As filed with the Securities and Exchange Commission on April 28, 1997
Registration No. 2-98410
811-4328
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
Post-Effective Amendment No. 16
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
(SEPARATE ACCOUNT B)
(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 April 30, 1997 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, 1996 on February 26, 1997.
<PAGE>
TABLE OF CONTENTS
TO FORM S-6
Contents of Post-Effective Amendment No. 16 to Registration Statement of First
Investors Life Level Premium Variable Life Insurance.
1. The Facing Page
2. The Prospectus consisting of 53 pages
3. Undertakings
4. The Signature Page
5. Written consent of Independent Public Accountants
<PAGE>
FIRST INVESTORS
LIFE LEVEL PREMIUM
VARIABLE LIFE INSURANCE
Cross-Reference Sheet
N-8B-2
Item No. Location
1-8 Organizational and General
Information Front Cover; The Separate
Account; Summary of The Policy
9 Material Litigation Not Applicable
10 General Information Concerning the
Securities of the Trust and the
Rights of Holders Summary of The Policy; The
Separate Account; Investments of
the Account; The Variable Life
Policy
11-12 Information Concerning the
Securities Underlying
the Trust's Securities Investments of the Account; The
Separate Account
13 Information Concerning Loads,
Fees, Charges and Expenses Charges and Expenses
14-24 Information Concerning the
Operations of the Trust Summary of the Policy; The
Separate Account; Investments of
the Account; Charges and
Expenses
25-27 Organization and Operations
of Depositor First Investors Life Insurance
Company
28 Officials and Affiliated
Persons of Depositor Officers and Directors of First
Investors Life Insurance Company
29 Companies Owning Securities
of Depositor First Investors Life Insurance
Company
30 Controlling Persons Not Applicable
31-34 Compensation of Officers and
Directors of Depositor First Investors Life Insurance
Company
35-38 Distribution of Securities First Investors Life Insurance
Company; Investments of the
Account
41-43 Information Concerning
Principal Underwriter
<PAGE>
44-45 Offering Price or Acquisition
Valuation of Securities of
the Trust Pertinent Provisions of the
Prospectus of First Investors
Life Series Fund (File No.
2-98409) incorporated herein by
reference
46 Redemption Valuation of
Securities of the Trust Pertinent Provisions of the
Prospectus of First Investors
Life Series Fund (File No.
2-98409) incorporated herein by
reference
47 Purchase and Sale of
Interests in Underlying
Securities from and to
Security Holders The Separate Account; Charges
and Expenses; The Variable Life
Policy
48-50 Information Concerning the
Trustee or Custodian Custodian
51 Information Concerning
Insurance of Holders of Appendix I - Other Provisions
Securities
52 Policy of Registrant Investments of the Account
53 Regulated Investment Company Federal Income Tax Status
54-59 Financial and Statistical
Information The Variable Life Policy;
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>
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./***/ Opinion of Counsel
3. Not Applicable
4. 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, 1996 filed with the Commission on February
26, 1997.
<PAGE>
Undertaking To File Reports
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
Representation Regarding Reasonableness of
Aggregate Policy Fees and Charges
Pursuant to Section 26(a)(e)(2)(A) of the
Investment Company Act of 1940
First Investors Life represents that the fees and charges deducted
under the Policies described in this Registration Statement, in the aggregate,
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by First Investors Life under the Policies.
First Investors Life bases its representation on its assessment of all of the
facts and circumstances, including such relevant factors as: the nature and
extent of such services, expenses and risks; the need for First Investors Life
to earn a profit; and the regulatory standards for exemptive relief under the
Investment Company Act of 1940 under prior to October 1996, including the range
of industry practice.
<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 First Investors Life Level Premium Variable Life Insurance (Separate
Account B) ("Separate Account B"). A Policyowner elects to have his or her net
premiums paid into one or more of the nine subaccounts of Separate Account B
("Subaccounts"). The assets of each Subaccount are invested at net asset value
in shares of a related series of First Investors Life Series Fund (the "Life
Series Fund"), an open-end diversified management investment company. Target
Maturity 2007 Fund and Target Maturity 2010 Fund are not offered to Policyowners
of Separate Account B.
The Policy is similar to a limited payment whole 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
whole 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 because, among other things, of the cost of the
Policy during the first few years.
This Prospectus sets forth the information about the Policies and 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 ATTACHED TO THE
CURRENT PROSPECTUS FOR FIRST INVESTORS LIFE SERIES FUND.
The date of this Prospectus is April 30, 1997
<PAGE>
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 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.
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.
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.
STATE PREMIUM TAX CHARGE. This charge is 2% of the 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 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.
Deductions and the accrual for the above charges begin on a Policy's issue
date. For the fiscal year ended December 31, 1996, First Investors Life received
$5,419,000 in sales charges.
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<PAGE>
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.
COST OF INSURANCE. After the net 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, 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 Funds bear the cost of brokerage commissions, transfer
taxes and other fees related to securities transactions.
OTHER CHARGES. Each Subaccount purchases shares of the corresponding Fund at
net asset value. The net asset value of those shares reflects management fees
and expenses already deducted from the assets of the Fund. Those fees and
expenses are described in detail in Life Series Fund's Prospectus.
GENERAL DESCRIPTION
FIRST INVESTORS LIFE INSURANCE COMPANY
First Investors Life Insurance Company, 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. In addition to Separate Account B,
First Investors Life also maintains First Investors Life Variable Annuity Fund A
and First Investors Life Variable Annuity Fund C. Variable annuity contracts
funded through those accounts are offered through their own prospectuses. 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 Life, First Investors Corporation
("FIC" or "Underwriter") and Administrative Data Management Corp., the transfer
agent for Life Series Fund. Mr. Glenn O. Head controls FICC and, therefore,
controls the Adviser and First Investors Life.
First Investors Life assumes all of the insurance risks under the Policy and
its assets support
3
<PAGE>
the Policy's benefits. At December 31, 1996, First Investors Life had assets of
over $638 million and over $3.193 billion of life insurance in force. (See First
Investors Life's financial statements under "Financial Statements.")
SEPARATE ACCOUNT B
First Investors Life Level Premium Variable Life Insurance (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 Life Level Premium
Variable Life Insurance Policy (the "Policy") offered by First Investors Life.
Separate Account B is registered with the Securities and Exchange Commission
("Commission") 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 by the Commission 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 Fund (singularly,
"Fund," and collectively, "Funds") of Life Series Fund. For example, the Blue
Chip Subaccount invests in the Blue Chip Fund, the Government Subaccount invests
in the Government Fund, and so on. Life Series Fund's Prospectus describes the
risks attendant to an investment in each Fund.
