponds
to a Series of the Fund. The investment objectives of each Series of the Fund
which are offered to Policyowners of Separate Account B are set forth below.
See "The Fund." There is no assurance that the investment objective of any
Series of the Fund will be realized. Because each Series of the Fund is
intended to serve a different investment objective, each is subject to varying
degrees of financial and market risks. When deciding which Subaccount to
utilize, a Policyowner should consider that the Policy's investment return will
affect the death benefit, the cash value and the loan value of the Policy.
3
<PAGE>
As an example, using the policies illustrated on pages 19 through 21, First
Investors Life would allocate to the selected Subaccount(s) the following
amounts for each Policy year:
<TABLE>
<CAPTION>
MALE ISSUE MALE ISSUE MALE ISSUE
AGE 10 AGE 25 AGE 40
BEGINNING $600 ANNUAL $1,200 ANNUAL $1,800 ANNUAL
OF POLICY PREMIUM FOR PREMIUM FOR PREMIUM FOR
YEAR STANDARD RISK STANDARD RISK STANDARD RISK
- --------------- ------------- ------------- -------------
<S> <C> <C> <C>
1st............ $170.81 $ 508.46 $ 927.23
2nd-4th........ 489.00 1,008.00 1,527.00
5th and later.. 513.00 1,056.00 1,599.00
</TABLE>
THE FUND
First Investors Life Series Fund is a diversified open-end management
investment company registered under the 1940 Act. The Fund consists of ten
separate Series, nine of which are offered to Policyowners of Separate Account
B. Target Maturity 2007 Series, a series of the Fund, is not offered to
Policyowners of Separate Account B. The shares of the Series are not sold
directly to the general public but are available only through the purchase of an
annuity contract or a variable life insurance policy issued by First Investors
Life.
The investment objectives of each Series of the Fund which are offered to
Policyowners of Separate Account B are as follows:
BLUE CHIP SERIES. The investment objective of Blue Chip Series is to seek
high total investment return consistent with the preservation of capital. This
goal will be sought by investing, under normal market conditions, primarily in
equity securities of larger, well-capitalized companies with high potential
earnings growth that have shown a history of dividend payments, commonly known
as "Blue Chip" companies.
CASH MANAGEMENT SERIES. The objective of Cash Management Series is to seek to
earn a high rate of current income consistent with the preservation of capital
and maintenance of liquidity. The Cash Management Series will invest in money
market obligations, including high quality securities issued or guaranteed by
the U.S. Government or its agencies and instrumentalities, bank obligations and
high grade corporate instruments. An investment in the Series is neither
insured nor guaranteed by the U.S. Government. There can be no assurance that
the Series will be able to maintain a stable net asset value of $1.00 per share.
DISCOVERY SERIES. The investment objective of Discovery Series is to seek
long-term capital appreciation, without regard to dividend or interest income,
through investment in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have the potential for capital growth.
GOVERNMENT SERIES. The investment objective of Government Series is to seek
to achieve a significant level of current income which is consistent with
security and liquidity of principal by investing, under normal market
conditions, primarily in obligations issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities ("U.S.
Government Obligations"), including mortgage-related securities.
4
<PAGE>
GROWTH SERIES. The investment objective of Growth Series is to seek long-term
capital appreciation. This goal will be sought by investing, under normal
market conditions, primarily in common stocks of companies and industries
selected for their growth potential.
HIGH YIELD SERIES. The primary objective of the High Yield Series is to seek
to earn a high level of current income. Consistent with that objective, the
Series will also seek growth of capital as a secondary objective. The High
Yield Series seeks to attain its objectives primarily through investments in
lower-grade, high-yielding, high risk debt securities. Investments in high
yield, high risk securities, commonly referred to as "junk bonds," may entail
risks that are different or more pronounced than those involved in higher-rated
securities. See "High Yield Securities--Risk Factors" in the Fund's Prospectus.
INTERNATIONAL SECURITIES SERIES. The primary objective of International
Securities Series is to seek long-term capital growth. As a secondary
objective, the Series seeks to earn a reasonable level of current income. These
objectives are sought, under normal market conditions, through investment in
common stocks, rights and warrants, preferred stocks, bonds and other debt
obligations issued by companies or governments of any nation, subject to certain
restrictions with respect to concentration and diversification.
INVESTMENT GRADE SERIES. The investment objective of the Investment Grade
Series is to seek a maximum level of income consistent with investment in
investment grade debt securities.
UTILITIES INCOME SERIES. The primary objective of the Utilities Income Series
is to seek high current income. Long-term capital appreciation is a secondary
objective. These objectives are sought, under normal market conditions, through
investment in equity and debt securities issued by companies primarily engaged
in the public utilities industry.
No offer will be made of a Policy funded by the underlying Fund unless a
current Fund Prospectus has been delivered.
For more complete information about each of the Series underlying Separate
Account B, including management fees and other expenses, see the Fund's
Prospectus. The Prospectus details each Series' investment goals, management
strategies, investment restrictions, portfolio turnover, and the inherent market
and financial risks of an investment in the Series' shares. It is important to
read the Prospectus carefully before you decide to invest. Additional copies of
the Fund's Prospectus, which is attached hereto, may be obtained by writing to
First Investors Life Insurance Company, 95 Wall Street, New York, New York 10005
or by calling (212) 858-8200. There can be no assurance that any of the
objectives of the Series will be achieved.
CHANGES IN FUND INVESTMENT POLICIES AND RESTRICTIONS
The investment policies and restrictions of the Series are set forth above and
within the Fund's Prospectus. Fundamental policies of a Series may not be
changed without the approval of a majority vote of Policyowners investing in the
Subaccount which invests in that Series in accordance with the 1940 Act (see
"Voting Rights"). Changes in the investment policies or the adoption of new
investment policies may be made without such approval when required by state
insurance regulatory authorities. The investment policies may not be changed if
such change is disapproved by First Investors Life although any such disapproval
may not be unreasonable. Such a change would be disapproved only if it violated
state law or was prohibited by state regulatory authorities or if First
Investors Life determined that the change would have an adverse effect on its
general account because it would result in unsound or overly speculative
investments. If First Investors Life disapproves a change, a
5
<PAGE>
summary of the change and the reasons for disapproval will be set forth in the
Proxy Statement for the Fund's next Special Meeting of Shareholders.
ADVISER
First Investors Management Company, Inc., 95 Wall Street, New York, NY 10005,
a New York corporation, supervises and manages each Series' investments,
supervises all aspects of each Series operations and, except for INTERNATIONAL
SECURITIES SERIES and GROWTH SERIES, determines each Series' portfolio
transactions. The Adviser serves as such under an advisory agreement dated June
13, 1994, which was approved, with respect to each Series, by the Fund's Board
of Trustees and by the shareholders of each Series. See the Fund's Prospectus
for the amount of advisory fees paid by each Series for the fiscal year ended
December 31, 1994.
SUBADVISER
Wellington Management Company, 75 State Street, Boston, MA 02109 ("WMC" or
"Subadviser"), has been retained by the Adviser and the Fund on behalf of
INTERNATIONAL SECURITIES SERIES and GROWTH SERIES as each of those Series'
investment subadviser. The Subadviser serves as such under a subadvisory
agreement dated June 13, 1994 which was approved by the Fund's Board of Trustees
and by the shareholders of the INTERNATIONAL SECURITIES SERIES and GROWTH
SERIES. The Adviser has delegated discretionary trading authority to WMC with
respect to all the assets of INTERNATIONAL SECURITIES SERIES and GROWTH SERIES,
subject to the continuing oversight and supervision of the Adviser and the Board
of Trustees. As compensation for its services, WMC is paid by the Adviser, and
not by either Series, a fee which is computed daily and paid monthly.
UNDERWRITER
First Investors Life and Separate Account B have entered into an Underwriting
Agreement with First Investors Corporation. FIC, 95 Wall Street, New York, New
York 10005, is an affiliate of First Investors Life and of the Adviser. First
Investors Life has reserved the right in the Underwriting Agreement to sell the
Policies directly. The Policies are sold by insurance agents licensed to sell
variable life insurance policies, who are registered representatives of the
Underwriter or broker-dealers who have sales agreements with the Underwriter.
CHARGES AND EXPENSES
First Investors Life guarantees that it will not increase the amount of
premiums, charges deducted from premiums and the charges to the Subaccount(s)
for mortality and expense risks.
CHARGES DEDUCTED FROM PREMIUMS
AMOUNT ALLOCATED TO SELECTED SUBACCOUNT. The amount allocated to the selected
Subaccount(s) for a standard mortality risk Policy is the annual premium you pay
less the premiums for any optional insurance benefits and less the charges
listed below, which are allocated to First Investors Life's General Account.
ANNUAL CHARGE. A $30 charge, which will be made in each Policy year, is for
annual administrative expenses, including premium billing and collection,
recordkeeping, processing death benefit claims, cash surrenders and Policy
changes, reporting and other communications to Policyowners. This charge has
been set at a level that will recover no more than the actual costs associated
with administering the Policy.
6
<PAGE>
ADDITIONAL FIRST YEAR ADMINISTRATIVE CHARGE. A charge in the first Policy year
at the rate of $5 per $1,000 of initial face amount of insurance or a pro rata
portion thereof, is made to cover administrative expenses in connection with the
issuance of the Policy. Such expenses include medical examinations, insurance
underwriting costs, and costs incurred in processing applications and
establishing permanent Policy records. This charge has been set at a level that
will recover no more than the actual costs associated with administering the
Policy.
SALES LOAD. A charge, which is deemed to be a "sales load" as defined in the
1940 Act, not to exceed the following percentages of the annual premium, will be
charged as follows:
YEARS MAXIMUM PERCENTAGES
----- -------------------
1 30%
2-4 10%
5 and thereafter 6%
The amount of the "sales load" in any Policy year is not specifically related
to sales expenses for that year. First Investors Life expects to recover its
distribution costs solely from sales charges over the life of the Policy.
STATE PREMIUM TAX CHARGE. This charge is 2% of the annual premium. Premium
taxes vary from state to state and the 2% rate is the average rate expected to
be paid on premiums received in all states over the lifetime of the Insured
covered by the Policy.
RISK CHARGE. This is a maximum 1.5% charge of the annual premium, to cover the
contingency that the Insured would die at a time when the guaranteed minimum
death benefit exceeds the death benefit which would have been payable in the
absence of the guaranteed minimum death benefit.
OTHER CHARGES. The extra premium charged for sub-standard life insurance risk
and the charge for premiums not paid on an annual basis is deducted from the
gross premium upon receipt.
For the fiscal year ended December 31, 1994, First Investors Life received
$5,950,000 in sales charges and $350,000 in administrative fees.
EXPENSES CHARGED TO SEPARATE ACCOUNT B
CHARGE FOR MORTALITY AND EXPENSE RISKS. First Investors Life makes a daily
charge to each Subaccount for mortality and expense risks assumed by First
Investors Life. The charge is computed at an effective annual rate of .50% of
the value of the Subaccount's assets attributable to the Policies.
The mortality risk assumed is that the Insured may live for a shorter period
of time than estimated and, therefore, a greater amount of death benefits than
expected will be payable in relation to the amount of the premiums received. The
expense risk assumed is that expenses incurred in issuing and administering the
Policies will be greater than estimated. First Investors Life will realize a
gain from this charge to the extent it is not needed to provide for benefits and
expenses under the Policies.
COST OF INSURANCE. After the net annual premium is placed into Separate
Account B, a charge is made for the cost of insurance protection (see "Cost of
Insurance Protection").
CHARGES FOR INCOME TAXES. First Investors Life currently does not charge
Separate Account B for its corporate Federal income taxes that may be
attributable to Separate Account B. However,
7
<PAGE>
First Investors Life may make such a charge in the future. Charges for other
applicable taxes attributable to Separate Account B may also be made (see
"Charges for First Investors Life's Income Taxes").
EXPENSES CHARGED TO THE FUND
BROKERAGE CHARGES. The Series bear the cost of brokerage commissions, transfer
taxes and other fees related to securities transactions. See the Fund's
Statement of Additional Information for the amount of brokerage commissions paid
by the Series for the fiscal year ended December 31, 1994, all of which were
paid to unaffiliated dealers.
OTHER CHARGES. Each Subaccount purchases shares of the corresponding Series at
net asset value. The net asset value of those shares reflects management fees
and expenses already deducted from the assets of the Series. Those fees and
expenses are described in detail in the Fund's Prospectus.
THE VARIABLE LIFE POLICY
GENERAL
The following discussion summarizes important provisions of the Policy offered
by this Prospectus. Appendix I to this Prospectus contains summaries of other
provisions. These discussions assume that premiums have been duly paid and there
have been no Policy loans. The death benefit and cash value are affected if
premiums are not duly paid or if a Policy loan is made. For information about a
default in premium payment, see "Premiums-Default and Options on Lapse." For
loan information, see "Loan Provisions." Policy years and anniversaries will be
measured from the Date of Issue, and each Policy year will commence on the
anniversary of the Date of Issue.
DEATH BENEFIT
The death benefit is the amount paid to the beneficiary at the death of the
Insured. It will be the sum of the Guaranteed Insurance Amount (face amount of
the Policy) plus, if positive, the variable insurance amount for each selected
Subaccount as described below. The benefit will be increased to reflect any
insurance on the life of the Insured added by rider and any premium paid which
applies to a period of time beyond the Policy month in which the Insured dies.
It will be reduced by any Policy loan and loan interest and any unpaid premium
which applies to a period prior to and including the Policy month in which the
Insured dies.
Generally, payment is made within seven days after all claim requirements are
received by First Investors Life at its Home Office. Interest is paid on death
proceeds from the date of death until payment is made at the annual rate First
Investors Life is paying under the payment option when proceeds are left on
deposit with First Investors Life, or at a higher rate if required by law.
