Registration No. 2-98590
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 26 TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
SEPARATE ACCOUNT FP
of
EQUITABLE VARIABLE LIFE James M. Benson, President
INSURANCE COMPANY Equitable Variable Life Insurance Company
(Exact Name of Trust) 787 Seventh Avenue
EQUITABLE VARIABLE LIFE New York, New York 10019
INSURANCE COMPANY (Name and Address of Agent for Service)
(Exact Name of Depositor)
787 Seventh Avenue
New York, New York 10019
(Address of Depositor's Principal
Executive Offices)
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Telephone Number, Including Area Code: (212) 554-1234
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Please send copies of all communications to:
MARY P. BREEN, ESQ. with a copy to:
Vice President and Counsel MILTON P. KROLL
The Equitable Life Assurance Freedman, Levy, Kroll & Simonds
Society of the United States 1050 Connecticut Avenue, N.W., Suite 825
787 Seventh Avenue Washington, D.C. 20036
New York, New York 10019
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Securities Being Registered: Units of Interest in Separate Account FP
It is proposed that this filing will become effective (check appropriate line):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on (May 1, 1996) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485.
on ( ) pursuant to paragraph (a) of Rule 485
Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933. The Registrant filed the 24f-2 Notice for the year ended
December 31, 1995 on February 27, 1996.
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VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT FP
PROSPECTUS SUPPLEMENT DATED MAY 1, 1996
Incentive Life Plus(TM) Survivorship 2000(TM)
Champion 2000(TM) Incentive Life(TM)
Incentive Life 2000(TM) SP-Flex(TM)
Issued By
EQUITABLE VARIABLE
LIFE INSURANCE COMPANY
Principal Office Located at:
787 Seventh Avenue
New York, NY 10019
VM 521
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THE HUDSON RIVER TRUST
PROSPECTUS DATED MAY 1, 1996
HRT 596
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VARIABLE LIFE INSURANCE POLICIES
FUNDED THROUGH SEPARATE ACCOUNT FP
INCENTIVE LIFE PLUS (94-300)
CHAMPION 2000(TM) (90-400) ISSUED BY
INCENTIVE LIFE 2000(TM) (90-300) EQUITABLE VARIABLE
SURVIVORSHIP 2000(TM) (92-500) LIFE INSURANCE COMPANY
INCENTIVE LIFE(TM) (85-300 & 88-300)
SP-FLEX(TM) (87-500)
PROSPECTUS SUPPLEMENT DATED MAY 1, 1996
INTRODUCTION. This Supplement updates certain information contained in the
prospectuses for:
o INCENTIVE LIFE PLUS dated December 19, 1994, May 1, 1995 and
September 15, 1995;
o CHAMPION 2000 dated May 1, 1994, May 1, 1993, and November 27, 1991;
o INCENTIVE LIFE 2000 dated May 1, 1994, May 1, 1993 and November 27,
1991;
o SURVIVORSHIP 2000 dated May 1, 1995, May 1, 1994, May 1, 1993 and
August 18, 1992;
o INCENTIVE LIFE dated May 1, 1994, May 1, 1993, February 27, 1991,
May 1, 1990 and August 29, 1989; and
o SP-FLEX dated September 30, 1987 and August 24, 1987.
For your convenience, we have consolidated the prior updating supplements that
have been previously distributed. For this reason, you may already be familiar
with some of the information in this prospectus supplement, but we encourage you
to read it anyway. You can find the information about your policy by referring
to one or more of the following headings:
PAGE
INFORMATION RELATED TO ALL POLICIES 2
INFORMATION ABOUT ALL POLICIES EXCEPT SP-FLEX 6
INFORMATION ABOUT INCENTIVE LIFE PLUS 7
INFORMATION ABOUT INCENTIVE LIFE 2000 AND CHAMPION 2000 7
INFORMATION ABOUT INCENTIVE LIFE 7
INFORMATION ABOUT SP-FLEX 8
You should attach this Supplement to your prospectus and retain it for future
reference. Equitable Variable Life Insurance Company (Equitable Variable) will
send you an additional copy of any prospectus or supplement, without charge, on
written request. Except as otherwise noted, terms used in this supplement have
the same meaning as in the prospectus. However, we now refer to the Guaranteed
Interest Division as the Guaranteed Interest Account and to divisions of
Separate Account FP as "Funds."
Champion 2000, Incentive Life 2000, Incentive Life and SP-Flex policies are no
longer offered for sale.
INFORMATION RELATED TO ALL POLICIES:
1. EQUITABLE VARIABLE. The information under the heading EQUITABLE VARIABLE is
updated as follows: Equitable Variable was organized in 1972 in New York
State as a stock life insurance company. We are licensed to do business in
all 50 states, Puerto Rico, the Virgin Islands and the District of
Columbia. At December 31, 1995, we had approximately $132.8 billion face
amount of variable life insurance in force.
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THIS SUPPLEMENT SHOULD BE RETAINED FOR FUTURE REFERENCE.
VM 521 Copyright 1996 Equitable Variable Life Insurance Company.
All rights reserved.
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2. EQUITABLE. The information under the heading OUR PARENT, EQUITABLE is
updated as follows: Equitable is a wholly-owned subsidiary of The
Equitable Companies Incorporated (the Holding Company). The largest
stockholder of the Holding Company is AXA S.A. (AXA), a French insurance
holding company. AXA beneficially owns 60.6% of the outstanding shares of
common stock of the Holding Company plus convertible preferred stock.
Under its investment arrangements with Equitable and the Holding Company,
AXA is able to exercise significant influence over the operations and
capital structure of the Holding Company and its subsidiaries, including
Equitable and Equitable Variable. AXA is the principal holding company for
most of the companies in one of the largest insurance groups in Europe.
The majority of AXA's stock is controlled by a group of five French mutual
insurance companies. Equitable, the Holding Company and their subsidiaries
managed approximately $195.3 billion in assets as of December 31, 1995.
3. HUDSON RIVER TRUST INVESTMENT POLICIES. Net premiums can be allocated to
the Separate Account Funds or to the Guaranteed Interest Account (except
for SP-Flex policyowners). The Funds of Separate Account FP in turn invest
those net premiums in corresponding portfolios of The Hudson River Trust,
a mutual fund. Each portfolio has a different investment objective which
it tries to achieve by following separate investment policies. The
objectives and policies of each portfolio will affect its return and its
risks. There is no guarantee that these objectives will be achieved. The
policies and objectives of the Trust's portfolios are as follows:
<TABLE>
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PORTFOLIO INVESTMENT POLICY OBJECTIVE
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<S> <C> <C>
THE FIXED INCOME SERIES:
MONEY MARKET ........... Primarily high quality short-term money market High level of current income while
instruments. preserving assets and maintaining
liquidity.
INTERMEDIATE ........... Primarily debt securities issued or guaranteed High current income consistent with
GOVERNMENT by the U.S. Government, its agencies and relative stability of principal.
SECURITIES instrumentalities. Each investment will have a
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
QUALITY BOND ........... Primarily investment grade fixed income High current income consistent with
securities. preservation of capital.
HIGH YIELD ............. Primarily a diversified mix of high yield, High return by maximizing current
fixed-income securities involving greater income and, to the extent
volatility of price and risk of principal and consistent with that objective,
income than high quality fixed-income capital appreciation.
securities. The medium and lower quality debt
securities in which the Portfolio may invest are
known as "junk bonds."
THE EQUITY SERIES:
GROWTH & INCOME ........ Primarily common stocks and securities High return through a combination
convertible into common stocks. of current income and capital
appreciation.
EQUITY INDEX ........... Selected securities in the S&P's 500 Index (the Total return performance (before
"Index") which the adviser believes will, in the trust expenses) that approximates
aggregate, approximate the performance results the investment performance of the
of the Index. Index (including reinvestment of
dividends) at a risk level
consistent with that of the Index.
COMMON STOCK ........... Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income.
GLOBAL ................. Primarily equity securities of non-United States Long-term growth of capital.
as well as United States companies.
INTERNATIONAL .......... Primarily equity securities selected principally Long-term growth of capital.
to permit participation in non-United States
companies with prospects for growth.
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</TABLE>
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<TABLE>
<CAPTION>
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PORTFOLIO INVESTMENT POLICY OBJECTIVE
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<S> <C> <C>
AGGRESSIVE STOCK .......... Primarily common stock and other equity-type Long-term growth of capital.
securities issued by medium and other smaller
sized companies with strong growth potential.
ASSET ALLOCATION SERIES:
CONSERVATIVE INVESTORS .... Diversified mix of publicly-traded, fixed-income High total return without, in the
and equity securities; asset mix and security adviser's opinion, undue risk to
selection are primarily based upon factors principal.
expected to reduce risk. The Portfolio is
generally expected to hold approximately 70% of
its assets in fixed income securities and 30%
in equity securities.
BALANCED .................. Primarily common stocks, publicly-traded debt High return through a combination
securities and high quality money market of current income and capital
instruments. The portfolio is generally expected appreciation.
to hold 50% of its assets in equity securities
and 50% in fixed income securities.
GROWTH INVESTORS .......... Diversified mix of publicly-traded, fixed-income High total return consistent with
and equity securities; asset mix and security the adviser's determination of
selection based upon factors expected to reasonable risk.
increase possibility of high long-term return.
The Portfolio is generally expected to hold
approximately 70% of its assets in equity
securities and 30% in fixed income securities.
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</TABLE>
Subject to the terms described in your prospectus, you may transfer cash
values between Separate Account Funds and/or change how your net premiums
are allocated among Funds. See TRANSFERS OF POLICY ACCOUNT VALUE in your
prospectus and CHARGE FOR TRANSFERS below.
4. INVESTMENT PERFORMANCE. Footnote 7 to the Separate Account FP financial
statements included herein contains information about the net return for
each Fund. The attached prospectus supplement for The Hudson River Trust
contains rates of return and other portfolio performance information of the
Trust for various periods ended December 31, 1995. Remember, the changes in
the Policy Account value of your policy depend not only on the performance
of the Trust portfolios, but also on the deductions and charges under your
policy. To obtain the current unit values of the Separate Account Funds,
call (212) 714-5015.
The values reported in footnote 7 for all Policies are computed using the
net rates of return for the corresponding portfolios of the Trust. The
SP-Flex returns are net of charges for cost of insurance, administrative
expense, and mortality and expense risks.
The returns reported in footnote 7 for each of the other policy forms are
reduced only by any mortality and expense risk charge deducted from
Separate Account assets.
5. THE TRUST'S INVESTMENT ADVISER. The information about Alliance Capital
Management L.P. (Alliance), the Trust's investment adviser, is updated as
follows: As of December 31, 1995, Alliance was managing approximately
$146.5 billion in assets. Alliance, a publicly traded limited partnership,
is indirectly majority-owned by Equitable.
For your convenience, we are restating that the advisory fee payable by the
Trust to Alliance, which is based on the following annual percentages of
the value of each portfolio's daily average net assets:
<TABLE>
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DAILY AVERAGE NET ASSETS
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FIRST NEXT OVER
PORTFOLIO $350 MILLION $400 MILLION $750 MILLION
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<S> <C> <C> <C>
Common Stock, Money Market and Balanced................................... .400% .375% .350%
Aggressive Stock and Intermediate Government Securities................... .500% .475% .450%
High Yield, Global, Conservative Investors and Growth Investors........... .550% .525% .500%
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</TABLE>
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<TABLE>
<CAPTION>
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DAILY AVERAGE NET ASSETS
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FIRST NEXT OVER
PORTFOLIO $500 MILLION $500 MILLION $1 BILLION
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<S> <C> <C> <C>
Quality Bond and Growth & Income.......................................... .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
PORTFOLIO $750 MILLION $750 MILLION $1.5 BILLION
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<S> <C> <C> <C>
Equity Index.............................................................. .350% .300% .250%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
PORTFOLIO $500 MILLION $1 BILLION $1.5 BILLION
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<S> <C> <C> <C>
International............................................................. .900 .850 .800
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</TABLE>
6. LIVING BENEFIT OPTION AVAILABLE. Subject to regulatory approval in your
state and our underwriting guidelines, you may now be eligible for a Living
Benefit payment under your policy. The Living Benefit enables the
policyowner to receive a portion of the policy's death benefit (excluding
death benefits payable under certain riders) if the insured has a terminal
illness. Certain eligibility requirements will apply when you submit a
Living Benefit claim (for example, satisfactory evidence of less than six
month life expectancy). We will deduct an administrative charge of up to
$250 from the proceeds of the Living Benefit payment. This charge may be
less in some states.
When a Living Benefit claim is paid, Equitable Variable establishes a lien
against the policy. The amount of the lien is the sum of the Living Benefit
payment, any accrued interest on that payment and any unpaid scheduled
premium (if applicable under your policy). Interest will be charged at a
rate equal to the greater of: (i) the yield on a 90-day Treasury bill and
(ii) the maximum adjustable policy loan interest rate permitted in the
state in which your policy is delivered.
Until a death benefit is paid, or the policy is surrendered, a portion of
the lien is allocated to the policy's Cash Surrender Value. This portion of
the liened amount will be transferred to the Guaranteed Interest Account
where it will earn interest at the same rate credited to unloaned amounts
(in the case of SP-Flex policies, this portion of the liened amount will be
transferred to the Money Market Fund). This portion of the liened amount
will not be available for loans or partial withdrawals (if permitted under
your policy). Any death benefit or Cash Surrender Value payable upon policy
surrender will be reduced by the amount of the lien.
Unlike a death benefit received by a beneficiary after the death of an
insured, receipt of a Living Benefit payment may be taxable as a
distribution under the policy. See TAX EFFECTS in your prospectus or, for
SP-Flex policyowners, in this supplement, for a discussion of the tax
treatment of distributions under the policy. Consult your tax adviser.
Receipt of a Living Benefit payment may also affect a policyowner's
eligibility for certain government benefits or entitlements. To submit a
claim for this benefit and receive a copy of the Living Benefit rider,
please contact your Equitable agent.
7. TELEPHONE TRANSFERS. The information under the heading Telephone Transfers
is updated, as follows:
In order to make a transfer by telephone, each policyowner must first
complete and return an authorization form. Authorization forms can be
obtained from your Equitable agent or our Administrative Office. The
completed form MUST be returned to our Administrative Office before
requesting a telephone transfer.
Telephone transfers may be requested on each day we are open to transact
business. You will receive the Fund's unit value as of the close of
business on the day you call. We do not accept telephone transfer requests
after 4:00 p.m. Eastern Time. Only one telephone transfer request is
permitted per day and it may not be revoked at any time. Telephone transfer
requests are automatically recorded and are invalid if incomplete
information is given, portions of the request are inaudible, no
authorization form is on file, or the request does not comply with the
transfer limitations described in your policy.
We have established reasonable procedures designed to confirm that
instructions communicated by telephone are genuine. Such procedures include
requiring certain personal identification information prior to acting on
telephone instructions and providing written confirmation of instructions
communicated by telephone. If we do not employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, we may be
liable for any losses arising out of any act or any failure to act
resulting from our own negligence, lack of good faith, or willful
misconduct. In light of the procedures established, we will not be liable
for following telephone instructions that we reasonably believe to be
genuine.
During times of extreme market activity it may be impossible to contact us
to make a telephone transfer. If this occurs, you should submit a written
transfer request to our Administrative Office. Our rules on telephone
transfers are subject to change and we reserve the right to discontinue
telephone transfers in the future.
8. TAX CHANGES. The United States Congress may in the future enact legislation
that could change the tax treatment of life insurance policies. In
addition, the Treasury Department may amend existing regulations, issue new
regulations, or adopt new interpretations of existing laws. There is no way
of predicting whether, when or in what form any such change
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would be adopted. Any such change could have a retroactive effect
regardless of the date of enactment. State tax laws or, if you are not a
United States resident, foreign tax laws, may affect the tax consequences
to you, the insured person or your beneficiary. These laws may change from
time to time without notice.
The discussion of the tax effects on policy proceeds contained in your
prospectus and this supplement is based on our understanding of Federal
income tax laws as of the date of such prospectus or supplement, as applied
to policies owned by U.S. resident individuals. The tax effects on
corporate taxpayers, subject to the Federal alternative minimum tax, other
non-natural owners such as trusts, non-U.S. residents or non-U.S. citizens,
may be different. This discussion is general in nature, and should not be
considered tax advice, for which you should consult your legal or tax
adviser.
9. DISTRIBUTION. Equico Securities Inc. ("Equico"), a wholly-owned subsidiary
of Equitable, is the principal underwriter of the Trust under a
Distribution Agreement. Equico is also the distributor of our variable life
insurance policies and Equitable's variable annuity contracts under a
Distribution and Servicing Agreement. Equico is registered with the SEC as
a broker-dealer under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. Equico's principal
business address is 1755 Broadway, New York, NY 10019. Equico is paid a fee
for its services as distributor of our policies. In 1994 and 1995,
Equitable and Equitable Variable paid Equico a fee of $216,920 and
$325,380, respectively, for its services under the Distribution and
Servicing Agreement. On or about May 1, 1996, Equico will change its name
to EQ Financial Consultants, Inc.
The amounts paid and accrued to Equitable by us under our sales and
services agreements with Equitable totaled approximately $377.2 million in
1995, $380.5 million in 1994 and $355.7 million in 1993.
10. MANAGEMENT. A list of our directors and principal officers and a brief
statement of their business experience for the past five years is contained
in Appendix A to this supplement.
11. LONG-TERM MARKET TRENDS. Appendix B to this supplement presents historical
return trends for various types of securities which may be useful for
understanding how different investment strategies may affect long term
results.
12. FINANCIAL STATEMENTS. The financial statements of Separate Account FP and
Equitable Variable included in this prospectus supplement have been audited
for the years ended December 31, 1995, 1994 and 1993 by the accounting firm
of Price Waterhouse LLP, our independent auditors, to the extent stated in
their report. The financial statements of Separate Account FP and Equitable
Variable for the years ended December 31, 1995, 1994 and 1993 included in
this prospectus supplement have been so included in reliance on the reports
of Price Waterhouse LLP, given on the authority of such firm as experts in
accounting and auditing.
The financial statements of Equitable Variable contained in this prospectus
supplement should be considered only as bearing upon the ability of
Equitable Variable to meet its obligations under the policies. They should
not be considered as bearing upon the investment experience of the Separate
Account Funds.
ATTENTION NORTH CAROLINA INVESTORS: THE INFORMATION CONTAINED IN THIS
VARIABLE CONTRACT OFFERING HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA; NOR HAS THE
COMMISSIONER RULED UPON THE ADEQUACY OR ACCURACY OF THIS DOCUMENT. VARIABLE
CONTRACTS SOLD BY PROSPECTUS MIGHT NOT BE COVERED BY THE NORTH CAROLINA
LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION.
INFORMATION ABOUT ALL POLICIES EXCEPT SP-FLEX
1. AUTOMATIC TRANSFER SERVICE. We offer an Automatic Transfer Service. This
service enables you to make automatic monthly transfers out of the Money
Market Fund into the other Separate Account Funds.
To start using this service you must first complete a special election form
that is available from your agent or our Administrative Office. You must
also have a minimum of $5,000 in the Money Market Fund on the date the
Automatic Transfer Service is scheduled to begin. You can elect up to eight
Separate Account Funds for monthly transfers, but the minimum amount that
may be transferred to each Fund each month is $50. Automatic transfers will
begin on the next monthly processing date after we receive your election
form at our Administrative Office.
The Automatic Transfer Service will remain in effect until the earliest of
the following events: (1) the funds in the Money Market Fund are
insufficient to cover the automatic transfer amount; (2) the policy is in a
grace period; (3) we receive at our Administrative Office your written
instruction to cancel the Automatic Transfer Service; (4) we receive a
death claim under the policy; or (5) you elect to use your Net Cash
Surrender Value to purchase a fixed-benefit insurance option (if available
under your policy).
Using the Automatic Transfer Service does not guarantee a profit or protect
against loss in a declining market.
2. CHARGE FOR TRANSFERS. We have reserved the right under your policy to make
a charge of $25 for transfers of Policy Account value. You are currently
able to make twelve free transfers in any policy year but we will charge
$25 per transfer after the twelfth transfer. All transfers made on the same
effective date (either written or by telephone) will count as one transfer.
Transfers
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made through the Automatic Transfer Service do not count toward the twelve
free transfers. There will be no charge for a transfer of all of your
amounts in the Separate Account to the Guaranteed Interest Account.
INFORMATION ABOUT INCENTIVE LIFE PLUS
DEDUCTIONS AND CHARGES. Cost of Insurance Charge. The information under Cost of
Insurance Charge is updated as follows: Beginning in the tenth policy year,
current monthly cost of insurance charges are reduced by an amount equal to a
percentage of your unloaned Policy Account value on the date such charges are
assessed. This means that the larger your unloaned Policy Account value, the
greater your potential reduction in current cost of insurance charges. This
percentage begins at an annual rate of .05%, grading up to an annual rate of
.50% in policy years 26 and later. Effective on or about July 1, 1996, we intend
to increase this cost of insurance charge reduction to grade up to .65% in
policy years 25 and later. This cost of insurance charge reduction applies on a
current basis and is not guaranteed. We may in the future increase, decrease,
change the duration of, or eliminate the amount of the current cost of insurance
charge reduction without advance notice to you. Because Incentive Life Plus was
offered for the first time in 1995, no reduction of cost of insurance charges in
the tenth policy year has yet been attained.
INFORMATION ABOUT INCENTIVE LIFE 2000 AND CHAMPION 2000
1. PROSPECTUS SUMMARY. On page 1 of the prospectus, under the heading
INVESTMENT FEATURES -- POLICY ACCOUNT the bold face text in the second
bullet point is replaced by the following: REQUESTS FOR TRANSFERS OUT OF
THE GUARANTEED INTEREST ACCOUNT CAN ONLY BE MADE ON OR WITHIN 30 DAYS OF A
POLICY ANNIVERSARY. SUCH TRANSFERS WILL BE EFFECTIVE AS OF THE DATE WE
RECEIVE YOUR REQUEST, BUT NO EARLIER THAN THE POLICY ANNIVERSARY. TRANSFERS
INTO THE GUARANTEED INTEREST ACCOUNT AND AMONG ALL SEPARATE ACCOUNT FUNDS
MAY BE REQUESTED AT ANY TIME.
2. BORROWING FROM YOUR POLICY ACCOUNT. We will first allocate loan repayments
to our Guaranteed Interest Account until the amount of any loan originally
allocated to that account has been repaid. After you have repaid this
amount, you may choose how you want us to allocate the balance of any
additional repayments. If you do not provide specific instructions,
repayments will be allocated on the basis of your premium allocation
percentages.
3. MINIMUM FACE AMOUNT (INCENTIVE LIFE 2000 ONLY). The minimum Face Amount for
Incentive Life 2000 is $50,000 for issue ages 65 and below. This is also
the minimum Face Amount for the "designated insured option" rider described
under ADDITIONAL BENEFITS MAY BE AVAILABLE in your Incentive Life 2000
prospectus.
INFORMATION ABOUT INCENTIVE LIFE
1. MONTHLY ADMINISTRATIVE CHARGE. We deduct a monthly administrative charge
from your Policy Account, which covers the costs associated with
administering Incentive Life policies. The current administrative charge is
$6 per month. This administrative charge is guaranteed never to exceed $8
per month.
2. COST OF INSURANCE CHARGE. The tables under "Cost of Insurance Charge" in
prospectuses dated February 27, 1991 and earlier are updated as follows:
<TABLE>
<CAPTION>
ILLUSTRATIVE TABLE OF MONTHLY COST OF INSURANCE RATES
(ROUNDED)
FACE AMOUNT $50,000-$199,000 FACE AMOUNT $200,000 AND OVER
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MALE GUARANTEED CURRENT GUARANTEED CURRENT
ISSUE AGE MAXIMUM RATE (NON-SMOKER) RATE MAXIMUM RATE (NON-SMOKER) RATE
- --------------------- ---------------------- ------------------------- ---------------------- -------------------------
<C> <C> <C> <C> <C>
5 $ .08 $ .08 $ .08 $ .08
15 .11 .11 .11 .11
25 .15 .13 .15 .12
35 .18 .14 .18 .13
45 .38 .25 .38 .22
55 .88 .54 .88 .46
65 2.14 1.41 2.14 1.19
</TABLE>
3. EMPLOYEE BENEFIT PROGRAMS. Complex rules may apply when a policy is held by
an employee or a trust, or acquired by an employee, in connection with the
provision of employee benefits. These policyowners also must consider
whether the policy was applied for by or issued to a person having an
insurable interest under applicable state law, as the lack of insurable
interest may, among other things, affect the qualification of the policy as
life insurance for federal income tax purposes and the right of the
beneficiary to death benefits. Employers and employer-created trusts may be
subject to
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reporting, disclosure, and fiduciary obligations under the Employee
Retirement Income Security Act of 1974 (ERISA). For information on these
matters, we suggest that you consult your tax and legal advisers.
4. UNISEX RATES. Incentive Life policies were issued on a unisex basis in
Montana and, after February 2, 1990, in Massachusetts. Unisex means that
there is no distinction based on sex in determining the cost of insurance
rates. Cost of insurance rates applicable to a policy issued on a unisex
basis would not be greater than the comparable male rates set forth or
illustrated in the prospectus. Similarly, illustrated policy values in the
prospectus would be no less favorable for comparable policies issued on a
unisex basis. The guaranteed cost of insurance rates for our Incentive Life
policy are based on the Commissioner's 1980 Standard Ordinary "B" Mortality
Table.
INFORMATION ABOUT SP-FLEX
1. TAX EFFECTS. This discussion supersedes the discussion of the tax
effects on policy proceeds contained in the prospectus. The Technical and
Miscellaneous Revenue Act of 1988 changed the tax consequences of
distributions from "modified endowments", a category of life insurance
policies. For this purpose, "distributions" include policy loans and
amounts received on lapse, maturity or surrender of a policy.
POLICY PROCEEDS. An SP-Flex Policy will be treated as "life insurance" for
Federal income tax purposes if it meets the definitional requirement of the
Internal Revenue Code (Code) and for as long as the portfolios of the Trust
satisfy the diversification requirements under the Code. We believe that
SP-Flex will meet these requirements, and that under Federal income tax
law:
o the death benefit received by the beneficiary under your policy will
not be subject to Federal income tax; and
o as long as your policy remains in force, increases in the value of your
policy as a result of investment experience will not be subject to
Federal income tax unless and until there is a distribution from your
policy.