Any and all distributions received from a Fund will be reinvested to purchase
additional shares of the distributing Fund at net asset value for the
corresponding Subaccount. Accordingly, no capital distributions from the
Policies are anticipated. Shares of the Funds 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 Fund of Life Series Fund:
SEPARATE ACCOUNT
B SUBACCOUNT FUND
Blue Chip Subaccount Blue Chip Fund
Cash Management Subaccount Cash Management Fund
Discovery Subaccount Discovery Fund
Government Subaccount Government Fund
Growth Subaccount Growth Fund
High Yield Subaccount High Yield Fund
International Securities Subaccount International Securities Fund
Investment Grade Subaccount Investment Grade Fund
Utilities Income Subaccount Utilities Income Fund
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
4
<PAGE>
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, subject to compliance with
applicable law, including approval of Policyowners if so required, (1) to invest
the assets of Separate Account B in the shares of any investment companies or
series thereof or any investment permitted by law; (2) 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; (3) to operate Separate
Account B as a "management 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; (4) to deregister Separate Account B under the 1940 Act; and
(5) 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.
INVESTMENT OBJECTIVES AND RISK FACTORS
When a Policy is purchased, the Policyowner decides to place the net 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 issue date and at the beginning of each
Policy year thereafter. A portion of the allocated amount covers the cost of
insurance protection. Coverage under the Policy begins in accordance with the
terms of the Conditional Receipt or the issue date of the Policy in accordance
with the terms of the Policy. That Subaccount in turn invests in the
corresponding Fund of Life Series 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. The transfer becomes
effective on the date of receipt of the transfer request. Each Subaccount
corresponds to a Fund of Life Series Fund.
The net premium increases over time as charges and expenses decline. As an
example, using the policies illustrated on pages 21 through 23, 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 investment objectives and general characteristics of each Fund of Life
Series Fund which are offered to Policyowners of Separate Account B are set
forth below. See "Life Series Fund."
5
<PAGE>
There is no assurance that the investment objective of any Fund of Life Series
Fund will be realized. Because each Fund of Life Series 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.
Because the Life Series Fund sells its shares to more than one separate
account, the possibility arises that violation of the Federal tax laws by
another separate account investing in Life Series Fund could cause the Policies
funded through Separate Account B to lose their tax-deferred status, unless
remedial action were taken. There are also special risk factors which should be
considered before taking advantage of the Policy Loan Privilege. These risk
factors are discussed in the "Loan Provision" section of this prospectus.
LIFE SERIES FUND
First Investors Life Series Fund is a diversified open-end management
investment company registered under the 1940 Act. Life Series Fund consists of
eleven separate Funds, nine of which are offered to Policyowners of Separate
Account B. Target Maturity 2007 Fund and Target Maturity 2010 Fund, separate
Funds of Life Series Fund, are not offered to Policyowners of Separate Account
B. The shares of the Funds 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 nine Funds of Life Series Fund offered to Policyowners may be referred to
as: First Investors Life Blue Chip Fund, First Investors Life Cash Management
Fund, First Investors Life Discovery Fund, First Investors Life Government Fund,
First Investors Life Growth Fund, First Investors Life High Yield Fund, First
Investors Life International Securities Fund, First Investors Life Investment
Grade Fund and First Investors Life Utilities Income Fund.
The investment objectives of each Fund of Life Series Fund which are offered
to Policyowners of Separate Account B are as follows:
BLUE CHIP FUND. The investment objective of Blue Chip Fund 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 "Blue Chip" companies that the Adviser believes have potential
earnings growth that is greater than the average company included in the
Standard & Poor's 500 Composite Stock Price Index.
CASH MANAGEMENT FUND. The objective of Cash Management Fund is to seek to
earn a high rate of current income consistent with the preservation of capital
and maintenance of liquidity. The Cash Management Fund 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 Fund is neither insured
nor guaranteed by the U.S. Government. There can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
6
<PAGE>
DISCOVERY FUND. The investment objective of Discovery Fund 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 FUND. The investment objective of Government Fund 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 (including
mortgage-backed securities).
GROWTH FUND. The investment objective of Growth Fund 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 FUND. The primary objective of High Yield Fund is to seek to earn
a high level of current income. The Fund actively seeks to achieve its secondary
objective of capital appreciation to the extent consistent with its primary
objective. The Fund 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 Life Series Fund's
Prospectus.
INTERNATIONAL SECURITIES FUND. The primary objective of International
Securities Fund is to seek long-term capital growth. As a secondary objective,
the Fund 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 FUND. The investment objective of Investment Grade Fund is
to seek a maximum level of income consistent with investment in investment grade
debt securities. The Fund seeks to achieve its objective primarily by investing,
under normal market conditions, in debt securities of U.S. issuers that are
rated in one of the four highest rating categories by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Group or, if unrated, are deemed to be of
comparable quality by the Adviser.
UTILITIES INCOME FUND. The primary objective of Utilities Income Fund 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 Life Series Fund Prospectus has been delivered. Each Fund of the Life
Series Fund may be referred to as "Fund" or "Series" in the underlying Policies.
For more complete information about each of the Funds underlying Separate
Account B, including management fees and other expenses, see Life Series Fund's
Prospectus. The Prospectus details each Fund's investment goals, management
strategies, investment restrictions, portfolio turnover rate, the market and
financial risks of an
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<PAGE>
investment in the Fund's shares, as well as, the risk of investing in a fund
that sells its shares to other separate accounts including variable life
insurance company separate accounts.
It is important to read the Prospectus carefully before you decide to invest.
Additional copies of Life Series 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 Funds will be achieved.
CHANGES IN FUND INVESTMENT POLICIES AND RESTRICTIONS
The investment policies and restrictions of the Funds are set forth above and
within Life Series Fund's Prospectus. Fundamental policies of a Fund may not be
changed without the approval of a majority vote of shareholders of that Fund in
accordance with the 1940 Act. Policyholders investing in the Subaccount which
invests in that Fund will have an opportunity to provide voting instructions in
connection with any such vote (see "Voting Rights"). Changes in such 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 summary of the
change and the reasons for disapproval will be set forth in the Proxy Statement
for Life Series Fund's next Meeting of Shareholders.