THE GUARANTEED MINIMUM. The death benefit is guaranteed never to be less than
the Policy's face amount. The Policy's face amount is constant throughout the
life of the Policy. During the first Policy year, the death benefit is equal to
the Guaranteed Insurance Amount. Thereafter, the death benefit is determined on
each Policy anniversary, and it remains level during the following Policy year.
The death benefit payable, therefore, depends on the Policy year in which the
Insured dies.
THE VARIABLE INSURANCE AMOUNT. The death benefit is made up of two parts: the
Guaranteed Insurance Amount and, if positive, the variable insurance amount for
each selected
8
<PAGE>
Subaccount. The variable insurance amount reflects the investment results of
the selected Subaccount(s). During the first Policy year, the death benefit is
the Guaranteed Insurance Amount because the variable insurance amount is zero.
On the first Policy anniversary, and on each anniversary thereafter, the
investment results for the preceding Policy year are ascertained. If the net
investment return ("Net Investment Return") for each selected Subaccount is 4%,
then the variable insurance amount does not change.
If the Net Investment Return for each selected Subaccount for the preceding
Policy year is greater than 4%, the variable insurance amount increases. If the
Net Investment Return is less than 4%, the variable insurance amount decreases
(but the death benefit never goes below the Guaranteed Insurance Amount). The
variable insurance amount is set on each Policy anniversary and remains at that
amount until the next Policy anniversary. The percentage change in the death
benefit is not the same as the Net Investment Return.
The change in the variable insurance amount on a Policy anniversary equals the
amount of insurance purchased under a Policy or the amount of insurance coverage
cancelled under a Policy which results from positive or negative investment
return, respectively. To calculate the change in the variable insurance amount,
First Investors Life uses a net single premium per $1 of paid-up whole life
insurance based on the Insured's age at the anniversary. Thus, if the investment
return for a male age 25 is $100, positive or negative, the variable insurance
amount will increase or decrease by $542 (see net single premium amounts on next
page).
For example, using the policy illustration for a male issue age 25 on Page 20,
and assuming the 8% hypothetical gross annual investment return (equivalent to a
Net Investment Return of approximately 6.55%), the change in the variable
insurance amount on the 6th Policy anniversary and the change on the 12th Policy
anniversary are calculated as follows:
<TABLE>
<CAPTION>
CALCULATION OF CHANGE IN
VARIABLE INSURANCE ADJUSTMENT
AMOUNT AT END OF POLICY YEAR
------------------------------
6 12
--------- ----------
<S> <C> <C> <C>
(1) Cash Value End of Prior Year. $4,972.00 $14,529.00
(2) Net Premium.................. 1,056.00 1,056.00
(3) Benefit Base Beginning of
Current Policy Year: (1)+(2). 6,028.00 15,585.00
(4) Actual Net Rate of Return
(.064399) less the Base
Rate of Return which is the
Assumed Rate (.04)........... .024399 .024399
(5) Investment Return (3)x(4).... 147.08 380.25
(6) Net Single Premium at
End of Current Year.......... 0.22416 0.27338
(7) Change in Variable Adjustment
Amounts (5) divided by (6)... $ 656.14 $ 1,390.92
</TABLE>
Figures are rounded.
It should be noted that, as shown in the table below, the net single premium
increases as the Insured advances in age and thus larger dollar amounts of
investment return are required each year to result in the same increases in the
variable insurance amount.
NET SINGLE PREMIUM. A Policy includes a table of net single premiums used to
convert the investment return for a Policy into increases or decreases in the
variable insurance amount. This
9
<PAGE>
purchase basis does not depend upon the risk classification of a Policy or any
changes in the Insured's health after issue of a Policy. The net single premium
will be lower for a Policy issued to a female than for a Policy issued to a
male, as shown below.
<TABLE>
<CAPTION>
VARIABLE INSURANCE
ADJUSTMENT AMOUNT
NET SINGLE PREMIUM PURCHASED OR CANCELLED
MALE PER $1.00 OF VARIABLE BY $1.00 OF
ATTAINED AGE INSURANCE AMOUNT INVESTMENT RETURN
- -------------------------- --------------------- ----------------------
<S> <C> <C>
5 $.09884 $10.12
15 .13693 7.30
25 .18452 5.42
35 .25593 3.91
45 .35291 2.83
55 .47352 2.11
65 .60986 1.64
<CAPTION>
VARIABLE INSURANCE
ADJUSTMENT AMOUNT
NET SINGLE PREMIUM PURCHASED OR CANCELLED
FEMALE PER $1.00 OF VARIABLE BY $1.00 OF
ATTAINED AGE INSURANCE AMOUNT INVESTMENT RETURN
- -------------------------- --------------------- ----------------------
<S> <C> <C>
5 $.08195 $12.20
15 .11326 8.83
25 .15684 6.38
35 .21872 4.57
45 .30185 3.31
55 .40746 2.45
65 .54017 1.85
</TABLE>
The variable insurance amount is cumulative and reflects the accumulation of
increases and decreases from past Policy years. The amount may be positive or
may be negative, depending on the investment performance of the designated
Subaccount(s) during the time the Policy is in force. If, at the time of the
Insured's death, the variable insurance amount is negative, then the insurance
benefit is the Guaranteed Insurance Amount. Good investment performance must
first offset any negative variable insurance amount before there can be a
positive amount.
An example of the death benefit using the policy illustration for a male issue
age 25 on Page 20, and assuming the 8% hypothetical gross annual investment
return (equivalent to a Net Investment Return of approximately 6.55%), the death
benefit shown for the end of Policy year 5 would increase to the amount shown
for the end of Policy year 6 for the Policy, as follows:
<TABLE>
<CAPTION>
GUARANTEED
INSURANCE VARIABLE
VARIABLE LIFE AMOUNT + INSURANCE = DEATH
POLICY MINIMUM AMOUNT BENEFIT
- ---------------------- ---------- --------- -------
<S> <C> <C> <C>
End of Policy Year 5.. $51,908 $1,489 $53,398
Increase.............. -- 657 657 (1.2% Increase)
End of Policy Year 6.. $51,908 $2,146 $54,055
</TABLE>
If, instead, the gross annual investment return in the year illustrated had
been 0% (equivalent to a Net Investment Return of approximately -1.45%), the
death benefit would have decreased by $1,464 (a 2.7% decrease), and the death
benefit for the end of Policy year 6 would have been $51,934.
At a given Net Investment Return rate, the dollar amount of an increase or
decrease in the variable insurance amount is greater when assets in the
Subaccount(s) supporting the death benefit
10
<PAGE>
under a Policy are greater. Therefore, the change in the variable insurance
amount (which affects the change in the death benefit) is greater in the later
Policy years when those assets are higher in relation to the death benefit, than
in the early Policy years when those assets are relatively low.
For example, as shown in the example above for a male issue age 25 assuming
the 8% hypothetical gross annual investment return (equivalent to a Net
Investment Return of approximately 6.55%), the death benefit for the end of
Policy year 6 is 1.2% higher than the death benefit for the end of Policy year
5. The death benefit for that Policy at the end of Policy year 12, assuming the
8% hypothetical gross annual investment return, would be 2.4% higher than the
death benefit for the end of Policy year 11 (not shown on Page 20), as follows:
<TABLE>
<CAPTION>
GUARANTEED
INSURANCE VARIABLE
VARIABLE LIFE AMOUNT + INSURANCE = DEATH
POLICY MINIMUM AMOUNT BENEFIT
- ----------------------- ---------- --------- -------
<S> <C> <C> <C>
End of Policy Year 11.. $51,908 $7,258 $59,166
Increase............... -- 1,391 1,391 (2.4% Increase)
End of Policy Year 12.. $51,908 $8,649 $60,557
</TABLE>
Where a Policy's death benefit for a Policy year (after the first Policy year)
was equal to the Guaranteed Insurance Amount because the variable insurance
amount was negative, the death benefit would increase above the Guaranteed
Insurance Amount on a Policy anniversary only if the Net Investment Return for
the preceding Policy year was sufficiently greater than 4% to result in a
positive variable insurance amount and, accordingly, a death benefit above the
Guaranteed Insurance Amount. For example, assume the Policy for a male issue age
25 illustrated on Page 20 had a 0% hypothetical gross annual investment return
for the first five policy years (which results in a negative variable insurance
amount). In order for there to be an increase in the death benefit above the
Guaranteed Insurance Amount for Policy year 7 (the amount shown for the end of
Policy year 6), the Net Investment Return for Policy year 6 would have to be at
least 17.5%.
NET INVESTMENT RETURN. On each Policy anniversary, the Net Investment Return
of the designated Subaccount(s) is computed separately for each Policy. The Net
Investment Return reflects the investment performance of each selected
Subaccount from the first day of the Policy year until the last day of the
Policy year. It reflects each Subaccount's:
Investment income (net of Series expenses);
Plus realized and unrealized capital gains;
Minus realized and unrealized capital losses;
Minus charges, if any, for taxes;
Minus a charge not exceeding .50% per year for mortality, expenses and other
risks.
The method of calculating the Net Investment Return is detailed in the Policy.
The Net Investment Return for a Policy year is not the same as the Net
Investment Return for the Subaccount(s) for a calendar year unless a Policy's
anniversary is the last day of the calendar year.
VALUATION OF ASSETS. For purposes of computing the Net Investment Return, the
value of the assets of each Subaccount are determined as of the close of
business on each business day.
First Investors Life daily calculates the asset valuation of each Subaccount.
The net asset value of a Series share is determined by the Series in the manner
set forth in the Fund's prospectus.
11
<PAGE>
CASH VALUE
AMOUNT OF CASH VALUE. The cash value of the Policy on any date is the sum of
the cash value you have in each Subaccount in which you have invested. The
amounts of the cash value you have in each Subaccount will vary daily depending
on investment experience. The cash value of each Subaccount at the end of each
Policy year is the amount of the tabular cash value attributable to the
Subaccount(s) on that date plus or minus the net single premium for the current
variable insurance amount attributable to the Subaccount(s) on that date. If the
date is other than the Policy anniversary date, the cash value will be increased
or decreased depending on the investment results of the Subaccount(s) selected
for the time elapsed since the last Policy anniversary. This assumes that no
premium is due and unpaid. In calculating the cash value, adjustments are made
for the net premium, the investment results and the cost of insurance
protection. (See below for an explanation of the Cost of Insurance Protection.)
For example, using the Policy illustration for a male issue age 25 on Page 20,
and assuming the 8% hypothetical gross annual investment return (equivalent to a
Net Investment Return of approximately 6.55%), the cash value shown for the end
of Policy year 5 would increase to the amount shown for the end of Policy year 6
for the Policy as follows:
<TABLE>
<CAPTION>
<C> <S> <C>
(1) Cash Value End of Prior Year.............................. $ 4,972
(2) Net Premium............................................... 1,056
(3) Benefit Base Beginning of Current Policy Year 6: (1)+(2).. 6,028
(4) Actual Rate of Return..................................... .064399
(5) Actual Investment Return (3)x(4).......................... 388
(6) Benefit Base End of Policy Year 6: (3)+(5)................ 6,416
(7) Cost of Insurance During Policy Year 6.................... 84
(8) Cash Value End of Policy Year 6: (6)-(7).................. 6,332
</TABLE>
The cash value is not guaranteed. The Policy offers the possibility of cash
value appreciation resulting from good investment performance, although there is
no assurance that such appreciation will occur. It is also possible, due to poor
investment performance, for the cash value to decline to the point of having no
value. The Policyowner bears all the investment risk as to the amount of the
cash value. It is unlikely that the Policy will have any cash value until the
later months of the first Policy year (see "Additional First Year Administrative
Charge"). The cash value stated in the illustrations on Pages 19 to 21 and Pages
30 to 32 are at the end of the Policy years shown, assuming the various
hypothetical investment returns, the cash value as of the end of the preceding
Policy year, adjusted to reflect the Net Investment Return of each Subaccount in
which you have invested, the cost of the insurance protection and premiums paid
since the Policy's last anniversary.
TRANSFER RIGHTS. Twice a year, at any time during the Policy year, you may
transfer part or all of your cash value from the Subaccounts you are in to any
other Subaccounts provided the cash value is not allocated to more than five of
the Subaccounts.
SURRENDER FOR CASH VALUE. The Policyowner may surrender the Policy for its
cash value at any time while the Insured is living. The amount payable will be
the cash value next computed after the request is received at the Home Office of
First Investors Life. Surrender will be effective on the date First Investors
Life has received both the Policy and a written request in a form acceptable to
First Investors Life. First Investors Life will usually pay the surrender value
within 7 days, but payment may be delayed when First Investors Life is not able
to determine the amount because the New York Stock Exchange is closed for
trading or the Securities and Exchange Commission determines that a state of
emergency exists.
12
<PAGE>
COST OF INSURANCE PROTECTION
First Investors Life issues variable life insurance policies to individuals
with standard mortality risks and to individuals with higher mortality risks, as
permitted by First Investors Life's underwriting rules. A higher gross premium
is charged for the person with the higher mortality risk. Given the same age,
sex and insurance face amount, the net annual premium going into the
Subaccount(s) is the same for the standard risk and the higher risk person.
Also, the cost of insurance deducted from the Subaccount(s) (item 7 in the
example above) would be the same for each such individual. First Investors Life
uses the 1980 Commissioners' Standard Ordinary Mortality Table to actuarially
compute the cost of insurance for each Policy, except mortality rates for
extended term insurance are from the Commissioners' 1980 Extended Term Table.
The cost is based on the net amount of insurance at risk (the Policy's face
amount plus the variable insurance amount less the cash value) and the person's
sex and attained age. The amount that is deducted each year is different because
as the person's age increases the probability of death generally increases. The
net amount of insurance at risk may decrease or increase each year depending on
investment experience of the selected Subaccount(s).