SPECIAL TAX RULES MAY APPLY, HOWEVER, IF YOU TRANSFER YOUR OWNERSHIP OF THE
POLICY. CONSULT YOUR TAX ADVISER BEFORE ANY TRANSFER OF YOUR POLICY.
The Federal income tax consequences of a distribution from your policy will
depend on whether your policy is determined to be a "modified endowment."
SP-Flex policies entered into prior to June 21, 1988 will not be considered
modified endowments, unless an additional premium is paid. Generally,
SP-Flex policies entered into after June 20, 1988 will be considered
modified endowments. However, SP-Flex policies acquired as a result of an
exchange from a policy that is not a modified endowment, will generally not
be considered a modified endowment as long as no additional premiums are
paid and the death benefit of the new policy is not reduced below that of
the old policy.
IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT, as long as it remains in force,
a loan under your policy will be treated as indebtedness and no part of the
loan will be subject to Federal income tax. Interest on the loan will not
be tax deductible. If your policy lapses, matures or is surrendered, the
excess, if any, of your Cash Surrender Value (which includes the amount of
any unpaid policy loan and loan interest) over your Basis will be subject
to Federal income tax. Your Basis in your policy generally will equal the
premiums you have paid.
IF YOUR POLICY IS A MODIFIED ENDOWMENT, any loan from your policy will be
taxed in a manner comparable to distributions from annuities (i.e., on an
"income-first" basis). A loan for this purpose also includes any increase
in the loan amount to pay interest on an existing loan or an assignment or
a pledge to secure a loan. A loan will be considered taxable income to you
to the extent your Policy Account Value exceeds your Basis in the policy at
the time you make the loan. For modified endowments, your Basis would be
increased by the amount of any prior loan under your policy that was
considered taxable income to you.
A 10% penalty tax will also apply to the taxable portion of a loan under a
modified endowment. The penalty tax will not, however, apply to loans (i)
to taxpayers 59 1/2 years of age or older, (ii) in the case of a disability
(as defined in the Code) or (iii) received as part of a series of
substantially equal periodic annuity payments for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life expectancies)
of the taxpayer and his beneficiary. In addition, if your policy lapses,
matures or is surrendered, the excess, if any, of your Cash Surrender Value
over your Basis will be subject to Federal income tax and, unless one of
the above exceptions applies, the 10% penalty tax.
If your policy becomes a modified endowment, a distribution during the
policy year it becomes a modified endowment and any subsequent policy year
will be taxed as described in the two preceding paragraphs. In addition, a
distribution from a policy within two years before it becomes a modified
endowment will be subject to tax in this manner. As referred to above, if
additional premiums are paid under an SP-Flex policy entered into prior to
June 21, 1988, it will become a modified endowment. THIS MEANS THAT A
DISTRIBUTION MADE AFTER JUNE 20, 1988 FROM AN SP-FLEX POLICY ENTERED INTO
PRIOR TO JUNE 21, 1988 COULD LATER BECOME TAXABLE AS A DISTRIBUTION FROM A
MODIFIED ENDOWMENT. The Secretary of the Treasury has been authorized to
prescribe rules which would treat similarly other distributions made in
anticipation of a policy becoming a modified endowment.
DIVERSIFICATION. Under Section 817(h) of the Code, the Secretary of the
Treasury has the authority to set standards for diversification of the
investments underlying variable life insurance policies. The Treasury
Department has issued regulations regarding the
8
<PAGE>
diversification requirements. Failure by us to meet these requirements
would disqualify your policy as a life insurance policy under Section 7702
of the Code. If this were to occur, you would be subject to Federal income
tax on the income under the policy. Equitable Variable Separate Account FP,
through the Trust, intends to comply with these requirements.
In connection with the issuance of the temporary diversification
regulations, the Treasury Department stated that it anticipates the
issuance of regulations or rulings prescribing the circumstances in which
the ability of a policyowner to direct his investment to particular funds
of a separate account may cause the policyowner, rather than the insurance
company, to be treated as the owner of the assets in the account. If you
were considered the owner of the assets of the Separate Account, income and
gains from the account would be included in your gross income for Federal
income tax purposes.
For purposes of determining the taxable income to you resulting from a loan
under your policy or a distribution on its lapse, maturity or surrender,
all modified endowment contracts issued to you by the same insurer or an
affiliate during any calendar year will be aggregated and treated as one
contract. This provision applies to policies entered into after June 20,
1988, but does not affect contracts purchased by certain qualified plans.
Under prior law, a "twelve-month period" rather than a calendar year
standard was used.
POLICY CHANGES. For you and your beneficiary to receive the tax treatment
discussed above, your policy must initially qualify and continue to qualify
as life insurance under Sections 7702 and 817(h) of the Code. We have
reserved in the SP-Flex policy the right to decline to accept all or part
of any premium payments that would cause the policy to fail to qualify. We
may also make changes in the SP-Flex policy or its riders or make
distributions from the policy to the extent we deem necessary to qualify
the policy as life insurance for tax purposes. Any such change will apply
uniformly to all policies that are affected. SP-Flex policyowners will be
given advance written notice of such changes.
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Equitable Variable Life Insurance Company
and Policyowners of Separate Account FP
of Equitable Variable Life Insurance Company
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of Money Market Division,
Intermediate Government Securities Division, Quality Bond Division, High Yield
Division, Growth and Income Division, Equity Index Division, Common Stock
Division, Global Division, International Division, Aggressive Stock Division,
Conservative Investors Division, Balanced Division and Growth Investors
Division, separate investment divisions of Equitable Variable Life Insurance
Company ("Equitable Variable Life") Separate Account FP at December 31, 1995 and
the results of each of their operations and changes in each of their net assets
for each of the periods indicated, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Equitable Variable Life's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of shares in The Hudson River Trust at
December 31, 1995 with the transfer agent, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
New York, NY
February 7, 1996
FSA-1
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
INTERMEDIATE
MONEY GOVERNMENT QUALITY HIGH GROWTH & EQUITY
MARKET SECURITIES BOND YIELD INCOME INDEX
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in shares of
The Hudson River
Trust -- at market
value (Notes 2 and 7)
Cost: $207,548,119..... $207,638,095
37,536,467..... $37,681,989
141,011,715..... $138,906,039
68,700,148..... $72,524,129
17,021,456..... $19,144,802
59,443,291..... $71,895,056
Receivable for sales of
shares of The Hudson
River Trust........... -- -- -- -- -- --
Receivable for policy-
related transactions.. 1,030,719 472,227 195,736 671,870 272,371 214,843
------------ ----------- ------------ ----------- ----------- -----------
Total Assets............ 208,668,814 38,154,216 139,101,775 73,195,999 19,417,173 72,109,899
------------ ----------- ------------ ----------- ----------- -----------
LIABILITIES
Payable for purchases
of shares of The
Hudson River
Trust................. 1,021,043 488,551 195,429 740,734 272,227 214,856
Payable for policy-
related transactions.. -- -- -- -- -- --
Amount retained by
Equitable Variable Life
in Separate Account
FP (Note 4)........... 514,240 516,621 618,900 524,303 526,633 271,428
------------ ----------- ------------ ----------- ---------- -----------
Total Liabilities....... 1,535,283 1,005,172 814,329 1,265,037 798,860 486,284
------------ ----------- ------------ ----------- ---------- -----------
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS......... $207,133,531 $37,149,044 $138,287,446 $71,930,962 $18,618,313 $71,623,615
============ =========== ============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
COMMON AGGRESSIVE
STOCK GLOBAL INTERNATIONAL STOCK
DIVISION DIVISION DIVISION DIVISION
-------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in shares of
The Hudson River
Trust -- at market
value (Notes 2 and 7)
Cost: 966,230,780...... $1,148,055,059
297,303,481...... $333,829,077
11,991,226...... $12,659,132
475,758,260...... $556,029,378
Receivable for sales of
shares of The Hudson
River Trust........... -- -- -- --
Receivable for policy-
related transactions.. 233,000 421,042 137,166 800,569
-------------- ------------ ----------- ------------
Total Assets............ 1,148,288,059 334,250,119 12,796,298 556,829,947
-------------- ------------ ----------- ------------
LIABILITIES
Payable for purchases
of shares of The
Hudson River
Trust................. 679,729 246,368 143,511 1,121,615
Payable for policy-
related transactions.. -- -- -- --
Amount retained by
Equitable Variable Life
in Separate Account
FP (Note 4)........... 1,023,056 506,731 220,849 520,201
-------------- ------------ ----------- ------------
Total Liabilities....... 1,702,785 753,099 364,360 1,641,816
-------------- ------------ ----------- ------------
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS....... $1,146,585,274 $333,497,020 $12,431,938 $555,188,131
============== ============ =========== ============
</TABLE>
See Notes to Financial Statements.
ASSET ALLOCATION SERIES
--------------------------------------------
CONSERVATIVE GROWTH
INVESTORS BALANCED INVESTORS
DIVISION DIVISION DIVISION
------------ ------------ ------------
ASSETS
Investments in shares of
The Hudson River
Trust -- at market
value (Notes 2 and 7)
Cost: 162,300,470...... $172,662,590
356,282,500...... $399,379,687
474,917,898...... $556,703,771
Receivable for sales of
shares of The Hudson
River Trust........... 76,736 -- --
Receivable for policy-
related transactions.. -- -- 191,779
------------ ------------ ------------
Total Assets............ 172,739,326 399,379,687 556,895,550
------------ ------------ ------------
LIABILITIES
Payable for purchases
of shares of The
Hudson River
Trust................. -- 179,701 414,996
Payable for policy-
related transactions.. 81,465 47,918 --
Amount retained by
Equitable Variable Life
in Separate Account
FP (Note 4)........... 570,762 586,859 602,888
------------ ------------ ------------
Total Liabilities....... 652,227 814,478 1,017,884
------------ ------------ ------------
NET ASSETS ATTRIBUTABLE
TO POLICYOWNERS....... $172,087,099 $398,565,209 $555,877,666
============ ============ ============
See Notes to Financial Statements.
FSA-2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
MONEY MARKET DIVISION SECURITIES DIVISION
------------------------------------ --------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------ --------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust......... $9,225,401 $5,368,883 $4,163,389 $2,010,283 $ 5,671,984 $14,930,827
Expenses (Note 3):
Mortality and expense risk charges............ 954,556 826,379 834,113 197,721 527,675 1,470,325
---------- ---------- ---------- ---------- ----------- -----------
NET INVESTMENT INCOME............................. 8,270,845 4,542,504 3,329,276 1,812,562 5,144,309 13,460,502
---------- ---------- ---------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments........... (432,347) 95,530 (339,754) (810,768) (10,163,976) 3,999,846
Realized gain distribution from
The Hudson River Trust...................... -- -- -- -- -- 11,449,074
---------- ---------- ---------- ---------- ----------- -----------
NET REALIZED GAIN (LOSS).......................... (432,347) 95,530 (339,754) (810,768) (10,163,976) 15,448,920
Unrealized appreciation/depreciation on
investments:
Beginning of period........................... 32,760 (14,267) (224,885) (2,736,863) (1,617,237) 1,966,231
End of period................................. 89,976 32,760 (14,267) 145,522 (2,736,863) (1,617,237)
---------- ---------- ---------- ---------- ----------- -----------
Change in unrealized appreciation/depreciation
during the period............................. 57,216 47,027 210,618 2,882,385 (1,119,626) (3,583,468)
---------- ---------- ---------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. (375,131) 142,557 (129,136) 2,071,617 (11,283,602) 11,865,452
---------- ---------- ---------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $7,895,714 $4,685,061 $3,200,140 $3,884,179 $(6,139,293) $25,325,954
========== ========== ========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND DIVISION
-------------------------------------------
OCTOBER 1*
TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
--------------------------- ------------
1995 1994 1993
----------- ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust......... $ 7,958,285 $ 8,123,722 $ 1,221,840
Expenses (Note 3):
Mortality and expense risk charges............ 767,627 689,178 163,308
----------- ------------ ------------
NET INVESTMENT INCOME............................. 7,190,658 7,434,544 1,058,532
----------- ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments........... (632,666) (410,697) (106)
Realized gain distribution from
The Hudson River Trust...................... -- -- 130,973
----------- ------------ ------------
NET REALIZED GAIN (LOSS).......................... (632,666) (410,697) 130,867
Unrealized appreciation/depreciation on
investments:
Beginning of period........................... (15,521,200) (1,886,621) --
End of period................................. (2,105,676) (15,521,200) (1,886,621)
----------- ------------ -----------
Change in unrealized appreciation/depreciation
during the period............................. 13,415,524 (13,634,579) (1,886,621)
----------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. 12,782,858 (14,045,276) (1,755,754)
----------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $19,973,516 $ (6,610,732) $ (697,222)
=========== ============ ===========
See Notes to Financial Statements.
<FN>
* Commencement of Operations
</FN>
</TABLE>
FSA-3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
HIGH YIELD DIVISION
----------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust................. $ 6,518,568 $ 4,578,946 $4,488,259
Expenses (Note 3):
Mortality and expense risk charges.................... 371,369 305,522 285,992
----------- ----------- ----------
NET INVESTMENT INCOME..................................... 6,147,199 4,273,424 4,202,267
----------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments................... (179,454) (328,199) 107,852
Realized gain distribution from
The Hudson River Trust.............................. -- -- 1,030,687
----------- ----------- ----------
NET REALIZED GAIN (LOSS).................................. (179,454) (328,199) 1,138,539
Unrealized appreciation/depreciation on investments:
Beginning of period................................... (873,103) 4,734,999 763,746
End of period......................................... 3,823,981 (873,103) 4,734,999
----------- ----------- ----------
Change in unrealized appreciation/depreciation
during the period..................................... 4,697,084 (5,608,102) 3,971,253
----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.... 4,517,630 (5,936,301) 5,109,792
----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS......................................... $10,664,829 $(1,662,877) $9,312,059
=========== =========== ==========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
GROWTH & INCOME DIVISION EQUITY INDEX DIVISION
--------------------------------------- --------------------------
OCTOBER 1* APRIL 1*
TO YEAR ENDED TO
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------ ------------- ----------- -------------
1995 1994 1993 1995 1994
---------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust................. $ 380,677 $ 108,492 $ 3,394 $ 964,775 $ 596,180
Expenses (Note 3):
Mortality and expense risk charges.................... 69,716 19,204 1,833 289,199 152,789
---------- --------- ------- ----------- ---------
NET INVESTMENT INCOME..................................... 310,961 89,288 1,561 675,576 443,391
---------- --------- ------- ----------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments................... 2,791 (11,709) (134) 3,060 (6,949)
Realized gain distribution from
The Hudson River Trust.............................. -- -- -- 536,890 134,154
---------- --------- ------- ----------- ---------
NET REALIZED GAIN (LOSS).................................. 2,791 (11,709) (134) 539,950 127,205
Unrealized appreciation/depreciation on investments:
Beginning of period................................... (141,585) (904) -- (399,286) --
End of period......................................... 2,123,346 (141,585) (904) 12,451,765 (399,286)
---------- --------- ------- ----------- ---------
Change in unrealized appreciation/depreciation
during the period..................................... 2,264,931 (140,681) (904) 12,851,051 (399,286)
---------- --------- ------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.... 2,267,722 (152,390) (1,038) 13,391,001 (272,081)
---------- --------- ------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS......................................... $2,578,683 $ (63,102) $ 523 $14,066,577 $ 171,310
========== ========= ======= =========== =========
See Notes to Financial Statements.
<FN>
* Commencement of Operations
</FN>
</TABLE>
FSA-4
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCK DIVISION GLOBAL STOCK DIVISION
-------------------------------------------- -----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson
River Trust.................... $ 14,259,262 $ 11,755,355 $ 10,311,886 $ 5,152,442 $ 2,768,605 $ 1,060,406
Expenses (Note 3):
Mortality and expense risk
charges........................ 6,050,368 4,741,008 4,005,102 1,743,898 1,211,620 466,897
------------ ------------ ------------ ----------- ----------- -----------
NET INVESTMENT INCOME................ 8,208,894 7,014,347 6,306,784 3,408,544 1,556,985 593,509
------------ ------------ ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on
investments.................... 16,793,683 292,144 4,176,629 3,049,444 3,347,704 1,333,766
Realized gain distribution from
The Hudson River Trust......... 63,838,178 43,936,280 85,777,775 9,214,950 4,821,242 11,642,904
------------ ------------ ------------ ----------- ----------- -----------
NET REALIZED GAIN (LOSS)............. 80,631,861 44,228,424 89,954,404 12,264,394 8,168,946 12,976,670
Unrealized appreciation
(depreciation) on investments:
Beginning of period.............. (2,048,649) 71,350,568 22,647,989 3,130,280 7,062,877 2,783,724
End of period.................... 181,824,279 (2,048,649) 71,350,568 36,525,596 3,130,280 7,062,877
------------ ------------ ------------ ----------- ----------- -----------
Change in unrealized appreciation/
depreciation during the period... 183,872,928 (73,399,217) 48,702,579 33,395,316 (3,932,597) 4,279,153
------------ ------------ ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.............. 264,504,789 (29,170,793) 138,656,983 45,659,710 4,236,349 17,255,823
------------ ------------ ------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.......... $272,713,683 $(22,156,446) $144,963,767 $49,068,254 $ 5,793,334 $17,849,332
============ ============ ============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
INTERNATIONAL
DIVISION AGGRESSIVE STOCK DIVISION
-------------- --------------------------------------------
APRIL 3*
TO
DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------- --------------------------------------------
1995 1995 1994 1993
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson
River Trust.................... $195,500 $ 1,268,689 $ 400,102 $ 766,228
Expenses (Note 3):
Mortality and expense risk
charges........................ 36,471 2,702,978 1,944,639 1,757,109
-------- ------------ ------------ ------------
NET INVESTMENT INCOME................ 159,029 (1,434,289) (1,544,537) (990,881)
-------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on
investments.................... (790) 11,560,966 (6,075,250) 35,696,507
Realized gain distribution from
The Hudson River Trust......... 51,741 61,903,470 -- 25,339,962
-------- ------------ ------------ ------------
NET REALIZED GAIN (LOSS)............. 50,951 73,464,436 (6,075,250) 61,036,469
Unrealized appreciation
(depreciation) on investments:
Beginning of period.............. -- 30,761,318 35,185,988 53,885,737
End of period.................... 667,906 80,271,118 30,761,318 35,185,988
-------- ------------ ------------ ------------
Change in unrealized appreciation/
depreciation during the period... 667,906 49,509,800 (4,424,670) (18,699,749)
-------- ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS.............. 718,857 122,974,236 (10,499,920) 42,336,720
-------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.......... $877,886 $121,539,947 $(12,044,457) $ 41,345,839
======== ============ ============ ============
See Notes to Financial Statements.
<FN>
*Commencement of Operations
</FN>
</TABLE>
FSA-5
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF OPERATIONS (CONCLUDED)
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
---------------------------------------------------------------------------------
CONSERVATIVE INVESTORS DIVISION BALANCED DIVISION
-------------------------------------- ----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
----------- ----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust....... $ 8,169,109 $ 6,205,574 $4,088,977 $12,276,328 $ 10,557,487 $10,062,862
Expenses (Note 3):
Mortality and expense risk charges.......... 921,294 750,164 551,610 2,237,982 2,103,510 2,047,811
----------- ----------- ---------- ----------- ------------ -----------
NET INVESTMENT INCOME........................... 7,247,815 5,455,410 3,537,367 10,038,346 8,453,977 8,015,051
----------- ----------- ---------- ----------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments......... (378,551) (421,501) 91,739 (2,466,524) 858,164 1,446,919
Realized gain distribution from
The Hudson River Trust.................... 1,068,272 -- 4,651,717 10,894,130 -- 20,280,817
----------- ----------- ---------- ----------- ------------ -----------
NET REALIZED GAIN (LOSS)........................ 689,721 (421,502) 4,743,456 8,427,606 858,164 21,727,736
Unrealized appreciation (depreciation) on
investments:
Beginning of period......................... (8,767,697) 1,915,037 2,223,612 (2,878,875) 37,960,661 30,072,900
End of period............................... 10,362,120 (8,767,697) 1,915,037 43,097,187 (2,878,875) 37,960,661
----------- ----------- ---------- ----------- ------------ -----------
Change in unrealized appreciation/depreciation
during the period........................... 19,129,817 (10,682,734) (308,575) 45,976,062 (40,839,536) 7,887,761
----------- ----------- ---------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS................................ 19,819,538 (11,104,236) 4,434,881 54,403,668 (39,981,372) 29,615,497
----------- ----------- ---------- ----------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $27,067,353 $(5,648,826) $7,972,248 $64,442,014 $(31,527,395) $37,630,548
=========== =========== ========== =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
-------------------------------------------
GROWTH INVESTORS DIVISION
-------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Income (Note 2):
Dividends from The Hudson River Trust......... $ 15,855,901 $ 10,663,204 $ 5,922,228
Expenses (Note 3):
Mortality and expense risk charges............ 2,796,354 1,995,747 1,274,117
------------ ------------ -----------
NET INVESTMENT INCOME............................. 13,059,547 8,667,457 4,648,111
------------ ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Realized gain (loss) on investments........... 1,752,185 241,591 52,392
Realized gain distribution from
The Hudson River Trust...................... 7,421,853 -- 14,624,517
------------ ------------ -----------
NET REALIZED GAIN (LOSS).......................... 9,174,038 241,591 14,676,909
Unrealized appreciation (depreciation) on
investments:
Beginning of period........................... (770,693) 20,567,604 12,746,740
End of period................................. 81,785,873 (770,693) 20,567,604
------------ ------------ -----------
Change in unrealized appreciation/depreciation
during the period............................. 82,556,566 (21,338,297) 7,820,864
------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. 91,730,604 (21,096,706) 22,497,773
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $104,790,151 $(12,429,249) $27,145,884
============ ============ ===========
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
MONEY MARKET DIVISION SECURITIES DIVISION
------------------------------------------ -------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------------ -------------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............. $ 8,270,845 $ 4,542,504 $ 3,329,276 $ 1,812,562 $ 5,144,309 $ 13,460,502
Net realized gain (loss).......... (432,347) 95,530 (339,754) (810,768) (10,163,976) 15,448,920
Change in unrealized appreciation/
depreciation on investments..... 57,216 47,027 210,618 2,882,385 (1,119,626) (3,583,468)
------------ ------------ ------------ ----------- ------------- -------------
Net increase (decrease)
from operations................. 7,895,714 4,685,061 3,200,140 3,884,179 (6,139,293) 25,325,954
------------ ------------ ------------ ----------- ------------- -------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............. 96,773,056 82,536,703 64,845,505 11,016,347 18,915,140 26,598,113
Benefits and other policy-related
transactions (Note 3)........... (39,770,849) (32,432,771) (31,747,197) (6,286,070) (5,813,181) (7,539,335)
Net transfers among divisions..... 4,776,165 (25,466,044) (50,510,704) 953,149 (125,116,319) (180,916,946)
------------ ------------ ------------ ----------- ------------- -------------
Net increase (decrease) from
policy-related transactions..... 61,778,372 24,637,888 (17,412,396) 5,683,426 (112,014,360) (161,858,168)
------------ ------------ ------------ ----------- ------------- -------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 4)...... (36,640) (24,067) 92,890 (72,636) 15,335 (69,330)
------------ ------------ ------------ ----------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS... 69,637,446 29,298,882 (14,119,366) 9,494,969 (118,138,318) (136,601,544)
NET ASSETS, BEGINNING OF PERIOD..... 137,496,085 108,197,203 122,316,569 27,654,075 145,792,393 282,393,937
------------ ------------ ------------ ----------- ------------- -------------
NET ASSETS, END OF PERIOD........... $207,133,531 $137,496,085 $108,197,203 $37,149,044 $ 27,654,075 $ 145,792,393
============ ============ ============ =========== ============= =============
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
QUALITY BOND DIVISION
-------------------------------------------
OCTOBER 1*
TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------- -----------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............. $ 7,190,658 $ 7,434,544 $ 1,058,532
Net realized gain (loss).......... (632,666) (410,697) 130,867
Change in unrealized appreciation/
depreciation on investments..... 13,415,524 (13,634,579) (1,886,621)
------------ ------------ -----------
Net increase (decrease)
from operations................. 19,973,516 (6,610,732) (697,222)
------------ ------------ -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)............. 2,516,135 850,240 181,283
Benefits and other policy-related
transactions (Note 3)........... (3,189,044) (2,891,278) (441,626)
Net transfers among divisions..... 2,462,969 25,765,197 100,786,909
------------ ------------ -----------
Net increase (decrease) from
policy-related transactions..... 1,790,060 23,724,159 100,526,566
------------ ------------ -----------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP (Note 4)...... (712,602) 255,654 38,047
------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS... 21,050,974 17,369,081 99,867,391
NET ASSETS, BEGINNING OF PERIOD..... 117,236,472 99,867,391 --
------------ ------------ -----------
NET ASSETS, END OF PERIOD........... $138,287,446 $117,236,472 $99,867,391
============ ============ ===========
See Notes to Financial Statements.