ADVISER
First Investors Management Company, Inc. (the "Adviser") is the investment
adviser of each Fund. The Adviser supervises and manages the investments and
operations of each Fund, except for International Securities Fund and Growth
Fund. The Adviser is a New York Corporation located at 95 Wall Street, New York,
New York 10005. The Adviser serves as such under an advisory agreement dated
June 13, 1994, which was approved, with respect to each Fund, by Life Series
Fund's Board of Trustees and by the shareholders of each Fund. See Life Series
Fund's Prospectus for the amount of advisory fees paid by each Fund for the
fiscal year ended December 31, 1996.
SUBADVISER
Wellington Management Company, 75 State Street, Boston, MA 02109 ("WMC" or
"Subadviser"), has been retained by the Adviser and Life Series Fund on behalf
of International Securities Fund and Growth Fund as each of those Fund's
investment subadviser. The Subadviser serves as such under a subadvisory
agreement dated June 13, 1994 which was approved by Life Series Fund's Board of
Trustees and by the shareholders of the International Securities Fund and Growth
Fund. The Adviser has delegated discretionary trading authority to WMC with
respect to all the assets of International Securities Fund and Growth Fund,
subject to the continuing oversight and supervision of the Adviser and the
Fund's Board of Trustees. As compensation for its services, WMC is paid by the
Adviser, and not by either Fund, a fee which is computed daily and paid monthly.
8
<PAGE>
UNDERWRITER
First Investors Life and Separate Account B have entered into an Underwriting
Agreement with their affiliate, FIC, 95 Wall Street, New York, New York 10005.
For the fiscal years ended December 31, 1994, 1995, and 1996, FIC received fees
of $4,048,086, $4,963,368, and $5,207,230, respectively, in connection with the
distribution of Policies in a continuous offering. 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.
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. The Date of Issue will generally be the date
on which the application is approved. The Date of Issue may be backdated to save
age but it cannot be earlier than either (a) the date the application is signed
or (b) a date 15 days prior to the date on which the application is approved.
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.
9
<PAGE>
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 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 on the Policy's benefit base ("Net Investment Return") for
each selected Subaccount is 4%, then the variable insurance amount does not
change. The "benefit base" is the amount at work earning a return under a
Policy.
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.
We call the amount by which the Net Investment Return is more or less than 4%
the "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
22, 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:
CALCULATION OF CHANGE IN
VARIABLE INSURANCE ADJUSTMENT
AMOUNT AT END OF POLICY YEAR
6 12
--------- ----------
(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 Investment 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
Figures are rounded.
10
<PAGE>
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 or
decreases 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 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.
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
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
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
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
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 22, 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:
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<PAGE>
<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 under a Policy are greater.
Therefore, the change in the variable insurance amount (which affects the change
in the death benefit) is expected to be greater in the later Policy years when
those assets are expected to be 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 22), 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 22 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
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<PAGE>
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 Fund 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 and expense 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 Fund's share is determined by the Fund in the manner
set forth in Life Series Fund's prospectus.
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
22, 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:
(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
13
<PAGE>
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 or, in fact, a negative value. Subsequent net premium payments and
investment returns would be credited against the negative cash 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 21 to 23 and Pages 33 to 35 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, and provided the allocation to any one Subaccount is not less
than 10% of the cash value.
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. On any Policy anniversary, a Policyowner may also make a
partial surrender of the Policy. This is effected by reducing the premium
amount. It is permitted only if there are no outstanding policy loans and the
new modal premium due on the Policy anniversary has been paid. All requirements
for a partial surrender must be received at the Home Office on or before the
Policy anniversary. The partial surrender will be effective on the Policy
anniversary. The amounts of the Guaranteed Insurance Amount (face amount of the
Policy), death benefit and cash value for the reduced Policy will be the same as
they would have been had the reduced premium been paid from inception. The
portion of the cash value of the original Policy which is in excess of the cash
value of the reduced Policy will be paid to the Policyowner as a surrender. The
cash value of the reduced Policy will be allocated among the subaccounts in the
same proportion as the cash value of the original Policy was allocated.
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 if a recent payment by check has not yet cleared the
bank, when First Investors Life is not able to determine the amount because the
New York Stock Exchange is closed for trading or the Commission determines that
a state of emergency exists or for such other periods as the Commission may by
order permit for the protection of security holders. Interest will be paid if
payment of the surrender value is delayed beyond 7 days. In addition, under
Federal tax laws withholding taxes may be deducted from the surrender value.
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 premium going into the Subaccount(s) is
the same for
14
<PAGE>
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.
EFFECTS OF LOANS. 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. The Loan is charged to each Subaccount in proportion to
the investment in each Subaccount as of the date of the Policy loan. A Policy
loan does not affect the amount of the premiums due. A Policy loan does,
however, reduce the death benefit and cash value by the amount of the loan. It
may also permanently affect the death benefit above the Guaranteed Insurance
Amount and the cash value whether or not the loan is repaid in whole or in part.
This is because 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.
A Policy loan will have a negative impact on the growth of the cash value
during periods when the actual returns of the Subaccounts exceed the assumed
rate of 4%. 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). Thus, 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 22,
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
value shown on Page 22 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%.
15
<PAGE>
Conversely, 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.
Policy loans are taxable if a Policy is surrendered or terminates for any
reason prior to the owner's death to the extent that they exceed cost basis. As
a general rule the Policyowner is responsible for paying income taxes on the
difference between the surrender value and total premiums paid. Any outstanding
Policy loan will be added to the cash surrender value for the purpose of
calculating income tax liability. A termination could occur if the total amount
of outstanding loans exceeds the cash balance. An example might be adverse
market conditions causing this to occur. Consult with your representative or tax
advisor before taking Policy loans.
PREMIUMS
ALLOCATION OF PREMIUM. At the time of application, the Policyowner decides to
place his or her net 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
16
<PAGE>
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 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)
AGGREGATE PREMIUMS
FREQUENCY EACH PREMIUM FOR POLICY YEAR
--------- ------------ ---------------
Annual.......................... 100.00% 100.00%
Semiannual...................... 51.00 102.00
Quarterly....................... 26.00 104.00
Pre-authorized Monthly.......... 8.83 105.96
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 (1) 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 and (2) 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,
17
<PAGE>
the paid-up insurance will be the automatic option. 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 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 22
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:
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
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.
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
18
<PAGE>
specified in the Policy on the Insured's life. The Policyowner also may exchange
the Policy for a fixed life insurance policy if a Fund changes its investment
adviser or has a material change in its investment objectives or restrictions.
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.
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.
If a Policy is not issued for any reason, an applicant shall only be refunded
the amount of the premium without interest.
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 21 to 23 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 33 to 35 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
equivalent to an annual charge of .50% at the beginning of each year.