LOAN PROVISION
LOAN PRIVILEGE. The Policyowner may borrow up to 75% of the cash value during
the first three Policy years or 90% of the cash value after the first three
Policy years upon assignment to First Investors Life of the Policy as sole
security. Interest will be charged daily at an effective annual rate of 6%
compounded on each Policy anniversary. In general, the loan amount is sent
within seven days of receipt of the request. Except when used to pay premiums, a
new loan will not be permitted unless it is at least $100. The Policyowner may
repay all or a portion of any loan and accrued interest while the Insured is
living and the Policy is in force.
EFFECT OF LOAN. A loan does not affect the amount of the premiums due. When a
loan is taken out, a portion of the cash value equal to the loan is transferred
from the Subaccount(s) to First Investors Life's General Account. Loans will be
charged to each Subaccount in proportion to the investment in each Subaccount as
of the date of the Policy loan. The amount maintained in the General Account
will not be credited with the Net Investment Return earned by Subaccount(s)
during the period the loan is outstanding. Instead, it grows at the assumed
interest rate of 4%, in accordance with the tabular cash value calculations as
filed with the state insurance departments. Therefore, a Policy's death benefit
above the Guaranteed Insurance Amount and a Policy's cash value are permanently
affected by any loan whether or not repaid in whole or in part.
Recall that the death benefit is made up of two parts: the Guaranteed
Insurance Amount and, if positive, the variable insurance amount (see "The
Guaranteed Minimum" and "The Variable Insurance Amount"). The cash value, the
variable insurance amount and the death benefit in excess of the Guaranteed
Insurance Minimum, if any, are dependent upon the Net Investment Return of the
Subaccount(s). During periods of favorable investment return (a net rate of
return greater than 4%), an outstanding Policy loan will result in lower Policy
values than would have otherwise resulted in the absence of any indebtedness.
For example, use the Policy for a male issue age 25 illustrated on Page 20,
and assume the 8% gross annual investment return and that a $3,000 loan was made
at the end of Policy year 9. For the end of Policy year 10, the death benefit
and cash value would be $57,612 and $12,612, respectively. (The outstanding
indebtedness would be deducted from these amounts upon death or surrender.) The
differences between these amounts and the $57,898 death benefit and $12,685 cash
13
<PAGE>
value shown on Page 20 for Policy year 10 result because the portion of the cash
value equal to the indebtedness which is transferred from the Subaccount(s) does
not reflect the Subaccount(s) Net Investment Return of approximately 6.55%.
However, outstanding indebtedness will diminish the adverse effect on Policy
values during a period of unfavorable investment return (a net rate of return
less than 4%) because the portion of the cash value transferred from the
Subaccount(s) to the General Account will grow at the assumed rate of 4%. Thus,
a Policy loan can protect the cash value from decreasing if the Net Investment
Return is less than 4%.
Interest will be charged daily at an effective annual rate of 6% compounded on
each Policy anniversary. Interest is payable at the end of each Policy year and
on the date the loan is repaid. If interest is not paid when due, the loan will
be increased by that amount and an equivalent amount of cash value will be
transferred from the Subaccount(s) to the General Account. Loan repayments will
be credited to each Subaccount in proportion to the investment in each
Subaccount as of the date of repayment.
The amount of any outstanding loan plus interest is subtracted from the death
benefit or the cash value on payment. Whenever the then outstanding loan with
accrued interest equals or exceeds the cash value, the Policy terminates 31 days
after notice has been mailed by First Investors Life to the Policyowner and any
assignee of record at their last known addresses, unless a repayment is made
within that period.
As of December 31, 1994, loans in the aggregate amount of $5,814,229 were
outstanding. During the year 1994, First Investors Life received $257,934 in
interest on outstanding loans. As of December 31, 1994, there were no loans in
default.
PREMIUMS
ALLOCATION OF PREMIUM. At the time of application, the Policyowner decides to
place his or her net annual premium (see "Charges Deducted from Premiums") into
any one or more of the Subaccounts. The death benefit and cash value may
increase or decrease depending on the investment performance of the chosen
Subaccount(s).
PAYMENT PERIODS AND FREQUENCY. Premiums are payable annually or may be paid
more frequently as elected by the Policyowner. Payments are due on or before the
due dates as specified in the Policy at the Home Office of First Investors Life.
Premium payments received before they are due will be placed in First Investors
Life's General Account. On the day the premium payment is due, the premium will
be credited to the Subaccount(s) selected by the Policyowner. Premiums for the
Policy are payable for twelve years. A refund will be made of premiums paid
which are applicable to any period which extends beyond the end of the month in
which the Insured's death occurs.
LEVEL PREMIUMS. The level premiums act as an averaging device to cover
expenses, which are highest in the early Policy years, and the cost of the
mortality risk, which increases with age. Thus, in the early Policy years,
premiums are higher than needed to pay death claims, while in the later years
premiums are less than required to meet the death claims. Accordingly, the
assets allocated to the Subaccount(s) in the early Policy years are used in part
to support the expected death claims in those years, with the balance
accumulated as a reserve to help meet the death claims in the later Policy
years. Also, assets are allocated to First Investors Life's General Account to
accumulate as a reserve to cover the contingency that the Insured will die at a
time when the guaranteed minimum death benefit exceeds the death benefit which
would have been payable in the absence of such
14
<PAGE>
guarantee. In setting its premium rates, First Investors Life took into
consideration actuarial estimates of death and surrender benefits, lapses,
expenses, investment experience and an amount to be contributed to First
Investors Life's surplus.
PREMIUM RATES. When payments are made on other than an annual basis, the
aggregate premium amounts for a Policy year are higher, reflecting charges for
loss of interest and additional billing and collection expenses. The additional
charge is deducted from these premiums when they are received.
PREMIUMS ON INSTALLMENT BASIS
(AS A PERCENTAGE OF AN ANNUAL PREMIUM)
<TABLE>
<CAPTION>
AGGREGATE PREMIUMS
FREQUENCY EACH PREMIUM FOR POLICY YEAR
- ------------------------------ ------------- ----------------
<S> <C> <C>
Annual.................. 100.00% 100.00%
Semiannual.............. 51.00 102.00
Quarterly............... 26.00 104.00
Pre-authorized Monthly.. 8.83 105.96
</TABLE>
Under a pre-authorized monthly plan, premiums are automatically paid by
charges made against the Policyowner's bank account.
AUTOMATIC PREMIUM LOAN PROVISION. Any premium not paid before the end of the
grace period (described below) will be paid by charging the premium as a Policy
loan against the Policy provided the Automatic Premium Loan provision has been
elected in the application for the Policy or is elected in writing and received
by First Investors Life at its Home Office while no premium is in default;
provided, the resulting Policy loan and loan interest to the next premium due
date do not exceed the loan value.
The Automatic Premium Loan Provision may be revoked at any time by written
request from the Policyowner received by First Investors Life at its Home
Office.
DEFAULT AND OPTIONS ON LAPSE. A premium not paid on or before its due date is
in default, but the Policy provides for a 31-day grace period for the payment of
each premium after the due date. The insurance continues in force during the
grace period, but, if the Insured dies during the grace period, the portion of
the premium due which is applicable to the period from the premium due date to
the end of the Policy month in which death occurs is deducted from the death
benefit.
Within 60 days after the date of default, if a Policy is not surrendered, the
cash value less any loans and interest may be applied to purchase continued
insurance. The options are for reduced paid-up whole life insurance or extended
term insurance. Under the Policy, the extended term insurance option would be
the automatic option if no other election was selected. However, that option is
available only in standard risk cases. If the Policy was rated for extra
mortality risks, the paid-up insurance will be the automatic option, unless
paid-up insurance provides equal or more insurance. Both options are for fixed
life insurance and neither option requires the further payment of premiums.
The reduced paid-up whole life insurance option provides a fixed and level
amount of paid-up whole life insurance. The amount of coverage will be that
which the surrender value on the date the option becomes effective will
purchase. The extended term insurance option provides a fixed and level amount
of term insurance equal to the death benefit (less any indebtedness) as of the
date the option
15
<PAGE>
became effective. The insurance coverage under this option will continue for as
long a period as the surrender value on such date will purchase.
For example, use the Policy for a male issue age 25 illustrated on Page 20 and
assume the 0% and 8% hypothetical gross annual investment returns. If an option
became effective at the end of Policy year 5, the fixed insurance coverage under
these Policies would be as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
0% 8%
------- -------
Cash Value................. $ 3,992 $ 4,972
Reduced Paid-up Insurance.. 18,406 22,925
for life for life
Extended Term Insurance.... 51,908 53,398
for 25 years for 28 years
</TABLE>
A Policy continued under either option may be surrendered for its cash value
while the Insured is living. Loans are available under the reduced paid-up whole
life insurance option, but not under the extended term insurance option.
REINSTATEMENT. A Policy not surrendered for its cash value may be reinstated
within five years from the date of default in accordance with the Policy. To
reinstate, the Policyowner must present evidence of insurability acceptable to
First Investors Life and must pay to First Investors Life the greater of (a) (i)
all premiums from the date of default with interest to the date of reinstatement
plus (ii) any Policy debt (plus interest to the date of reinstatement) in effect
when the Policy was continued as paid up insurance or extended term insurance;
or (b) 110% of the increase in cash value resulting from reinstatement. Any
Policy debt that arose after the Policy was continued as paid up insurance and
in effect immediately before reinstatement is then added to the greater of (a)
or (b) to comprise the payment required. Interest is calculated at the rate of
6% per year compounded annually.
For the fiscal year ended December 31, 1994, First Investors Life received
$26,505,000 in premiums from Policyowners.
CANCELLATION RIGHTS
The Policyowner has a limited right to cancel and return the Policy to First
Investors Life. The Policyowner may examine the Policy and at any time within 10
days after receipt of the Policy or notice of right of withdrawal, or within 45
days after completion of Part I of the application for the Policy, whichever is
later, return it to First Investors Life or to the agent of First Investors Life
through whom it was purchased with a written request for cancellation and obtain
a full refund of the premiums paid.
EXCHANGE PRIVILEGE
Provided premiums are duly paid, within twenty-four months after the issue
date shown in the Policy, the Policyowner may exchange the Policy for a
permanent fixed life insurance policy specified in the Policy on the Insured's
life. Evidence of insurability is not required to exercise this privilege. The
new policy will have a level face amount equal to the face amount of the Policy
and the same benefit riders, issue dates and risk classification for the Insured
as the Policy. Premiums for the new policy will be based on the premium rates
for the new policy which were in effect on the Policy date. The Policyowner may
elect either a continuous-premium policy or a limited-payment policy.
16
<PAGE>
In some cases, there may be a cash adjustment on exchange. The adjustment will
be the Policy's surrender value minus the new policy's tabular cash value. If
the result is positive, First Investors Life must pay the owner; if the result
is negative, the owner must pay First Investors Life. First Investors Life will
determine the amount of a cash adjustment as of the date the Policy and written
request is received by First Investors Life at its Home Office.
The foregoing description of Policy provisions is qualified by reference to a
specimen of the Policy which has been filed as an exhibit to the Registration
Statement of Separate Account B. Settlement options, optional insurance benefits
and general provisions of the Policies are discussed under Appendix I.
ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES AND ACCUMULATED PREMIUMS
The tables on Pages 19 to 21 illustrate the way in which the Policy operates.
They show how the death benefit and the cash value may vary over an extended
period of time assuming the Subaccount(s) experience hypothetical rates of
investment return (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross annual rates of 0%, 4% and
8%. The cash value on any day within a Policy year equals the cash value as of
the end of the preceding Policy year, adjusted to reflect the Subaccount(s) Net
Investment Return, the cost of the insurance protection and premiums paid since
the Policy's last anniversary. The tables are based on annual premiums of $600,
$1,200 and $1,800 to assist in a comparison of the death benefits and cash
values under the Policy with those under other variable life insurance policies
which may be issued by First Investors Life or other companies. The death
benefit and cash value for the Policy would be different from those shown if
premiums are paid more frequently than annually or if the actual rates of
investment return applicable to the Policy averaged 0%, 4% or 8% over a period
of years, but nevertheless fluctuated above or below that average for individual
Policy years. Please refer to Pages 30 to 32 for additional illustrations of
death benefits, cash values and accumulated premiums which assume a hypothetical
gross annual investment return of 0%, 6% and 12%.
The constant gross annual rate of investment return of 0%, 4% and 8% is reduced
by the following:
1. A daily charge to the Subaccount(s) for mortality and expense risks and
other contingencies equivalent to an annual charge of .50% at the
beginning of each year.
2. An investment advisory fee of 0.75% of each underlying Series' average
daily net assets.
3. Assumed operating expenses of 0.20% of each underlying Series' average
daily net assets.
Taking into account all of these charges, the gross annual rates of investment
return of 0%, 4%, and 8% correspond to net annual rates of approximately -1.45%,
2.55% and 6.55%, respectively. The tables reflect that no charge is currently
made to the Subaccount(s) for First Investors Life's corporate Federal income
taxes. However, First Investors Life may make such charges in the future which
would require higher rates of investment return in order to produce after-tax
returns of 0%, 4% and 8% (see "Charges for First Investors Life's Income
Taxes").
The second column of each table shows the amount which would be accumulated if
the annual premium (gross amount) was invested to earn interest, after taxes, at
5% compounded annually. For a further discussion of illustrations of death
benefits, cash values and accumulated premiums, see Appendix II.
--------------------------------
17
<PAGE>
First Investors Life will furnish upon request a comparable illustration using
the proposed Insured's age and the face amount or premium amount requested, and
assuming that premiums are paid on an annual basis and the proposed Insured is a
standard risk. In addition, a comparable illustration will be included at the
delivery of the Policy if a purchase is made, reflecting the Insured's risk
classification.