<FN>
*Commencement of Operations
</FN>
</TABLE>
FSA-7
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
HIGH YIELD DIVISION
------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................................... $ 6,147,199 $ 4,273,424 $ 4,202,267
Net realized gain (loss)................................ (179,454) (328,199) 1,138,539
Change in unrealized appreciation/
depreciation on investments........................... 4,697,084 (5,608,102) 3,971,253
----------- ------------ -----------
Net increase (decrease) from operations................. 10,664,829 (1,662,877) 9,312,059
----------- ------------ -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................................... 15,333,474 14,287,345 10,787,763
Benefits and other policy-related
transactions (Note 3)................................. (8,211,013) (7,162,537) (5,179,424)
Net transfers among divisions........................... 4,789,450 (11,048,174) 1,006,671
----------- ------------ -----------
Net increase (decrease) from policy-related
transactions.......................................... 11,911,911 (3,923,366) 6,615,010
----------- ------------ -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE
VARIABLE IN SEPARATE ACCOUNT FP (Note 4)................ (100,679) 16,028 (31,889)
----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS......................... 22,476,061 (5,570,215) 15,895,180
NET ASSETS, BEGINNING OF PERIOD........................... 49,454,901 55,025,116 39,129,936
----------- ------------ -----------
NET ASSETS, END OF PERIOD................................. $71,930,962 $ 49,454,901 $55,025,116
=========== ============ ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
GROWTH & INCOME DIVISION EQUITY INDEX DIVISION
------------------------------------- --------------------------
OCTOBER 1* APRIL 1*
TO YEAR ENDED TO
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------- ----------- ----------- -----------
1995 1994 1993 1995 1994
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income................................... $ 310,961 $ 89,288 $ 1,561 $ 675,576 $ 443,391
Net realized gain (loss)................................ 2,791 (11,709) (134) 539,950 127,205
Change in unrealized appreciation/
depreciation on investments........................... 2,264,931 (140,681) (904) 12,851,051 (399,286)
----------- ---------- -------- ----------- -----------
Net increase (decrease) from operations................. 2,578,683 (63,102) 523 14,066,577 171,310
----------- ---------- -------- ----------- -----------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3)................................... 6,464,035 2,953,965 182,381 10,308,871 690,540
Benefits and other policy-related
transactions (Note 3)................................. (1,385,132) (481,430) (6,581) (2,111,532) (472,818)
Net transfers among divisions........................... 5,274,221 3,033,230 279,153 18,305,589 30,736,505
----------- ---------- -------- ----------- -----------
Net increase (decrease) from policy-related
transactions.......................................... 10,353,124 5,505,765 454,953 26,502,928 30,954,227
----------- ---------- -------- ----------- -----------
NET (INCREASE) DECREASE IN AMOUNT RETAINED BY EQUITABLE
VARIABLE IN SEPARATE ACCOUNT FP (Note 4)................ (221,877) 6,113 4,131 (71,293) (134)
----------- ---------- -------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS......................... 12,709,930 5,448,776 459,607 40,498,212 31,125,403
NET ASSETS, BEGINNING OF PERIOD........................... 5,908,383 459,607 -- 31,125,403 --
----------- ---------- -------- ----------- -----------
NET ASSETS, END OF PERIOD................................. $18,618,313 $5,908,383 $459,607 $71,623,615 $31,125,403
=========== ========== ======== =========== ===========
See Notes to Financial Statements.
<FN>
*Commencement of Operations
</FN>
</TABLE>
FSA-8
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCK DIVISION GLOBAL STOCK DIVISION
-------------------------------------------- ------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------------------- ------------------------------------------
1995 1994 1993 1995 1994 1993
-------------- ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
FROM OPERATIONS:
Net investment income..... $ 8,208,894 $ 7,014,347 $ 6,306,784 $ 3,408,544 $ 1,556,985 $ 593,509
Net realized gain (loss).. 80,631,861 44,228,424 89,954,404 12,264,394 8,168,946 12,976,670
Change in unrealized
appreciation/
depreciation on
investments............. 183,872,928 (73,399,217) 48,702,579 33,395,316 (3,932,597) 4,279,153
-------------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
from operations......... 272,713,683 (22,156,446) 144,963,767 49,068,254 5,793,334 17,849,332
-------------- ------------ ------------ ------------ ------------ ------------
FROM POLICY-RELATED
TRANSACTIONS:
Net premiums (Note 3)..... 216,068,996 171,525,812 124,210,476 92,666,618 77,766,997 25,508,452
Benefits and other
policy-related
transactions (Note 3)... (118,456,643) (93,481,219) (77,837,895) (37,507,499) (23,371,745) (8,931,159)
Net transfers among
divisions............... (34,354,864) 19,730,410 (9,498,455) (12,472,104) 47,610,957 59,544,080
-------------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
from policy-related
transactions............ 63,257,489 97,775,003 36,874,126 42,687,015 102,006,209 76,121,373
-------------- ------------ ------------ ------------ ------------ ------------
NET (INCREASE) DECREASE IN
AMOUNT RETAINED BY
EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP
(Note 4).................. (392,099) 44,948 (124,376) (96,720) (17,737) 4,085
-------------- ------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS...... 335,579,073 75,663,505 181,713,517 91,658,549 107,781,806 93,974,790
NET ASSETS, BEGINNING OF
PERIOD.................... 811,006,201 735,342,696 553,629,179 241,838,471 134,056,665 40,081,875
-------------- ------------ ------------ ------------ ------------ ------------
NET ASSETS, END OF
PERIOD.................... $1,146,585,274 $811,006,201 $735,342,696 $333,497,020 $241,838,471 $134,056,665
============== ============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
INTERNATIONAL
DIVISION AGGRESSIVE STOCK DIVISION
----------- ------------------------------------------
APRIL 3*
TO
DECEMBER 31, YEAR ENDED DECEMBER 31,
----------- ------------------------------------------
1995 1995 1994 1993
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
FROM OPERATIONS:
Net investment income..... $ 159,029 $ (1,434,289) $ (1,544,537) $ (990,881)
Net realized gain (loss).. 50,951 73,464,436 (6,075,250) 61,036,469
Change in unrealized
appreciation/
depreciation on
investments............. 667,906 49,509,800 (4,424,670) (18,699,749)
----------- ------------ ------------ ------------
Net increase (decrease)
from operations......... 877,886 121,539,947 (12,044,457) 41,345,839
----------- ------------ ------------ ------------
FROM POLICY-RELATED
TRANSACTIONS:
Net premiums (Note 3)..... 2,028,670 121,962,483 101,932,221 77,930,596
Benefits and other
policy-related
transactions (Note 3)... (339,723) (63,165,185) (48,604,650) (39,462,340)
Net transfers among
divisions............... 9,885,952 19,367,834 4,346,636 (73,890,214)
----------- ------------ ------------ ------------
Net increase (decrease)
from policy-related
transactions............ 11,574,899 78,165,132 57,674,207 (35,421,958)
----------- ------------ ------------ ------------
NET (INCREASE) DECREASE IN
AMOUNT RETAINED BY
EQUITABLE VARIABLE IN
SEPARATE ACCOUNT FP
(Note 4).................. (20,847) (188,813) 35,791 (2,220)
----------- ------------ ------------ ------------
INCREASE IN NET ASSETS...... 12,431,938 199,516,266 45,665,541 5,921,661
NET ASSETS, BEGINNING OF
PERIOD.................... 0 355,671,865 310,006,324 304,084,663
----------- ------------ ------------ ------------
NET ASSETS, END OF
PERIOD.................... $12,431,938 $555,188,131 $355,671,865 $310,006,324
=========== ============ ============ ============
See Notes to Financial Statements.
<FN>
*Commencement of Operations
</FN>
</TABLE>
FSA-9
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
-----------------------------------------------------------------------------------------
CONSERVATIVE INVESTORS DIVISION BALANCED DIVISION
------------------------------------------- ------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------------- ------------------------------------------
1995 1994 1993 1995 1994 1993
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............. $ 7,247,815 $ 5,455,410 $ 3,537,367 $ 10,038,346 $ 8,453,977 $ 8,015,051
Net realized gain (loss)........... 689,721 (421,502) 4,743,456 8,427,606 858,164 21,727,736
Change in unrealized appreciation/
depreciation on investments...... 19,129,817 (10,682,734) (308,575) 45,976,062 (40,839,536) 7,887,761
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
from operations.................. 27,067,353 (5,648,826) 7,972,248 64,442,014 (31,527,395) 37,630,548
------------ ------------ ------------ ------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).............. 41,419,959 48,492,315 43,782,002 63,451,955 70,116,900 67,351,402
Benefits and other policy-related
transactions (Note 3)............ (22,866,003) (21,612,430) (17,644,077) (48,742,571) (45,655,363) (44,497,967)
Net transfers among divisions...... (3,379,296) (2,076,793) 6,165,330 (18,908,540) (19,954,097) (6,834,099)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) from
policy-related transactions...... 15,174,660 24,803,092 32,303,255 (4,199,156) 4,507,440 16,019,336
------------ ------------ ------------ ------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT FP (Note 4).... (95,412) 22,600 18,535 (93,214) 47,322 256,506
------------ ------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS.... 42,146,601 19,176,866 40,294,038 60,149,644 (26,972,633) 53,906,390
NET ASSETS, BEGINNING OF PERIOD...... 129,940,498 110,763,632 70,469,594 338,415,565 365,388,198 311,481,808
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, END OF PERIOD............ $172,087,099 $129,940,498 $110,763,632 $398,565,209 $338,415,565 $365,388,198
============ ============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
--------------------------------------------
GROWTH INVESTORS DIVISION
--------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............. $ 13,059,547 $ 8,667,457 $ 4,648,111
Net realized gain (loss)........... 9,174,038 241,591 14,676,909
Change in unrealized appreciation/
depreciation on investments...... 82,556,566 (21,338,297) 7,820,864
------------ ------------ ------------
Net increase (decrease)
from operations.................. 104,790,151 (12,429,249) 27,145,884
------------ ------------ ------------
FROM POLICY-RELATED TRANSACTIONS:
Net premiums (Note 3).............. 155,616,059 139,140,391 105,136,825
Benefits and other policy-related
transactions (Note 3)............ (68,357,709) (54,863,821) (36,431,873)
Net transfers among divisions...... (3,269,896) 20,294,785 30,908,183
------------ ------------ ------------
Net increase (decrease) from
policy-related transactions...... 83,988,454 104,571,355 99,613,135
------------ ------------ ------------
NET (INCREASE) DECREASE IN AMOUNT
RETAINED BY EQUITABLE VARIABLE
IN SEPARATE ACCOUNT FP (Note 4).... (120,493) 15,372 (27,455)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS.... 188,658,112 92,157,478 126,731,564
NET ASSETS, BEGINNING OF PERIOD...... 367,219,554 275,062,076 148,330,512
------------ ------------ ------------
NET ASSETS, END OF PERIOD............ $555,877,666 $367,219,554 $275,062,076
============ ============ ============
</TABLE>
See Notes to Financial Statements.
FSA-10
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. General
Equitable Variable Life Insurance Company (Equitable Variable Life), a
wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States (Equitable Life), established Separate Account FP (the
Account) as a unit investment trust registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. The Account
consists of thirteen investment divisions: the Money Market Division, the
Intermediate Government Securities Division, the High Yield Division, the
Balanced Division, the Common Stock Division, the Global Division, the
Aggressive Stock Division, the Conservative Investors Division, the Growth
Investors Division, the Growth & Income Division, the Quality Bond Division,
the Equity Index Division and the International Division. The assets in each
Division are invested in shares of a designated portfolio (Portfolio) of a
mutual fund, The Hudson River Trust (the Trust). Each Portfolio has separate
investment objectives.
The Account supports the operations of Incentive Life,(TM) flexible premium
variable life insurance policies, Incentive Life 2000,(TM) flexible premium
variable life insurance policies, Champion 2000,(TM) modified premium
variable whole life insurance policies, Survivorship 2000,(TM) flexible
premium joint survivorship variable life insurance policies, Incentive Life
Plus,(TM) flexible premium variable life insurance policies and SP-Flex,(TM)
variable life insurance policies with additional premium option,
collectively, the Policies, and the Incentive Life 2000, Champion 2000 and
Survivorship 2000 policies are referred to as the Series 2000 Policies.
Incentive Life policies offered with the prospectus dated September 15,
1995, are referred to as Incentive Life Plus Second Series. Incentive Life
Plus policies issued with a prior prospectus are referred to as Incentive
Life Plus Original Series. All Policies are issued by Equitable Variable.
The assets of the Account are the property of Equitable Variable. However,
the portion of the Account's assets attributable to the Policies will not be
chargeable with liabilities arising out of any other business Equitable
Variable may conduct.
Policyowners may allocate amounts in their individual accounts to the
Divisions of the Account and/or (except for SP-Flex policies) to the
guaranteed interest division of Equitable Variable Life's General Account.
Net transfers to the guaranteed interest division of the General Account and
other Separate Accounts of $6,569,372, $35,120,632 and $125,668,098 for the
years ended 1995, 1994 and 1993, respectively, are included in Net Transfers
Among Divisions. The net assets of any Division of the Account may not be
less than the aggregate of the policyowners' accounts allocated to that
Division. Additional assets are set aside in Equitable Variable Life's
General Account to provide for (1) the unearned portion of the monthly
charges for mortality costs, and (2) other policy benefits, as required
under the state insurance law.
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments are made in shares of the Trust and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by the Trust using the market or fair value of the underlying
assets of the Portfolio.
Investment transactions are recorded on the trade date. Realized gains and
losses include gains and losses on redemptions of the Trust's shares
(determined on the identified cost basis) and Trust distributions
representing the net realized gains on Trust investment transactions.
The operations of the Account are included in the consolidated Federal
income tax return of Equitable Life. Under the provisions of the Policies,
Equitable Variable Life has the right to charge the Account for Federal
income tax attributable to the Account. No charge is currently being made
against the Account for such tax since, under current tax law, Equitable
Variable Life pays no tax on investment income and capital gains reflected
in variable life insurance policy reserves. However, Equitable Variable Life
retains the right to charge for any Federal income tax incurred which is
attributable to the Account if the law is changed. Charges for state and
local taxes, if any, attributable to the Account also may be made.
Dividends are recorded as income at the end of each quarter on the
ex-dividend date. Capital gains are distributed by the Trust at the end of
each year.
3. Asset Charges
Under the Policies, Equitable Variable Life assumes mortality and expense
risks and, to cover these risks, deducts charges from the assets of the
Account currently at annual rates of 0.60% of the net assets attributable to
Incentive Life, Incentive Life 2000, Incentive Life Plus Second Series and
Champion 2000 policyowners, 0.90% of net assets attributable to Survivorship
2000 policyowners, and 0.85% for SP-Flex policyowners. Incentive Life Plus
Original Series deducts this charge from the Policy Account. Under SP-Flex,
Equitable Variable Life also deducts charges from the assets of the Account
for mortality and administrative costs of 0.60% and 0.35%, respectively, of
net assets attributable to SP-Flex policies.
FSA-11
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
Under Incentive Life, Incentive Life Plus and the Series 2000 Policies,
mortality and administrative costs are charged in a different manner than
SP-Flex policies (see Notes 4 and 5).
Before amounts are allocated to the Account for Incentive Life, Incentive
Life Plus and the Series 2000 Policies, Equitable Variable Life deducts a
charge for taxes and either an initial policy fee (Incentive Life) or a
premium sales charge (Incentive Life Plus and Series 2000 Policies) from
premiums. Under SP-Flex, the entire initial premium is allocated to the
Account. Before any additional premiums under SP-Flex are allocated to the
Account, an administrative charge is deducted.
The amounts attributable to Incentive Life, Incentive Life Plus and the
Series 2000 policyowners' accounts are charged monthly by Equitable Variable
Life for mortality and administrative costs. These charges are withdrawn
from the Account along with amounts for additional benefits. Under the
Policies, amounts for certain policy-related transactions (such as policy
loans and surrenders) are transferred out of the Separate Account.
4. Amounts Retained by Equitable Variable Life in Separate Account FP
The amount retained by Equitable Variable Life in the Account arises
principally from (1) contributions from Equitable Variable Life, and (2)
that portion, determined ratably, of the Account's investment results
applicable to those assets in the Account in excess of the net assets for
the Policies. Amounts retained by Equitable Variable Life are not subject to
charges for mortality and expense risks or mortality and administrative
costs.
Amounts retained by Equitable Variable Life in the Account may be
transferred at any time by Equitable Variable Life to its General Account.
The following table shows the surplus contributions (withdrawals) by
Equitable Variable Life by investment division:
<TABLE>
<CAPTION>
INVESTMENT DIVISION 1995 1994 1993
------------------- ----------- ----------- ----------
<S> <C> <C> <C>
Common Stock $ (630,000) -- --
Money Market (250,000) -- $1,145,000
Balanced -- -- --
Aggressive Stock (350,000) -- --
High Yield (100,000) -- 330,000
Global (130,000) -- (6,895,000)
Conservative Investors -- -- 575,000
Growth Investors -- -- 130,000
Short-Term World Income -- $(5,165,329) --
Intermediate Government Securities (165,000) -- --
Growth & Income (685,000) -- 1,000,000
Quality Bond (4,800,000) -- 5,000,000
Equity Index -- 200,000 --
International 200,000 -- --
----------- ----------- ----------
$(6,910,000) $(4,965,329) $1,285,000
=========== =========== ==========
</TABLE>
5. Distribution and Servicing Agreements
Equitable Variable Life has entered into a Distribution and Servicing
Agreement with Equitable Life and Equico Securities Inc. (Equico), whereby
registered representatives of Equico, authorized as variable life insurance
agents under applicable state insurance laws, sell the Policies. The
registered representatives are compensated on a commission basis by
Equitable Life.
Equitable Variable Life also has entered into an agreement with Equitable
Life under which Equitable Life performs the administrative services related
to the Policies, including underwriting and issuance, billings and
collections, and policyowner services. There is no charge to the Account
related to this agreement.
6. Share Substitution
On February 22, 1994, Equitable Variable Life, the Account and the Trust
substituted shares of the Trust's Intermediate Government Securities
Portfolio for shares of the Trust's Short-Term World Income Portfolio. The
amount transferred to Intermediate Government Securities Portfolio was
$2,192,109. The statements of operations and statements of changes in net
assets for the Intermediate Government Securities Portfolio is combined with
the Short-Term World Income Portfolio for periods prior to the merger on
February 22, 1994. The Short-Term World Income Division is not available for
future investment.
FSA-12
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
7. Investment Returns
The Separate Account rates of return attributable to Incentive Life,
Incentive Life 2000, Incentive Life Plus and Champion 2000 policyowners are
different than those attributable to Survivorship 2000, Incentive Life Plus
Original Series and to SP-Flex policyowners because asset charges are
deducted at different rates under each policy (see Note 3).
The tables on this page and the following pages show the gross and net
investment returns with respect to the Divisions for the periods shown. The
net return for each Division is based upon net assets for a policy whose
policy commences with the beginning date of such period and is not based on
the average net assets in the Division during such period. Gross return is
equal to the total return earned by the underlying Trust investment.
RATES OF RETURN:
INCENTIVE LIFE,
- --------------
INCENTIVE LIFE 2000,
- --------------------
INCENTIVE LIFE PLUS SECOND SERIES
- ---------------------------------
AND CHAMPION 2000*
- -----------------
<TABLE>
<CAPTION>
JANUARY 26(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------------------------------------------------------
MONEY MARKET DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.74 % 4.02 % 3.00 % 3.56 % 6.18 % 8.24 % 9.18 % 7.32 % 6.63 % 6.05 %
Net return................ 5.11 % 3.39 % 2.35 % 2.94 % 5.55 % 7.59 % 8.53 % 6.68 % 5.99 % 5.47 %
</TABLE>
APRIL 1(A) TO
INTERMEDIATE YEAR ENDED DECEMBER 31, DECEMBER 31,
GOVERNMENT -----------------------------------------------
SECURITIES DIVISION 1995 1994 1993 1992 1991
- ------------------- ---- ---- ---- ---- ----
Gross return.............. 13.33 % (4.37)% 10.58 % 5.60 % 12.26 %
Net return................ 12.65 % (4.95)% 9.88 % 4.96 % 11.60 %
YEAR ENDED OCTOBER 1(A)
DECEMBER 31, DECEMBER 31,
----------------------------------
QUALITY BOND DIVISION 1995 1994 1993
- --------------------- ---- ---- ----
Gross return.............. 17.02 % (5.10)% (0.51)%
Net return................ 16.32 % (5.67)% (0.66)%
<TABLE>
<CAPTION>
JANUARY 26(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------------------------------------------------------
HIGH YIELD DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 19.92 % (2.79)% 23.15 % 12.31 % 24.46 % (1.12)% 5.13 % 9.73 % 4.68 % --
Net return................ 19.20 % (3.37)% 22.41 % 11.64 % 23.72 % (1.71)% 4.50 % 9.08 % 4.05 % --
</TABLE>
YEAR ENDED OCTOBER 1(A) TO
DECEMBER 31, DECEMBER 31,
----------------------------------
GROWTH & INCOME DIVISION 1995 1994 1993
- ------------------------- ---- ---- ----
Gross return.............. 24.07 % (0.58)% (0.25)%
Net return................ 23.33 % (1.17)% (0.41)%
YEAR ENDED MARCH 31(A) TO
DECEMBER 31, DECEMBER 31,
-----------------------------------
EQUITY INDEX DIVISION 1995 1994
- --------------------- ---- ----
Gross return.............. 36.48 % 1.08 %
Net return................ 35.66 % 0.58 %
- -------------------------------
* Sales of Incentive Life 2000 and Champion 2000 commenced on March 2, 1992.
Sales of Incentive Life Plus Second Series commenced on September 15, 1995.
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
FSA-13
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
JANUARY 26(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------------------------------------------------------
COMMON STOCK DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 32.45 % (2.14)% 24.84 % 3.22 % 37.88 % (8.12)% 25.59 % 22.43 % 7.49 % 15.65 %
Net return................ 31.66 % (2.73)% 24.08 % 2.60 % 37.06 % (8.67)% 24.84 % 21.70 % 6.84 % 15.01 %
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------------------------------------------
GLOBAL DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 18.81 % 5.23 % 32.09 % (0.50)% 30.55 % (6.07)% 26.93 % 10.88 % (13.27)%
Net return................ 18.11 % 4.60 % 31.33 % (1.10)% 29.77 % (6.63)% 26.17 % 10.22 % (13.45)%
</TABLE>
APRIL 3(A)
TO
DECEMBER 31,
INTERNATIONAL DIVISION 1995
- ---------------------- ----------
Gross return.............. 11.29 %
Net return................ 10.79 %
<TABLE>
<CAPTION>
JANUARY 26(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
----------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- -------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 31.63 % (3.81)% 16.77 % (3.16)% 86.86 % 8.17 % 43.50 % 1.17 % 7.31 % 35.88 %
Net return................ 30.85 % (4.39)% 16.05 % (3.74)% 85.75 % 7.51 % 42.64 % 0.53 % 6.66 % 35.13 %
</TABLE>
<TABLE>
<CAPTION>
JANUARY 26(A) TO
ASSET ALLOCATION SERIES YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------------------------------------------------
BALANCED DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 19.75 % (8.02)% 12.28 % (2.84)% 41.26 % 0.24 % 25.83 % 13.27 % (0.85)% 29.07 %
Net return................ 19.03 % (8.57)% 11.64 % (3.42)% 40.42 % (0.36)% 25.08 % 12.59 % (1.45)% 28.34 %
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 2(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
CONSERVATIVE --------------------------------------------------------------------------------
INVESTORS DIVISION 1995 1994 1993 1992 1991 1990 1989
- ------------------ ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 20.40 % (4.10)% 10.76 % 5.72 % 19.87 % 6.37 % 3.09 %
Net return................ 19.68 % (4.67)% 10.15 % 5.09 % 19.16 % 5.73 % 2.94 %
</TABLE>
<TABLE>
<CAPTION>
GROWTH INVESTORS DIVISION 1995 1994 1993 1992 1991 1990 1989
- ------------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 26.37 % (3.15)% 15.26 % 4.90 % 48.89 % 10.66 % 3.98 %
Net return................ 25.62 % (3.73)% 14.58 % 4.27 % 48.01 % 10.00 % 3.82 %
<FN>
- ----------------------------
* Sales of Incentive Life 2000 and Champion 2000 commenced on March 2, 1992.
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
</FN>
</TABLE>
RATES OF RETURN:
SURVIVORSHIP 2000
- -----------------
AUGUST 17(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------
MONEY MARKET DIVISION 1995 1994 1993 1992
- --------------------- ---- ---- ---- ----
Gross return.............. 5.74 % 4.02 % 3.00 % 1.11 %
Net return................ 4.80 % 3.08 % 2.04 % 0.77 %
INTERMEDIATE GOVERNMENT
SECURITIES DIVISION 1995 1994 1993 1992
- ------------------- ---- ---- ---- ----
Gross return.............. 13.33 % (4.37)% 10.58 % 0.90 %
Net return................ 12.31 % (5.23)% 9.55 % 0.56 %
- ----------
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
FSA-14
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
OCTOBER 1(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------
QUALITY BOND DIVISION 1995 1994 1993
- --------------------- ---- ---- ----
Gross return.............. 17.02 % (5.10)% (0.51)%
Net return................ 15.97 % (5.95)% (0.73)%
AUGUST 17(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------
HIGH YIELD DIVISION 1995 1994 1993 1992
- ------------------- ---- ---- ---- ----
Gross return.............. 19.92 % (2.79)% 23.15 % 1.84 %
Net return................ 18.84 % (3.66)% 22.04 % 1.50 %
OCTOBER 1(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------
GROWTH & INCOME DIVISION 1995 1994 1993
- ------------------------ ---- ---- ----
Gross return.............. 24.07 % (0.58)% (0.25)%
Net return................ 22.96 % (1.47)% (0.48)%
YEAR ENDED MARCH 1(A) TO
DECEMBER 31, DECEMBER 31,
------------------------------
EQUITY INDEX DIVISION 1995 1994
- --------------------- ---- ----
Gross return.............. 36.48 % 1.08 %
Net return................ 35.26 % 0.33 %
AUGUST 17(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------
COMMON STOCK DIVISION 1995 1994 1993 1992
- --------------------- ---- ---- ---- ----
Gross return.............. 32.45 % (2.14)% 24.84 % 5.28 %
Net return................ 31.26 % (3.02)% 23.70 % 4.93 %
GLOBAL DIVISION
- ---------------
Gross return.............. 18.81 % 5.23 % 32.09 % 4.87 %
Net return................ 17.75 % 4.29 % 30.93 % 4.52 %
APRIL 3(A) TO
DECEMBER 31,
----------------
INTERNATIONAL DIVISION 1995
- ---------------------- ----
Gross return.............. 11.29 %
Net return................ 10.55 %
AUGUST 17(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------
AGGRESSIVE STOCK DIVISION 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ----
Gross return.............. 31.63 % (3.81)% 16.77 % 11.49 %
Net return................ 30.46 % (4.68)% 15.70 % 11.11 %
ASSET ALLOCATION SERIES
AUGUST 17(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
CONSERVATIVE INVESTORS --------------------------------------------------
DIVISION 1995 1994 1993 1992
- -------- ---- ---- ---- ----
Gross return.............. 20.40 % (4.10)% 10.76 % 1.38 %
Net return................ 19.32 % (4.96)% 9.81 % 1.04 %
BALANCED DIVISION 1995 1994 1993 1992
- ----------------- ---- ---- ---- ----
Gross return.............. 19.75 % (8.02)% 12.28 % 5.37 %
Net return................ 18.68 % (8.84)% 11.30 % 5.02 %
GROWTH INVESTORS DIVISION 1995 1994 1993 1992
- ------------------------- ---- ---- ---- ----
Gross return.............. 26.37 % (3.15)% 15.26 % 6.89 %
Net return................ 25.24 % (4.02)% 14.24 % 6.53 %
- ----------
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
FSA-15
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31,1995
RATES OF RETURN:
INCENTIVE LIFE PLUS ORIGINAL SERIES(b)*
- ---------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1995
----
Money Market Division........ 5.69%
Intermediate Government
Securities Division.......... 13.31%
Quality Bond Division........ 17.13%
High Yield Division.......... 19.95%
Growth & Income Division..... 24.38%
Equity Index Division........ 36.53%
Common Stock Division........ 33.07%
Global Division.............. 19.38%
April 30 To December 31,
------------------------
1995
----
International Division....... 11.29%
Year Ended December 31,
------------------------
1995
----
Aggressive Stock Division.... 33.00%
ASSET ALLOCATION SERIES
Year Ended December 31,
------------------------
1995
----
Conservative Investors Division... 20.59%
Balanced Division................ 20.32%
Growth Investors Division......... 26.92%
- --------------------
*Sales of Incentive Life Plus Original Series commenced on January 6, 1996.