2. An investment advisory fee of 0.75% of each Fund's average daily net
assets.
3. Assumed operating expenses of 0.20% of each Fund's average daily net
assets.
19
<PAGE>
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.
===============================
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.
20
<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 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 Life 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 Life 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>
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 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 Life 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 Life 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.
22
<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 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 Life 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 Life 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.
23
<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
and regulations as they are currently interpreted. No representation is made
regarding the likelihood of continuation of such laws and regulations or the
current interpretations by the Internal Revenue Service. Any changes in such
laws, regulations or in interpretations may be given retroactive effect.
Moreover, no attempt is made to consider any applicable state or other (e.g.,
estate, gift, 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 generally not be
taxed on 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 Funds in a manner that complies
with these diversification requirements, and under a special "look-through"
rule, satisfaction of such requirements by the Funds will be attributed to
Separate Account B. The look-through rule is applicable because all shares of
the Funds comprising Life Series Fund will be owned only by Separate Account B
(and similar accounts of First Investors Life or other insurance companies) and
access to the Funds 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). Fund shares also may be held by
the Adviser provided such shares are being held in connection with the creation
or management of the Fund. The Adviser does not intend to sell any Fund shares
it owns to the general public. The tax law does not currently provide guidance
as to the circumstances in which a Policyowner may be said to have "control"
over Separate Account B assets and thus be subject to current taxation on income
credited to the Policyowner's Policy. The Treasury Department has said that it
may provide such guidance by a ruling or regulation. It is not clear what this
additional guidance would provide, nor whether it would be applied on a
prospective basis only. First Investors Life reserves the right to amend the
Policies in any appropriate way and take other action necessary to avoid such
current taxation. 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 received in exchange for another that was
issued, on or after June 21, 1988, but only if the policy surrendered in
exchange therefor was deemed to be a modified endowment contract. 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
24
<PAGE>
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 surrender or loan made under, or in result of a pledge or
assignment of, the Policy), after the Policy becomes a modified endowment
contract, or within two years prior thereto, will be includable in gross income
and subject to regular Federal income taxation to the extent of the income in
the Policy (basically, cash value less premium paid). An additional 10% tax will
also be imposed on the taxable amount of any such portion, subject to certain
exceptions.
All modified endowment contracts issued by the same insurer (or affiliates)
to the Policyowner during any calendar year generally will be treated as one
Policy for the purpose of applying the modified endowment contract rules. You
should consult your tax advisor if you have questions regarding the possible
impact of the modified endowment contract rules on your Policy.
If a Policy is not a modified endowment contract, any loans made under a
Policy will be treated as indebtedness and no part of such loans will constitute
income to the Policyowner, unless the Policy is surrendered or terminated for
any reason prior to the Policyowner's death. See "Effects of Loans" on page 15
to 16 of this Prospectus. In addition, the interest on such loan generally will
not be deductible.
Upon surrender of a Policy, taxation of the Surrender Value will depend on
the Payment Option that the Policyowner has selected. If payment is in one sum,
the Policyowner will be taxed on the income in the Policy at the time payment is
made. If payment is in installments, the Policyowner may be taxed (1) on all or
a portion of each installment until the income in the Policy has been paid; (2)
only after all investment in the Policy has been paid, or (3) on a portion of
each payment. You should consult your tax advisor if you have questions about
the taxation of a Policy surrender.
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.
25
<PAGE>
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
First Investors Life will vote the shares of any Fund held in a corresponding
Subaccount or directly, at any Fund shareholders meeting, in accordance with its
view of present law. It will vote Fund shares held in any corresponding
Subaccount as follows: shares attributable to Policyowners for which it receives
instructions, in accordance with the instructions; shares attributable to
Policyowners for which it does not receive instructions, in the same proportion
that it votes shares held in the Subaccount for which it receives instructions;
and shares not attributable to Policyowners, in the same proportion that it
votes shares held in the Subaccount that are attributable to Policyowners and
for which it receives instructions. First Investors Life will vote Fund shares
held directly by it in the same proportion that it votes shares held in any
corresponding subaccounts that are attributable to Policyowners and for which it
receives instructions, except where there are no shares held in any subaccount
it will vote its own shares as it deems appropriate. All of the shares of any
Fund held by First Investors Life through a Subaccount or directly will be
presented at any Fund shareholders meeting for purposes of determining a quorum.
The number of Fund shares held in a corresponding Subaccount that is
attributable to each Policyowner is determined by dividing the Subaccount's
Accumulated Value by the net asset value of one Fund share. The number of votes
that a Policyowner has the right to cast will be determined as of the record
date established by Life Series Fund.
Voting instructions will be solicited by written communication prior to the
date of the meeting at which votes are to be cast. Each Policyowner having a
voting interest in a Subaccount will be sent meeting and other materials
relating to the Fund.
First Investors Life reserves the right to proceed other than as described
above, including the right to vote shares of any Fund in its own right, to the
extent permitted by law.
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.
26
<PAGE>
OFFICERS AND DIRECTORS OF FIRST INVESTORS LIFE INSURANCE COMPANY
PRINCIPAL OCCUPATION FOR
NAME OFFICE LAST 5 YEARS
---- ------ --------------------------------
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.
Glenn T. Dallas Director Retired since April 1996;
Division President and Senior
Vice President, ADT Security
Systems, Parsippany, New Jersey,
prior thereto.
William H. Drinkwater First Vice First Vice President and Chief
President and Actuary, First Investors Life.
Chief Actuary
Lawrence M. Falcon Senior Senior Vice President and
Vice President Comptroller, First Investors Life.
and Comptroller
Richard H. Gaebler President President, First Investors Life.
and Director
William P. Galvin Assistant Assistant Vice President, First
Vice President Investors Life, since February
1996; Manager since February
1995; Licensing Manager, Pfizer,
Inc., New York, New York from
May 1990 to February 1995.
George V. Ganter Director Vice President, First Investors
Asset Management Company, Inc.,
Portfolio Manager, FIMCO.
Robert J. Grosso Director Director of Compliance, FIC
since April 1997; Assistant
Counsel since January 1995;
Business Consultant from August
1994 to January 1995; 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.
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.
Carol Lerner Brown Secretary Assistant Secretary, FIC;
Secretary, FIMCO and FICC.
27
<PAGE>
William M. Lipkus Vice President Vice President, First Investors
and Chief Life since May 1996; Chief
Accounting Officer since June
1992; Manager, Tait, Weller &
Baker, Edison, New Jersey from
June 1986 to June 1992.