18
<PAGE>
MALE ISSUE AGE 10
$600 ANNUAL PREMIUM FOR STANDARD RISK (1)
$39,638 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT A RETURN OF
YEAR DUE INTEREST AT 5% 0% 4% 8% 0% 4% 8%
------- -------- -------------- ------- ------- -------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $600 $ 630 $39,638 $39,638 $ 39,673 $ 138 $ 145 $ 152
2 600 1,291 39,638 39,638 39,798 586 617 650
3 600 1,986 39,638 39,638 40,014 1,023 1,098 1,176
4 600 2,715 39,638 39,638 40,321 1,450 1,585 1,730
5 600 3,481 39,638 39,638 40,720 1,889 2,104 2,339
6 600 4,285 39,638 39,638 41,213 2,316 2,629 2,981
7 600 5,129 39,638 39,638 41,799 2,734 3,163 3,658
8 600 6,016 39,638 39,638 42,479 3,143 3,707 4,374
9 600 6,947 39,638 39,638 43,253 3,547 4,263 5,132
10 600 7,924 39,638 39,638 44,120 3,946 4,832 5,936
15 0 11,608 39,638 39,638 49,496 4,473 6,382 9,133
20 0 14,816 39,638 39,638 55,625 4,010 6,971 12,064
25 0 18,909 39,638 39,638 62,507 3,610 7,646 15,998
30 0 24,133 39,638 39,638 70,244 3,244 8,369 21,173
Attained
Age
65 0 81,723 39,638 39,638 126,226 1,685 11,721 76,980
</TABLE>
(1) Corresponds to $306.00 semiannually, $156.00 quarterly, or $52.98 monthly.
(2) Assumes no policy loan is made.
Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against the Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical rates.
No representation can be made by First Investors Life or the Series Fund that
hypothetical rates can be achieved for any one year or sustained over any period
of time. See prospectus for details of the calculations.
19
<PAGE>
MALE ISSUE AGE 25
$1,200 ANNUAL PREMIUM FOR STANDARD RISK (1)
$51,908 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT A RETURN OF
YEAR DUE INTEREST AT 5% 0% 4% 8% 0% 4% 8%
------ ------- ------------- ---------- ------- -------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,200 $ 1,260 $51,908 $51,908 $ 51,973 $ 409 $ 429 $ 449
2 1,200 2,583 51,908 51,908 52,154 1,308 1,385 1,462
3 1,200 3,972 51,908 51,908 52,451 2,197 2,366 2,543
4 1,200 5,431 51,908 51,908 52,864 3,076 3,375 3,695
5 1,200 6,962 51,908 51,908 53,398 3,992 4,459 4,972
6 1,200 8,570 51,908 51,908 54,054 4,897 5,572 6,332
7 1,200 10,259 51,908 51,908 54,832 5,791 6,713 7,778
8 1,200 12,032 51,908 51,908 55,732 6,673 7,882 9,315
9 1,200 13,893 51,908 51,908 56,754 7,544 9,080 10,949
10 1,200 15,848 51,908 51,908 57,898 8,404 10,308 12,685
15 0 23,217 51,908 51,908 64,950 9,524 13,635 19,577
20 0 29,631 51,908 51,908 72,999 8,504 14,836 25,762
25 0 37,818 51,908 51,908 82,058 7,539 16,033 33,680
30 0 48,266 51,908 51,908 92,259 6,628 17,185 43,687
Attained
Age
65 0 78,620 51,908 51,908 116,712 4,947 19,096 71,178
</TABLE>
(1) Corresponds to $612.00 semiannually, $312.00 quarterly, or $105.96 monthly.
(2) Assumes no policy loan is made.
Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against the Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical rates.
No representation can be made by First Investors Life or the Series Fund that
hypothetical rates can be achieved for any one year or sustained over any period
of time. See prospectus for details of the calculations.
20
<PAGE>
MALE ISSUE AGE 40
$1,800 ANNUAL PREMIUM FOR STANDARD RISK (1)
$47,954 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT A RETURN OF
YEAR DUE INTEREST AT 5% 0% 4% 8% 0% 4% 8%
------ ------- -------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,800 $ 1,890 $47,954 $47,954 $48,027 $ 762 $ 799 $ 835
2 1,800 3,874 47,954 47,954 48,206 2,097 2,225 2,355
3 1,800 5,958 47,954 47,954 48,492 3,406 3,678 3,964
4 1,800 8,146 47,954 47,954 48,883 4,689 5,161 5,667
5 1,800 10,443 47,954 47,954 49,386 6,020 6,747 7,549
6 1,800 12,856 47,954 47,954 49,999 7,328 8,367 9,543
7 1,800 15,388 47,954 47,954 50,724 8,615 10,023 11,656
8 1,800 18,048 47,954 47,954 51,560 9,884 11,717 13,898
9 1,800 20,840 47,954 47,954 52,509 11,137 13,450 16,276
10 1,800 23,772 47,954 47,954 53,571 12,375 15,225 18,798
15 0 34,825 47,954 47,954 60,126 13,764 19,765 28,471
20 0 44,447 47,954 47,954 67,618 11,963 20,956 36,545
25 0 56,727 47,954 47,954 76,062 10,274 21,963 46,387
30 0 72,399 47,954 47,954 85,589 8,695 22,699 58,095
Attained
Age
65 0 56,727 47,954 47,954 76,062 10,274 21,963 46,387
</TABLE>
(1) Corresponds to $918.00 semi annually; $468.00 quarterly, or
$158.94 monthly.
(2) Assumes no policy loan is made.
Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against the Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical
rates. No representation can be made by First Investors Life or the Series Fund
that hypothetical rates can be achieved for any one year or sustained over any
period of time. See prospectus for details of the calculations.
21
<PAGE>
FEDERAL INCOME TAX STATUS
POLICY PROCEEDS
The discussion herein is general in nature and not intended as tax advice. It
is based upon First Investors Life's understanding of Federal income tax laws as
they are currently interpreted. No representation is made regarding the
likelihood of continuation of such laws or the current interpretations by the
Internal Revenue Service. Moreover, no attempt is made to consider any
applicable state or other (e.g., estate or inheritance) tax laws. Each
interested person should consult his tax advisor concerning the matters set
forth herein.
First Investors Life believes that the Policy qualifies as a life insurance
contract as defined in Section 7702(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). Consequently, the death benefit should be fully excludable
from the beneficiary's gross income and the Policyowner should not be deemed to
be in actual or constructive receipt of the cash values (including increments
thereof) under the Policy, until its actual surrender. With respect to a
corporate Policyowner, however, such "inside build-up" of the Policy may be
subject to the alternative minimum tax.
Qualification as a life insurance contract for Federal income tax purposes
depends, in part, upon the satisfaction by Separate Account B of certain
diversification requirements contained in Section 817(h) of the Code. The
Adviser is expected to manage the assets of the Series in a manner that complies
with these diversification requirements, and under a special "look-through"
rule, satisfaction of such requirements by the Series will be attributed to
Separate Account B. The look-through rule is applicable because all shares of
the Series comprising the Fund will be owned only by Separate Account B (and
similar accounts of First Investors Life or other insurance companies) and
access to the Series will be available exclusively through the purchase of
Policies (and additional variable annuity or life insurance products of First
Investors Life or other insurance companies). Series shares also may be held by
the Adviser provided such shares are being held in connection with the creation
or management of the Series. The Adviser does not intend to sell any Series
shares it owns to the general public. It is possible that future guidelines, if
any, concerning diversification could restrict the rights of a Policyowner with
respect to the selection of investment options.
First Investors Life does not believe that any Policy will be characterized,
at issuance, as a "modified endowment contract" within the meaning of Section
7702A of the Code. Section 7702A and the characterizations given thereunder
generally apply to a Policy that was newly issued, or that was received in
exchange for another that was issued, on or after June 21, 1988, but only if the
amounts to be paid for the new Policy or the Policy surrendered in exchange
therefor were deemed to be excessive by reference to a statutorily prescribed
test. A Policy that escapes characterization as a modified endowment contract
may nonetheless be treated as such if a material term of the Policy, e.g., death
benefits, is altered or if the Policy is converted from a term life insurance
contract to a life insurance contract providing a different form of coverage
(whether or not issued before June 21, 1988). If a Policy is treated as a
modified endowment contract, then distributions thereunder (including the
proceeds of any loan made under, or in result of a pledge or assignment of, the
Policy) will be includable in gross income and subject to regular Federal income
taxation to the extent of the income in the contract. An additional 10% tax will
also be imposed on the taxable amount of any such portion, subject to certain
exceptions.
Prospective Policyowners are advised that Code Section 7702A was only
recently enacted into law and that no regulations or other forms of definitive
guidance have as yet been provided with respect to such section. Section 7702A
is complex and there can be no assurance that the Internal Revenue
22
<PAGE>
Service would necessarily agree in every particular with First Investors Life's
interpretation of such section. Interested persons are accordingly urged to
consult their tax advisors before acquiring or converting a Policy or otherwise
effecting a material change to a Policy.
Subject to the foregoing discussion of modified endowment contracts, any
loans made under a Policy will be treated as indebtedness and no part of such
loan will constitute income to the Policyowner. In addition, the deductibility
of the interest on such loans will depend upon the purposes for which the loan
is made in accordance with the normal Federal income tax treatment of interest
expense.
With respect to business-related policies (purchased after June 20, 1986 and
covering the lives of officers, employees or persons with a financial interest
in the Policyowner's trade or business), no deduction for interest on loans is
allowed to the extent that aggregate loans to any such officer, employee or
financially interested person exceed $50,000.
Under the Code, income tax must generally be withheld from the taxable
portion of the proceeds paid upon surrender of a Policy, unless the Policyowner
notifies First Investors Life in writing, before the payment date, that such
withholding is not to be made. Failure to withhold or withholding of an
insufficient amount may subject the Policyowner to taxation. In addition,
insufficient withholding and insufficient estimated tax payments may subject the
Policyowner to penalties.
CHARGES FOR FIRST INVESTORS LIFE'S INCOME TAXES
First Investors Life is taxed as a "life insurance company" under Subchapter
L of the Code. Under the applicable provisions of the Code, First Investors Life
will be required to include its variable life insurance operations in its
Federal income tax return. Currently, no charges are made against the
Subaccount(s) for First Investors Life's Federal income taxes attributable to
the Subaccount(s). However, First Investors Life may make such charges in the
future. First Investors Life may charge the Subaccount(s) for its Federal income
taxes attributable to the Subaccount(s) when First Investors Life's tax
treatment and obligations become clarified. Any such charges against a
Subaccount would reduce its Net Investment Return.
Under current laws, First Investors Life may incur state and local taxes (in
addition to premium taxes) in several states. At present, these taxes are not
significant. After First Investors Life's Federal income tax treatment is
clarified, or if prior to that time there is a material change in applicable
state or local tax laws, charges for such taxes, if any, attributable to the
Subaccount(s) may be made.
If any tax charges are made in the future they will be accumulated daily and
transferred from the Subaccount(s) to First Investors Life's General Account.
Any investment earnings on tax charges accumulated in the Subaccount(s) will be
retained by First Investors Life.
VOTING RIGHTS
In accordance with its view of present applicable law, First Investors Life
will vote the Series' shares held in the corresponding Subaccount(s) at regular
and special meetings of shareholders of the Fund in accordance with instructions
received from Policyowners. Shares of the Series held by First Investors Life
which do not represent shares attributable to Policyowners will be voted, on any
matter, in proportion to the instructions from Policyowners as to their own
shares. However, if the 1940 Act or any Regulation thereunder should be amended
or if the present interpretation thereof
23
<PAGE>
should change, and as a result, First Investors Life determines that it is
permitted to vote the Series' shares in its own right, it may elect to do so.
The number of Series shares held in the corresponding Subaccount which is
attributable to each Policyowner is determined by dividing the corresponding
Subaccount's Accumulated Value by the value of one Series share. The number of
votes which a person has the right to cast will be determined as of the record
date established by the Fund. Voting instructions will be solicited by written
communication prior to the date of the meeting at which votes are to be cast.
Series shares held in the corresponding Subaccount as to which no timely
instructions are received will be voted by First Investors Life in proportion to
the voting instructions which are received with respect to all Policies
participating in the Subaccount. Each person having a voting interest in the
Subaccount will receive reports and other materials relating to the Series.
The voting rights described in this Prospectus are created under applicable
Federal securities laws. To the extent that such laws or regulations promulgated
thereunder eliminate the necessity to submit such matters for approval by
persons having voting rights in separate accounts of insurance companies or
restrict such voting rights, First Investors Life reserves the right to proceed
in accordance with any such laws or regulations. First Investors Life also
reserves the right, subject to compliance with applicable law, including
approval of Policyowners if so required, (1) to transfer assets determined by
First Investors Life to be associated with the class of policies to which the
Policies belong from Separate Account B to another separate account by
withdrawing the same percentage of each investment in Separate Account B with
appropriate adjustments to avoid odd lots and fractions, (2) to operate Separate
Account B as an "open-end investment company" under the 1940 Act, or in any
other form permitted by law, the investment adviser of which would be First
Investors Life or an affiliate, (3) to deregister Separate Account B under the
1940 Act, and (4) to operate Separate Account B under the general supervision of
a committee any or all the members of which may be interested persons (as
defined in the 1940 Act) of First Investors Life or an affiliate, or to
discharge the Committee. First Investors Life has reserved all rights in respect
of its corporate name and any part thereof, including without limitation the
right to withdraw its use and to grant its use to one or more other separate
accounts and other entities.
OFFICERS AND DIRECTORS OF FIRST INVESTORS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
NAME OFFICE PRINCIPAL OCCUPATION FOR LAST 5 YEARS
- ---- ------ -------------------------------------
<S> <C> <C>
Jay G. Baris Director Partner, Kramer, Leven, Naftalis, Nessen, Kamin & Frankel,
New York, Attorneys; Secretary and Counsel, First
Financial Savings Bank, S.L.A., New Jersey.
William H. Drinkwater First Vice First Vice President and Chief Actuary, First Investors
President and Life since April, 1992; Vice President - Actuary, Home
Chief Actuary Life Insurance Company, New York, prior thereto.