(a) There are no Separate Account asset charges for this policy and therefore
the gross and net rates of return are the same. The rate of return for the
period indicated is not an annual rate of return.
FSA-16
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31,1995
RATES OF RETURN:
SP-FLEX
- -------
<TABLE>
<CAPTION>
AUGUST 31(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------------------------------------------
MONEY MARKET DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 5.74 % 4.02 % 3.00 % 3.56 % 6.17 % 8.24 % 9.18 % 7.32 % 2.15 %
Net return................ 3.86 % 2.17 % 1.13 % 1.71 % 4.29 % 6.30 % 7.24 % 5.41 % 1.62 %
</TABLE>
APRIL 1(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
INTERMEDIATE GOVERNMENT --------------------------------------------------
SECURITIES DIVISION 1995 1994 1993 1992 1991
- ------------------- ---- ---- ---- ---- ----
Gross return.............. 13.33 % (4.37) % 10.58 % 5.60 % 12.10 %
Net return................ 11.31 % (6.08) % 8.57 % 3.71 % 10.59 %
YEAR ENDED SEPTEMBER 1(A) TO
DECEMBER 31, DECEMBER 31,
-------------------------------
QUALITY BOND DIVISION 1995 1994
- --------------------- ---- ----
Gross return.............. 17.02 % (2.20)%
Net return................ 14.94 % (2.35)%
<TABLE>
<CAPTION>
AUGUST 31(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------------------------------------------
HIGH YIELD DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 19.92 % (2.79)% 23.15 % 12.31 % 24.46 % (1.12)% 5.13 % 9.73 % 1.95 %
Net return................ 17.79 % (4.52)% 20.96 % 10.30 % 22.25 % (2.89)% 3.26 % 7.78 % 1.39 %
</TABLE>
YEAR ENDED SEPTEMBER 1(A) TO
DECEMBER 31, DECEMBER 31,
---------------------------------
GROWTH & INCOME DIVISION 1995 1994
- ------------------------ ---- ----
Gross return.............. 24.07 % (3.40)%
Net return................ 21.87 % (3.55)%
EQUITY INDEX DIVISION 1995 1994
- --------------------- ---- ----
Gross return.............. 36.48 % (2.54)%
Net return................ 34.06 % (2.69)%
<TABLE>
<CAPTION>
AUGUST 31(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------------------------------------------------
COMMON STOCK DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- --------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 32.45 % 2.14 % 24.84 % 3.23 % 37.87 % (8.12)% 25.59 % 22.43 % (22.57)%
Net return................ 30.10 % (3.88)% 22.60 % 1.38 % 35.43 % (9.76)% 23.36 % 20.26 % (23.00)%
GLOBAL DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- --------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
Gross return.............. 18.81 % 5.23 % 32.09 % (0.50)% 30.55 % (6.07)% 26.93 % 10.88 % (11.40)%
Net return................ 16.70 % 3.36 % 29.77 % (2.28)% 28.23 % (7.75)% 24.67 % 8.90 % (11.86)%
</TABLE>
APRIL 3(A) TO
DECEMBER 31,
-------------
INTERNATIONAL DIVISION 1995
- ---------------------- ----
Gross return.............. 11.29 %
Net return................ 9.82 %
<TABLE>
<CAPTION>
AUGUST 31(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
--------------------------------------------------------------------------------------------
AGGRESSIVE STOCK DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.............. 31.63 % 3.81 % 16.77 % (3.16)% 86.86 % 8.17 % 43.50 % 1.17 % (24.28)%
Net return................ 29.30 % (5.53)% 14.67 % (4.89)% 83.54 % 6.23 % 40.95 % (0.66)% (24.68)%
<FN>
- ------------------------------
(a) Date as of which net premiums under the policies were first allocated to the
Division. The gross return and the net return for the periods indicated are
not annual rates of return.
</FN>
</TABLE>
FSA-17
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FP
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
ASSET ALLOCATION SERIES
YEAR ENDED SEPTEMBER 1(A) TO
DECEMBER 31, DECEMBER 31,
CONSERVATIVE INVESTORS ---------------------------------------
DIVISION 1995 1994
- -------- ---- ----
Gross return.......... 20.40 % (1.83)%
Net return............ 18.26 % (1.98)%
<TABLE>
<CAPTION>
AUGUST 31(A) TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------------------------------------------------------
BALANCED DIVISION 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross return.......... 19.75 % (8.02)% 12.28 % (2.83)% 41.27 % 0.24 % 25.83 % 13.27 % (20.26)%
Net return............ 17.62 % (9.66)% 10.31 % (4.57)% 38.75 % (1.56)% 23.59 % 11.25 % (20.71)%
</TABLE>
YEAR ENDED SEPTEMBER 1(A) TO
DECEMBER 31, DECEMBER 31,
GROWTH INVESTORS ------------------------------------
DIVISION 1995 1994
- -------- ---- ----
Gross return........... 26.37 % (3.16)%
Net return............. 24.12 % (3.31)%
- -------------------------
(a) Date as of which net premiums under the policies were first allocated to
the Division. The gross return and the net return for the periods indicated
are not annual rates of return.
FSA-18
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------------- ----------------
ASSETS (IN MILLIONS)
<S> <C> <C>
Investments:
Fixed maturities:
Available for sale, at estimated fair value........................................ $ 4,366.3 $ 2,138.8
Held to maturity, at amortized cost................................................ -- 2,008.5
Policy loans......................................................................... 1,300.1 1,185.2
Mortgage loans on real estate........................................................ 771.5 888.5
Equity real estate................................................................... 525.4 641.0
Other equity investments............................................................. 200.5 239.1
Other invested assets................................................................ 120.9 107.8
----------------- ----------------
Total investments.................................................................. 7,284.7 7,208.9
Cash and cash equivalents............................................................... 277.6 182.3
Deferred policy acquisition costs....................................................... 2,037.8 2,077.1
Other assets............................................................................ 250.6 240.7
Separate Accounts assets................................................................ 4,611.6 3,345.3
----------------- ----------------
TOTAL ASSETS............................................................................ $ 14,462.3 $ 13,054.3
================= ================
LIABILITIES
Policyholders' account balances......................................................... $ 7,045.9 $ 7,340.0
Future policy benefits and other policyholders' liabilities............................. 570.8 509.4
Other liabilities....................................................................... 521.4 441.1
Separate Accounts liabilities........................................................... 4,586.5 3,314.9
----------------- ----------------
Total liabilities.................................................................. 12,724.6 11,605.4
----------------- ----------------
Commitments and contingencies (Notes 7, 9, 10 and 11)
SHAREHOLDER'S EQUITY
Common stock, par value $1 per share;
5.0 million shares authorized, 1.5 million shares issued and outstanding............. 1.5 1.5
Capital in excess of par value.......................................................... 1,480.7 1,355.7
Retained earnings....................................................................... 221.6 165.5
Net unrealized investment gains (losses)................................................ 44.6 (72.6)
Minimum pension liability............................................................... (10.7) (1.2)
----------------- ----------------
Total shareholder's equity......................................................... 1,737.7 1,448.9
----------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY.............................................. $ 14,462.3 $ 13,054.3
================= ================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-1
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
REVENUES
<S> <C> <C> <C>
Universal life and investment-type product policy fee income...... $ 584.5 $ 552.6 $ 485.2
Premiums.......................................................... 33.7 40.1 46.9
Net investment income............................................. 529.1 526.8 557.6
Investment (losses) gains, net.................................... (.5) (4.6) 1.5
Other income...................................................... 2.1 2.9 3.0
----------------- ---------------- -----------------
Total revenues.................................................. 1,148.9 1,117.8 1,094.2
----------------- ---------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.............. 376.1 389.3 439.2
Policyholders' benefits........................................... 267.5 242.3 251.0
Other operating costs and expenses................................ 419.5 413.8 356.7
----------------- ---------------- -----------------
Total benefits and other deductions............................. 1,063.1 1,045.4 1,046.9
----------------- ---------------- -----------------
Earnings before Federal income taxes and cumulative
effect of accounting change....................................... 85.8 72.4 47.3
Federal income tax expense........................................... 29.7 25.0 20.5
----------------- ---------------- -----------------
Earnings before cumulative effect of accounting change............... 56.1 47.4 26.8
Cumulative effect of accounting change, net of Federal income taxes. -- (11.4) --
----------------- ---------------- -----------------
Net Earnings......................................................... $ 56.1 $ 36.0 $ 26.8
================= ================ =================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-2
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
COMMON STOCK AT PAR VALUE, beginning and end of year................. $ 1.5 $ 1.5 $ 1.5
----------------- ---------------- -----------------
CAPITAL IN EXCESS OF PAR VALUE, beginning of year.................... 1,355.7 1,305.7 1,055.7
Additional capital in excess of par value............................ 125.0 50.0 250.0
----------------- ---------------- -----------------
Capital in excess of par value, end of year.......................... 1,480.7 1,355.7 1,305.7
----------------- ---------------- -----------------
RETAINED EARNINGS, beginning of year................................. 165.5 129.5 102.7
Net earnings......................................................... 56.1 36.0 26.8
----------------- ---------------- -----------------
Retained earnings, end of year....................................... 221.6 165.5 129.5
----------------- ---------------- -----------------
NET UNREALIZED INVESTMENT (LOSSES) GAINS, beginning of year.......... (72.6) 22.3 11.1
Change in unrealized investment gains (losses)....................... 117.2 (94.9) 11.2
----------------- ---------------- -----------------
Net unrealized investment gains (losses), end of year................ 44.6 (72.6) 22.3
----------------- ---------------- -----------------
MINIMUM PENSION LIABILITY, beginning of year......................... (1.2) (6.3) --
Change in minimum pension liability.................................. (9.5) 5.1 (6.3)
----------------- ---------------- -----------------
Minimum pension liability, end of year............................... (10.7) (1.2) (6.3)
----------------- ---------------- -----------------
TOTAL SHAREHOLDER'S EQUITY, END OF YEAR.............................. $ 1,737.7 $ 1,448.9 $ 1,452.7
================= ================ =================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-3
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
NET EARNINGS......................................................... $ 56.1 $ 36.0 $ 26.8
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH (USED) PROVIDED
BY OPERATING ACTIVITIES:
Interest credited to policyholders' account balances.............. 376.1 389.3 439.2
General Account policy charges.................................... (618.7) (572.8) (496.7)
Investment losses (gains), net.................................... .5 4.6 (1.5)
Other, net........................................................ 63.8 (17.2) 117.2
----------------- ---------------- -----------------
Net cash (used) provided by operating activities..................... (122.2) (160.1) 85.0
----------------- ---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities and repayments......................................... 640.7 511.8 1,165.8
Sales............................................................. 2,667.0 2,119.0 2,844.2
Return of capital from joint ventures and limited partnerships.... 23.9 14.2 56.3
Purchases......................................................... (3,065.9) (2,251.7) (4,414.0)
Other, net........................................................ (114.8) (102.2) (98.8)
----------------- ---------------- -----------------
Net cash provided (used) by investing activities..................... 150.9 291.1 (446.5)
----------------- ---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits........................................................ 581.1 602.8 612.9
Withdrawals..................................................... (636.6) (697.7) (506.2)
Capital contribution from Equitable Life.......................... 125.0 50.0 250.0
Other, net........................................................ (2.9) (1.8) 2.0
----------------- ---------------- -----------------
Net cash provided (used) by financing activities..................... 66.6 (46.7) 358.7
----------------- ---------------- -----------------
Change in cash and cash equivalents.................................. 95.3 84.3 (2.8)
Cash and cash equivalents, beginning of year......................... 182.3 98.0 100.8
----------------- ---------------- -----------------
Cash and Cash Equivalents, End of Year............................... $ 277.6 $ 182.3 $ 98.0
================= ================ =================
Supplemental cash flow information
Interest Paid..................................................... $ -- $ 5.7 $ 2.1
================= ================ =================
Income Taxes Refunded............................................. $ -- $ 8.4 $ .3
================= ================ =================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
F-4
<PAGE>
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Equitable Variable Life Insurance Company ("Equitable Variable Life") was
incorporated on September 11, 1972 as a wholly owned subsidiary of The
Equitable Life Assurance Society of the United States ("Equitable Life").
Equitable Variable Life's operations consist principally of the sale of
interest-sensitive life insurance and annuity products.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in conformity
with generally accepted accounting principles ("GAAP").
The accompanying consolidated financial statements include the accounts of
Equitable Variable Life and its subsidiaries, (collectively "EVLICO").
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
All significant intercompany transactions and balances have been eliminated
in consolidation.
Certain reclassifications have been made in the amounts presented for prior
periods to conform these periods with the 1995 presentation.
Accounting Changes
In the first quarter of 1995, EVLICO adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan." This statement applies to all loans, including loans
restructured in a troubled debt restructuring involving a modification of
terms. This statement addresses the accounting for impairment of a loan by
specifying how allowances for credit losses should be determined. Impaired
loans within the scope of this statement are measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. EVLICO provides for
impairment of loans through an allowance for possible losses. The adoption of
this statement did not have a material effect on the level of these
allowances or on EVLICO's consolidated statements of earnings and
shareholder's equity.
In the fourth quarter of 1994 (effective as of January 1, 1994), EVLICO
adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits,"
which required employers to recognize the obligation to provide
postemployment benefits. Implementation of this statement resulted in a
charge for the cumulative effect of accounting change of $11.4 million, net
of a Federal income tax benefit of $6.2 million.
At December 31, 1993, EVLICO adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expanded the use of fair
value accounting for those securities that a company does not have positive
intent and ability to hold to maturity. Implementation of this statement
increased consolidated shareholder's equity by $7.2 million, net of deferred
policy acquisition costs and deferred Federal income tax. Beginning
coincident with issuance of SFAS No. 115 implementation guidance in November
1995, the Financial Accounting Standards Board ("FASB") permitted companies a
one-time opportunity, through December 31, 1995, to reassess the
appropriateness of the classification of all securities held at that time. On
December 1, 1995, EVLICO transferred $1,806.7 million of securities
classified as held to maturity to the available for sale portfolio. As a
result, consolidated shareholder's equity increased by $17.9 million, net of
deferred policy acquisition costs and deferred Federal income tax.
New Accounting Pronouncements
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
the carrying amount of such assets may not be recoverable. EVLICO will
implement this statement as of January 1, 1996. EVLICO currently provides
allowances for possible losses for assets under the scope of this statement.
Management has not yet determined the impact of this statement on these
assets.
Valuation of Investments
Fixed maturities which have been identified as available for sale are
reported at estimated fair value. At December 31, 1994, fixed maturities
which EVLICO had both the ability and the intent to hold to maturity, were
stated principally at amortized cost. The amortized cost of fixed maturities
is adjusted for impairments in value deemed to be other than temporary.
F-5
<PAGE>
Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts and valuation allowances. Effective with the adoption
of SFAS No. 114 on January 1, 1995, the valuation allowances are based on the
present value of expected future cash flows discounted at the loan's original
effective interest rate or the collateral value if the loan is collateral
dependent. However, if foreclosure is or becomes probable, the measurement
method used is collateral value. Prior to the adoption of SFAS No. 114, the
valuation allowances were based on losses expected by management to be
realized on transfers of mortgage loans to real estate (upon foreclosure or
in-substance foreclosure), on the disposition or settlement of mortgage loans
and on mortgage loans management believed may not be collectible in full. In
establishing valuation allowances, management previously considered, among
other things, the estimated fair value of the underlying collateral.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired in
satisfaction of debt is valued at estimated fair value. Valuation allowances
on real estate held for the production of income are computed using the
forecasted cash flows of the respective properties discounted at a rate equal
to EVLICO's cost of funds; valuation allowances on real estate available for
sale are computed using the lower of current estimated fair value, net of
disposition costs, or depreciated cost.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which EVLICO does not have
control and a majority economic interest are reported on the equity basis of
accounting and are included with either equity real estate or other equity
investments, as appropriate.
Common stocks are carried at estimated fair value and are included in other
equity investments.
Short-term investments are stated at amortized cost which approximates fair
value and are included with other invested assets.
Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.
All securities are recorded in the consolidated financial statements on a
trade date basis.
Investment Results and Unrealized Investment Gains (Losses)
Realized investment gains and losses are determined by specific
identification and are presented as a component of revenue. Valuation
allowances are netted against the asset categories to which they apply and
changes in the valuation allowances are included in investment gains or
losses.
Unrealized investment gains and losses on fixed maturities available for sale
and equity securities held by EVLICO are accounted for as a separate
component of shareholder's equity, net of related deferred Federal income
taxes and deferred policy acquisition costs related to universal life and
investment-type products.
Recognition of Insurance Income and Related Expenses
Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenues from these contracts
consist of amounts assessed during the period against policyholders' account
balances for mortality charges, policy administration charges and surrender
charges. Policy benefits and claims that are charged to expenses include
benefit claims incurred in the period in excess of related policyholders'
account balances.
Premiums from life and annuity policies with life contingencies generally are
recognized as income when due. Benefits and expenses are matched with such
income so as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions, underwriting,
agency and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred. Deferred policy
acquisition costs are subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, deferred policy
acquisition costs are amortized over the expected average life of the
contracts (periods ranging from 15 to 35 years and 5 to 17 years,
respectively) as a constant percentage of estimated gross profits arising
principally from investment results, mortality and expense margins and
surrender charges based on historical and anticipated future experience,
updated at the end of each accounting period. The effect on the amortization
of deferred policy acquisition costs of revisions to estimated gross profits
is reflected in earnings in the period such estimated gross profits are
revised. The effect on the deferred policy acquisition cost asset that would
result from realization of unrealized gains (losses) is recognized with an
offset to unrealized gains (losses) in consolidated shareholder's equity as
of the balance sheet date.
Amortization charged to income amounted to $199.0 million, $200.2 million and
$135.5 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
F-6
<PAGE>
Policyholders' Account Balances and Future Policy Benefits
EVLICO's insurance contracts primarily are universal life and investment-type
contracts. Policyholders' account balances are equal to the policy account
values. The policy account values represent an accumulation of gross premium
payments plus credited interest less expense and mortality charges and
withdrawals.
The future policy benefit liabilities for the remainder of EVLICO's insurance
contracts, consisting primarily of supplementary contracts with life
contingencies and various policy riders, are computed by various valuation
methods based on assumed interest rates and mortality and morbidity
assumptions reflecting EVLICO's experience and industry standards.
Federal Income Taxes
EVLICO is included in a consolidated Federal income tax return with Equitable
Life and its other eligible subsidiaries. In accordance with an agreement
between EVLICO and Equitable Life, the amount of current income taxes as
determined on a separate return basis will be paid to, or received from,
Equitable Life. Benefits for losses, which are paid to EVLICO to the extent
they are utilized by Equitable Life, may not have been received in the
absence of such agreement. Deferred income tax assets and liabilities are
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using the enacted
income tax rates and laws.
Separate Accounts
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that arise
from any other business of EVLICO. Separate Accounts assets are subject to
General Account claims only to the extent the value of such assets exceeds
the Separate Accounts liabilities.
Assets and liabilities of the Separate Accounts, representing net deposits
and accumulated net investment earnings less fees, held primarily for the
benefit of contractholders are shown as separate captions in the consolidated
balance sheets. Assets held in the Separate Accounts are carried at quoted
market values or, where quoted values are not available, at estimated fair
values as determined by management.
The investment results of Separate Accounts are reflected directly in
Separate Accounts liabilities. For the years ended December 31, 1995, 1994
and 1993, investment results of Separate Accounts were $342.2 million, $135.9
million and $344.1 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate Accounts
liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges of the Separate Accounts are included in
revenues.
F-7
<PAGE>
3. INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------------- ----------------- ----------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
December 31, 1995
Fixed Maturities:
Available for Sale:
Corporate................................. $ 3,053.5 $ 101.0 $ 22.0 $ 3,132.5
Mortgage-backed........................... 573.9 7.7 .4 581.2
U.S. Treasury securities and U.S. government
and agency securities.................. 569.2 9.2 2.6 575.8
States and political subdivisions......... 4.3 .1 -- 4.4
Foreign governments....................... 16.2 .8 -- 17.0
Redeemable preferred stock................ 56.8 3.7 5.1 55.4
---------------- ----------------- ----------------- ---------------
Total Available for Sale.................... $ 4,273.9 $ 122.5 $ 30.1 $ 4,366.3
================ ================= ================= ===============
Equity Securities:
Common stock................................ $ 36.2 $ 10.3 $ 4.7 $ 41.8
================ ================= ================= ===============
December 31, 1994
Fixed Maturities:
Available for Sale:
Corporate................................. $ 1,622.3 $ 5.1 $ 112.6 $ 1,514.8
Mortgage-backed........................... 221.9 .5 16.4 206.0
U.S. Treasury securities and U.S. government
and agency securities.................. 365.4 1.4 20.7 346.1
States and political subdivisions......... 4.8 -- .6 4.2
Foreign governments....................... 14.8 .2 -- 15.0
Redeemable preferred stock................ 58.0 .1 5.4 52.7
---------------- ----------------- ----------------- ---------------
Total Available for Sale.................... $ 2,287.2 $ 7.3 $ 155.7 $ 2,138.8
================ ================= ================= ===============
Held to Maturity:
Corporate................................. $ 1,812.4 $ 11.9 $ 93.1 $ 1,731.2
U.S. Treasury securities and U.S. government
and agency securities.................. 180.4 -- 21.7 158.7
States and political subdivisions......... 14.4 -- .9 13.5
Foreign governments....................... 1.3 .1 -- 1.4
---------------- ----------------- ----------------- ---------------
Total Held to Maturity...................... $ 2,008.5 $ 12.0 $ 115.7 $ 1,904.8
================ ================= ================= ===============
Equity Securities:
Common stock................................ $ 42.0 $ 10.1 $ 9.4 $ 42.7
================ ================= ================= ===============
</TABLE>
For publicly traded fixed maturities and equity securities, estimated fair
value is determined using quoted market prices. For fixed maturities without
a readily ascertainable market value, EVLICO has determined an estimated fair
value using a discounted cash flow approach, including provisions for credit
risk, generally based upon the assumption that such securities will be held
to maturity. Estimated fair value for equity securities, substantially all of
which do not have a readily ascertainable market value, has been determined
by EVLICO. Such estimated fair values do not necessarily represent the values
for which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1995 and 1994, respectively,
securities without a readily ascertainable market value having an amortized
cost of $1,233.7 million and $1,571.5 million, respectively, had estimated
fair values of $1,291.1 million and $1,512.2 million, respectively.
F-8
<PAGE>
The contractual maturity of bonds at December 31, 1995 are shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE
------------------------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
----------------- ----------------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less............................................................. $ 133.3 $ 133.4
Due in years two through five....................................................... 1,416.4 1,444.9
Due in years six through ten........................................................ 1,361.5 1,391.8
Due after ten years................................................................. 732.0 759.6
Mortgage-backed securities.......................................................... 573.9 581.2
----------------- ----------------
Total............................................................................... $ 4,217.1 $ 4,310.9
================= ================
</TABLE>
Bonds not due at a single maturity date have been included in the above table
in the year of final maturity. Actual maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ----------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balances, beginning of year.................................... $ 68.5 $ 87.3 $ 147.2
Additions charged to income.................................... 31.0 12.7 44.4
Deductions for writedowns and asset dispositions............... (33.8) (31.5) (104.3)
----------------- ----------------- -----------------
Balances, End of Year.......................................... $ 65.7 $ 68.5 $ 87.3
================= ================= =================
Balances, end of year comprise:
Mortgage loans on real estate............................... $ 15.9 $ 24.0 $ 46.7
Equity real estate.......................................... 49.8 44.5 40.6
----------------- ----------------- -----------------
Total.......................................................... $ 65.7 $ 68.5 $ 87.3
================= ================= =================
</TABLE>
Deductions for writedowns and asset dispositions for 1993 include a $20.2
million writedown of fixed maturity investments at December 31, 1993 as a
result of adopting a new accounting statement for the valuation of these
investments that requires specific writedowns instead of valuation
allowances.
At December 31, 1995, the carrying values of investments held for the
production of income which were non-income producing for the twelve months
preceding the consolidated balance sheet date were $21.5 million of fixed
maturities and $29.1 million of mortgage loans on real estate.
EVLICO's fixed maturity investment portfolio includes corporate high yield
securities consisting of public high yield bonds, redeemable preferred stocks
and directly negotiated debt in leveraged buyout transactions. EVLICO seeks
to minimize the higher than normal credit risks associated with such
securities by monitoring the total investments in any single issuer or total
investment in a particular industry group. Certain of these corporate high
yield securities are classified as other than investment grade by the various
rating agencies, i.e., a rating below Baa or an NAIC (National Association of
Insurance Commissioners) designation of 3 (medium grade), 4 or 5 (below
investment grade) or 6 (in or near default). At December 31, 1995,
approximately 11.0% of the $4,217.2 million aggregate amortized cost of bonds
held by EVLICO were considered to be other than investment grade.
In addition to its holding of corporate high yield securities, EVLICO is an
equity investor in limited partnership interests which primarily invest in
securities considered to be other than investment grade.