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.
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. 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.
DISTRIBUTION OF POLICIES
The Policies distributed by First Investors Life are sold by insurance agents
who are licensed to sell variable life insurance. These agents are paid a
commission of 28.55% of the first year premium payment and 1% of the premium
payments for years two through ten.
The Policies are offered for sale in Alabama, Arizona, Arkansas, Colorado,
Connecticut, Delaware, 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, 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 Subacounts 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
28
<PAGE>
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, 1996, 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.
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).
29
<PAGE>
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. Tax consequences
may vary depending on the settlement option chosen. 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.
OPTIONAL INSURANCE BENEFITS
On payment of an additional premium and subject to certain age and insurance
underwriting requirements, the following optional provisions, which are 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.
ACCIDENTAL DEATH BENEFIT. Providing for an additional fixed amount of death
benefit in the event the Insured dies from accidental bodily injury before the
Policy anniversary nearest the Insured's 70th birthday.
TERM INSURANCE. Providing 12 year convertible level term insurance.
30
<PAGE>
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 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.
31
<PAGE>
APPENDIX II
ADDITIONAL ILLUSTRATIONS OF DEATH BENEFITS,
CASH VALUES AND ACCUMULATED PREMIUMS
Tables on Pages 33 to 35 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
33 is based on an annual premium of $600 for a male issue age 10, the table on
Page 34 is based on an annual premium of $1,200 for a male issue age 25, and the
table on Page 35 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 19 for additional discussion and to Pages 21 to
23 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.
32
<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 RETURN 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 Life 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 Life 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.
33
<PAGE>
34
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 RETURN 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 Life 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 Life 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.
34
<PAGE>
35
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 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 Life 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 Life 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.
35
<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, 1996 and 1995, and the related statements
of income, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1996. 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1997
36
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31,1995
<S> <C> <C>
Investments (note 2):
Available-for-sale securities....................................... $114,011,891 $113,815,086
Held-to-maturity securities......................................... 5,549,214 5,942,604
Short term investments.............................................. 7,667,491 5,160,201
Policy loans........................................................ 18,865,648 17,016,692
--------------- --------------
Total investments................................................ 146,094,244 141,934,583
Cash ................................................................. 901,980 1,189,030
Premiums and other receivables, net of allowances of
$30,000 in 1996 and 1995............................................ 3,998,210 4,334,595
Accrued investment income............................................. 2,903,566 2,833,561
Deferred policy acquisition costs (note 6)............................ 17,547,129 17,318,214
Deferred Federal income taxes (note 7) ........................... 934,000 12,000
Furniture, fixtures and equipment, at cost, less accumulated
depreciation of $925,736 in 1996 and $800,593 in 1995............... 146,078 236,736
Other assets.......................................................... 136,302 123,509
Separate account assets............................................... 465,456,848 344,568,486
-------------- -------------
Total assets..................................................... $638,118,357 $512,550,714
============= ============
LIABILITIES AND STOCKHOLDER'S EQUITY
<CAPTION>
<S> <C>
LIABILITIES:
Policyholder account balances (note 6)................................ $113,295,474 $113,374,173
Claims and other contract liabilities................................. 12,190,281 11,289,108
Accounts payable and accrued liabilities.............................. 3,730,943 4,150,250
Separate account liabilities.......................................... 464,852,507 343,956,938
-------------- -------------
Total liabilities................................................ 594,069,205 472,770,469
-------------- -------------
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)................................................. 644,000 1,878,000
Retained earnings .................................................... 34,370,809 28,867,902
-------------- --------------
Total stockholder's equity....................................... 44,049,152 39,780,245
--------------- --------------
Total liabilities and stockholder's equity....................... $638,118,357 $512,550,714
============= ============
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31,1995 DECEMBER 31,1994
<S> <C> <C> <C>
REVENUES
Policyholder fees................................... $22,955,165 $ 19,958,420 $16,433,269
Premiums............................................ 6,725,329 7,293,719 7,630,182
Investment income (note 2).......................... 9,771,389 9,363,212 8,835,356
Realized gain (loss) on investments................. (221,025) 373,582 (259,987)
Other income........................................ 704,678 835,703 701,355
------------- ------------- ------------
Total income..................................... 39,935,536 37,824,636 33,340,175
------------- ------------- ------------
BENEFITS AND EXPENSES
Benefits and increases in contract liabilities...... 12,912,810 13,027,516 14,297,499
Dividends to policyholders.......................... 964,913 954,384 910,754
Amortization of deferred acquisition costs (note 6). 1,454,408 1,672,429 1,573,216
Commissions and general expenses.................... 16,287,498 15,773,968 13,513,644
------------- ------------- ------------
Total benefits and expenses...................... 31,619,629 31,428,297 30,295,113
------------- ------------- ------------
Income before Federal income tax ..................... 8,315,907 6,396,339 3,045,062
Federal income tax (note 7):
Current............................................. 3,099,000 2,553,000 838,000
Deferred............................................ (286,000) (376,000) (352,000)
------------- ------------- ------------
2,813,000 2,177,000 486,000
------------- ------------- ------------
Net Income............................................ $ 5,502,907 $ 4,219,339 $ 2,559,062
============= ============= ===========
Income per share, based on 534,350 shares
outstanding........................................... $10.30 $7.90 $4.79
=============== ================= ===============
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31,1996 DECEMBER 31,1995 DECEMBER 31, 1994
<S> <C> <C> <C>
Balance at beginning of year............................. $ 39,780,245 $ 31,196,906 $ 34,173,844
Net income............................................... 5,502,907 4,219,339 2,559,062
Increase (decrease) in unrealized holding gains on
available-for-sale securities.......................... (1,234,000) 4,364,000 (5,536,000)
------------ ------------ -------------
Balance at end of year................................... $ 44,049,152 $ 39,780,245 $ 31,196,906
============ ============ =============
STATEMENTS OF CASH FLOWS
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31,1994
----------------- ----------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Policyholder fees received.......................... $ 22,925,131 $ 19,374,522 $ 16,433,269
Premiums received................................... 6,413,009 6,895,096 7,366,276
Amounts received on policyholder accounts........... 105,489,481 87,156,662 63,526,544
Investment income received.......................... 9,964,169 9,360,894 8,886,847
Other receipts...................................... 55,779 69,621 46,581
Benefits and contract liabilities paid.............. (117,321,389) (101,642,156) (75,131,594)
Commissions and general expenses paid............... (20,857,687) (18,176,870) (15,252,935)
------------- ------------ -------------
Net cash provided by (used for) operating
activities....................................... 6,668,493 3,037,769 5,874,988
------------- ------------ -------------
Cash flows from investing activities:
Proceeds from sale of investment securities......... 39,062,702 58,755,827 36,751,082
Purchase of investment securities................... (44,134,604) (58,622,646) (42,164,770)
Purchase of furniture, equipment and other
assets........................................... (34,485) (128,442) (67,121)
Net increase in policy loans........................ (1,848,956) (2,330,591) (1,801,780)
Investment in Separate Account ..................... (200) (500,000) --
------------- ------------ -------------
Net cash provided by (used for) investing
activities........................................ (6,955,543) (2,825,852) (7,282,589)
------------- ------------ -------------
Net increase (decrease) in cash..................... (287,050) 211,917 (1,407,601)
Cash
Beginning of year ..................................... 1,189,030 977,113 2,384,714
------------- ------------ -------------
End of year............................................ $ 901,980 $ 1,189,030 $ 977,113
============= ============ =============
</TABLE>
The Company received a refund of Federal income tax of $102,000 in 1995 and paid
Federal income tax of $3,243,000 in 1996, $2,125,000 in 1995 and $1,368,000 in
1994.