Lawrence M. Falcon Senior Senior Vice President and Comptroller, First Investors Life.
Vice President
and Comptroller
Richard H. Gaebler President President, First Investors Life.
and Director
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NAME OFFICE PRINCIPAL OCCUPATION FOR LAST 5 YEARS
- ---- ------ -------------------------------------
<S> <C> <C>
George V. Ganter Director Vice President, First Investors Asset Management Company, Inc.,
Portfolio Manager, FIMCO.
Albert J. Gretz Vice President Vice President, First Investors Life
Robert J. Grosso Director Assistant Counsel, FIC since January 1995; Business Consultant; Assistant Vice President
and Assistant General Counsel, Alliance Fund Distributors, Inc. from September 1993 to
August 1994; Of Counsel, Law Office of Richard S. Mazawey from May 1991 to September
1993; Secretary and General Counsel, FIC prior to April 1990
Glenn O. Head Chairman and Director Chairman and Director, FICC, FIMCO and FIC.
Kathryn S. Head Director President, FICC and FIMCO; Vice President, Chief Financial Officer and Director, FIC;
President and Director, First Financial Savings Bank, S.L.A.
Scott Hodes Director Partner, Ross & Hardies, Chicago, Illinois, Attorneys, since January 1992; prior
thereto, Partner, Arvery, Hodes, Costello & Burman, Chicago, Illinois, Attorneys.
Carol Lerner Brown Secretary Assistant Secretary, FIC; Secretary, FIMCO and FICC.
William M. Lipkus Chief Accounting Chief Accounting Officer, First Investors Life since June, 1992;
Officer Manager, Tait Weller & Baker, Edison, New Jersey from June, 1986 to June, 1992.
F. Van S. Parr Director Of Counsel to Whitman & Ransom, New York, Attorneys.
Jackson Ream Director Senior Vice President, Nations Bank of Texas (formerly NCNB Texas National Bank),
Dallas, Texas.
Nelson Schaenen Jr. Director Partner, Weiss, Peck & Greer, New York, Investment Managers.
Ada M. Suchow Vice President Vice President, First Investors Life.
John T. Sullivan Director Director, FIMCO and FIC; Of Counsel to Hawkins, Delafield & Wood, New York,
Attorneys.
</TABLE>
First Investors Life paid its three highest paid officers aggregate
compensation from salaries of $441,459 during 1994. The aggregate remuneration
paid to all other officers during 1994 was $350,295. Administrative personnel,
excluding officers, received $1,868,292 in compensation. Directors of First
Investors Life were paid $8,250 in the aggregate for directors fees.
A fidelity bond in the amount of $5,000,000 covering First Investors Life's
officers and employees has been issued by Gulf Insurance Company and CNA
Insurance Company, as co-surety. A directors and officers liability policy in
the amount of $3,000,000 covering First Investors Life's directors and officers
has been issued by the Great American Insurance Companies.
25
<PAGE>
DISTRIBUTION OF POLICIES
The Policies distributed by First Investors Life are sold by insurance agents
who are licensed to sell variable life insurance.
The Policies are offered for sale in Alabama, Arizona, Arkansas, Colorado,
Connecticut, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana,
Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, North
Carolina, Nebraska, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington, West
Virginia, Wisconsin and Wyoming.
CUSTODIAN
First Investors Life, subject to applicable laws and regulations, is to be the
custodian of the securities of the Subaccounts. First Investors Life will
maintain the records and accounts of Separate Account B. The assets of the
Subaccounts will be held by United States Trust Company of New York (TIN 13-
6065574), 114 W. 47th Street, New York, NY 10036 under a safekeeping
arrangement. Under the terms of a Safekeeping Agreement dated June 16, 1986,
between First Investors Life and United States Trust Company of New York,
securities and similar investments of the Subaccounts shall be deposited in the
safekeeping of United States Trust Company of New York. Such agreement will
remain in effect until Separate Account B has been completely liquidated and the
proceeds of the liquidation distributed to the security holders of Separate
Account B, or a successor custodian, having the requisite qualifications, has
been designated and has accepted such custodianship. First Investors Life is
responsible for the payment of all expenses of, and compensation to, United
States Trust Company of New York in such amounts as may be agreed upon from time
to time. For the fiscal year ended December 31, 1994, First Investors Life paid
$400 to United States Trust Company of New York.
REPORTS
At least once each Policy year, First Investors Life shall mail a report to
the Policyowner within 31 days after the Policy anniversary. The report shall
be mailed to the last address known to First Investors Life. The report will
show the death benefit, cash value and policy debt on the anniversary and any
loan interest for the prior year. The report will also show the allocation of
the investment base on that anniversary. No report will be sent if the Policy is
continued as reduced paid-up or extended term insurance.
STATE REGULATION
First Investors Life is subject to the laws of the State of New York governing
insurance companies and to regulations by the New York State Insurance
Department. An annual statement in a prescribed form is filed with the
Department of Insurance each year covering the operations of First Investors
Life for the preceding year and its financial condition as of the end of such
year.
First Investors Life's books and accounts are subject to review by the
Insurance Department at any time and a full examination of its operations is
conducted periodically. Such regulation does not, however, involve any
supervision of management or investment practices or policies except to
determine compliance with the requirements of the New York Insurance Law. In
addition, First Investors Life is subject to regulation under the insurance laws
of other jurisdictions in which it may operate.
26
<PAGE>
EXPERTS
The financial statements included in this Prospectus have been examined by
Tait, Weller & Baker, independent certified public accountants, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
RELEVANCE OF FINANCIAL STATEMENTS
The values of the interests of Policyowners under the Policies will be
affected solely by the investment results of the Subaccount(s). The financial
statements of First Investors Life as contained herein should be considered only
as bearing upon First Investors Life's ability to meet its obligations to
Policyowners under the Policies, and they should not be considered as bearing on
the investment performance of the Subaccount(s).
The most current financial statements of First Investors Life and Separate
Account B are those as of the end of the most recent fiscal year. Neither First
Investors Life nor Separate Account B prepare their financial statements more
often than annually and believe that any incremental benefit to prospective
policyholders that may result from preparing and delivering more current
financial statements, though unaudited, does not justify the additional cost
that would be incurred. In addition, First Investors Life represents that there
have been no adverse changes in the financial condition or operations of First
Investors Life or Separate Account B between the end of the most current fiscal
year and the date of this Prospectus.
APPENDIX I-OTHER POLICY PROVISIONS
SETTLEMENT OPTIONS
In lieu of a single sum payment of Policy proceeds on death or surrender, an
election may be made to apply all or a portion of the proceeds under any one of
the fixed benefit settlement options provided in the Policy. The options are
stated below.
PROCEEDS LEFT AT INTEREST. Left on deposit to accumulate with First Investors
Life with interest payable at a rate of 2 1/2% per year.
PAYMENT OF A DESIGNATED AMOUNT. Payable in installments until proceeds applied
under the option and interest on unpaid balance at 2 1/2% per year and any
additional interest are exhausted.
PAYMENT FOR A DESIGNATED NUMBER OF YEARS. Payable in installments for up to 25
years, including interest at 2 1/2% per year. Payments may be increased by
additional interest which would be paid at the end of each installment year.
LIFE INCOME OPTION, GUARANTEED PERIOD. Payments are guaranteed for 10 or 20
years, as elected, and for life thereafter. During the guaranteed period of 10
or 20 years, the payments may be increased by additional interest.
LIFE INCOME, GUARANTEED RETURN. The sum of the payments made and any payments
due at the death of the person on whom the payments are based will never be less
than the proceeds applied.
LIFE INCOME ONLY. Payments will be made only while the person on whom the
payments are based is alive.
27
<PAGE>
OPTIONAL INSURANCE BENEFITS
On payment of an additional premium and subject to certain age and insurance
underwriting requirements, the following optional provisions, which is subject
to the restrictions and limitations set forth therein, may be included in a
Policy.
DISABILITY PREMIUM WAIVER. Providing that in the event of the Insured's total
disability before the Policy anniversary nearest to the Insured's 60th birthday
and continuing for at least 6 months, First Investors Life will waive all
premiums falling due after the commencement and during the continuance of such
disability.
TERM INSURANCE. Providing 12 year convertible level term insurance.
GENERAL PROVISIONS
BENEFICIARY. The beneficiary is as designated in the application for the
Policy, unless thereafter changed by the Policyowner during the Insured's
lifetime. A change of designation may be made by filing a written request with
the Home Office of First Investors Life in a form acceptable to First Investors
Life.
ASSIGNMENT. The Policy may be assigned by the Policyowner but no assignment
shall be binding on First Investors Life unless it is in writing and filed with
First Investors Life at its Home Office. First Investors Life will assume no
responsibility for the validity or sufficiency of any assignment. Unless
otherwise provided in the assignment, the interest of any revocable beneficiary
shall be subordinate to the interest of any assignee, regardless of when the
assignment was made and the assignee shall receive any sum payable to the extent
of his or her interest.
AGE AND SEX. If the age or sex of the Insured has been misstated, the benefits
available under the Policy will be those which the premiums paid would have
purchased for the correct age and sex.
SUICIDE. If the Insured commits suicide within 2 years from the Policy's date
of issue, the liability of First Investors Life under the Policy will be limited
to all premiums paid less any indebtedness.
INCONTESTABILITY. Except for nonpayment of premiums, the validity of the
Policy and its riders will not be contestable after it has been in force during
the lifetime of the Insured for 2 years from the Date of Issue.
GRACE PERIOD. A Grace Period of 31 days will be allowed for payment of each
premium after the first. The Policy will continue in force during the Grace
Period unless surrendered.
PAYMENTS AND DEFERMENT. Payment of the death benefit or surrender value or
loan proceeds will usually be made within 7 days after receipt by First
Investors Life of all documents required for such payments. However, payment may
be delayed if the amount cannot be determined because the New York Stock
Exchange is closed for trading or the Securities and Exchange Commission
determines that a state of emergency exists.
Under a Policy continued as paid-up or extended term insurance, the payment of
the surrender value or loan proceeds may be deferred for up to six months. If
the payment is postponed more than 30 days, interest at a rate of not less than
3% will be paid on the Surrender Value. The interest will be paid from the date
of surrender to the date payment is made.
DIVIDENDS. The Policies do not provide for dividend payments and therefore are
considered "non-participating" in the earnings of First Investors Life.
28
<PAGE>
APPENDIX II
ADDITIONAL ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES AND ACCUMULATED PREMIUMS
Tables on Pages 30 to 32 illustrate the way in which a Policy operates. They
show how the death benefit and the cash value may vary over an extended period
of time assuming hypothetical rates of investment return for the Subaccount(s)
equivalent to constant gross annual rates of 0%, 6% and 12%. The table on Page
30 is based on an annual premium of $600 for a male issue age 10, the table on
Page 31 is based on an annual premium of $1,200 for a male issue age 25, and the
table on Page 32 is based on an annual premium of $1,800 for a male issue age
40. The illustrations assume a standard risk classification and will assist in
the comparison of death benefits and cash values under the Policies with those
under other variable life policies issued by First Investors Life or other
companies. Please refer to Page 17 for additional discussion and to Pages 19 to
21 for additional illustrations of death benefits, cash values and accumulated
premiums which assume a hypothetical gross annual investment return of 0%, 4%
and 8%.
The amounts shown are as of the end of each Policy year and take into account
deductions from the annual premium and the daily charge for investment advisory
services and mortality and expense risk equivalent to an effective annual charge
of 1.45%. Taking account of the daily charges, the gross annual rates of
investment return of 0%, 6% and 12% correspond to net annual rates of
approximately -1.45%, 4.55% and 10.55%, respectively. The returns shown are also
net of any tax charges attributable to the Subaccount(s).
The second column of each table shows the amount to which the total premiums
paid to the end of the Policy year during the premium paying period would
accumulate if an amount equal to those premiums were invested to earn interest,
after taxes, at 5% compounded annually.
First Investors Life will furnish upon request a comparable illustration
reflecting the proposed Insured's age and the face amount or premium amount
requested, and assuming that premiums are paid on an annual basis and the
proposed Insured is a standard risk. In addition, a comparable illustration will
be included at the delivery of a Policy if a purchase is made reflecting the
Insured's risk classification if other than standard.
29
<PAGE>
MALE ISSUE AGE 10
$600 ANNUAL PREMIUM FOR STANDARD RISK (1)
$39,638 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT AETURN OF
YEAR DUE INTEREST AT 5% 0% 6% 12% 0% 6% 12%
------ ----------- -------------- ------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $600 $ 630 $39,638 $39,645 $ 39,729 $ 138 $ 148 $ 158
2 600 1,291 39,638 39,669 40,061 586 633 682
3 600 1,986 39,638 39,710 40,642 1,023 1,136 1,256
4 600 2,715 39,638 39,767 41,482 1,450 1,656 1,884
5 600 3,481 39,638 39,841 42,599 1,889 2,219 2,597
6 600 4,285 39,638 39,932 44,005 2,316 2,800 3,375
7 600 5,129 39,638 40,039 45,711 2,734 3,402 4,227
8 600 6,016 39,638 40,161 47,732 3,143 4,026 5,160
9 600 6,947 39,638 40,299 50,081 3,547 4,676 6,184
10 600 7,924 39,638 40,453 52,774 3,946 5,354 7,309
15 0 11,608 39,638 41,363 70,965 4,473 7,632 13,094
20 0 14,816 39,638 42,310 95,773 4,010 9,176 20,771
25 0 18,909 39,638 43,278 129,224 3,610 11,076 33,073
30 0 24,133 39,638 44,269 174,378 3,244 13,343 52,561
Attained
Age
65 0 81,723 39,638 49,597 785,431 1,685 30,247 479,001
</TABLE>
(1) Corresponds to $306.00 semi annually; $156.00 quarterly, or
$52.98 monthly.
(2) Assumes no policy loan is made.
Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after
deduction of tax charges but before any other expenses charged
against the Series Fund or Separate Account B. Actual rates may be
higher or lower than hypothetical rates. No representation can be
made by First Investors Life or the Series Fund that hypothetical
rates can be achieved for any one year or sustained over any period
of time. See prospectus for details of the calculations.
30
<PAGE>
MALE ISSUE AGE 25
$1,200 ANNUAL PREMIUM FOR STANDARD RISK (1)
$51,908 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT AETURN OF
YEAR DUE INTEREST AT 5% 0% 6% 12% 0% 6% 12%
----- ------- -------------- ------- ------- -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,200 $ 1,260 $51,908 $51,921 $ 52,078 $ 409 $ 439 $ 469
2 1,200 2,583 51,908 51,955 52,558 1,308 1,423 1,542
3 1,200 3,972 51,908 52,011 53,359 2,197 2,454 2,727
4 1,200 5,431 51,908 52,088 54,495 3,076 3,532 4,037
5 1,200 6,962 51,908 52,188 55,994 3,992 4,710 5,535
6 1,200 8,570 51,908 52,308 57,870 4,897 5,941 7,187
7 1,200 10,259 51,908 52,450 60,141 5,791 7,226 9,008
8 1,200 12,032 51,908 52,612 62,823 6,673 8,568 11,014
9 1,200 13,893 51,908 52,794 65,934 7,544 9,969 13,222
10 1,200 15,848 51,908 52,996 69,495 8,404 11,430 15,653
15 0 23,217 51,908 54,188 93,429 9,524 16,333 28,161
20 0 29,631 51,908 55,430 126,119 8,504 19,562 44,508
25 0 37,818 51,908 56,702 170,313 7,539 23,273 69,903
30 0 48,266 51,908 58,005 230,101 6,628 27,467 108,958
Attained
Age
65 0 78,620 51,908 60,711 420,822 4,947 37,025 256,641
</TABLE>
(1) Corresponds to $612.00 semi annually; $312.00 quarterly, or $105.96 monthly.
(2) Assumes no policy loan is made.
Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against the Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical rates.
No representation can be made by First Investors Life or the Series Fund that
hypothetical rates can be achieved for any one year or sustained over any period
of time. See prospectus for details of the calculations.
31
<PAGE>
MALE ISSUE AGE 40
$1,800 ANNUAL PREMIUM FOR STANDARD RISK (1)
$47,954 FACE AMOUNT (GUARANTEED MINIMUM DEATH BENEFIT)
<TABLE>
<CAPTION>
TOTAL DEATH BENEFIT (2) CASH VALUES (2)
END OF PREMIUMS ASSUMING HYPOTHETICAL GROSS (AFTER ASSUMING HYPOTHETICAL GROSS (AFTER
POLICY PREMIUM PAID PLUS TAX) ANNUAL INVESTMENT RETURN OF TAX) ANNUAL INVESTMENT A RETURN OF
YEAR DUE INTEREST AT 5% 0% 6% 12% 0% 6% 12%
------ ------- -------------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1,800 $ 1,890 $47,954 $47,968 $ 48,144 $ 762 $ 817 $ 872
2 1,800 3,874 47,954 48,002 48,621 2,097 2,289 2,488
3 1,800 5,958 47,954 48,056 49,393 3,406 3,819 4,263
4 1,800 8,146 47,954 48,129 50,473 4,689 5,409 6,211
5 1,800 10,443 47,954 48,222 51,886 6,020 7,138 8,431
6 1,800 12,856 47,954 48,335 53,645 7,328 8,937 10,869
7 1,800 15,388 47,954 48,467 55,766 8,615 10,809 13,548
8 1,800 18,048 47,954 48,617 58,266 9,884 12,760 16,491
9 1,800 20,840 47,954 48,786 61,164 11,137 14,792 19,724
10 1,800 23,772 47,954 48,973 64,480 12,375 16,911 23,276
15 0 34,825 47,954 50,080 86,798 13,764 23,714 41,101
20 0 44,447 47,954 51,233 117,342 11,963 27,690 63,419
25 0 56,727 47,954 52,416 158,741 10,274 31,966 96,809
30 0 72,399 47,954 53,630 214,919 8,695 36,402 145,879
Attained
Age
65 0 56,727 47,954 52,416 158,741 10,274 31,966 96,809
</TABLE>
(1) Corresponds to $918.00 semi annually; $468.00 quarterly, or $158.94
monthly.
(2) Assumes no policy loan is made.
Hypothetical rates of interest are illustrative only and are not a
representation of past or future rates of return. They are after deduction of
tax charges but before any other expenses charged against the Series Fund or
Separate Account B. Actual rates may be higher or lower than hypothetical rates.
No representation can be made by First Investors Life or the Series Fund that
hypothetical rates can be achieved for any one year or sustained over any period
of time. See prospectus for details of the calculations.
32
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
First Investors Life Insurance Company
New York, New York
We have audited the accompanying balance sheets of First Investors Life
Insurance Company as of December 31, 1994 and 1993, and the related statements
of income, stockholder's equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Investors Life Insurance
Company as of December 31, 1994 and 1993, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in notes 2 and 7 to the Financial Statements, the Company
changed its method of accounting for investments and its method of accounting
for income taxes.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 21, 1995
33
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, 1994 DECEMBER 31,1993
----------------- ----------------
<S> <C> <C>
Investments (note 2):
Available-for-sale securities................................. $103,898,007 $108,821,051
Held-to-maturity securities................................... 5,990,367 5,973,791
Short term investments........................................ 6,964,868 6,282,689
Policy loans.................................................. 14,686,101 12,884,321
------------ ------------
Total investments........................................... 131,539,343 133,961,852
Cash.......................................................... 977,133 2,384,714
Premiums and other receivables, net of allowances of
$30,000 in 1994 and 1993...................................... 3,901,489 2,895,579
Accrued investment income..................................... 2,593,771 2,357,922
Deferred policy acquisition costs (note 6).................... 19,321,891 19,006,119
Deferred Federal income taxes (note 7)........................ 1,884,000 -
Furniture, fixtures and equipment, at cost, less accumulated
depreciation of $697,010 in 1994 and $583,419 in 1993......... 243,634 290,104
Other assets.................................................. 193,780 171,566
Separate account assets....................................... 232,913,278 198,746,658
------------ ------------
Total assets................................................ $393,568,299 $359,814,454
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
<S> <C> <C>
Policyholder account balances (note 6)................... $115,256,764 $112,537,306
Claims and other contract liabilities.................... 10,737,716 10,234,691
Deferred Federal income taxes (note 7)................... - 1,322,799
Accounts payable and accrued liabilities................. 3,463,635 2,799,156
Separate account liabilities............................. 232,913,278 198,746,658
------------ ------------
Total liabilities...................................... 362,371,393 325,640,610
------------ ------------
STOCKHOLDER'S EQUITY:
Common Stock, par value $4.75; authorized,
issued and outstanding 534,350 shares.................... 2,538,163 2,538,163
Additional paid in capital............................... 6,496,180 6,496,180
Unrealized holding gains (losses) on available-for-sale
securities (note 2)...................................... (2,486,000) 3,050,000
Retained earnings........................................ 24,648,563 22,089,501
------------ ------------
Total stockholder's equity............................. 31,196,906 34,173,844
------------ ------------
Total liabilities and stockholder's equity............. $393,568,299 $359,814,454
============ ============
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31,1993
----------------- ----------------
<S> <C> <C>
REVENUES
Policyholder fees................................. $16,433,269 $14,825,696
Premiums.......................................... 7,630,182 8,141,342
Investment income (note 2)........................ 8,835,356 8,470,643
Realized gain (loss) on fixed securities (259,987) 318,372
Other income...................................... 701,355 654,608
----------- -----------
Total income.................................... 33,340,175 32,410,661
----------- -----------
BENEFITS AND EXPENSES
Benefits and increases in contract liabilities.... 14,297,499 13,118,328
Dividends to policyholders........................ 910,754 985,756
Amortization of deferred acquisition costs (note 6) 1,573,216 1,528,876
Commissions and general expenses.................. 13,513,644 13,212,536
----------- -----------
Total benefits and expenses..................... 30,295,113 28,845,496
----------- -----------
Income before Federal income tax, and cumulative
effect of a change in accounting principle....... 3,045,062 3,565,165
Federal income tax (note 7):
Current........................................... 838,000 1,425,000
Deferred.......................................... (352,000) (721,000)
----------- -----------
486,000 704,000
----------- -----------
Income before cumulative effect
of a change in accounting principle............... 2,559,062 2,861,165
Cumulative effect on prior years
of a change in accounting principle (note 7)...... - 540,000
----------- -----------
Net Income......................................... $ 2,559,062 $ 3,401,165
=========== ===========
Income per share, based on 534,350 shares outstanding
Income before cumulative effect
of a change in accounting principle................... $4.79 $5.35
Cumulative effect of a change in accounting principle.. - 1.01
----------- -----------
$4.79 $6.36
=========== ===========
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31,1993
------------------ -----------------
<S> <C> <C>
Balance at beginning of year............................ $ 34,173,844 $ 27,722,679
Net income.............................................. 2,559,062 3,401,165
Increase (decrease) in unrealized holding gains on
available-for-sale securities........................... (5,536,000) 3,050,000
------------ ------------
Balance at end of year.................................. $ 31,196,906 $ 34,173,844
============ ============
</TABLE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31,1993
----------------- ----------------
<S> <C> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Policyholder fees received............................. $ 16,433,269 $ 14,825,696
Premiums received...................................... 7,366,276 7,996,528
Amounts received on policyholder accounts.............. 63,526,544 52,654,219
Investment income received............................. 8,886,847 8,583,133
Other receipts......................................... 46,581 44,193
Benefits and contract liabilities paid................. (75,131,495) (61,360,490)
Commissions and general expenses paid.................. (15,252,935) (15,866,354)
------------ ------------
Net cash provided by (used for) operating activities.. 5,874,988 6,876,905
------------ ------------
Cash flows from investing activities:
Proceeds from sale of investment securities............ 36,751,082 36,063,998
Purchase of investment securities...................... (42,164,770) (39,148,690)
Purchase of furniture, equipment and other assets...... (67,121) (40,227)
Net increase in policy loans........................... (1,801,780) (1,941,256)
------------ ------------
Net cash provided by (used for) investing activities.. (7,282,589) (5,066,175)
------------ ------------
Net increase (decrease) in cash....................... (1,407,601) 1,810,730
Cash
Beginning of year..................................... 2,384,714 573,984
------------ ------------
End of year........................................... $ 977,113 $ 2,384,714
============ ============
</TABLE>
The Company paid Federal income tax of $1,368,000 in 1994 and $1,265,000 in
1993.
See accompanying notes to financial statements.
36
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
------------------ ------------------
<S> <C> <C>
Reconciliation of net income to net cash
provided by (used for) operating activities:
Net income.......................................... $ 2,559,062 $ 3,401,165
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization...................... 122,199 118,365
Amortization of deferred policy acquisition costs.. 1,573,216 1,528,876
Realized investment (gains) losses............... 259,987 (318,372)
Amortization of premiums and discounts on fixed
maturities....................................... 287,340 299,666
Deferred Federal income taxes...................... (352,000) (721,000)
Cumulative effect of a change in
accounting principle............................. - (540,000)
Other items not requiring cash - net............... ( 149) (1,908)
(Increase) decrease in:
Premiums and other receivables, net................ (1,055,910) 1,683,261
Accrued investment income.......................... (235,849) (187,196)
Deferred policy acquisition costs, exclusive
of amortization.................................. (1,138,988) (1,254,547)
Other assets....................................... (30,882) (13,108)
Increase (decrease) in:
Policyholder account balances...................... 2,719,458 1,268,788
Claims and other contract liabilities.............. 503,025 1,903,908
Accounts payable and accrued liabilities........... (664,479) (290,993)
----------- -----------
$ 5,874,988 $ 6,876,905
=========== ===========
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
Note 1 -- Basis of Financial Statements
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles (GAAP). Such basis of presentation
differs from statutory accounting practices permitted or prescribed by insurance
regulatory authorities primarily in that:
(a) policy reserves are computed according to the Company's estimates of
mortality, investment yields, withdrawals and other benefits and expenses,
rather than on the statutory valuation basis;
(b) certain expenditures, principally for furniture and equipment and agents'
debit balances, are recognized as assets rather than being non-admitted and
therefore charged to retained earnings;
(c) commissions and other costs of acquiring new business are recognized as
deferred acquisition costs and are amortized over the premium paying period of
policies and contracts, rather than charged to current operations when incurred;
(d) income tax effects of temporary differences, relating primarily to policy
reserves and acquisition costs, are provided;
(e) the statutory asset valuation and interest maintenance reserves are
reported as retained earnings rather than as liabilities;
Note 2 -- Other Significant Accounting Practices
(a) Depreciation. Depreciation is computed on the useful service life of
the depreciable asset using the straight line method of depreciation.
(b) Investments. The Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting For Certain Investments in Debt and Equity
Securities ("SFAS 115"), effective December 31, 1993. SFAS 115 requires that
investments in equity securities that have readily determinable fair values and
all investments in debt securities be classified in three separate categories
and accounted for as follows:
HELD-TO-MATURITY SECURITIES
Debt securities the Company has the positive intent and ability to hold to
maturity are recorded at amortized cost.
TRADING SECURITIES
Debt and equity securities that are held principally for the purpose of selling
such securities in the near term are recorded at fair value with unrealized
gains and losses included in earnings.
AVAILABLE-FOR-SALE SECURITIES
Debt and equity securities not classified in the other two categories are
recorded at fair value with unrealized gains and losses excluded from earnings
and reported as "unrealized holding gains or losses on available-for-sale
securities" in stockholder's equity.
Short term investments are reported at market value which approximates cost.