EVLICO has restructured or modified the terms of certain fixed maturity
investments. The fixed maturity portfolio, based on amortized cost, includes
$13.7 million and $13.3 million at December 31, 1995 and 1994, respectively,
of such restructured securities. The December 31, 1994 amount includes fixed
maturities which are in default as to principal and/or interest payments, are
to be restructured pursuant to commenced negotiations or where the borrowers
went into bankruptcy subsequent to acquisition (collectively, "problem fixed
maturities") of $5.6 million. Gross interest income that would have been
recorded in accordance with the original terms of restructured fixed
maturities amounted to $1.4 million, $1.1 million and $2.2 million in 1995,
1994 and 1993, respectively. Gross interest income on these fixed maturities
included in net investment income aggregated $1.4 million, $1.0 million and
$1.5 million in 1995, 1994 and 1993, respectively.
F-9
<PAGE>
At December 31, 1995 and 1994, mortgage loans on real estate with scheduled
payments 60 days (90 days for agricultural mortgages) or more past due or in
foreclosure (collectively, "problem mortgage loans on real estate") had an
amortized cost of $36.0 million (4.6% of total mortgage loans on real estate)
and $35.2 million (3.9% of total mortgage loans on real estate),
respectively.
The payment terms of mortgage loans on real estate may from time to time be
restructured or modified. The investment in restructured mortgage loans on
real estate, based on amortized cost, amounted to $173.5 million and $130.8
million at December 31, 1995 and 1994, respectively. Gross interest income on
restructured mortgage loans on real estate that would have been recorded in
accordance with the original terms of such loans amounted to $16.1 million,
$12.3 million and $13.9 million in 1995, 1994 and 1993, respectively. Gross
interest income on these loans included in net investment income aggregated
$14.0 million, $11.4 million and $11.5 million in 1995, 1994 and 1993,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
DECEMBER 31, 1995
------------------
(IN MILLIONS)
Impaired mortgage loans with provision for losses.... $ 99.0
Impaired mortgage loans with no provision for losses. 24.5
------------------
Recorded investment in impaired mortgage loans....... 123.5
Provision for losses................................. 14.5
------------------
Net Impaired Mortgage Loans.......................... $ 109.0
==================
Impaired mortgage loans with no provision for losses are loans where the fair
value of the collateral or the net present value of the loan equals or
exceeds the recorded investment. Interest income earned on loans where the
collateral value is used to measure impairment is recorded on a cash basis.
Interest income on loans where the present value method is used to measure
impairment is accrued on the net carrying value amount of the loan at the
interest rate used to discount the cash flows. Changes in the present value
attributable to changes in the amount or timing of expected cash flows are
reported as investment gains or losses.
During the year ended December 31, 1995, EVLICO's average recorded investment
in impaired mortgage loans was $99.2 million. Interest income recognized on
these impaired mortgage loans totaled $8.2 million for the year ended
December 31, 1995, including $2.2 million recognized on a cash basis.
EVLICO's investment in equity real estate is through direct ownership and
through investments in real estate joint ventures. At December 31, 1995 and
1994, the carrying value of equity real estate available for sale amounted to
$55.6 million and $138.4 million, respectively. For the years ended December
31, 1995, 1994 and 1993, respectively, real estate of $12.2 million, $59.0
million and $92.1 million was acquired in satisfaction of debt. At December
31, 1995 and 1994, EVLICO owned $196.6 million and $230.5 million,
respectively, of real estate acquired in satisfaction of debt.
Depreciation on real estate is computed using the straight-line method over
the estimated useful lives of the properties, which generally range from 40
to 50 years. Accumulated depreciation on real estate was $51.0 million and
$51.1 million at December 31, 1995 and 1994, respectively. Depreciation
expense on real estate totaled $12.8 million, $12.7 million and $11.6 million
for the years ended December 31, 1995, 1994 and 1993, respectively.
F-10
<PAGE>
4. JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information of real estate joint ventures (10
and 12 individual ventures as of December 31, 1995 and 1994, respectively)
and of other limited partnership interests accounted for under the equity
method, in which EVLICO has an investment of $10.0 million or greater and an
equity interest of 10% or greater is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------
1995 1994
------------------- ------------------
(IN MILLIONS)
<S> <C> <C>
FINANCIAL POSITION
Investments in real estate, at depreciated cost............................... $ 966.3 $ 1,047.0
Investments in securities, generally at estimated fair value.................. 648.5 3,061.2
Cash and cash equivalents..................................................... 99.2 46.4
Other assets.................................................................. 90.8 261.9
------------------- ------------------
Total assets.................................................................. 1,804.8 4,416.5
------------------- ------------------
Borrowed funds -- third party.................................................. 74.4 1,233.6
Other liabilities............................................................. 132.4 611.0
------------------- ------------------
Total liabilities............................................................. 206.8 1,844.6
------------------- ------------------
Partners' Capital............................................................. $ 1,598.0 $ 2,571.9
=================== ==================
Equity in partners' capital included above.................................... $ 243.8 $ 327.3
Equity in limited partnership interests not included above.................... 82.3 50.4
(Deficit) excess of equity in partners' capital over
investment cost and equity earnings........................................ (.4) 3.7
------------------- ------------------
Carrying Value................................................................ $ 325.7 $ 381.4
=================== ==================
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............................ $ 152.3 $ 180.1 $ 136.6
Revenues of other limited partnership interests................... 86.9 102.5 318.9
Interest expense -- third party.................................... (23.1) (88.1) (79.7)
Interest expense -- The Equitable.................................. (5.6) -- --
Other expenses.................................................... (131.8) (172.4) (132.7)
----------------- ---------------- -----------------
Net Earnings...................................................... $ 78.7 $ 22.1 $ 243.1
================= ================ =================
Equity in net earnings included above............................. $ 14.4 $ 11.7 $ 34.0
Equity in net earnings of limited partnership
interests not included above................................... 12.9 6.3 12.0
Reduction of earnings in joint ventures
over equity ownership percentage and
amortization of differences in bases........................... -- (1.1) (.1)
----------------- ----------------- -----------------
Total Equity in Net Earnings...................................... $ 27.3 $ 16.9 $ 45.9
================= ================ =================
</TABLE>
F-11
<PAGE>
5. NET INVESTMENT INCOME AND INVESTMENT (LOSSES) GAINS
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................................. $ 319.5 $ 331.4 $ 319.9
Mortgage loans on real estate.................................... 70.3 86.7 105.7
Equity real estate............................................... 66.2 67.0 69.8
Policy loans..................................................... 86.8 79.5 76.1
Other equity investments......................................... 22.4 13.4 38.5
Other investment income.......................................... 30.5 24.5 17.0
----------------- ---------------- -----------------
Gross investment income.......................................... 595.7 602.5 627.0
Investment expenses.............................................. 66.6 75.7 69.4
----------------- ---------------- -----------------
Net Investment Income............................................ $ 529.1 $ 526.8 $ 557.6
================= ================ =================
</TABLE>
Investment (losses) gains, net, including changes in valuation allowances,
are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturities................................................. $ 23.7 $ (6.8) $ 45.1
Mortgage loans on real estate.................................... (7.0) (13.3) (32.0)
Equity real estate............................................... (18.9) (5.3) (13.4)
Other equity investments......................................... 1.7 20.8 1.8
----------------- ---------------- -----------------
Investment (Losses) Gains, Net................................... $ (.5) $ (4.6) $ 1.5
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $11.1 million, $8.2 million and
$1.4 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
For the years ended December 31, 1995 and 1994, respectively, proceeds
received on sales of fixed maturities classified as available for sale
amounted to $2,551.6 million and $2,065.1 million. Gross gains of $49.6
million and $22.1 million and gross losses of $18.7 million and $24.4
million, respectively, were realized on these sales. The change in unrealized
investment gains (losses) related to fixed maturities classified as available
for sale for the years ended December 31, 1995 and 1994, amounted to $240.8
million and $(215.2) million, respectively.
Gross gains of $66.2 million and gross losses of $66.5 million were realized
on sales of investments in fixed maturities held for investment and available
for sale for the year ended December 31, 1993.
F-12
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity, and the changes for the
corresponding years are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Balance, beginning of year....................................... $ (72.6) $ 22.3 $ 11.1
Changes in unrealized investment gains (losses).................. 244.7 (241.8) 3.4
Effect of adopting SFAS No. 115.................................. -- -- 72.2
Changes in unrealized investment (gains) losses attributable to:
Deferred policy acquisition costs............................. (64.4) 95.8 (58.2)
Deferred Federal income taxes................................. (63.1) 51.1 (6.2)
----------------- ---------------- -----------------
Balance, End of Year............................................. $ 44.6 $ (72.6) $ 22.3
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains (losses) on:
Fixed maturities............................................ $ 92.4 $ (148.4) $ 66.8
Other equity investments.................................... 5.6 .7 25.6
Other....................................................... (2.7) (1.7) --
----------------- ---------------- -----------------
Total......................................................... 95.3 (149.4) 92.4
Amounts of unrealized investment (gains) losses attributable to:
Deferred policy acquisition costs........................... (26.8) 37.6 (58.2)
Deferred Federal income taxes............................... (23.9) 39.2 (11.9)
----------------- ---------------- -----------------
Total............................................................ $ 44.6 $ (72.6) $ 22.3
================= ================ =================
</TABLE>
6. FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated statements of
earnings is shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current....................................................... $ -- $ (1.4) $ (3.4)
Deferred...................................................... 29.7 26.4 23.9
----------------- ---------------- -----------------
Total............................................................ $ 29.7 $ 25.0 $ 20.5
================= ================ =================
</TABLE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and cumulative effect of accounting change by the
expected Federal income tax rate of 35%.
The sources of the difference and the tax effects of each are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Expected Federal income tax expense.............................. $ 30.0 $ 25.3 $ 16.6
Tax rate adjustment.............................................. -- -- 4.0
Other............................................................ (.3) (.3) (.1)
----------------- ---------------- -----------------
Federal Income Tax Expense....................................... $ 29.7 $ 25.0 $ 20.5
================= ================ =================
</TABLE>
F-13
<PAGE>
The components of the net deferred Federal income tax account are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------------- ---------------------------------
ASSETS LIABILITIES ASSETS LIABILITIES
--------------- --------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Deferred policy acquisition costs, reserves and
reinsurance....................................... $ -- $ 253.8 $ -- $ 250.6
Investments.......................................... -- 20.5 38.4 --
Compensation and related benefits.................... 44.3 -- 52.2 --
Other................................................ 7.9 -- 25.6 --
--------------- --------------- --------------- ---------------
Total................................................ $ 52.2 $ 274.3 $ 116.2 $ 250.6
=============== =============== =============== ===============
</TABLE>
The deferred Federal income tax expense (benefit) impacting operations
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The sources of these temporary
differences and the tax effects of each are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Deferred policy acquisition costs, reserves and
reinsurance................................................... $ 3.2 $ (11.4) $ (6.8)
Investments...................................................... (4.2) 26.1 11.4
Compensation and related benefits................................ 13.0 (2.8) 1.9
Other............................................................ 17.7 14.5 17.4
----------------- ---------------- -----------------
Deferred Federal Income Tax Expense.............................. $ 29.7 $ 26.4 $ 23.9
================= ================ =================
</TABLE>
At December 31, 1995, EVLICO had net operating loss carryforwards of
approximately $10.2 million. These loss carryforwards are available to offset
future tax payments to Equitable Life under the tax sharing agreement.
7. REINSURANCE AGREEMENTS
EVLICO cedes reinsurance to other insurance companies. EVLICO evaluates the
financial condition of its reinsurers to minimize its exposure to significant
losses from reinsurer insolvencies. The effect of reinsurance is summarized
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
----------------- ----------------
(IN MILLIONS)
<S> <C> <C>
Direct premiums..................................................................... $ 34.1 $ 40.2
Reinsurance ceded................................................................... (.4) (.1)
----------------- ----------------
Premiums............................................................................ $ 33.7 $ 40.1
================= ================
Universal Life and Investment-type Product Policy Fee Income Ceded.................. $ 31.0 $ 24.9
================= ================
Policyholders' Benefits Ceded....................................................... $ 18.7 $ 8.3
================= ================
</TABLE>
EVLICO reinsures mortality risks in excess of $5.0 million on any single
life. EVLICO also reinsures the entire risk on certain substandard
underwriting risks as well as in certain other cases.
F-14
<PAGE>
8. RELATED PARTY TRANSACTIONS
Under a cost sharing agreement, EVLICO reimburses Equitable Life for its use
of Equitable Life's personnel, property and facilities in carrying out
certain of its operations. Reimbursement for intercompany services is based
on the allocated cost of the services provided. The incurred balances of
these intercompany transactions, which are included in other operating costs
and expenses are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Personnel and facilities......................................... $ 249.8 $ 257.9 $ 252.7
Agent commissions and fees....................................... 127.4 122.6 103.0
</TABLE>
These cost allocations include various employee related obligations for
pensions and postretirement benefits. At December 31, 1995 and 1994, EVLICO
recorded as a reduction of shareholder's equity its allocated portion of an
additional minimum pension liability of $10.7 million and $1.2 million, net
of Federal income taxes, respectively, representing the excess of the
accumulated benefit obligation over the fair value of plan assets and accrued
pension liability.
During 1995, 1994 and 1993, Equitable Life restructured certain operations in
connection with cost reduction programs. EVLICO recorded provisions of $6.7
million, $6.9 million and $17.3 million in 1995, 1994 and 1993, respectively,
relating primarily to allocated lease obligations (net of sub-lease rentals)
and severance liabilities.
EVLICO incurred investment advisory and asset management fee expenses of
$17.6 million, $19.2 million and $16.0 million during 1995, 1994 and 1993,
respectively.
EVLICO and Equitable Life have an agreement whereby certain Equitable Life
policyholders may purchase EVLICO's policies without presenting evidence of
insurability. Under the agreement, Equitable Life pays EVLICO a conversion
charge for the extra mortality risk associated with issuing these policies.
EVLICO received payments of $2.9 million, $3.0 million and $3.1 million in
1995, 1994 and 1993, respectively, which were reported as other income.
On August 31, 1993, EVLICO sold $250.0 million of primarily privately placed
below investment grade fixed maturities to EQ Asset Trust 1993 (the "Trust").
EVLICO realized a $1.1 million gain, net of related deferred policy
acquisition costs and deferred Federal income taxes. In conjunction with this
transaction, EVLICO received $75.4 million of Class B notes issued by the
Trust. These notes have interest rates ranging from 6.85% to 9.45%. The Class
B notes are classified as other invested assets on the consolidated balance
sheets.
Net amounts payable to Equitable Life were $190.2 million and $226.7 million
at December 31, 1995 and 1994, respectively.
9. DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
EVLICO primarily uses derivatives for asset/liability risk management and for
hedging individual securities. Derivatives mainly are utilized to reduce
EVLICO's exposure to interest rate fluctuations. Accounting for interest rate
swap transactions is on an accrual basis. Gains and losses related to
interest rate swap transactions are amortized as yield adjustments over the
remaining life of the underlying hedged security. Income and expense
resulting from interest rate swap activities are reflected in net investment
income. The notional amount of matched interest rate swaps outstanding at
December 31, 1995 was $444.8 million. The average unexpired terms at December
31, 1995 is 3.0 years. At December 31, 1995, the cost of terminating
outstanding matched swaps in a loss position was $10.1 million and the
unrealized gain on outstanding matched swaps in a gain position was $3.4
million. EVLICO has no intention of terminating these contracts prior to
maturity.
Fair Value of Financial Instruments
EVLICO defines fair value as the quoted market prices for those instruments
that are actively traded in financial markets. In cases where quoted market
prices are not available, fair values are estimated using present value or
other valuation techniques. The fair value estimates are made at a specific
point in time, based on available market information and judgments about the
financial instrument, including estimates of timing, amount of expected
future cash flows and the credit standing of counterparties. Such estimates
do not reflect any premium or discount that could result from offering for
sale at one time EVLICO's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates cannot be
substantiated by comparison to independent markets, nor can the disclosed
value be realized in immediate settlement of the instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts. Fair
market value of off-balance-sheet financial instruments of EVLICO was not
material at December 31, 1995 and 1994.
F-15
<PAGE>
Fair value for mortgage loans on real estate are estimated by discounting
future contractual cash flows using interest rates at which loans with
similar characteristics and credit quality would be made. Fair values for
foreclosed mortgage loans and problem mortgage loans are limited to the
estimated fair value of the underlying collateral if lower.
The estimated fair values for single premium deferred annuities ("SPDA") are
estimated using projected cash flows discounted at current offering rates.
The estimated fair values for supplementary contracts not involving life
contingencies ("SCNILC") and annuities certain are derived using discounted
cash flows based upon the estimated current offering rate.
The following table discloses carrying value and estimated fair value for
financial instruments not otherwise disclosed in Note 3:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------
1995 1994
-------------------------------- --------------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
--------------- --------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
Mortgage loans on real estate....................... $ 771.5 $ 809.4 $ 888.5 $ 865.3
Other joint ventures................................ 158.7 158.7 196.4 196.4
Policy loans........................................ 1,300.1 1,374.0 1,185.2 1,138.7
Policyholders' account balances:
SPDA............................................. 1,265.8 1,272.0 1,744.3 1,732.7
Annuities certain and SCNILC..................... 188.0 188.1 159.0 151.3
</TABLE>
10. COMMITMENTS AND CONTINGENT LIABILITIES
EVLICO is the obligor under certain structured settlement agreements which
it had entered into with unaffiliated insurance companies and beneficiaries.
To satisfy its obligations under these agreements, EVLICO has purchased
single premium annuities from Equitable Life and directed Equitable Life to
make payments directly to the beneficiaries. A contingent liability exists
with respect to these agreements should Equitable Life be unable to meet its
obligations. Management believes the need to satisfy such obligations is
remote.
11. LITIGATION
A number of lawsuits have been filed against life and health insurers in the
jurisdictions in which EVLICO does business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents,
and other matters. Some of the lawsuits have resulted in the award of
substantial judgments against other insurers, including material amounts of
punitive amounts, or in substantial settlements. In some states juries have
substantial discretion in awarding punitive damages. EVLICO, like other life
and health insurers, from time to time is involved in such litigation as
well as other legal actions and proceedings in connection with its
businesses. Some of these litigations have been brought on behalf of various
alleged classes of claimants and certain of these claimants seek damages of
unspecified amounts. While the ultimate outcome of such matters cannot be
predicted with certainty, in the opinion of management no such matter is
likely to have a material adverse effect on EVLICO's financial position or
results of operations.
12. STATUTORY FINANCIAL INFORMATION
EVLICO is restricted as to the amounts it may pay as dividends to Equitable
Life. Under the New York Insurance Law, the New York Superintendent has
broad discretion to determine whether the financial condition of a stock
life insurance company would support the payment of dividends to its
shareholders. For the years ended December 31, 1995, 1994 and 1993,
statutory (loss) earnings totaled $(102.5) million, $27.3 million and
$(88.4) million, respectively. No amounts are expected to be available for
dividends from EVLICO to Equitable Life in 1996.
At December 31, 1995, EVLICO, in accordance with various government and
state regulations, had $4.2 million of securities deposited with such
government or state agencies.
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles EVLICO's net change in
statutory surplus and capital stock and statutory surplus and capital stock
determined in accordance with accounting practices prescribed by the New
York Insurance Department with net earnings and equity on a GAAP basis.
F-16
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Net change in statutory surplus and capital stock................ $ (56.6) $ 64.8 $ 184.4
Change in asset valuation reserves............................... 57.8 18.5 26.0
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves.................................. 1.2 83.3 210.4
Adjustments:
Future policy benefits and policyholders' account balances.... (12.9) (13.5) (22.5)
Initial fee liability......................................... (34.2) (20.3) (11.6)
Deferred policy acquisition costs............................. 25.1 34.7 62.2
Deferred Federal income taxes................................. (29.7) (20.2) (23.9)
Valuation of investments...................................... 38.3 19.9 25.9
Limited risk reinsurance...................................... 146.9 .1 (5.4)
Contribution from Equitable Life.............................. (125.0) (50.0) (250.0)
Other, net.................................................... 46.4 2.0 41.7
----------------- ---------------- -----------------
Net Earnings..................................................... $ 56.1 $ 36.0 $ 26.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
----------------- ---------------- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Statutory surplus and capital stock.............................. $ 720.9 $ 777.6 $ 712.7
Asset valuation reserves......................................... 146.1 88.3 69.8
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset valuation reserves.... 867.0 865.9 782.5
Adjustments:
Future policy benefits and policyholders' account balances.... (367.4) (354.5) (341.1)
Initial fee liability......................................... (234.7) (200.5) (180.3)
Deferred policy acquisition costs............................. 2,037.8 2,077.1 1,946.7
Deferred Federal income taxes................................. (222.1) (134.4) (159.5)
Valuation of investments...................................... 68.4 (219.2) 4.4
Limited risk reinsurance...................................... (231.7) (378.6) (378.7)
Postretirement and other pension liabilities.................. (111.6) (105.8) (122.7)
Other, net.................................................... (68.0) (101.1) (98.6)
----------------- ---------------- -----------------
Shareholder's Equity............................................. $ 1,737.7 $ 1,448.9 $ 1,452.7
================= ================ =================
</TABLE>
F-17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Equitable Variable Life
Insurance Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and of cash
flows present fairly, in all material respects, the financial position of
Equitable Variable Life Insurance Company and its subsidiaries ("EVLICO") at
December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of EVLICO's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, EVLICO
changed its methods of accounting for loan impairments in 1995, for
postemployment benefits in 1994 and for investment securities in 1993.
PRICE WATERHOUSE LLP
New York, New York
February 7, 1996
F-18
<PAGE>
APPENDIX A
MANAGEMENT
Here is a list of our directors and principal officers and a brief statement of
their business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- -------------------- ------------------------
<S> <C>
DIRECTORS
Michel Beaulieu...................... Director of Equitable Variable since February 1992. Senior Vice President, Equitable, since
September 1991; prior thereto, Chief Life Actuary AXA group 1989 to 1991; Managing Director
Blondeau & CIE (France) 1986 to 1989. Director, Equity & Law (London).
Laurent Clamagirand.................. Director of Equitable Variable since February 1995; Vice President, Financial Reporting,
Equitable, since March 1996; prior thereto, Director from November 1994 to March 1996; prior
thereto, International Controller, AXA, January 1990 to October 1994; Director, Equitable of
Colorado, since March 1995.
William T. McCaffrey................. Director of Equitable Variable since February 1987; Senior Executive Vice President and
Chief Operating Officer, Equitable Life, since February 1996; prior thereto, Executive Vice
President, since February 1986 and Chief Administrative Officer since February 1988;
Director, Equitable Life, since February 1996 and Equitable Foundation since September 1986.
Michael J. Rich...................... Director of Equitable Variable since May 1995. Senior Vice President, Equitable, since
October 1994; prior thereto, Vice President of Underwriting, John Hancock Mutual Life
Insurance Co. since 1988.
Jose S. Suquet....................... Director of Equitable Variable since January 1995. Executive Vice President and Chief Agency
Officer, Equitable, since August 1994; prior thereto, Agency Manager, Equitable, since
February 1985.
OFFICERS -- DIRECTORS
James M. Benson...................... President and Chief Executive Officer, Equitable Variable since March 1996; prior thereto,
President from December 1993 to March 1996; Vice Chairman of the Board, Equitable Variable,
July 1993 to December 1993. President & Chief Executive Officer, Equitable Life, since
February 1996; President and Chief Operating Officer, Equitable, February 1994 to present;
Senior Executive Vice President, April 1993 to February 1994. Prior thereto, President,
Management Compensation Group, 1983 to February 1993. Director, Alliance Capital, October
1993 to present; National Mutual Association of Australasia, September 1995 to present and
AXA Re Life Insurance Co., January 1995 to present.
Harvey Blitz......................... Vice President, Equitable Variable since April 1995; Director of Equitable Variable since
October 1992. Senior Vice President, Equitable, since September 1987. Senior Vice President,
The Equitable Companies Incorporated, since July 1992. Director, Equico Securities, Inc.,
since September 1992; Equitable of Colorado, since September 1992; Equisource and its
subsidiaries since October 1992, and Chairman of the Board Frontier Trust since September
1995 and Director of Equitable Distributors, Inc. since February 1995.
Gordon Dinsmore...................... Senior Vice President, Equitable Variable, since February 1991. Senior Vice President,
Equitable, since September 1989; prior thereto, various other Equitable positions. Director
and Senior Vice President, March 1991 to present, Equitable of Colorado; Director, FHJV
Holdings, Inc., December 1990 to present; Director, Equitable Distributors, Inc., August
1993 to present, and Director, Equitable Foundation, May 1991 to present.
Jerry de St. Paer.................... Senior Investment Officer, Equitable Variable, since April 1995; Director of Equitable
Variable since April 1992. Senior Executive Vice President & Chief Financial Officer,
Equitable Life, since February 1996; prior thereto, Executive Vice President & Chief
Financial Officer, Equitable, since April 1992; Executive Vice President since December
1990; Senior Vice President & Treasurer June 1990 to December 1990; Senior Vice President,
Equitable Investment Corporation, January 1987 to January 1991; Executive Vice President &
Chief Financial Officer, The Equitable Companies Incorporated, since May 1992; Director,
Economic Services Corporation & various Equitable subsidiaries.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ----------------------- -------------------------
<S> <C>
OFFICERS -- DIRECTORS (Continued)
Joseph J. Melone..................... Chairman of the Board, Equitable Variable since March 1996; Chairman of the Board and Chief
Executive Officer, Equitable Variable, November 1990 to March 1996; Chairman of the Board,
Equitable Life, since February 1996; prior thereto, Chairman of the Board and Chief
Executive Officer, Equitable, February 1994 to February 1996; President and Chief Executive
Officer, September 1992 to February 1994; President and Chief Operating Officer from
November 1990 to September 1992. President & Chief Executive Officer of The Equitable
Companies Incorporated since February 1996; prior thereto, President and Chief Operating
Officer since July 1992. Prior thereto, President, The Prudential Insurance Company of
America, since December 1984. Director, Equity & Law (United Kingdom) and various other
Equitable subsidiaries.
Peter D. Noris....................... Executive Vice President and Chief Investment Officer, Equitable Variable, since September
1995. Director of Equitable Variable since June 1995. Executive Vice President and Chief
Investment Officer, Equitable, since May 1995; prior thereto, Vice President, Salomon
Brothers, Inc., 1992 to 1995; Principal of Equity Division, Morgan Stanley & Co. Inc., from
1984 to 1992. Director, various Equitable subsidiaries.
Samuel B. Shlesinger................. Senior Vice President, Equitable Variable, since February 1988. Senior Vice President and
Actuary, Equitable; prior thereto, Vice President and Actuary. Director, Chairman and CEO,
Equitable of Colorado.