See accompanying notes to financial statements.
39
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C>
Reconciliation of net income to net cash
provided by (used for) operating activities:
Net income........................................ $ 5,502,907 $ 4,219,339 $ 2,559,062
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization.................. 130,924 141,121 122,199
Amortization of deferred policy acquisition
costs........................................ 1,454,408 1,672,429 1,573,216
Realized investment (gains) losses......................... 221,025 (373,582) 259,987
Amortization of premiums and discounts on
investments.................................. 262,785 237,472 287,340
Deferred Federal income taxes.................. (286,000) (376,000) (352,000)
Other items not requiring cash - net........... 6,794 ( 112,268) (149)
(Increase) decrease in:
Premiums and other receivables, net............ 336,385 (433,106) (1,055,910)
Accrued investment income...................... (70,005) (239,790) (235,849)
Deferred policy acquisition costs, exclusive
of amortization.............................. (1,275,323) (1,117,752) (1,138,988)
Other assets................................... (18,574) 64,490 (30,882)
Increase (decrease) in:
Policyholder account balances.................. (78,699) (1,882,591) 2,719,458
Claims and other contract liabilities.......... 901,173 551,392 503,025
Accounts payable and accrued liabilities....... (419,307) 686,615 664,479
----------- ------------ -----------
$ 6,668,493 $ 3,037,769 $ 5,874,988
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
40
<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) Accounting Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosures of contingent assets and liabilities, at the date
of the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.
(b) Depreciation. Depreciation is computed on the useful service life of the
depreciable asset using the straight line method of depreciation.
(c) Investments. Investments in equity securities that have readily
determinable fair values and all investments in debt securities are 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.
41
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 YEAR ENDED
DECEMBER 31,1996 DECEMBER 31, 1995 DECEMBER 31,1994
<S> <C> <C> <C>
Interest on fixed maturities............................. $8,559,429 $8,243,748 $8,091,627
Interest on short term investments....................... 410,930 451,475 225,682
Interest on policy loans................................. 1,151,681 973,242 886,465
Dividends on equity securities........................... 43,756 58,305 10,220
------------- ------------- -----------
Total investment income............................. 10,165,796 9,726,770 9,213,994
Investment expense.................................. 394,407 363,558 378,638
------------ ------------ ------------
Net investment income.................................... $9,771,389 $9,363,212 $8,835,356
========== ========== ==========
</TABLE>
The amortized cost and estimated market values of investments at December
31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C>
Available-For-Sale Securities
December 31, 1996
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies............................... $ 41,254,552 $ 569,803 $ 157,020 $ 41,667,335
Debt Securities issued by
States of the U.S.......................... 5,525,022 -- 172,264 5,352,758
Corporate Debt Securities................... 56,013,590 1,217,747 297,752 56,933,585
Other Debt Securities ...................... 9,952,727 133,266 27,780 10,058,213
------------ ---------- ----------- ------------
$112,745,891 $1,920,816 $ 654,816 $114,011,891
============ ========== =========== ============
December 31,1995
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies............................... $ 40,056,913 $ 1,459,984 $ -- $ 41,516,897
</TABLE>
42
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Debt Securities issued by
States of the U.S. ..... 9,067,445 215,464 10,295 9,272,614
Corporate Debt Securities 53,636,330 1,872,502 121,193 55,387,639
Equity Securities ....... 500,000 55,000 -- 555,000
Other Debt Securities ... 7,010,398 78,876 6,338 7,082,936
$110,271,086 $3,681,826 $ 137,826 $113,815,086
============ ========== ========= ============
At December 31, 1996 and 1995, the Company recognized "Unrealized Holding
Gains (Losses) on Available-For-Sale Securities" of $644,000 and $1,878,000, net
of applicable deferred income taxes and amortization of deferred acquisition
costs. The change in the Unrealized Holding Gains (Losses) of ($1,234,000),
$4,364,000 and ($5,536,000) for 1996, 1995 and 1994, respectively is reported as
a separate component of stockholders' equity.
Held-To-Maturity Securities
December 31,1996
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies ........... $3,439,214 $36,945 $ 10,944 $3,465,215
Corporate Debt Securities 2,000,000 -- 66,200 1,933,800
Other Debt Securities ... 110,000 -- -- 110,000
---------- ------- ---------- ----------
$5,549,214 $36,945 $ 77,144 $5,509,015
========== ======= ========== ==========
December 31,1995
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies ......... $3,332,604 $120,983 $ -- $3,453,587
Corporate Debt Securities 2,000,000 -- 40,412 1,959,588
Other Debt Securities . 610,000 -- -- 610,000
---------- -------- ---------- ----------
$5,942,604 $120,983 $ 40,412 $6,023,175
========== ======== ========== ==========
The amortized cost and estimated market value of debt securities at
December 31, 1996, 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.
43
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<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 .............. $ 100,000 $ 100,000 $ 2,359,443 $ 2,368,650
Due after one year through five years 267,660 265,400 36,423,615 36,855,145
Due after five years through ten years 3,181,554 3,209,815 48,199,575 49,009,561
Due after ten years .................. 2,000,000 1,933,800 25,763,258 25,778,535
---------- ------------ ------------ ------------
$5,549,214 $ 5,509,015 $112,745,891 $114,011,891
========== ============ ============ ============
</TABLE>
Proceeds from sales of investments in fixed maturities were $39,046,422,
$56,949,635 and $36,701,082 in 1996, 1995 and 1994, respectively. Gross gains of
$185,708 and gross losses of $406,733 were realized on those sales in 1996.