Gains and losses on sales of investments are determined using the specific
identification method. Investment income for the years indicated consists of the
following:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31,1993
----------------- ----------------
<S> <C> <C>
Interest on fixed maturities........ $8,091,627 $7,844,723
Interest on short term investments.. 225,682 232,244
Interest on policy loans............ 886,465 771,082
Dividends on equity securities...... 10,220 -
---------- ----------
Total investment income............ 9,213,994 8,848,049
Investment expense................. 378,638 377,406
---------- ----------
Net investment income............... $8,835,356 $8,470,643
========== ==========
</TABLE>
38
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The amortized cost and estimated market values of investments at December 31,
1994 and 1993 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Available-For-Sale Securities
- ------------------------------------------
December 31, 1994
- ------------------------------------------
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies............................. $ 49,362,608 $ 5,901 $1,541,620 $ 47,826,889
Debt Securities issued by
States of the U.S........................ 3,910,143 - 379,945 3,530,198
Corporate Debt Securities................. 53,768,481 86,359 2,578,037 51,276,803
Other Debit Securities.................... 873,777 1,801 96,461 779,117
Equity Securities......................... 500,000 - 15,000 485,000
------------ ---------- ---------- ------------
$108,415,009 $ 94,061 $4,611,063 $103,898,007
============ ========== ========== ============
December 31,1993
- ------------------------------------------
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies............................. $ 49,405,229 $2,528,521 $ - $ 51,933,750
Debt Securities issued by
States of the U.S........................ 4,085,000 26,292 - 4,111,292
Corporate Debt Securities................. 49,330,996 2,110,508 100,808 51,340,696
Other Debt Securities..................... 1,376,028 59,285 - 1,435,313
------------ ---------- ---------- ------------
$104,197,253 $4,724,606 $ 100,808 $108,821,051
============ ========== ========== ============
</TABLE>
At December 31, 1994 and 1993, the Company recognized "Unrealized Holding
Gains (Losses) on Available-For-Sale Securities" of ($2,981,000) and $3,050,000,
net of applicable deferred income taxes and amortization of deferred acquisition
costs. The change in the Unrealized Holding Gains (Losses) of ($5,536,000) and
$3,050,000 for 1994 and 1993 respectively is reported as a separate component of
stockholders' equity.
<TABLE>
<CAPTION>
Held-To-Maturity Securities
- ------------------------------------------
December 31,1994
- ------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies............................. $3,380,367 $ 4,873 $ 56,807 $3,328,433
Corporate Debt Securities................. 2,000,000 - 324,020 1,675,980
Other Debt Securities..................... 610,000 - - 610,000
---------- -------- -------- ----------
$5,990,367 $ 4,873 $380,827 $5,614,413
========== ======== ======== ==========
December 31,1993
- ------------------------------------------
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies............................. $3,163,791 $121,583 $ 124 $3,285,250
Corporate Debt Securities................. 2,000,000 - - 2,000,000
Other Debt Securities..................... 810,000 - - 810,000
---------- -------- -------- ----------
$5,973,791 $121,583 $ 124 $6,095,250
========== ======== ======== ==========
</TABLE>
39
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The amortized cost and estimated market value of debt securities at December
31, 1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
------------------------ --------------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST MARKET VALUE COST MARKET VALUE
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Due in one year or less................. $1,402,857 $1,406,636 $ 5,349,646 $ 5,338,348
Due after one year through five years... 2,005,617 1,975,524 54,476,425 54,091,139
Due after five years through ten years.. 581,893 556,273 43,764,673 40,099,497
Due after ten years..................... 2,000,000 1,675,980 4,324,265 3,884,023
---------- ---------- ------------ ------------
$5,990,367 $5,614,413 $107,915,009 $103,413,007
========== ========== ============ ============
</TABLE>
Proceeds from sales of investments in fixed maturities were $36,701,082 and
$35,352,716 in 1994 and 1993, respectively. Gross gains of $85,827 and gross
losses of $345,814 were realized on those sales in 1994. Gross gains of
$397,829 and gross losses of $79,457 were realized on those sales in 1993.
(c) Recognition of Revenue, Policyholder Account Balances and Policy Benefits
TRADITIONAL ORDINARY LIFE AND HEALTH
Revenues from the traditional life insurance policies represent
premiums which are recognized as earned when due. Health insurance premiums are
recognized as revenue over the time period to which the premiums relate.
Benefits and expenses are associated with earned premiums so as to result in
recognition of profits over the lives of the contracts. This association is
accomplished by means of the provision for liabilities for future policy
benefits and the deferral and amortization of policy acquisition costs.
UNIVERSAL LIFE AND VARIABLE LIFE
Revenues from universal life and variable life policies represent
amounts assessed against policyholders. Included in such assessments are
mortality charges, surrender charges and policy service fees.
Policyholder account balances on universal life consist of the
premiums received plus credited interest, less accumulated policyholder
assessments. Amounts included in expense represent benefits in excess of
policyholder account balances. The value of policyholder accounts on variable
life are included in separate account liabilities as discussed below.
ANNUITIES
Revenues from annuity contracts represent amounts assessed against
contractholders. Such assessments are principally sales charges, administrative
fees, and in the case of variable annuities, mortality and expense risk charges.
The carrying value and fair value of fixed annuities are equal to the
policyholder account balances, which represent the net premiums received plus
accumulated interest.
(d) Separate Accounts. Separate account assets and the related liabilities,
both of which are valued at market, represent segregated variable annuity and
variable life contracts maintained in accounts with individual investment
objectives. All investment income (gains and losses of these accounts) accrues
directly to the contractholders and therefore does not affect net income of the
Company.
(e) Reclassifications. Certain reclassifications have been made to the 1993
Financial Statements in order to conform to the 1994 presentation.
40
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note 3 - Fair Value of Financial Instruments
The carrying amounts for cash, short-term investments and policy loans as
reported in the accompanying balance sheet approximate their fair values. The
fair values for fixed maturities and equity-securities are based upon quoted
market prices, where available or are estimated using values from independent
pricing services.
The carrying amounts for the Company's liabilities under investment - type
contracts approximate their fair values because interest rates credited to
account balances approximate current rates paid on similar investments and are
generally not guaranteed beyond one year. Fair values for the Company's
insurance contracts other than investment - type contracts are not required to
be disclosed. However, the fair values ofl liabilities for all insurance
contracts are taken into consideration in the overall management of interest
rate risk, which minimizes exposure to changing interest rates.
Note 4 -- Retirement Plans
The Company has a non-contributory profit sharing plan for the benefit of its
employees which provides for retirement benefits based upon earnings. Vesting
of benefits is based upon years of service. The Company did not make profit
sharing contributions in 1994 and 1993.
The Company also has a non-contributory retirement plan for the benefit of
its sales agents. The plan provides for retirement benefits based upon
commission on first-year premiums and length of service. The plan is unfunded.
Vesting of benefits is based upon graduated percentages dependent upon the
number of allocations made in accordance with the plan by the Company for each
participant. The Company charged to operations pension expenses of
approximately $312,000 in 1994 and $292,000 in 1993. The accrued liability of
approximately $2,415,000 in 1994 and $2,194,600 in 1993 was sufficient to cover
the value of benefits provided by the plan.
Note 5 -- Commitments and Contingent Liabilities
The Company has agreements with affiliates and non-affiliates as follows:
(a) The Company's maximum retention on any one life is $100,000. The Company
reinsures a portion of its risk with other insurance companies and reserves are
reduced by the amount of reserves for such reinsured risks. The Company is
liable for any obligations which any reinsurance company may be unable to meet.
The Company had reinsured approximately 10% of its net life insurance in force
at December 31, 1994 and 1993. The Company also had assumed reinsurance
amounting to approximately 21% and 22% of its net life insurance in force at the
respective year ends. None of these transactions had any material effect on the
Company's operating results.
(b) The Company and certain affiliates share office space, data processing
facilities and management personnel. Charges for these services are based upon
space occupied, usage of data processing facilities and time allocated to
management. During the years ended December 31, 1994 and 1993, the Company paid
approximately $1,099,000 and $1,187,000, respectively, for these services. In
addition, the Company reimbursed an affiliate approximately $196,000 in 1993
for its share of the cost of the branch offices and approximately $6,651,000 in
1994 and $5,510,000 in 1993 for commissions relating to the sale of its
products.
(c) The Company is subject to certain claims and lawsuits arising in the
ordinary course of business. In the opinion of management, all such claims
currently pending will not have a material adverse effect on the financial
position of the Company or its results of operations.
41
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note 6 -- Adjustments Made to Statutory Accounting Practices
Note 1 describes some of the common differences between statutory practices
and generally accepted accounting principles. The effects of these differences
for the years ended December 31, 1994 and 1993 are shown in the following table
in which net income and capital shares and surplus reported therein on a
statutory basis are adjusted to a GAAP basis.
<TABLE>
<CAPTION>
NET INCOME CAPITAL SHARES AND SURPLUS
YEAR ENDED DECEMBER 31 AT DECEMBER 31
-------------------------- ------------------------------
1994 1993 1994 1993
------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Reported on a statutory basis............... $2,205,814 $1,682,537 $18,020,531 $15,933,807
---------- ---------- ----------- -----------
Adjustments:
Deferred policy acquisition costs (b)....... (434,228) (274,329) 19,321,891 19,006,119
Future policy benefits (a).................. 727,849 669,990 (3,334,870) (4,062,719)
Deferred income taxes....................... 352,000 1,261,435 (1,884,000) (1,322,799)
Premiums due and deferred (e)............... 70,968 11,558 (1,524,702) (1,595,669)
Cost of collection and other statutory
liabilities................................ (32,454) 8,598 65,585 98,039
Non-admitted assets......................... -- -- 385,500 423,038
Asset valuation reserve..................... -- -- 901,041 744,264
Interest maintenance reserve................ (71,048) (222,809) (5,070) 325,965
Gross unrealized holding gains (losses) on
available-for-sale securities.............. -- -- (4,517,000) 4,623,799
Net realized capital gains (losses)......... (259,987) 262,712 -- --
Other....................................... 148 1,473 -- --
---------- ---------- ----------- -----------
353,248 1,718,628 13,176,375 18,240,037
---------- ---------- ----------- -----------
In accordance with generally accepted
accounting principles....................... $2,559,062 $3,401,165 $31,196,906 $34,173,844
========== ========== =========== ===========
Per share, based on 534,350 shares
outstanding................................. $4.79 $6.36 $58.38 $63.95
========== ========== =========== ===========
</TABLE>
42
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following is a description of the significant policies used to adjust the
net income and capital shares and surplus from a statutory to a GAAP basis.
(a) Liabilities for future policy benefits have been computed primarily by
the net level premium method with assumptions as to anticipated mortality,
withdrawals and investment yields. The composition of the policy liabilities
and the more significant assumptions pertinent thereto are presented below:
<TABLE>
<CAPTION>
DISTRIBUTION OF LIABILITIES* BASIS OF ASSUMPTIONS
- ----------------------------------------------------------------------------------------------------
YEARS
1994 1993 OF ISSUE INTEREST MORTALITY TABLE WITHDRAWAL
- ------------------- ------------- ------------- ------------- ---------------------------------- ----------
<S> <C> <C> <C> <C> <C>
Non-par:
$ 1,721,636 $ 1,746,952 1962-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton B
5,764,026 5,889,653 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton B
2,583,886 2,551,830 1984-1988 7 1/2% 85% of 1965-70 Basic Select Modified
plus Ultimate Linton B
62,830 51,486 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Linton B
99,022 86,776 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Actual
41,021 44,040 1989-Present 8% 1975-80 Basic Select plus Ultimate Actual
31,043,074 29,886,814 1985-Present 6% Accumulation of Funds --
Par:
232,295 233,940 1966-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton A
13,696,383 13,238,049 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton A
1,037,503 973,551 1981-1984 7 1/4% 90% of 1965-70 Basic Select
plus Ultimate Linton B
4,634,783 4,457,912 1983-1988 9 1/2% 80% of 1965-70 Basic Select
plus Ultimate Linton B
9,922,152 7,509,240 1990-Present 8% 66% of 1975-80 Basic Select
plus Ultimate Linton B
Annuities:
32,707,541 35,905,357 1976-Present 5 1/2% Accumulation of Funds --
Miscellaneous:
12,776,574 11,081,764 1962-Present 2 1/2%-3 1/2% 1958-CSO None
- -------------------------
</TABLE>
* The above amounts are before deduction of deferred premiums of $1,065,962 in
1994 and $1,120,058 in 1993.
(b) The costs of acquiring new business, principally commissions and related
agency expenses, and certain costs of issuing policies, such as medical
examinations and inspection reports, all of which vary with and are primarily
related to the production of new business, have been deferred. Costs deferred
on universal life and variable life are amortized as a level percentage of the
present value of anticipated gross profits resulting from investment yields,
mortality and surrender charges. Costs deferred on traditional ordinary life
and health are amortized over the premium-paying period of the related policies
in proportion to the ratio of the annual premium revenue to the total
anticipated premium revenue. Anticipated premium revenue was estimated using
the same assumptions which were used for computing liabilities for future policy
benefits. Amortization of $1,573,216 in 1994 and $1,528,876 in 1993 was charged
to operations.
(c) Participating business represented 11.9% and 12.4% of individual life
insurance in force at December 31, 1994 and 1993, respectively.
The Board of Directors annually approves a dividend formula for calculation
of dividends to be distributed to participating policyholders.
The portion of earnings of participating policies that can inure to the
benefit of shareholders is limited to the larger of 10% of such earnings or $.50
per thousand dollars of participating insurance in force. Earnings in excess of
that limit must be excluded from shareholders' equity by a charge against
operations. No such charge has been made, since participating business has
operated at a loss to date on a statutory basis. It is anticipated, however,
that the participating lines will be profitable over the lives of the policies.
(d) New York State insurance law prohibits the payment of dividends to
stockholders from any source other than the statutory unassigned surplus. The
amount of said surplus was $8,235,339 and $6,148,130 at December 31, 1994 and
1993, respectively.