Dennis D. Witte...................... Senior Vice President, Equitable Variable, since February 1991; Senior Vice President,
Equitable, since July 1990; prior thereto, various other Equitable positions; Director,
Equitable Distributors, Inc. since February 1995.
OFFICERS
Kevin R. Byrne....................... Treasurer, Equitable Variable, since September 1990; Vice President and Treasurer,
Equitable, since September 1993; prior thereto, Vice President from March 1989 to September
1993. Vice President and Treasurer, The Equitable Companies Incorporated, September 1993 to
present; Frontier Trust since August 1990; Equisource and its subsidiaries, October 1990 to
present.
Stephen Hogan........................ Vice President and Controller, Equitable Variable, February 1994 to present. Vice President,
135 West 50th Street Equitable, January 1994 to present; prior thereto, Controller, John Hancock subsidiaries,
New York, New York 10020 from 1987 to December 1993.
J. Thomas Liddle, Jr................. Senior Vice President and Chief Financial Officer, Equitable Variable, since February 1986.
Senior Vice President, Equitable, since April 1991; prior thereto, Vice President and
Actuary, Equitable; Director, Equitable of Colorado since December 1985.
William A. Narducci.................. Vice President and Chief Claims Officer, Equitable Variable, since February 1989. Vice
200 Plaza Drive President, Equitable, since February 1988; prior thereto, Assistant Vice President.
Secaucus, New Jersey 07096
John P. Natoli....................... Vice President and Chief Underwriting Officer, Equitable Variable, since February 1988. Vice
President, Equitable.
</TABLE>
A-2
<PAGE>
APPENDIX B
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance or ranking of the Separate
Account Funds and Trust portfolios with (1) that of other insurance company
separate accounts or mutual funds included in the rankings prepared by Lipper
Analytical Services, Inc., Morningstar, Inc. or similar investment services that
monitor the performance of insurance company separate accounts or mutual funds,
(2) other appropriate indices of investment securities and averages for peer
universes of funds, or (3) data developed by us derived from such indices or
averages. Advertisements or other communications furnished to present or
prospective policyowners may also include evaluations of a Separate Account Fund
or Trust portfolio by financial publications that are nationally recognized such
as Barron's, Morningstar's Variable Annuities/Life, Business Week, Forbes,
Fortune, Institutional Investor, Money, Kiplinger's Personal Finance, Financial
Planning, Investment Adviser, Investment Management Weekly, Money Management
Letter, Investment Dealers Digest, National Underwriter, Pension & Investments,
USA Today, Investor's Daily, The New York Times, The Wall Street Journal, the
Los Angeles Times and the Chicago Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund.
The Morningstar Report consists of over 700 variable life and annuity funds, all
of which report their data net of investment management fees, direct operating
expenses and separate account level charges.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the Funds of the Separate Account or the Trust
portfolios, may help to provide a perspective on the potential returns of
different asset classes over different periods of time. By combining this
information with your knowledge of your own financial needs, you may be able to
better determine how you wish to allocate your Incentive Life Plus premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Fund of the Separate Account may, therefore,
be a desirable selection for policyowners who are willing to accept such risks.
Policyowners who have a need to limit short-term risk, may find it preferable to
allocate a smaller percentage of their net premiums to those funds that invest
primarily in common stock. Any investment in securities, whether equity or debt,
involves varying degrees of potential risk, in addition to offering varying
degrees of potential reward.
The chart on page A-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1925 and December 31, 1995 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trust and do not constitute a representation that the performance of the
Separate Account funds or the Trust portfolios will correspond to rates of
return such as those illustrated in the chart. For a comparative illustration of
performance results of The Hudson River Trust, see page A-1 of the Trust's
prospectus.
B-1
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RATES OF RETURN
FOR THE
FOLLOWING LONG-TERM LONG-TERM INTERMEDIATE- U.S. CONSUMER
PERIODS ENDING COMMON GOVERNMENT CORPORATE TERM GOV'T TREASURY PRICE
12/31/95: STOCKS BONDS BONDS BONDS BILLS INDEX
- -------- ------ ----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
1 year.................. 37.43 31.67 26.39 16.80 5.60 2.74
3 years................. 15.26 12.82 10.47 7.22 4.13 2.72
5 years................. 16.57 13.10 12.07 8.81 4.29 2.83
10 years................. 14.84 11.92 11.25 9.08 5.55 3.48
20 years................. 14.59 10.45 10.54 9.69 7.28 5.23
30 years................. 10.68 7.92 8.17 8.36 6.72 5.39
40 years................. 10.78 6.38 6.75 7.02 5.73 4.46
50 years................. 11.94 5.35 5.75 5.87 4.80 4.36
60 years................. 11.34 5.20 5.46 5.34 4.01 4.10
Since 1926............... 10.54 5.17 5.69 5.25 3.72 3.12
Inflation Adjusted
Since 1926............... 7.20 1.99 2.49 2.07 0.58 0.00
- ----------------------------
</TABLE>
*Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1996
YEARBOOK,(TM) Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500) -- Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-term Government Bonds -- Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty year maturity and a
reasonably current coupon.
Long-term Corporate Bonds -- For the period 1969-1995, represented by the
Salomon Brothers Long-Term, High-Grade Corporate Bond Index; for the period
1946-1968, the Salomon Brothers' Index was backdated using Salomon Brothers'
monthly yield data and a methodology similar to that used by Salomon for
1969-1995; for the period 1926-1945, the Standard and Poor's monthly
High-Grade Corporate Composite yield data were used, assuming a 4 percent
coupon and a twenty year maturity.
Intermediate-term Government Bonds -- Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five year maturity.
U.S. Treasury Bills -- Measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the bill having the
shortest maturity not less than one month.
Inflation -- Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
B-2
<PAGE>
INCENTIVE LIFE(TM)
Prospectus Dated May 1, 1994
Incentive Life is a flexible premium variable life insurance policy issued by
Equitable Variable Life Insurance Company (Equitable Variable), a wholly-owned
subsidiary of The Equitable Life Assurance Society of the United States
(Equitable).
You may decide the amount of premiums to invest and when, within limits. Other
than the initial premium, there are no required premiums (however, under certain
conditions, additional premiums may be needed to keep the policy in effect). Net
premiums are deposited in a Policy Account.
Policy Account values increase or decrease with credited interest and reflect
certain deductions and charges. You may allocate your Policy Account value to a
guaranteed fixed return and variable return investment strategies. The Hudson
River Trust (Trust) is the mutual fund which provides the underlying basis for
the variable return investment strategies. The Trust is a series fund with
twelve different investment portfolios:
<TABLE>
<C> <C> <C>
o Money Market o Growth & Income Asset Allocation Series:
o Intermediate Government Securities o Equity Index o Conservative Investors
o Quality Bond o Common Stock o Growth Investors
o High Yield o Global
o Balanced o Aggressive Stock
</TABLE>
You may draw upon the Policy Account value through loans, partial withdrawals or
policy surrender, within limits. A charge will apply if the policy is
surrendered during the first ten policy years. The charge may also apply if you
reduce the Face Amount or if the policy lapses.
Incentive Life provides a death benefit if the insured person dies while the
policy is in effect. You may choose either a fixed benefit equal to the Face
Amount of the policy or a variable benefit equal to the Face Amount plus the
Policy Account value. You can change the Face Amount and death benefit option,
within limits. The policy will lapse if the Net Cash Surrender Value (Policy
Account value less any applicable Surrender Charge and any loan and accrued loan
interest) is insufficient to pay the policy's monthly deductions and you do not
make the required payment.
Ask your Equitable agent to determine if changing, or adding to, your existing
insurance coverage with Incentive Life would be to your advantage. You may
examine the policy for a limited period after your initial payment and, if you
are not satisfied for any reason, you may return the policy for a full refund of
premiums paid.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS CONTAINS INFORMATION THAT SHOULD BE KNOWN BEFORE INVESTING IN
INCENTIVE LIFE. THIS PROSPECTUS IS NOT VALID UNLESS IT IS ATTACHED TO A CURRENT
PROSPECTUS FOR THE HUDSON RIVER TRUST.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Copyright 1994 Equitable Variable Life Insurance Company. All rights reserved.
VM 485
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY OF INCENTIVE LIFE FEATURES.................................. 1
PART 1 -- DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND
INCENTIVE LIFE INVESTMENT CHOICES......................... 4
THE COMPANY THAT ISSUES INCENTIVE LIFE.................... 4
Equitable Variable...................................... 4
Our Parent, Equitable................................... 4
THE SEPARATE ACCOUNT AND THE TRUST........................ 4
The Separate Account.................................... 4
The Trust............................................... 4
The Trust's Investment Adviser.......................... 4
Investment Policies Of The Trust's Portfolios........... 5
THE GUARANTEED INTEREST DIVISION.......................... 6
Amounts In The Guaranteed Interest Division............. 6
Adding Interest In The Guaranteed Interest Division..... 6
Transfers From The Guaranteed Interest Division......... 6
PART 2 -- DETAILED INFORMATION ABOUT INCENTIVE LIFE................. 7
FLEXIBLE PREMIUMS......................................... 7
DEATH BENEFITS............................................ 7
CHANGES IN INSURANCE PROTECTION........................... 8
Changing The Face Amount................................ 8
Changing The Death Benefit Option....................... 8
Substitution Of Insured Person.......................... 8
When Policy Changes Go Into Effect...................... 9
MATURITY BENEFITS......................................... 9
LIVING BENEFIT OPTION..................................... 9
ADDITIONAL BENEFITS MAY BE AVAILABLE...................... 9
YOUR POLICY ACCOUNT VALUE................................. 9
Amounts In The Separate Account......................... 9
How We Determine The Unit Value......................... 9
Transfers Of Policy Account Value...................... 10
Automatic Transfer Service............................. 10
Telephone Transfers.................................... 10
Charge For Transfers................................... 10
BORROWING FROM YOUR POLICY ACCOUNT....................... 11
How To Request A Loan.................................. 11
Policy Loan Interest................................... 11
When Interest Is Due................................... 11
Repaying The Loan...................................... 11
The Effects Of A Policy Loan........................... 11
PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT............. 11
Partial Withdrawal Charges............................. 12
Allocation Of Withdrawals And Charges.................. 12
The Effects Of A Partial Withdrawal.................... 12
Surrender For Net Cash Surrender Value................. 12
DEDUCTIONS AND CHARGES................................... 12
Deductions From Your Premiums.......................... 12
Deductions From Your Policy Account.................... 12
How Policy Account Charges Are Allocated............... 13
Charges Against The Separate Account................... 13
Trust Charges.......................................... 13
Surrender Charge....................................... 13
ADDITIONAL INFORMATION ABOUT INCENTIVE LIFE.............. 14
Your Policy Can Lapse.................................. 14
You May Reinstate The Policy........................... 14
Policy Periods, Anniversaries, Dates And Ages.......... 14
TAX EFFECTS.............................................. 15
Policy Proceeds........................................ 15
Diversification........................................ 16
Policy Changes......................................... 16
Tax Changes............................................ 17
Estate And Generation Skipping Taxes................... 17
Pension And Profit-Sharing Plans....................... 17
Other Employee Benefit Programs........................ 17
Our Taxes.............................................. 17
When We Withhold Income Taxes.......................... 17
PART 3 -- ADDITIONAL INFORMATION................................... 18
YOUR VOTING PRIVILEGES................................... 18
Trust Voting Privileges................................ 18
How We Determine Your Voting Shares.................... 18
Separate Account Voting Rights......................... 18
OUR RIGHT TO CHANGE HOW WE OPERATE....................... 18
OUR REPORTS TO POLICYOWNERS.............................. 18
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY.............. 18
YOUR PAYMENT OPTIONS..................................... 19
YOUR BENEFICIARY......................................... 19
ASSIGNING YOUR POLICY.................................... 19
WHEN WE PAY POLICY PROCEEDS.............................. 19
DIVIDENDS................................................ 20
REGULATION............................................... 20
SPECIAL CIRCUMSTANCES.................................... 20
DISTRIBUTION............................................. 21
LEGAL PROCEEDINGS........................................ 21
ACCOUNTING AND ACTUARIAL EXPERTS......................... 21
ADDITIONAL INFORMATION................................... 22
MANAGEMENT............................................... 22
PART 4 -- ILLUSTRATIONS OF POLICY BENEFITS......................... 24
SEPARATE ACCOUNT FP FINANCIAL STATEMENTS........................ FSA-1
EQUITABLE VARIABLE FINANCIAL STATEMENTS............................ F-1
APPENDIX A -- COMMUNICATING PERFORMANCE DATA....................... A-1
LONG-TERM MARKET TRENDS.............................. A-1
- --------------------------------------------------------------------------------
In this prospectus "we," "our" and "us" mean Equitable Variable Life Insurance
Company (Equitable Variable), a New York stock life insurance company. "You" and
"your" mean the owner of the policy. We refer to the person who is covered by
the policy as the "insured person" because the insured person and the
policyowner may not be the same. Unless indicated otherwise, the discussion in
this prospectus assumes that there is no policy loan outstanding and that the
policy is not in a grace period.
THE POLICY IS NOT AVAILABLE IN ALL JURISDICTIONS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. EQUITABLE VARIABLE DOES NOT AUTHORIZE ANY INFORMATION OR
REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN
AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED SUPPLEMENT THERETO OR IN ANY
SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY EQUITABLE VARIABLE.
<PAGE>
SUMMARY OF INCENTIVE LIFE FEATURES
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE TERMS OF THE POLICY
WHEN ISSUED AND THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS (SEE TABLE OF CONTENTS ON OPPOSITE PAGE).
INVESTMENT FEATURES
FLEXIBLE PREMIUMS
o Premiums may be invested whenever and in whatever amount you determine,
within limits. Other than the initial premium there are no scheduled or
required premium payments (however, under certain conditions, additional
premiums may be needed to keep a policy in effect).
POLICY ACCOUNT
o Net premiums are put in your Policy Account and can be allocated to a
Guaranteed Interest Division and to one or more of the divisions of Equitable
Variable's Separate Account FP (the Separate Account). The Separate Account
divisions invest in corresponding portfolios of the Trust. You may adjust
this allocation by changing your allocation percentages or by transfers among
the Separate Account divisions and the Guaranteed Interest Division.
o REQUESTS FOR TRANSFERS OUT OF THE GUARANTEED INTEREST DIVISION CAN ONLY BE
MADE ON OR WITHIN 30 DAYS OF A POLICY ANNIVERSARY. SUCH TRANSFERS WILL BE
EFFECTIVE AS OF THE DATE WE RECEIVE YOUR REQUEST, BUT NO EARLIER THAN THE
POLICY ANNIVERSARY; TRANSFERS INTO THE GUARANTEED INTEREST DIVISION AND AMONG
ALL SEPARATE ACCOUNT DIVISIONS MAY BE MADE AT ANY TIME. Transfers are subject
to the rules discussed under TRANSFERS FROM THE GUARANTEED INTEREST DIVISION
on page 6 and TRANSFERS OF POLICY ACCOUNT VALUE on page 10.
o There is no minimum guaranteed cash value for amounts allocated to the
Separate Account divisions. The value of amounts allocated to the Guaranteed
Interest Division will depend on the interest rates declared and guaranteed
each year by Equitable Variable (4 1/2% minimum).
REDEMPTION
o Loans may be taken against 90% of a policy's Cash Surrender Value (Policy
Account value less any applicable surrender charge) subject to certain
conditions. Loan interest accrues daily at a rate determined annually.
Currently, amounts set aside to secure the loan earn interest at a rate 1%
lower than the rate charged for policy loan interest. See BORROWING FROM YOUR
POLICY ACCOUNT on page 11.
o Partial Withdrawals of Net Cash Surrender Value (Cash Surrender Value less
any loan and accrued loan interest) may be taken after the first policy year,
subject to our approval and certain conditions. See PARTIAL WITHDRAWALS FROM
YOUR POLICY ACCOUNT on page 11.
o The policy may be surrendered for its Net Cash Surrender Value, less any lien
securing a Living Benefit payment, at which time insurance coverage will end.
INSURANCE PROTECTION FEATURES
DEATH BENEFITS
o Option A, a fixed benefit equal to the policy's Face Amount.
o Option B, a variable benefit that equals the Face Amount plus the Policy
Account value.
o In some cases a higher death benefit may apply in order to meet Federal
income tax law requirements.
o After the first year, you can change the Face Amount and death benefit
option, within limits. The minimum Face Amount is $50,000.
MATURITY BENEFITS
o A maturity benefit equal to the amount in your Policy Account less any policy
loan, any lien securing a Living Benefit payment and accrued interest, is
payable on the policy anniversary nearest the insured person's 95th birthday
(Final Policy Date), if the insured person is still living on that date.
LIVING BENEFIT
o The Living Benefit rider enables the policyowner to receive a portion of the
policy's death benefit (excluding death benefits payable under certain
riders) if the insured has a terminal illness. The Living Benefit rider will
be added to most policies at issue for no additional cost. The Living Benefit
rider is not available in certain states, including New Jersey.
ADDITIONAL BENEFITS
o Disability waiver, accidental death, term insurance on an additional insured
person, children's term insurance and substitution of insured person riders
are available.
DEDUCTIONS AND CHARGES
FROM PREMIUMS
o Applicable charges for taxes imposed by states and other jurisdictions. Such
taxes currently range between .75% and 5%.
o Administrative charge of $250 from the first premium if you select annual
planned premiums.
1
<PAGE>
FROM THE POLICY ACCOUNT
o Administrative charge during the first policy year that is currently $31 per
month if you selected semi-annual or more frequent planned premiums ($6 per
month if you selected annual planned premiums), and during subsequent policy
years, $6 per month regardless of the planned premium schedule you selected
(subject to $8 per month maximum).
o Monthly cost of insurance charge and monthly charge for any additional
benefits.
o Transaction charges (for partial withdrawals, Face Amount increases and
certain investment division transfers).
o During the first ten policy years, a surrender charge applies if the policy
lapses or is surrendered for its Net Cash Surrender Value or if the Face
Amount is reduced. The maximum charge is equivalent to 50% of one annual
premium for a comparable traditional life insurance policy; after the first
six policy years, the charge declines 20% per year.
FROM THE SEPARATE ACCOUNT
o 60% per annum charge for certain mortality and expense risks.
FROM THE TRUST
o Trust shares are purchased at net asset value which reflects investment
management fees and other direct expenses. Investment management fees are
charged at the maximum annual rates of .35% of net assets for the Equity
Index Portfolio, .40% of net assets for Common Stock, Money Market and
Balanced Portfolios; .50% for Aggressive Stock and Intermediate Government
Securities Portfolios and .55% for High Yield, Global, Conservative
Investors, Growth Investors, Quality Bond and the Growth & Income Portfolios.
VARIATIONS
o Equitable Variable is subject to the insurance laws and regulations in every
jurisdiction in which Incentive Life is sold. As a result, the terms of
Incentive Life may vary from jurisdiction to jurisdiction. The terms of
Incentive Life may also vary where special circumstances result in a
reduction in our costs.
o A modified version of Incentive Life may be offered where certain conditions
are met.
ADDITIONAL INFORMATION
CANCELLATION RIGHT
o You have a right to examine the policy. If for any reason you are not
satisfied with it, you may cancel the policy within the time limits described
below. You may cancel the policy by sending it to our Administrative Office
with a written request to cancel. Insurance coverage ends when you send your
request.
o Your request to cancel the policy must be postmarked no later than the latest
of the following three dates: (i) 10 days after you receive the policy, (ii)
10 days after we mail a written notice telling you about your rights to
cancel (Notice of Withdrawal Right); or (iii) 45 days after you sign Part I
of the policy application.
o If you cancel the policy, we will refund the premiums you paid. In certain
cases where the policy was purchased as a result of an exchange of an
existing life insurance policy, we may reinstate the prior policy. The
cancellation right may vary in certain states. There may be income tax and
withholding implications associated with cancellation.
LAPSE
o The policy will lapse if the Net Cash Surrender Value is insufficient to
cover monthly charges. If this occurs, you will be notified and given the
opportunity to maintain the policy in force by paying additional premiums.
You may be able to reinstate a lapsed policy within a limited time period,
but this will require additional evidence of insurability.
TAX EFFECTS
o Generally, under current Federal income tax law, death benefits are not
subject to income tax and Policy Account earnings are not subject to income
tax as long as they remain in the Policy Account. Loans, partial withdrawals,
surrender, maturity, lapse or a substitution of insured may result in
recognition of income for tax purposes.
2
<PAGE>
RATES OF RETURN
The rates of return shown below are based on the actual investment performance
of The Hudson River Trust portfolios, after deduction for investment management
fees and direct Trust operating expenses, for periods ending December 31, 1993.
The historical performance of the Common Stock and Money Market Portfolios for
periods prior to March 22, 1985 has been adjusted to reflect current investment
management fees of .40% per annum and estimated direct operating expenses of the
Trust of .10% per annum. The Common Stock Portfolio and its predecessors have
been in existence since 1976. No return information is provided for the Equity
Index Portfolio, since it received its initial funding on March 1, 1994.
These rates of return are not illustrative of how actual investment performance
will affect the benefits under your policy. Moreover, these rates of return are
not an estimate or guarantee of future performance.
THESE RATES OF RETURN ARE FOR THE TRUST ONLY AND DO NOT REFLECT THE
ADMINISTRATIVE AND COST OF INSURANCE CHARGES, THE MORTALITY AND EXPENSE RISK
CHARGE AND THE SURRENDER CHARGE APPLICABLE UNDER AN INCENTIVE LIFE POLICY.
<TABLE>
<CAPTION>
PERIODS ENDING 12/31/93
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS 15 YEARS SINCE INCEPTION(a)
--------- ------ ------- ------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Money Market.......................... 3.00% 4.23% 6.00% 6.95% -- 7.83%
Intermediate Gov't. Securities........ 10.58 -- -- -- -- 10.25
Quality Bond (b)...................... -- -- -- -- -- (0.51)
High Yield............................ 23.15 19.85 12.35 -- -- 10.84
Balanced.............................. 12.28 15.52 14.42 -- -- 13.95
Growth & Income (b)................... -- -- -- -- -- (0.25)
Common Stock.......................... 24.84 21.12 15.44 15.27 17.52% 14.87
Global................................ 32.09 19.73 15.36 -- -- 11.22
Aggressive Stock...................... 16.77 28.32 26.81 -- -- 21.97
The Asset Allocation Series:
Conservative Investors................ 10.76 11.98 -- -- -- 10.69
Growth Investors...................... 15.26 21.67 -- -- -- 18.69
----------
<FN>
(a) The Growth & Income and Quality Bond Portfolios received their initial
funding on October 1, 1993; the Intermediate Government Securities Portfolio
on April 1, 1991; the Conservative Investors and the Growth Investors
Portfolios on October 2, 1989; the Global Portfolio on August 27, 1987; the
High Yield Portfolio on January 2, 1987; the Aggressive Stock and Balanced
Portfolios on January 27, 1986; the predecessor of the Money Market
Portfolio on July 13, 1981; and the predecessor of the Common Stock
Portfolio on January 13, 1976.
(b) Unannualized.
</FN>
</TABLE>
Additional investment performance information appears in the attached Trust
prospectus.
3
<PAGE>
PART 1: DETAILED INFORMATION ABOUT EQUITABLE VARIABLE AND
INCENTIVE LIFE INVESTMENT CHOICES
THE COMPANY THAT ISSUES INCENTIVE LIFE
EQUITABLE VARIABLE. Equitable Variable was organized in 1972 in New York State
as a stock life insurance company. We are a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States. We are licensed to do
business in all 50 states, Puerto Rico, the Virgin Islands and the District of
Columbia. At December 31, 1993, we had approximately $81.6 billion face amount
of variable life insurance in force.
We sell both traditional and innovative forms of life insurance designed to give
policyowners maximum choice and flexibility. Additional forms of life insurance
are available through our parent, Equitable. Your Equitable agent can provide
information about all forms of life insurance available from us and Equitable
and help you decide which may best meet your objectives.
OUR PARENT, EQUITABLE. Equitable, a New York stock life insurance company, has
been in business since 1859. Equitable and its subsidiaries managed
approximately $174 billion as of December 31, 1993. Equitable's assets do not
back the benefits that we pay under our policies. Equitable's home office is 787
Seventh Avenue, New York, New York 10019.
Equitable is a wholly-owned subsidiary of The Equitable Companies Incorporated
(the Holding Company). The largest stockholder of the Holding Company is AXA, a
French insurance holding company. AXA currently owns 49% of the outstanding
shares of common stock of the Holding Company plus convertible preferred stock
and redeemable preferred stock. Under its investment arrangements with Equitable
and the Holding Company, AXA is able to exercise significant influence over the
operations and capital structure of the Holding Company, Equitable and their
subsidiaries. After September 19, 1994 (or earlier under certain circumstances)
AXA will be able to increase its ownership of the Holding Company's common stock
by converting certain convertible securities it currently owns or through
purchases. AXA is the principal holding company for most of the companies in one
of the largest insurance groups in Europe. The majority of AXA's stock is
controlled by a group of five French mutual insurance companies.
THE SEPARATE ACCOUNT AND THE TRUST
THE SEPARATE ACCOUNT. The Separate Account was established on April 19, 1985
under the Insurance Law of the State of New York. The Separate Account is a type
of investment company called a unit investment trust and is registered with the
Securities and Exchange Commission (SEC) under the Investment Company Act of
1940. This registration does not involve any supervision by the SEC of the
management or investment policies of the Separate Account.
Under New York law, we own the assets of the Separate Account and use them to
support your policy and other variable life insurance policies. The portion of
the Separate Account's assets supporting these policies may not be used to
satisfy liabilities arising out of any other business we may conduct. This means
that the assets supporting Policy Account values maintained in the Separate
Account are not subject to the claims of our other creditors. We may also retain
in the Separate Account amounts owed to us for charges or other permitted
allocations. Because such retained amounts do not support Policy Account values,
we may transfer them from the Separate Account to our general account.
THE TRUST. The Separate Account has several divisions, each of which invests in
shares of a corresponding portfolio of the Trust. The Trust is an open-end
diversified management investment company, more commonly called a mutual fund.
As a "series" type of mutual fund, it issues several different "series" of
stock, each of which relates to a different Trust portfolio with a different
investment policy. The Trust does not impose a sales charge or "load" for buying
and selling its shares. The Trust's shares are bought and sold by our Separate
Account at net asset value. The Trust's custodian is The Chase Manhattan Bank,
N.A.