Gross gains of $578,810 and gross losses of $205,228 were realized on those
sales in 1995. Gross gains of $85,827 and gross losses of $345,814 were realized
on those sales in 1994.
(d) 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
44
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
(e) 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.
(f) Reclassifications. Certain reclassifications have been made to the
1994 and 1995 Financial Statements in order to conform to the 1996 presentation.
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 of 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 participates in a non-contributory profit sharing plan for the
benefit of its employees and those of other wholly-owned subsidiaries of its
parent. The Plan provides for retirement benefits based upon earnings. Vesting
of benefits is based upon years of service. For the years ended December 31,
1996, 1995 and 1994, the Company charged operations approximately $100,000,
$40,000 and $ 0, respectively for its portion of the contribution.
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
$414,000 in 1996, $375,000 in 1995 and $312,000 in 1994. The accrued liability
of approximately $2,858,000 in 1996 and $2,621,000 in 1995 was sufficient to
cover the value of benefits provided by the plan.
45
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In addition, the Company participates in a 401(k) savings plan covering
all of its eligible employees and those of other wholly-owned subsidiaries of
its parent whereby employees may voluntarily contribute a percentage of their
compensation with the Company matching a portion of the contributions of certain
employees. The amount contributed by the Company in 1996 and 1995 was not
material.
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, 1996, 1995 and 1994. The Company also had
assumed reinsurance amounting to approximately 21%, 20% and 21% 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, 1996, 1995 and 1994, the Company
paid approximately $1,222,000, $1,282,000 and $1,099,000, respectively, for
these services. In addition, the Company reimbursed an affiliate approximately
$9,709,000 in 1996, $8,739,000 in 1995,and $6,651,000 in 1994 for commissions
relating to the sale of its products.
The Company maintains a checking account with a financial
institution, which is also a wholly-owned subsidiary of its parent. The balance
in this account was approximately $ 326,000 at December 31, 1996 and $343,000 at
December 31, 1995.
(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.
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, 1996, 1995 and 1994 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.
46
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NET INCOME CAPITAL SHARES AND SURPLUS
YEAR ENDED DECEMBER 31 AT DECEMBER 31
----------------------- --------------------------
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Reported on a statutory basis.......... $5,002,533 $3,705,334 $2,205,814 $26,580,877 $21,600,537 $18,020,531
---------- ---------- ---------- ----------- ----------- -----------
Adjustments:
Deferred policy acquisition costs (b) (179,085) (554,677) (434,228) 17,547,129 17,318,214 19,321,891
Future policy benefits (a).......... 514,086 422,387 727,849 (2,398,397) (2,912,483) (3,334,870)
Deferred income taxes............... 286,000 376,000 352,000 934,000 12,000 1,884,000
Premiums due and deferred (e)....... 85,461 80,133 70,968 (1,359,107) (1,444,568) (1,524,702)
Cost of colletion and other statutory
liabilities....................... (12,283) (16,318) (32,454) 36,984 49,267 65,585
Non-admitted assets................. -- -- -- 298,731 395,758 385,500
Asset valuation reserve................ -- -- -- 1,136,664 1,016,830 901,041
Interest maintenance reserve....... (48,542) (40,804) (71,048) 6,271 200,690 (5,070)
Gross unrealized holding gains (losses) on
available-for-sale securities... -- -- -- 1,266,000 3,544,000 (4,517,000)
Net realized capital gains (losses). (221,025) 373,582 (259,987) -- -- --
Other............................... 75,762 (126,298) 148 -- --
---------- ---------- ---------- ----------- ----------- -----------
500,374 514,005 353,248 17,468,275 18,179,708 13,176,375
---------- ---------- ---------- ----------- ----------- -----------
In accordance with generally accepted
accounting principles............... $5,502,907 $4,219,339 $2,559,062 $44,049,152 $39,780,245 $31,196,906
========== ========== ========== =========== =========== ===========
Per share, based on 534,350 shares
outstanding......................... $10.30 $7.90 $4.79 $82.44 $74.45 $58.38
====== ====== ====== ====== ====== ======
</TABLE>
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
1996 1995 OF ISSUE INTEREST MORTALITY TABLE WITHDRAWAL
---- ---- -------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Non-par:
$ 1,655,040 $ 1,722,604 1962-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton B
5,814,885 5,668,858 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton B
2,546,702 2,574,079 1984-1988 7 1/2% 85% of 1965-70 Basic Select Modified
plus Ultimate Linton B
86,508 74,055 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Linton B
113,117 109,919 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Actual
34,185 39,885 1989-Present 8% 1975-80 Basic Select plus Ultimate Actual
</TABLE>
47
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
31,902,122 31,896,847 1985-Present 6% Accumulation of Funds --
Par:
223,500 224,307 1966-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton A
13,357,249 13,557,033 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton A
975,132 988,555 1981-1984 7 1/4% 90% of 1965-70 Basic Select
plus Ultimate Linton B
4,772,595 4,713,069 1983-1988 9 1/2% 80% of 1965-70 Basic Select
plus Ultimate Linton B
14,031,404 12,459,045 1990-Present 8% 66% of 1975-80 Basic Select
plus Ultimate Linton B
Annuities:
21,779,771 25,202,605 1976-Present 5 1/2% Accumulation of Funds --
Miscellaneous:
16,939,829 15,161,153 1962-Present 2 1/2%-3 1/2% 1958-CSO None
</TABLE>
- ----------
* The above amounts are before deduction of deferred premiums of $936,565 in
1996 and $1,017,841 in 1995.
(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 $1,454,408 in 1996, $1,672,429 in 1995 and $1,573,216
in 1994 was charged to operations.
(c) Participating business represented 9.8% and 11.1% of individual life
insurance in force at December 31, 1996 and 1995, 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 $16,796,135, $11,815,645 and $8,235,339 at December
31, 1996, 1995 and 1994, 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.
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.
48
<PAGE>
FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Retained earnings at December 31, 1996 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.