(e) Statutory due and deferred premiums are adjusted to conform to the
expected premium revenue used in computing future benefits and deferred policy
acquisition costs. In this regard, the GAAP due premium is recorded as an asset
and the GAAP deferred premium is applied against future policy benefits.
43
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note 7 -- Federal Income Taxes
The Company joins with its parent company and other affiliated companies in
filing a consolidated Federal income tax return. The provision for Federal
income taxes is determined on a separate company basis.
Retained earnings at December 31, 1994 included approximately $146,000 which
is defined as "policyholders' surplus" and may be subject to Federal income tax
at ordinary corporate rates under certain future conditions, including
distributions to stockholders.
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting For Income Taxes" ("SFAS 109"), effective January 1, 1993. SFAS 109
is an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns.
Financial statements for the prior years have not been restated and the
cumulative effect of the accounting change as of January 1, 1993 was to increase
earnings by $540,000. This amount is reflected in the 1993 accompanying
Statement of Income as the cumulative effect of a change in accounting
principle. It primarily represents the impact of adjusting deferred taxes to
reflect the current tax rate of 34% as opposed to the tax rates that were in
effect when the deferred taxes were originally recorded.
Deferred tax liabilities (assets) are comprised of the following:
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Policyholder dividend provision...................................... $ (309,818) $ (317,722)
Non-qualified agents' pension plan reserve........................... (967,466) (890,532)
Deferred policy acquisition costs.................................... 3,521,550 4,061,347
Future policy benefits............................................... (2,862,789) (3,111,454)
Bond discount........................................................ 20,182 13,534
Unrealized holding gains (losses) on Available-For-Sale Securities.. (1,281,000) 1,573,798
Other................................................................ (4,659) (6,172)
----------- -----------
$ 1,884,000 $ 1,322,799
=========== ===========
</TABLE>
The currently payable Federal Income tax provision of $838,000 for 1994 is
net of a $102,000 Federal tax benefit resulting from a capital loss carry back
of $259,987.
A reconciliation of the Federal statutory income tax rate to the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Application of statutory tax rate................... 34% 34%
Special tax deduction for life insurance companies.. (18) (16)
Other............................................... - 2
---- ----
16% 20%
==== ====
</TABLE>
44
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
First Investors Life Insurance Company
New York, New York
We have audited the statement of assets and liabilities of First Investors
Life Level Premium Variable Life Insurance (a separate account of First
Investors Life Insurance Company, registered as a unit investment trust under
the Investment Company Act of 1940), as of December 31, 1994, and the related
statement of operations for the year then ended and changes in net assets for
each of the two years in the period then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Investors Life Level
Premium Variable Life Insurance as of December 31, 1994, and the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 21, 1995
45
<PAGE>
FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<S> <C>
ASSETS
Investments at net asset value (Note 3):
First Investors Life Series Fund................... $74,481,771
LIABILITIES
Payable to First Investors Life Insurance Company.. 2,110,584
-----------
NET ASSETS........................................... $72,371,187
===========
Net assets represented by Contracts.................. $72,371,187
===========
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
INVESTMENT INCOME
Income:
Dividends.......................................... $ 1,701,408
------------
Total income..................................... 1,701,408
------------
Expenses:
Cost of insurance charges (Note 4)................. 2,282,737
Mortality and expense risks (Note 4)............... 349,558
------------
Total expenses................................... 2,632,295
------------
NET INVESTMENT LOSSES................................ (930,887)
------------
UNREALIZED APPRECIATION ON INVESTMENTS...............
Beginning of year................................... 8,605,598
End of year......................................... 5,684,606
------------
Change in unrealized appreciation on investments (2,920,992)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,851,829)
============
</TABLE>
See notes to financial statements.
46
<PAGE>
FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31,
<S> <C> <C>
1994 1993
----------- -----------
Increase (Decrease) in Net Assets
From Operations
Net investment income (loss)............................... $ (930,887) $ 860,676
Change in unrealized appreciation on investments........... (2,920,992) 5,563,208
----------- -----------
Net increase (decrease) in net assets resulting from
operations................................................ (3,851,879) 6,423,884
----------- -----------
From Unit Transactions
Net insurance premiums..................................... 20,555,397 17,890,358
Contract payments.......................................... (8,253,343) (8,587,789)
----------- -----------
Net increase in net assets derived from unit transactions.. 12,302,054 9,302,569
----------- -----------
Net increase in net assets................................. 8,450,175 15,726,453
Net Assets
Beginning of year........................................... 63,921,012 48,194,559
----------- -----------
End of year................................................. $72,371,187 $63,921,012
=========== ===========
</TABLE>
See notes to financial statements.
47
<PAGE>
FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
Note 1 -- Organization
First Investors Life Level Premium Variable Life Insurance (Separate Account
B), a unit investment trust registered under the Investment Company Act of 1940
(the 1940 Act), is a segregated investment account established by First
Investors Life Insurance Company (FIL). Assets of the Separate Account B have
been used to purchase shares of First Investors Life Series Fund (The Fund), an
open-end diversified management investment company registered under the 1940
Act.
Note 2 -- Significant Accounting Policies
INVESTMENTS
Shares of the Fund held by Separate Account B are valued at net asset value
per share. All distributions received from the Fund are reinvested to purchase
additional shares of the Fund at net asset value.
NET ASSETS REPRESENTED BY CONTRACTS
The net assets represented by contracts represents the cash value of the
policyholder accounts which is the estimated liability for future policy
benefits. The liability for future policy benefits is computed based upon
assumptions as to anticipated mortality, withdrawals and investment yields. The
mortality assumption is based upon the 1975-80 Basic Select plus Ultimate
mortality table.
FEDERAL INCOME TAXES
Separate Account B is not taxed separately because its operations are part of
the total operations of FIL, which is taxed as a life insurance company under
the Internal Revenue Code. Separate Account B will not be taxed as a regulated
investment company under Subchapter M of the Code. Under existing Federal
income tax law, no taxes are payable on the investment income or on the capital
gains of Separate Account B.
Note 3 -- Investments
Investments consist of the following:
<TABLE>
<CAPTION>
NET ASSET MARKET
SHARES VALUE VALUE COST
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
First Investors Life
Series Fund
Cash Management......................... 1,278,618 $ 1.00 $ 1,278,618 $ 1,278,618
High Yield.............................. 2,228,425 10.58 23,587,190 23,878,448
Growth.................................. 693,452 16.73 11,600,467 10,394,496
Discovery............................... 556,800 19.86 11,060,355 9,492,816
Blue Chip............................... 891,224 13.75 12,255,449 10,721,550
International Securities................ 929,760 13.51 12,560,403 10,819,067
Government.............................. 57,849 9.70 561,297 595,539
Investment Grade........................ 112,881 10.31 1,163,786 1,192,131
Utility Income.......................... 45,074 9.19 414,206 424,500
----------- -----------
$74,481,771 $68,797,165
=========== ===========
</TABLE>
The High Yield Series' investments in high yield securities whether rated or
unrated may be considered speculative and subject to greater market fluctuations
and risks of loss of income and principal than lower yielding, higher rated,
fixed income securities.
Note 4 -- Mortality and Expense Risks and Deductions
In consideration for its assumption of the mortality and expense risks
connected with the Variable Life Contracts, FIL deducts an amount equal on an
annual basis to .50% of the daily net asset value of Separate Account B. The
deduction for the year ended December 31, 1994 was $349,558.
A monthly charge is also made to Separate Account B for the cost of insurance
protection. This amount varies with the age and sex of the insured and the net
amount of insurance at risk. For further discussion, see "Cost of Insurance
Protection" in the Prospectus. For the year ended December 31, 1994 cost of
insurance charges amounted to $2,282,737.
48
<PAGE>
TABLE OF CONTENTS
General Description............................... 2
Charges and Expenses.............................. 6
The Variable Life Policy.......................... 8
Illustrations of Death Benefits,
Cash Values and Accumulated Premiums............ 17
Federal income Tax Status......................... 22
Voting Rights..................................... 23
Officers and Directors of
First Investors Life Insurance Company.......... 24
Distribution of Policies.......................... 26
Custodian......................................... 26
Reports........................................... 26
State Regulation.................................. 26
Experts........................................... 27
Relevance of Financial Statements................. 27
Appendix I -- Other Policy Provisions............. 27
Appendix II -- Additional Illustrations of Death
Benefits, Cash Values and
Accumulated Premiums............................ 29
Financial Statements of First Investors Life...... 33
Financial Statements of Separate Account B........ 45
Life 318
FIRST INVESTORS LIFE
LEVEL PREMIUM
VARIABLE LIFE
INSURANCE POLICIES
- ---------------------------
Prospectus
- ----------------------------
May 1, 1995
First Investors Logo
Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."
Vertical line from top to bottom in center of the page about l/2 inch in
thickness.
<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
11th day of April, 1995.
FIRST INVESTORS LIFE LEVEL
PREMIUM VARIABLE LIFE INSURANCE
(Registrant)
BY: FIRST INVESTORS LIFE
INSURANCE COMPANY
(Depositor)
ATTEST:
/s/ Carol Lerner Brown By /s/ Richard H. Gaebler
- ----------------------------- -----------------------------
Carol Lerner Brown, Secretary Richard H. Gaebler, President
As required by the Securities Act of 1933, this Amendment to this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Richard H. Gaebler President April 11, 1995
- ----------------------
Richard H. Gaebler
/s/ Lawrence M. Falcon Senior Vice President April 11, 1995
- ---------------------- and Comptroller
Lawrence M. Falcon
/s/ Richard H. Gaebler Director April 11, 1995
- ----------------------
Richard H. Gaebler
Glenn O. Head* Chairman and Director April 11, 1995
Jay G. Baris* Director April 11, 1995
George V. Ganter* Director April 11, 1995
Robert J. Grosso* Director April 11, 1995
Scott Hodes* Director April 11, 1995
F. Van S. Parr* Director April 11, 1995
Jackson Ream* Director April 11, 1995
Nelson Schaenen Jr.* Director April 11, 1995
John T. Sullivan* Director April 11, 1995
Kathryn S. Head* Director April 11, 1995
* By:/s/ Richard H. Gaebler
-------------------------
Richard H. Gaebler
Attorney-In-Fact
Pursuant to Power of
Attorney previously filed
C-1
<PAGE>
EXHIBITS
--------
1. (A - Form N-8B-2)
1.* Resolution of Board of Directors Creating Separate Account
2.** Safekeeping Agreement
3(a) Not Applicable
3(b)* Specimen Agent's Agreement
3(c) See 1.A 3(b) above
4. Not Applicable
5.* Specimen Life Level Premium Variable Life Insurance Policy
6.* Certificate of Incorporation, as amended, and By-Laws, as
amended, of First Investors Life Insurance Company
7. Not Applicable
8. Not Applicable
9. Not Applicable
10* Application Form for Variable Life Insurance Policy
2. See 1.A(5) above
3.*** Opinion of Counsel
4. Not Applicable
5. Not Applicable
- -----------------------
* Incorporated by reference from Registrant's Registration Statement on
Form N-8B-2 (File No. 811-4328) previously filed with the Commission.
** Incorporated by reference from Amendment No. 2 to Registrant's
Registration Statement on Form S-6 (File No.
2-98410) previously filed with the Commission
*** Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ended December 31, 1994 filed with the Commission on
February 21, 1995.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
First Investors Life Insurance Company
95 Wall Street
New York, NY 10005
We hereby consent to the use in Post-Effective Amendment No. 14 to the
Registration Statement on Form S-6 (File No. 2-98410) of our report dated
February 21, 1995 relating to the December 31, 1994 financial statements of
First Investors Life Level Premium Variable Life Insurance and our report dated
February 21, 1995 relating to the December 31, 1994 financial statements of
First Investors Life Insurance Company, which are included in said Registration
Statement.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 11, 1995
<PAGE>
EXHIBIT 24
FIRST INVESTORS LIFE LEVEL PREMIUM VARIABLE LIFE INSURANCE
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director
of First Investors Life Insurance Company, as Depositor of First Investors Life
Level Premium Variable Life Insurance, hereby appoints Glenn O. Head or Richard
H. Gaebler, and each of them his true and lawful attorney to execute in his
name, place and stead and on his behalf a Registration Statement on Form S-6 for
the registration pursuant to the Securities Act of 1933 and the Investment
Company Act of 1940 of variable life insurance policies, and any and all
amendments to said Registration Statement (including post-effective amendments),
and all instruments necessary or incidental in connection therewith and to file
the same with the Securities and Exchange Commission. Said attorney shall have
full power and authority to do and perform in the name and on behalf of the
undersigned every act whatsoever requisite or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do, the undersigned hereby ratifying and approving all such acts of said
attorney.
IN WITNESS WHEREOF the undersigned has subscribed these presents this 6th
day of March 1995.
/s/Robert J. Grosso
----------------------------------
Robert J. Grosso
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> BLUE CHIP SERIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 10721550
<INVESTMENTS-AT-VALUE> 12255449
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12255449
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 341543
<TOTAL-LIABILITIES> 341543
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10721550
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (341543)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1533899
<NET-ASSETS> 11913906
<DIVIDEND-INCOME> 192284
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 473986
<NET-INVESTMENT-INCOME> (281702)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (369176)
<NET-CHANGE-FROM-OPS> (650878)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3481736
<NUMBER-OF-SHARES-REDEEMED> 1336588
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1494270
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 473986
<AVERAGE-NET-ASSETS> 11166771
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> CASH MANAGEMENT SERIES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 1278618
<INVESTMENTS-AT-VALUE> 1278618
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1278618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35993
<TOTAL-LIABILITIES> 35993
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1278618
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (35993)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1242625
<DIVIDEND-INCOME> 48818
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 51381
<NET-INVESTMENT-INCOME> (2563)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (2563)
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