The Trust sells its shares to separate accounts of insurance companies, both
affiliated and not affiliated with Equitable. We currently do not foresee any
disadvantages to our policyowners arising out of this. However, the Trust's
Board of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts that possibly may arise and to determine what action,
if any, should be taken in response. If we believe that the Trust's response to
any of those events insufficiently protects our policyowners, we will see to it
that appropriate action is taken to protect our policyowners. Also, if we ever
believe that any of the Trust's portfolios is so large as to impair materially
the investment performance of a portfolio or the Trust, we will examine other
investment options.
THE TRUST'S INVESTMENT ADVISER. The Trust is advised by Alliance Capital
Management L.P. (Alliance). Alliance is registered as an investment adviser
under the Investment Advisers Act of 1940 (the Advisers Act). Alliance, a
publicly-traded limited partnership, is indirectly majority-owned by Equitable.
Alliance acts as an investment adviser to various separate accounts and general
accounts of Equitable and other affiliated insurance companies. Alliance also
provides management and consulting services to mutual funds, endowment funds,
insurance companies, foreign entities, qualified and non-tax qualified corporate
funds, public and private pension and profit-sharing plans, foundations and
tax-exempt organizations. As of December 31, 1993, Alliance was managing
approximately $115 billion in assets.
Alliance's main office is 1345 Avenue of the Americas, New York, New York 10105.
4
<PAGE>
The advisory fee payable by the Trust is based on the following annual
percentages of the value of each portfolio's daily average net assets:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
----------------------------------------
FIRST NEXT OVER
PORTFOLIO $350 MILLION $400 MILLION $750 MILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Common Stock, Money Market and Balanced.......................................... .400% .375% .350%
Aggressive Stock and Intermediate Gov't. Securities.............................. .500% .475% .450%
High Yield, Global, Conservative Investors and
Growth Investors............................................................. .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
PORTFOLIO $500 MILLION $500 MILLION $1 BILLION
- --------- ------------ ------------ ----------
<S> <C> <C> <C>
Quality Bond and Growth & Income................................................. .550% .525% .500%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
PORTFOLIO $750 MILLION $750 MILLION $1.5 BILLION
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Equity Index..................................................................... .350% .300% .250%
</TABLE>
INVESTMENT POLICIES OF THE TRUST'S PORTFOLIOS. Each portfolio has a different
investment objective which it tries to achieve by following separate investment
policies. The objectives and policies of each portfolio will affect its return
and its risks. There is no guarantee that these objectives will be achieved. The
policies and objectives of the Trust's portfolios are as follows:
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- --------- ----------------- ---------
<S> <C> <C>
MONEY MARKET............... Primarily high quality short-term money market High level of current income while
instruments. preserving assets and maintaining
liquidity.
INTERMEDIATE............... Primarily debt securities issued or guaranteed by High current income consistent with
GOVERNMENT the U.S. Government, its agencies and relative stability of capital.
SECURITIES instrumentalities. Each investment will have a
final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
QUALITY BOND............... Primarily investment grade fixed-income securities. High current income consistent with
preservation of capital.
HIGH YIELD................. Primarily a diversified mix of high yield, High return by maximizing current
fixed-income securities involving greater income and, to the extent consistent
volatility of price and risk of principal and with that objective, capital apprecia-
income than high quality fixed-income securities. tion.
The medium and lower quality debt securities in
which the portfolio may invest are known as "junk
bonds."
BALANCED................... Primarily common stocks, publicly-traded debt High return through a combination of
securities and high quality money market current income and capital
instruments. appreciation.
GROWTH & INCOME............ Primarily common stocks and securities convertible High return through a combination of
into common stocks. current income and capital
appreciation.
EQUITY INDEX............... Selected securities in the Standard & Poor's 500 Total return before Trust expenses
Index which the advisor believes will, in the that approximates the total return
aggregate, approximate the performance results of performance of the Standard & Poor's
the Index. 500 Index, including reinvestment of
dividends, at a risk level consistent
with that of the Index.
COMMON STOCK............... Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income.
GLOBAL..................... Primarily equity securities of non-United States Long-term growth of capital.
as well as United States companies.
AGGRESSIVE STOCK........... Primarily common stocks and other equity-type Long-term growth of capital.
securities issued by medium and other smaller
sized companies with strong growth potential.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT POLICY OBJECTIVE
- --------- ----------------- ---------
<S> <C> <C>
ASSET ALLOCATION SERIES:
CONSERVATIVE............... Diversified mix of publicly-traded, fixed-income High total return without, in the
INVESTORS and equity securities; asset mix and security adviser's opinion, undue risk to
selection are primarily based upon factors principal.
expected to reduce risk.
GROWTH INVESTORS........... Diversified mix of publicly-traded, fixed-income High total return consistent with the
and equity securities; asset mix and security adviser's determination of reasonable
selection based upon factors expected to increase risk.
possibility of high long-term return.
</TABLE>
Because Policy Account values may be invested in mutual fund options, Incentive
Life offers an opportunity for the Cash Surrender Value to appreciate more
rapidly than it would under comparable fixed-benefit whole-life insurance. You
must, however, accept the risk that if investment performance is unfavorable,
the Cash Surrender Value may not appreciate as rapidly and, indeed, may decrease
in value.
More detailed information about the Trust, its investment policies, risks,
expenses and all other aspects of its operations, appears in its prospectus,
which is attached to this prospectus, and in its Statement of Additional
Information referred to therein.
THE GUARANTEED INTEREST DIVISION
YOU MAY ALLOCATE SOME OR ALL OF YOUR POLICY ACCOUNT TO THE GUARANTEED INTEREST
DIVISION, WHICH IS FUNDED BY OUR GENERAL ACCOUNT AND PAYS INTEREST AT A DECLARED
RATE GUARANTEED FOR EACH POLICY YEAR. THE PRINCIPAL, AFTER DEDUCTIONS, IS ALSO
GUARANTEED. THE GENERAL ACCOUNT SUPPORTS OUR INSURANCE AND ANNUITY OBLIGATIONS,
INCLUDING THE GUARANTEED INTEREST DIVISION. BECAUSE OF APPLICABLE EXEMPTIVE AND
EXCLUSIONARY PROVISIONS, PARTICIPATIONS IN THE GUARANTEED INTEREST DIVISION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER THE GUARANTEED
INTEREST DIVISION NOR THE GENERAL ACCOUNT HAS BEEN REGISTERED AS AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, NEITHER THE
GENERAL ACCOUNT, THE GUARANTEED INTEREST DIVISION NOR ANY INTERESTS THEREIN ARE
GENERALLY SUBJECT TO REGULATION UNDER THESE ACTS. WE HAVE BEEN ADVISED THAT THE
STAFF OF THE SEC HAS NOT MADE A REVIEW OF THE DISCLOSURES RELATING TO THE
GENERAL ACCOUNT AND THE GUARANTEED INTEREST DIVISION. SUCH DISCLOSURES ARE
INCLUDED IN THIS PROSPECTUS FOR YOUR INFORMATION. THESE DISCLOSURES, HOWEVER,
MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL
SECURITIES LAW RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN
PROSPECTUSES.
AMOUNTS IN THE GUARANTEED INTEREST DIVISION. You may accumulate amounts in the
Guaranteed Interest Division by allocating net premium and loan repayments to
that Division, transferring amounts from the divisions of the Separate Account
to the Guaranteed Interest Division or earning interest on amounts you already
have in the Guaranteed Interest Division. A Living Benefit payment will also
result in amounts being transferred to the Guaranteed Interest Division. See
LIVING BENEFIT OPTION on page 9. In addition, any policy loan is secured by an
amount in your Policy Account equal to the outstanding loan. This amount remains
part of the Policy Account but is assigned to the Guaranteed Interest Division.
We refer to this amount as the loaned amount in the Guaranteed Interest
Division.
The amount you have in the Guaranteed Interest Division at any time is the sum
of all net premiums and loan repayments allocated to that Division, all
transfers into that Division (including amounts securing any policy loan or
Living Benefit payment) plus earned interest, less amounts transferred out or
withdrawn, and monthly deductions allocated to, this Division.
ADDING INTEREST IN THE GUARANTEED INTEREST DIVISION. We pay a declared interest
rate on all amounts that you have in the Guaranteed Interest Division. At policy
issuance, and prior to each policy anniversary, we declare the rates that will
apply to amounts in the Guaranteed Interest Division for the following policy
year. Different rates may apply to policies currently being issued and
previously issued policies. These annual interest rates will never be less than
the minimum guaranteed interest rate of 4 1/2%. Different rates are also paid on
unloaned and loaned amounts in the Guaranteed Interest Division. See POLICY LOAN
INTEREST on page 11. Amounts securing a Living Benefit payment are considered
unloaned amounts for purposes of crediting interest.
Interest is compounded daily at an effective annual rate that equals the
declared rate for each policy year. We credit interest on unloaned amounts in
the Guaranteed Interest Division at the end of each policy month. Interest is
credited on any loaned amount in the Guaranteed Interest Division on each policy
anniversary and at any time you repay a policy loan in full. Credited interest
on the loaned amount is allocated to the Separate Account divisions and to the
unloaned portion of the Guaranteed Interest Division in accordance with your
premium allocation percentages.
TRANSFERS FROM THE GUARANTEED INTEREST DIVISION. Once during each policy year,
you may request a transfer from your unloaned amount in the Guaranteed Interest
Division to one or more of the divisions of the Separate Account. If we receive
your transfer request within 30 days prior to your policy anniversary, the
transfer will be made on your policy anniversary. If we receive your request on
or within 30 days after your policy anniversary, the transfer will be made as of
the date we receive your request. You may transfer up to 25% of your unloaned
value in the Guaranteed Interest Division as of the transfer date or the minimum
transfer amount, whichever is more. The minimum transfer amount is the minimum
transfer amount shown on the Information Page of your policy (the Policy
Information Page) or your total unloaned value in the Guaranteed Interest
Division on the transfer date, whichever is less. Amounts securing a Living
Benefit payment may not be transferred from the Guaranteed Interest Division.
6
<PAGE>
PART 2: DETAILED INFORMATION ABOUT INCENTIVE LIFE
FLEXIBLE PREMIUMS
You may choose the amount and frequency of premium payments, as long as they are
within the limits described below. We determine the applicable minimum initial
premium based on the age, sex, rating class and smoker/non-smoker status of the
insured person, the initial Face Amount of the policy (the minimum Face Amount
is $50,000) and any additional benefits selected. In certain situations,
however, no distinction is made based on the sex of the insured person. See COST
OF INSURANCE CHARGE on page 12. You may choose to pay a higher initial premium.
The full initial premium you indicated on your application must be paid on or
before the date on which the policy is delivered to you. No insurance under your
policy will take effect (a) until a policy is delivered and the full initial
premium is paid while the person proposed to be insured is living and (b) unless
the information in the application continues to be true and complete, without
material change, as of the time the initial premium is paid.
Your first premium payment should be given to your agent or broker and must be
by check or money order drawn on a U.S. bank in U.S. dollars and made payable to
Equitable Variable. Any additional premiums must be sent directly to our
Administrative Office. We will not accept cash payments. If you have submitted
the full initial premium with your application, we may, subject to certain
conditions, provide a limited amount of temporary insurance on the proposed
insured. You may review a copy of our Temporary Insurance Agreement on request.
On your application you provide us with initial instructions as to how to
allocate your net premiums and monthly charges among the Separate Account
divisions and the Guaranteed Interest Division. Allocation percentages may be
any whole number from zero to 100, but the sum must equal 100. These allocations
will go into effect on the first business day that follows the 20th calendar day
after the Issue Date of your policy. The Issue Date is shown on the Policy
Information Page and is the date we actually issue your policy. The date your
allocation instructions take effect is known as the Allocation Date. Our
business days are described in HOW WE DETERMINE THE UNIT VALUE on page 9.
Until the Allocation Date, any net premiums credited to your Policy Account will
be allocated to the Separate Account's Money Market Division, and any monthly
charges incurred will be deducted from the Money Market Division. On the
Allocation Date, all amounts then in your Policy Account will be allocated in
accordance with the directions contained in your policy application. We
establish the interest rate applicable to amounts in the Guaranteed Interest
Division as of the Register Date shown on the Policy Information Page and on
each policy anniversary. See ADDING INTEREST IN THE GUARANTEED INTEREST DIVISION
on page 6 and POLICY PERIODS, ANNIVERSARIES, DATES AND AGES on page 14.
We may delay the Allocation Date for the same reasons that we would also delay
effecting a transfer request. There will be no charge for the transfer out of
the Money Market Division on the Allocation Date and that transfer will not
count as one of the four free transfers per policy year. See TRANSFERS OF POLICY
ACCOUNT VALUE on page 10.
You may change the allocation percentages of net premiums or of monthly
deductions by writing to our Administrative Office and indicating the changes
you wish to make. These changes will go into effect as of the date your request
is received at our Administrative Office, but no earlier than the first business
day following the Allocation Date, and will affect transactions on and after
such date.
Although premiums are flexible, the Policy Information Page will show a
"planned" periodic premium. You determine the planned premium (within limits set
by us) when you apply for the policy. The planned premium is not necessarily
designed to equal the amount of premiums that will keep your policy in effect.
You may make the planned payment or skip the planned payment. We will send
premium reminder notices based on your planned premium. You may ask us not to
send notices by writing to our Administration Office. We reserve the right to
limit the amount of any premium payments you make which are in addition to your
planned premium.
Generally, premiums may be paid at any time and in any amount, as long as each
payment is at least $100. (Policies issued in some states may have different
minimum premium payments.) This minimum may be increased if we give you 90 days
written notice. We may return premium payments if we determine that they would
cause your policy to become a modified endowment contract or to cease to qualify
as life insurance under Federal income tax law. We may also make such changes to
the policy as we deem necessary to continue to qualify the policy as life
insurance. See TAX EFFECTS on page 15 for an explanation of modified endowment
contracts, the special tax consequences of such contracts and how your policy
might become a modified endowment contract.
If you stop paying premiums, your policy will continue in effect until the Net
Cash Surrender Value can no longer cover the monthly deductions from your Policy
Account. See YOUR POLICY CAN LAPSE on page 14.
DEATH BENEFITS
We pay a benefit to the beneficiary of the policy when the insured person dies.
This benefit will be equal to the death benefit under your policy plus any
additional benefits included in your policy and then due, less any policy loan,
any lien securing a Living Benefit payment and accrued interest. If the insured
person dies during a grace period, we will also deduct any overdue monthly
deductions.
You may choose between two death benefit options:
o OPTION A provides a death benefit equal to the policy's Face Amount. Except
as described below, the Option A benefit is fixed.
o OPTION B provides a death benefit equal to the Face Amount of the policy PLUS
the amount in your Policy Account on the day the insured person dies. Under
Option B, the value of the benefit is variable and fluctuates with the amount
in your Policy Account.
7
<PAGE>
Policyowners who prefer to have favorable investment experience reflected in
increased insurance coverage should choose Option B. Policyowners who prefer to
have insurance coverage that does not vary in amount and lower cost of insurance
charges should choose Option A.
Under both options, a higher death benefit may apply. This higher benefit is a
percentage multiple of the amount in your Policy Account. The percentage is
based on provisions of Federal tax law which require a minimum death benefit in
relation to cash value for your policy to qualify as life insurance. The higher
death benefit will be the amount in your Policy Account on the day the insured
person dies times the percentage for the insured person's age (nearest birthday)
at the beginning of the policy year of the insured person's death. The
percentage declines as the insured person gets older. For ages that are not
shown on the following table, the applicable percentage multiples will decrease
by a ratable portion for each full year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE OF DEATH BENEFITS BASED ON POLICY ACCOUNT VALUES
INSURED 40 or 45 50 55 60 65 70 75 to 95
PERSON'S AGE under 90
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
POLICY ACCOUNT 250% 215% 185% 150% 130% 120% 115% 105% 100%
PERCENTAGE MULTIPLE
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
For example, if the insured person were 40 years old and you had a Policy
Account value of $100,000, the death benefit would be at least 250% of $100,000
or $250,000.
CHANGES IN INSURANCE PROTECTION
CHANGING THE FACE AMOUNT. You may request a change in the Face Amount any time
after the first policy year by sending a written request to our Administrative
Office. See TAX EFFECTS on page 15 for the tax consequences of changing the Face
Amount. Any change will be subject to our approval and the following conditions:
o To increase the Face Amount, you must provide satisfactory evidence that the
insured person is still insurable. The cost of insurance rate for the amount
of the increase will be based on the rating class, attained age and
smoker/non-smoker status of the insured person on the date of the increase
and on the insured person's sex. If the insured person has become a more
expensive risk we will ask you if you want to pay the higher cost of
insurance charges before we process the change.
o Any increase must be at least $10,000. Monthly deductions from your Policy
Account for the cost of insurance will generally increase, beginning on the
date the increase takes effect. An administrative charge of $1.50 for each
additional $1,000 of insurance (up to a maximum charge of $250) will be
deducted from your Policy Account. See HOW POLICY ACCOUNT CHARGES ARE
ALLOCATED on page 13.
o You may reduce the Face Amount but not below the minimum we require to issue
this policy at the time of the reduction. Any reduction must be at least
$10,000. Monthly deductions from your Policy Account for the cost of
insurance will generally decrease, beginning on the date the decrease in Face
Amount takes effect. If you reduce the Face Amount during the first ten
policy years, we will deduct a pro rata share of the applicable surrender
charge from the Policy Account. See SURRENDER CHARGE on page 13.
o Our current procedure is to disapprove a requested decrease if it would cause
a death benefit based on the Policy Account percentage multiple to apply. See
DEATH BENEFITS on page 7.
Reductions will be applied to prior increases in the Face Amount, if any, in the
reverse order in which such increases occurred, and then to the original Face
Amount.
CHANGING THE DEATH BENEFIT OPTION. At any time after the first policy year while
your policy is in force, you may change the death benefit option by sending a
written request to our Administrative Office. See TAX EFFECTS on page 15 for the
tax consequences of changing the death benefit option.
o If you change from OPTION A TO OPTION B, the Face Amount will be decreased by
the amount in your Policy Account on the date of the change. We may not allow
such a change if it would reduce the Face Amount below the minimum required
to issue this policy at the time of the reduction.
o If you change from OPTION B TO OPTION A, the Face Amount of insurance will be
increased by the amount in the Policy Account on the date of the change.
These increases and decreases in Face Amount are made so that the amount of the
death benefit remains the same on the date of the change. When the death benefit
remains the same, there is no change in the net amount at risk, which is the
amount on which cost of insurance charges are based (see COST OF INSURANCE
CHARGE on page 12). We do not require evidence of insurability for the increase
in Face Amount when you change from Option B to Option A, nor do we make any
charge for this increase. We will not charge a surrender charge for the decrease
in Face Amount when you change from Option A to Option B.
SUBSTITUTION OF INSURED PERSON. If you provide satisfactory evidence that the
person proposed to be insured is insurable then, subject to certain
restrictions, you may, after the first policy year, substitute the insured
person under your policy. If you do so, the cost of insurance charges may change
but we will not change the surrender charge. Since substituting the insured
person is a taxable event and may have other tax consequences as well, you
should consult your tax adviser prior to substituting the insured person under
your policy. As a condition to substituting the insured person, we may require
you to sign a form acknowledging the tax consequences of making this change.
8
<PAGE>
WHEN POLICY CHANGES GO INTO EFFECT. A substitution of insured person, or change
in Face Amount or death benefit option, will go into effect at the beginning of
the policy month that coincides with or follows the date we approve the request
for the change. In some cases, we may not approve a change because it might
disqualify your policy as life insurance under applicable Federal tax law. In
other cases there may be tax consequences as a result of the change. See TAX
EFFECTS on page 15.
MATURITY BENEFITS
If the insured person is still living on the policy anniversary nearest his or
her 95th birthday (Final Policy Date), we will pay you the amount in the Policy
Account net of any policy loan, any lien securing a Living Benefit payment and
accrued interest. The policy will then terminate. You may choose to have this
benefit paid in installments. See TAX EFFECTS on page 15 and YOUR PAYMENT
OPTIONS on page 19.
LIVING BENEFIT OPTION
Subject to regulatory approval in your state and our underwriting guidelines,
our new Living Benefit rider will be added to your policy at issue. The Living
Benefit rider is not available in certain states, including New Jersey. The
Living Benefit rider enables the policyowner to receive a portion of the
policy's death benefit (excluding death benefits payable under certain riders)
if the insured person has a terminal illness. Certain eligibility requirements
apply when you submit a Living Benefit claim (for example, satisfactory evidence
of less than six month life expectancy). There is no additional charge for the
rider, but we will deduct an administrative charge of $250 from the proceeds of
the Living Benefit payment. This charge may be less in some states. In addition,
if you tell us that you do not wish to have the rider added at issue, but you
later ask to add it, additional underwriting will be required and there will be
a $100 administrative charge.
When a Living Benefit claim is paid, Equitable Variable establishes a lien
against the policy. The amount of the lien is the sum of the Living Benefit
payment and any accrued interest on that payment. Interest will be charged at a
rate equal to the greater of: (i) the yield on a 90-day Treasury bill and (ii)
the maximum adjustable policy loan interest rate permitted in the state your
policy is delivered. See BORROWING FROM YOUR POLICY ACCOUNT -- POLICY LOAN
INTEREST on page 11.
Until a death benefit is paid, or the policy is surrendered, a portion of the
lien is allocated to the policy's Cash Surrender Value. This liened amount will
be transferred to the Guaranteed Interest Division where it will earn interest
at the same rate as unloaned amounts. See THE GUARANTEED INTEREST DIVISION on
page 6. This liened amount will not be available for loans, transfers or partial
withdrawals. Any death benefit, maturity benefit or Net Cash Surrender Value
payable upon policy surrender will be reduced by the amount of the lien.
Unlike a death benefit received by a beneficiary after the death of an insured,
receipt of a Living Benefit payment may be taxable as a distribution under the
policy. See TAX EFFECTS on page 15 for a discussion of the tax treatment of
distributions under the policy. Consult your tax adviser. Receipt of a Living
Benefit payment may also affect a policyowner's eligibility for certain
government benefits or entitlements. You should contact your Equitable agent if
you wish to make a claim under the rider.
ADDITIONAL BENEFITS MAY BE AVAILABLE
Your policy may include additional benefits. A charge will be deducted from your
Policy Account monthly for each additional benefit you choose. These benefits
are subject to our rules and may be cancelled by you at any time. More details
will be included in your policy if you choose any of these benefits. The
following additional benefits are currently available: disability waiver
benefit, accidental death benefit, children's term insurance and term insurance
on an additional insured person.
If the disability waiver goes into effect, we will not permit Face Amount
increases or decreases and the death benefit will be changed to Option B.
YOUR POLICY ACCOUNT VALUE
The amount in your Policy Account is the sum of the amounts you have in the
Guaranteed Interest Division and in the various divisions of the Separate
Account. Your Policy Account also reflects various charges. See DEDUCTIONS AND
CHARGES on page 12.
AMOUNTS IN THE SEPARATE ACCOUNT. Amounts allocated, transferred or added to a
Separate Account division are used to purchase units of that division. Units are
redeemed from a Separate Account division when amounts are withdrawn,
transferred or deducted for charges or capitalized loan interest. The number of
units purchased or redeemed in a division of the Separate Account is calculated
by dividing the dollar amount of the transaction by the division's unit value
calculated after the close of business that day. On any given day, the value you
have in a division of the Separate Account is the unit value for that division
times the number of units credited to you in that division.
HOW WE DETERMINE THE UNIT VALUE. We determine unit values for the divisions of
the Separate Account at the end of each business day. Generally, a business day
is any day we are open and the New York Stock Exchange is open for trading. We
are closed on national business holidays, including Martin Luther King Day, and
also the Friday after Thanksgiving. Additionally, we may choose to close on the
day immediately preceding or following a national business holiday or due to
emergency conditions. We will not process any policy transactions as of such
days other than a policy anniversary report, monthly charge deduction and the
payment of death benefit proceeds. The unit value for any business day is equal
to the unit value for the preceding business day multiplied by the net
investment factor for that division on that business day.
A net investment factor is determined for each division of the Separate Account
every business day as follows: first, we take the net asset value of a share in
the corresponding Trust portfolio at the close of business that day as reported
by the Trust, and we add the per share amount of any dividends or capital gains
distributions paid by the Trust on that day. We divide this amount by the per
share net asset value on the preceding business day. Then, we subtract a daily
asset charge for each calendar day between business days (for example, a Monday
calculation may include charges for Saturday, Sunday and Monday). The daily
charge is guaranteed not to exceed an effective annual rate of .60%. See CHARGES
AGAINST THE SEPARATE ACCOUNT on page 13. Finally, we reserve the right to
subtract any daily charge for taxes or amounts set aside as a reserve for taxes.
For current Incentive Life unit values, call (212) 714-5015.
9
<PAGE>
TRANSFERS OF POLICY ACCOUNT VALUE. You may request a transfer of amounts from
any division of the Separate Account to any other division of the Separate
Account or to the Guaranteed Interest Division. Special rules apply to transfers
out of the Guaranteed Interest Division. See TRANSFERS FROM THE GUARANTEED
INTEREST DIVISION on page 6.
You may make a transfer by telephone or by submitting a written transfer request
to our Administrative Office. Transfer request forms are available from your
Equitable agent or from our Administrative Office. Special rules apply to
telephone transfers. See TELEPHONE TRANSFERS below.
The minimum amount which may be transferred on any date will be shown on the
Policy Information Page and is usually $500. This minimum need not come from any
one division or be transferred to any one division as long as the total amount
transferred that day, including any amounts transferred to or from the
Guaranteed Interest Division, at least equals the minimum. However, we will
transfer the entire amount in any division of the Separate Account even if it is
less than the minimum specified in your policy. A lower minimum amount applies
to our Automatic Transfer Service which is described below.
Transfers take effect on the date we receive your request, but no earlier than
the first business day following the Allocation Date. When part of a transfer
request cannot be processed, we will not process any part of the request. This
could occur, for example, where the request does not comply with our transfer
limitations, or where the request is for a transfer of an amount greater than
currently allocated to that division. We may delay making a transfer if the New
York Stock Exchange is closed or the SEC has declared that an emergency exists.
In addition, we may delay transfers where permitted under applicable law.
AUTOMATIC TRANSFER SERVICE. The Automatic Transfer Service enables you to make
automatic monthly transfers out of the Money Market Division into the other
Separate Account divisions.