Deferred tax liabilities (assets) are comprised of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Policyholder dividend provision............................. $ (332,719) $ (323,612)
Non-qualified agents' pension plan reserve.................. (1,127,384) (1,044,728)
Deferred policy acquisition costs........................... 2,507,526 2,968,214
Future policy benefits...................................... (2,346,908) (2,639,345)
Bond discount............................................... 28,677 27,842
Unrealized holding gains (losses) on
Available-For-Sale Securities............................. 331,000 967,000
Other....................................................... 5,808 32,629
----------- -----------
$ (934,000) $ (12,000)
=========== ===========
</TABLE>
The currently payable Federal Income tax provision of $3,099,000 for 1996
is net of a $75,000 Federal tax benefit resulting from a capital loss carryback
of $221,025 and the $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:
1996 1995 1994
---- ---- ----
Application of statutory tax rate...................... 34% 34% 34%
Special tax deduction for life insurance companies..... -- -- (18)
--- --- ---
34% 34% 16%
=== === ====
49
<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, 1996, 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, 1996, 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 24, 1997
50
<PAGE>
FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS
Investments at net asset value (Note 3):
First Investors Life Series Fund......................... $135,984,462
LIABILITIES
Payable to First Investors Life Insurance Company........ 2,829,055
------------
NET ASSETS................................................... $133,155,407
Net assets represented by Contracts.......................... $133,155,407
============
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
INVESTMENT INCOME
Income:
Dividends................................................ 5,767,048
------------
Total income......................................... 5,767,048
------------
Expenses:
Cost of insurance charges (Note 4)....................... 2,984,274
Mortality and expense risks (Note 4)..................... 600,034
------------
Total expenses....................................... 3,584,308
------------
NET INVESTMENT INCOME........................................ 2,182,740
------------
UNREALIZED APPRECIATION ON INVESTMENTS
Beginning of year.......................................... 19,645,118
End of year................................................ 32,071,931
------------
Change in unrealized appreciation on investments............. 12,426,813
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......... $ 14,609,553
============
See notes to financial statements.
51
<PAGE>
FIRST INVESTORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Increase (Decrease) in Net Assets
From Operations
Net investment income................................ $ 2,182,740 $ 1,752,264
Change in unrealized appreciation on investments..... 12,426,813 13,960,512
------------- -------------
Net increase in net assets resulting from
operations......................................... 14,609,553 15,712,776
------------- -------------
From Unit Transactions
Net insurance premiums............................... 27,107,376 23,709,341
Contract payments.................................... (10,946,422) (9,408,404)
------------- -------------
Net increase in net assets derived from unit
transactions........................................ 16,160,954 14,300,937
------------- -------------
Net increase in net assets........................... 30,770,507 30,013,713
Net Assets
Beginning of year...................................... 102,384,900 72,371,187
------------- -------------
End of year............................................ $ 133,155,407 $ 102,384,900
============= =============
</TABLE>
See notes to financial statements.
52
<PAGE>
FIRST INVETORS LIFE
LEVEL PREMIUM VARIABLE LIFE INSURANCE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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.............. 1,228,998 $ 1.00 $ 1,228,998 $ 1,228,998
High Yield................... 2,643,599 11.93 31,539,324 28,206,557
Growth....................... 1,015,261 24.56 24,934,841 16,868,652
Discovery.................... 973,920 25.06 24,405,742 18,763,314
Blue Chip.................... 1,318,649 19.77 26,070,652 17,531,293
International Securities..... 1,301,879 17.19 22,376,887 16,415,746
Government................... 79,835 10.19 813,719 827,433
Investment Grade............. 183,156 11.36 2,080,204 1,936,196
Utility Income............... 201,555 12.57 2,534,095 2,134,342
------------ ------------
$135,984,462 $103,912,531
============ ============
</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, 1996 was $600,034.
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, 1996
cost of insurance charges amounted to $2,984,274.
53
<PAGE>
First Investors Life
Level Premium
Variable Life
Insurance Policies
- ---------------------------
Prospectus
- ---------------------------
April 30, 1997
First Investors Logo
Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."
Verticle line from top to bottom in center of page about 1/2 inch in thickness
To the left of the verticle line is the following language:
TABLE OF CONTENTS
- -------------------------------------
Charges and Expenses............................... 2
General Description................................ 3
The Variable Life Policy........................... 9
Illustrations of Death Benefits,
Cash Values and Accumulated Premiums.............. 19
Federal Income Tax Status.......................... 24
Voting Rights...................................... 26
Officers and Directors of
First Investors Life Insurance Company............ 27
Distribution of Policies........................... 28
Custodian.......................................... 28
Reports............................................ 29
State Regulation................................... 29
Experts............................................ 29
Relevance of Financial Statements.................. 29
Appendix I -- Other Policy Provisions.............. 30
Appendix II -- Additional Illustrations of Death
Benefits, Cash Values and
Accumulated Premiums.............................. 32
Financial Statements of First Investors Life....... 36
Financial Statements of Separate Account B......... 50
LIFE 318
<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
21st day of April, 1997.
FIRST INVESTORS LIFE LEVEL
PREMIUM VARIABLE LIFE INSURANCE
(SEPARATE ACCOUNT B)
(Registrant)
BY: FIRST INVESTORS LIFE
INSURANCE COMPANY
(Depositor)
ATTEST:
/s/Carol Lerner 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 21, 1997
- ---------------------
Richard H. Gaebler
/s/Lawrence M. Falcon Senior Vice President April 21, 1997
- --------------------- and Comptroller
Lawrence M. Falcon
/s/Richard H. Gaebler Director April 21, 1997
- ---------------------
Richard H. Gaebler
Glenn O. Head* Chairman and Director April 21, 1997
Jay G. Baris* Director April 21, 1997
George V. Ganter* Director April 21, 1997
Robert J. Grosso* Director April 21, 1997
Scott Hodes* Director April 21, 1997
Jackson Ream* Director April 21, 1997
Nelson Schaenen Jr.* Director April 21, 1997
John T. Sullivan* Director April 21, 1997
Kathryn S. Head* Director April 21, 1997
Glenn T. Dallas*
* By:/s/Richard H. Gaebler
---------------------
Richard H. Gaebler
Attorney-In-Fact
Pursuant to Power of
Attorney previously filed
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. 16 to the
Registration Statement on Form S-6 (File No. 2-98410) of our report dated
February 24, 1997 relating to the December 31, 1996 financial statements of
First Investors Life Level Premium Variable Life Insurance (Separate Account B)
and our report dated February 24, 1997 relating to the December 31, 1996
financial statements of First Investors Life Insurance Company, which are
included in said Registration Statement.
/s/Tait,Weller & Baker
TAIT, WELLER & BAKER
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> HIGH YIELD SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 42490
<INVESTMENTS-AT-VALUE> 48502
<RECEIVABLES> 852
<ASSETS-OTHER> 176
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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