To start using this service you must first complete a special election form that
is available from your agent or our Administrative Office. You must also have a
minimum of $5,000 in the Money Market Division on the date the Automatic
Transfer Service is scheduled to begin. You can elect up to eight Separate
Account investment divisions for monthly transfers, but the minimum amount that
may be transferred to each division each month is $50.
If you elect the Automatic Transfer Service with your policy application, the
automatic transfers will begin in the second policy month following the
Allocation Date. If you elect the Automatic Transfer Service after your
application has been submitted, automatic transfers will begin on the next
monthly processing date after we receive your election form at our
Administrative Office. See POLICY PERIODS, ANNIVERSARIES, DATES AND AGES on page
14.
The Automatic Transfer Service will remain in effect until the earliest of the
following events: (1) the funds in the Money Market Division are insufficient to
cover the automatic transfer amount; (2) the policy is in a grace period; (3) we
receive at our Administrative Office your written instruction to cancel the
Automatic Transfer Service; or (4) we receive notice of death under the policy.
Using the Automatic Transfer Service does not guarantee a profit or protect
against loss in a declining market.
TELEPHONE TRANSFERS. In order to make transfers by telephone, you must first
complete and return an authorization form. Authorization forms can be obtained
from your Equitable agent or our Administrative Office. The completed form MUST
be returned to our Administrative Office before requesting a telephone transfer.
Telephone transfers may be requested on each day we are open to transact
business. You will receive the division's unit values as of the close of
business on the day you call. We do not accept telephone transfer requests after
3:00 p.m. Eastern Time. Only one telephone transfer request is permitted per day
and it may not be revoked at any time. The telephone transfer requests are
automatically recorded and are invalid if incomplete information is given,
portions of the request are inaudible, no authorization form is on file, or the
request does not comply with the transfer limitations described above.
Procedures have been established by Equitable Variable that are considered to be
reasonable and are designed to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting on telephone instructions and
providing written confirmation of instructions communicated by telephone. If
Equitable Variable does not employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, it may be liable for any
losses arising out of any action on its part or any failure or omission to act
as a result of its own negligence, lack of good faith, or willful misconduct. In
light of the procedures established, Equitable Variable will not be liable for
following telephone instructions that it reasonably believes to be genuine.
During times of extreme market activity it may be impossible to contact us to
make a telephone transfer. If this occurs, you should submit a written transfer
request to our Administrative Office. Our rules on telephone transfers are
subject to change and we reserve the right to discontinue telephone transfers in
the future.
CHARGE FOR TRANSFERS. We have reserved the right under your policy to make a
charge of up to $25 if you make more than four transfers of Policy Account value
in a policy year. Currently we are charging $25 per transfer after the twelfth
transfer. All transfers made on one transfer request form will count as one
transfer, and all transfers made in one telephone request will count as one
transfer. Transfers made through the Automatic Transfer Service or on the
Allocation Date will not count toward the twelve free transfers. No charge will
ever apply to the transfer of all of your amounts in the Separate Account to the
Guaranteed Interest Division.
10
<PAGE>
BORROWING FROM YOUR POLICY ACCOUNT
You may borrow up to 90% of your policy's Cash Surrender Value using only your
policy as security for the loan. Any new loan must be at least the minimum
amount shown on the Policy Information Page, usually $500. If you request an
additional loan, the additional amount requested will be added to the amount of
any outstanding loan and accrued loan interest. Any amount that secures a loan
remains part of your Policy Account but is assigned to the Guaranteed Interest
Division. This loaned amount earns an interest rate expected to be different
from the interest rate for unloaned amounts. Amounts securing a Living Benefit
payment are not available for policy loans.
HOW TO REQUEST A LOAN. You may request a loan by writing to our Administrative
Office. You should tell us how much of the loan you want taken from your
unloaned amount in the Guaranteed Interest Division and how much you want taken
from your amounts in the divisions of the Separate Account. If you request a
loan from a division of the Separate Account, we will redeem units sufficient to
cover that part of the loan and transfer the amount to the loaned portion of the
Guaranteed Interest Division. The amounts you have in each division will be
determined as of the day your request for a loan is received at our
Administrative Office.
If you do not indicate how you wish to allocate it, the loan will be allocated
according to the deduction allocation percentages applicable to your Policy
Account. If the loan cannot be allocated based on these percentages, it will be
allocated based on the proportions of your unloaned amounts in the Guaranteed
Interest Division and your value in each division of the Separate Account to the
unloaned value of your Policy Account.
POLICY LOAN INTEREST. Interest on a policy loan accrues daily at an adjustable
interest rate. We determine the rate at the beginning of each policy year. The
same rate applies to any outstanding policy loans and any new amounts you borrow
during the year. You will be notified of the current rate when you apply for a
loan. The maximum rate is the greater of 5 1/2%, or the "Published Monthly
Average" for the month that ends two months before the interest rate is set. The
"Published Monthly Average" is the Monthly Average Corporates yield shown in
Moody's Corporate Bond Yield Averages published by Moody's Investors Service,
Inc. If this average is no longer published, we will use any successor or the
average established by the insurance supervisory official of the jurisdiction in
which the policy is delivered. We will not charge more than the maximum rate
permitted by applicable law. We may also set a rate lower than the maximum.
Any change in the rate from one year to the next will be at least 1/2%. Your
maximum loan interest rate will only change, therefore, if the Published Monthly
Average differs from the previous interest rate by at least 1/2 of 1%. You will
be notified in advance of any increase in the interest rate on any loan you have
outstanding.
When you borrow on your policy, the amount of your loan is set aside in the
Guaranteed Interest Division where it earns a declared rate for loaned amounts.
Loaned amounts are expected to earn interest at a lower rate than the rate you
are charged for policy loan interest. Currently the rate we credit on loaned
amounts is 1% less than the rate we charge for policy loan interest. These loan
spreads are those currently in effect and are not guaranteed. However, the
interest credited on loaned amounts will never be less than 4 1/2%.
WHEN INTEREST IS DUE. Interest is due on each policy anniversary. If you do not
pay the interest when it is due, it will be added to your outstanding loan and
allocated based on the deduction allocation percentages for your Policy Account
which are then in effect. This means an additional loan is made to pay the
interest and amounts are transferred from the investment divisions to make the
loan. If the interest cannot be allocated on this basis, it will be allocated as
described above for allocating your loan.
REPAYING THE LOAN. You may repay all or part of a policy loan at any time. While
you have a policy loan and your policy is not in grace, we assume that any money
you send us is meant to repay the loan. If you wish to have any of these
payments applied as premium payments, you must specifically so indicate in
writing. Any amount not needed to repay a loan and accrued loan interest will be
applied as a premium payment. We will first allocate loan repayments to our
Guaranteed Interest Division until the amount of any loans originally allocated
to that division have been repaid. After you have repaid this amount, you may
choose how you want us to allocate the balance of any additional repayments. If
you do not provide specific instructions, repayments will be allocated on the
basis of your premium allocation percentages.
THE EFFECTS OF A POLICY LOAN. A loan will have a permanent effect on the value
of your Policy Account and, therefore, on the benefits under your policy, even
if the loan is repaid. The loaned amount in the Guaranteed Interest Division
will not be available for investment in the divisions of the Separate Account or
in the unloaned portion of the Guaranteed Interest Division. Whether you earn
more or less with the loaned amount set aside depends on the investment
experience of the divisions of the Separate Account and the rates declared for
the unloaned portion of the Guaranteed Interest Division. The amount of any
policy loan and accrued loan interest will reduce the proceeds paid from your
policy upon the death of the insured person, policy maturity or policy
surrender. In addition, a loan will reduce the amount available for you to
withdraw from your policy. See TAX EFFECTS on page 15 for the tax consequences
of a policy loan. A loan may also affect the length of time that your insurance
remains in force because the amount set aside to secure your loan cannot be used
to cover the monthly deductions. See YOUR POLICY CAN LAPSE on page 14.
PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT
At any time after the first policy year while the insured person is living, you
may request a partial withdrawal of your Net Cash Surrender Value by writing to
our Administrative Office. Any such withdrawal is subject to our approval and to
certain conditions. Amounts securing a Living Benefit payment are not available
for partial withdrawals. In addition, we reserve the right to decline a request
for a partial withdrawal. Under our current rules, a withdrawal must:
o be at least $500,
o not cause the death benefit to fall below the minimum Face Amount for which
we would issue the policy at the time, and
o not cause the policy to fail to qualify as life insurance under applicable
tax law.
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PARTIAL WITHDRAWAL CHARGES. When you make a partial withdrawal, an expense
charge of $25 or 2% of the amount withdrawn, whichever is less, will be deducted
from your Policy Account.
ALLOCATION OF WITHDRAWALS AND CHARGES. You may specify how much of the
withdrawal you want taken from amounts you have in each division of the Separate
Account and the unloaned portion of the Guaranteed Interest Division. If you do
not specifically indicate, we will make the withdrawal on the basis of your
deduction allocation percentages. The related expense charge is deducted from
the amount you have remaining in each division and the unloaned portion of the
Guaranteed Interest Division, based on the proportion that the amount withdrawn
from each bears to the total amount withdrawn. If we cannot make the withdrawal
or deduct the expense charge in the manner discussed above, we will make the
withdrawal and deduction based on the proportions of your unloaned amounts in
the Guaranteed Interest Division and the divisions of the Separate Account to
the total unloaned value of your Policy Account.
THE EFFECTS OF A PARTIAL WITHDRAWAL. A partial withdrawal reduces the amount you
have in your Policy Account. Normally, it also reduces the Cash Surrender Value
and the death benefit on a dollar-for-dollar basis, but does not affect the net
amount at risk, which is the difference between the current death benefit and
the amount in your Policy Account. If you selected death benefit Option A, the
Face Amount of your policy will be reduced so that generally there will be no
change in the net amount at risk. However, under either option, if the death
benefit is based on the Policy Account percentage multiple, the reduction in
death benefit would be greater and the net amount at risk would be reduced. See
DEATH BENEFITS on page 7. The withdrawal and these reductions will be effective
as of the date your request is received at our Administrative Office. See TAX
EFFECTS on page 15 for the tax consequences of a reduction in benefits and a
partial withdrawal.
SURRENDER FOR NET CASH SURRENDER VALUE. The Cash Surrender Value is the amount
in your Policy Account minus the surrender charge described under SURRENDER
CHARGE on page 14. The Net Cash Surrender Value equals the Cash Surrender Value
minus any loan and accrued loan interest.
You may surrender your policy for its Net Cash Surrender Value at any time while
the insured person is living. We will deduct from the Net Cash Surrender Value
any amount securing a Living Benefit payment. You may surrender the policy by
sending a written request and the policy to our Administrative Office. We will
compute the Net Cash Surrender Value as of the date we receive your request and
the policy at our Administrative Office. All insurance coverage under your
policy will end on that date. See TAX EFFECTS on page 15 for the tax
consequences of a policy surrender.
DEDUCTIONS AND CHARGES
DEDUCTIONS FROM YOUR PREMIUMS. Charges for applicable taxes are deducted from
all premiums and an initial administrative charge may be deducted from your
first premium. The balance of each premium (the net premium) is placed in your
Policy Account.
o CHARGES FOR APPLICABLE TAXES and all additional charges imposed on premium
payments by states and certain jurisdictions are deducted from each premium
payment. The amount of the tax may vary depending on the jurisdiction in
which the insured person resides. Such taxes currently range between .75% and
5%. This tax is incurred by Equitable Variable, so you cannot deduct it on
your income tax return.
This charge will be increased or decreased to reflect any legislative changes
in the applicable tax. In addition, if an insured person changes his or her
place of residence, you should notify us to change the charge to the tax rate
of the new jurisdiction.
o INITIAL ADMINISTRATIVE CHARGE. If you intend to invest premiums annually
(annual mode), and indicate this on your application, a $250 initial
administrative charge will be deducted from your first premium to cover the
costs of issuing your policy such as application processing, medical
examinations, establishment of policy records and underwriting costs
(determining insurability and assigning the insured person to a risk class).
This charge is designed to reimburse us for expenses and we do not expect a
profit from it. This charge will not apply to semi-annual, quarterly or
monthly payment modes.
DEDUCTIONS FROM YOUR POLICY ACCOUNT. At the beginning of each policy month, the
following charges are deducted from your Policy Account:
o ADMINISTRATIVE CHARGE. The current administrative charge is $31 per month
during the first policy year if you selected semi-annual or more frequent
planned premiums ($6 per month if you selected annual planned premiums).
During subsequent policy years, the administrative charge is currently $6 per
month regardless of the planned premium schedule you selected. This charge is
guaranteed never to be more than $8 per month.
This charge is designed to cover the continuing costs of maintaining your
policy, such as billing, policy transactions and policyowner communications.
In the case of policies not on an annual mode, the higher first year monthly
charge is also intended to cover the costs discussed above under INITIAL
ADMINISTRATIVE CHARGE. This charge is designed to reimburse us for expenses
and we do not expect to profit from it.
o COST OF INSURANCE CHARGE. The cost of insurance charge is calculated by
multiplying the net amount at risk at the beginning of the policy month by
the monthly cost of insurance rate applicable to the insured person at that
time. The net amount at risk is the difference between the current death
benefit and the amount in your Policy Account.
Your cost of insurance charge will vary from month to month with changes in
the net amount at risk. For example, if the current death benefit for the
month is increased because the death benefit is based on a percentage
multiple of the Policy Account, then the net amount at risk for the month
will increase. Assuming the percentage multiple is not in effect, increases
or decreases to the Policy Account will result in a corresponding increase or
decrease to the net amount at risk under Option A policies, but no
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change to the net amount at risk under Option B policies. Increases or
decreases to the Policy Account can result from making premium payments,
investment experience or the deduction of charges.
The monthly cost of insurance rate applicable to your policy will be based on
our current monthly cost of insurance rates. After the first policy year, the
current monthly cost of insurance rates may be changed from time to time.
However, the current rates will never be more than the guaranteed maximum
rates set forth in your policy. The guaranteed rates are based on the
Commissioner's 1980 Standard Ordinary Male and Female Mortality Tables.
The current and guaranteed monthly cost of insurance rates are determined
based on the sex, age and rating class of the insured person and the Face
Amount of the policy at the time of the charge. In addition, the current
rates also vary depending on the duration of the policy (i.e., the length of
time since a policy has been issued) and on whether the insured person is a
non-smoker.
The current rate for a policy after the tenth policy year is less than the
rate that applies during the first ten policy years for a policy of the same
Face Amount on an insured person of the same sex, age, rating class and
smoker status. This cost of insurance charge reduction applies on a current
basis and is not guaranteed. Because Incentive Life was first offered in
1986, no cost of insurance charge reflecting a reduction for duration has yet
been made by Equitable Variable.
Lower current cost of insurance rates apply at most ages for insured persons
who qualify as non-smokers. To qualify, an insured person must be at standard
risk and must meet additional requirements that relate to smoking habits. In
addition, the insured person must be age twenty or over. Insured persons who
are under twenty years of age may ask us to review their current smoking
habits when they reach their twentieth birthday.
Congress and the legislatures of various states have from time to time
considered legislation that would require insurance rates to be the same for
males and females of the same age and risk class. In addition, employers and
employee organizations should consider, in consultation with counsel, the
impact of Title VII of the Civil Rights Act of 1964 on the purchase of
Incentive Life in connection with an employment-related insurance or benefit
plan. The United States Supreme Court held, in a 1983 decision, that, under
Title VII, optional annuity benefits under a deferred compensation plan could
not vary on the basis of sex.
o CHARGES FOR ADDITIONAL BENEFITS. The cost of any additional benefits you
choose will be deducted monthly. Your policy contains tables showing the
guaranteed maximum rates for all of these insurance costs.
Any changes in the cost of insurance, charges for additional benefits or
administrative charges will be by class of insured person and will be based on
changes in future expectations about such factors as investment earnings,
mortality, the length of time policies will remain in effect, expenses and
taxes.
In addition to the monthly deductions from your Policy Account described above,
we charge fees for certain policy transactions: see PARTIAL WITHDRAWALS FROM
YOUR POLICY ACCOUNT on page 11, CHANGES IN INSURANCE PROTECTION on page 8,
TRANSFERS OF POLICY ACCOUNT VALUE on page 10. Also, if, after your policy is
issued, you request more than one illustration in a policy year, we may charge a
fee. See ILLUSTRATIONS OF POLICY BENEFITS in Part 24.
HOW POLICY ACCOUNT CHARGES ARE ALLOCATED. Generally, deductions from your Policy
Account for monthly charges are made from the divisions of our Separate Account
and the unloaned portion of our Guaranteed Interest Division in accordance with
the deduction allocation percentages specified in your application unless you
instruct us in writing to do otherwise. See FLEXIBLE PREMIUMS on page 7. If a
deduction cannot be made in accordance with these percentages, it will be made
based on the proportion that your unloaned amounts in the Guaranteed Interest
Division and your amounts in the divisions of the Separate Account bear to the
total unloaned value of your Policy Account.
CHARGES AGAINST THE SEPARATE ACCOUNT. These charges are reflected in the unit
values for the divisions of the Separate Account. See HOW WE DETERMINE THE UNIT
VALUE on page 9.
o A charge for assuming MORTALITY AND EXPENSE RISKS will be made. The annual
rate is .60%. We are committed to fulfilling our obligations under the policy
and providing service to you over the lifetime of your policy. Despite the
uncertainty of future events, we guarantee that monthly administrative and
insurance deductions from your Policy Account will never be greater than the
maximum amounts shown in your policy. In making this guarantee, we assume the
mortality risk that insured persons will live for shorter periods than we
estimated. When this happens, we have to pay a greater amount of death
benefit than we expected to pay in relation to the cost of insurance charges
we received. We also assume the expense risk that the cost of issuing and
administering policies will be greater than we expected. If the amount
collected from this charge exceeds losses from the risks assumed, it will be
to our profit.
o We reserve the right to make a charge in the future for taxes or reserves set
aside for taxes, which will reduce the investment experience of the divisions
of the Separate Account. See TAX EFFECTS on page 15.
TRUST CHARGES. Our Separate Account purchases shares of the Trust at net asset
value. That price reflects investment management fees and other direct expenses
that have already been deducted from the assets of the Trust. The Trust does not
impose a sales charge. See THE TRUST'S INVESTMENT ADVISER on page 4.
SURRENDER CHARGE. No deductions are made from premiums for sales expenses. We
incur various sales and promotional expenses in connection with selling
Incentive Life, such as commissions, the cost of preparing sales literature,
other promotional activities and other direct and indirect expenses. We pay
these expenses from our own resources, including any surrender charge we might
collect and any profit we may earn on the charges deducted under the policy.
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There is a difference between the amount in your Policy Account and the Cash
Surrender Value of your policy for the first ten policy years. This difference
is the surrender charge, a contingent deferred sales load. It is a contingent
load because you pay it only if you surrender your policy (or reduce its Face
Amount or let it lapse) during the first ten policy years. It is a deferred load
because we do not deduct it from your premiums. Because the surrender charge is
contingent and deferred, the amount we might collect in a policy year is not
related to the actual sales expenses for that year.
To determine surrender charges, "target" premiums are used. Target premiums are
not based on the "planned" premium you determine. See FLEXIBLE PREMIUMS on page
7. In general, a target premium would equal the amount of annual premium
necessary to maintain a fixed whole life insurance policy for the same face
amount on the life of the insured person. Target premiums are based on the age
of the insured person and the initial Face Amount of the policy. Except in
certain circumstances, the sex of the insured person is also a factor in
determining target premiums. See COST OF INSURANCE CHARGE on page 12.
The maximum surrender charge for your policy will be shown on the Policy
Information Page and will equal 50% of one target premium. This maximum will not
vary based on the amount of premiums you pay or when you pay them. After the
first six policy years, this maximum surrender charge begins to decrease by 20%
per year. After ten years, there is no surrender charge.
Subject to the maximum, the surrender charge is calculated based on actual
premium payments. The surrender charge equals 30% of premium payments made
during the first policy year up to the amount of one target premium and 9% of
any additional premiums paid during the first ten policy years.
Attempting to structure the timing and amount of premium payments to reduce the
potential surrender charge below the maximum is not recommended. Paying small
amounts of premium in the policy's first ten years to reduce the potential
surrender charge could increase the risk that your policy will lapse. If
payments are structured in this manner, the amounts in your Policy Account would
need to receive favorable investment performance for your policy not to lapse
(performance in which, as a result of the payment structure, you would not fully
participate).
If you request a Face Amount reduction during the first ten policy years, we
will consider it a partial surrender and may deduct a portion of the surrender
charge. If you increase the Face Amount and later ask for a decrease, a
surrender charge will apply only to a decrease below the original Face Amount.
Generally, the pro rata surrender charge for a partial surrender will be
determined by dividing the amount of the Face Amount decrease (below the initial
Face Amount) by the initial Face Amount and multiplying that fraction by the
surrender charge. See TAX EFFECTS on page 15 for a discussion of the tax
consequences of changing the Face Amount.
ADDITIONAL INFORMATION ABOUT INCENTIVE LIFE
YOUR POLICY CAN LAPSE. Your insurance coverage under Incentive Life continues as
long as the Net Cash Surrender Value of the policy is enough to pay the monthly
deductions. The Net Cash Surrender Value equals the Cash Surrender Value minus
any loan and accrued loan interest. If the Net Cash Surrender Value at the
beginning of any policy month is less than the deductions for that month, a
61-day grace period will begin. We will notify you, and any assignees on our
records, in writing, that the grace period has begun and indicate the payment
that is needed to avoid policy lapse at the end of the grace period. The
required payment will approximate an amount which would increase the Net Cash
Surrender Value to cover total monthly deductions for three months (without
regard to any investment performance in the Policy Account).
The required payment and any residual Policy Account value will be used to cover
the overdue deductions. However, if your Policy Account has unfavorable
investment experience, the required payment may not be sufficient to cover the
overdue deductions on the date we receive the payment. In this case, a new
61-day grace period will begin.
If we do not receive payment within the 61 days, your policy will lapse without
value. We will withdraw any amount left in your Policy Account and apply this
amount to the overdue deductions, any applicable surrender charge and any unpaid
loan and accrued loan interest. We will inform you, and any assignee, at last
known addresses that your policy has ended without value. See TAX EFFECTS on
page 15 for the potential tax consequences of policy lapse.
YOU MAY REINSTATE THE POLICY. You may reinstate the policy within three years
after it lapses if:
o you provide evidence that the insured person (and any other person insured
under a rider) is still insurable, and
o you make the premium payment that we require to reinstate the policy.
The effective date of the reinstated policy will be the beginning of the policy
month which coincides with or follows the date we approve your reinstatement
application. Upon reinstatement, there will be no further surrender charges
applied against the policy. Previous loans will not be reinstated. Some states
may vary the time period and conditions for reinstatement.
POLICY PERIODS, ANNIVERSARIES, DATES AND AGES. When an application for an
Incentive Life policy is completed and submitted to us, we decide whether or not
to issue the policy. This decision is made based on the information in the
application and our standards for issuing insurance and classifying risks. If we
decide not to issue a policy, any premium paid will be refunded.
The Issue Date, shown on the Policy Information Page, is the date your policy is
actually issued. Generally, contestability is measured from the Issue Date, as
is the suicide exclusion.
The Final Policy Date is the policy anniversary nearest the insured person's
95th birthday. The policy ends on that date and the maturity benefit is paid if
the insured person is still alive.
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The Register Date, also shown on the Policy Information Page, is used to measure
policy years and policy months. Charges and deductions under the policy are
first made as of the Register Date. As to when coverage under the policy begins,
see FLEXIBLE PREMIUMS on page 7.
Generally, we determine the Register Date based upon when we receive your full
initial premium. In most cases:
o If you submit the full initial premium to your Equitable agent at the time
you sign the application, and we issue the policy as it was applied for, then
the Register Date will be the later of (a) the date part I of the policy
application was signed or, (b) the date part II of the policy application was
signed by a medical professional.
o If we do not receive your full initial premium at our Administrative Office
before the Issue Date or, if the policy is not issued as applied for, the
Register Date will be the same as the Issue Date.
We may permit corporate policyowners to backdate a Register Date (up to six
months) in order to coordinate a single premium payment date for all employees.
We may also permit policyowners to advance a Register Date (up to three months)
in employer-sponsored payroll deduction cases. Backdating the Register Date (up
to six months) may also be permitted to save age.
The investment start date is the date that your initial net premium begins to
vary with the investment performance of the divisions of the Separate Account or
accrue interest in the Guaranteed Interest Division. Generally, the investment
start date will be the same as the Register Date if the full initial premium is
received at our Administrative Office before the Register Date. Otherwise, the
investment start date will be the date the full initial premium is received at
our Administrative Office. Thus, to the extent that your first premium is
received before the Register Date, there will be a period during which the
initial premium will not be invested. The investment start date for policies
with backdated Register Dates will also be the date the premium is received at
our Administrative Office. Any subsequent premium payment received after the
investment start date for the initial premium payment will begin to experience
investment performance as of the date such payment is received at our
Administrative Office. Remember, your net initial premium may be temporarily
allocated to the Money Market Division of the Separate Account prior to
allocation in accordance with your instructions.
See FLEXIBLE PREMIUMS on page 7.
Generally, when we refer to the age of the insured person, we mean his or her
age on the birthday nearest to the beginning of the particular policy year.
TAX EFFECTS
This discussion is based on our understanding of the effect of the current
Federal income tax laws as currently interpreted on Incentive Life policies
owned by U.S. resident individuals. The tax effects on corporate taxpayers
subject to the Federal alternative minimum tax, non-U.S. residents and non-U.S.
citizens, may be different. This discussion is general in nature, and should not
be considered tax advice, for which you should consult your legal or tax
adviser.
POLICY PROCEEDS. An Incentive Life policy will be treated as "life insurance"
for Federal income tax purposes if it meets the definitional requirement of the
Internal Revenue Code (the Code) and as long as the portfolios of the Trust
satisfy the diversification requirements under the Code. We believe that
Incentive Life will meet these requirements, and that under Federal income tax
law:
o the death benefit received by the beneficiary under your Incentive Life
policy will not be subject to Federal income tax; and
o as long as your policy remains in force, increases in the Policy Account
value as a result of interest or investment experience will not be subject to
Federal income tax unless and until there is a distribution from your policy,
such as a loan or a partial withdrawal.
Special tax rules may apply, however, if you transfer your ownership of the
policy. Consult your tax adviser before any transfer of your policy.
The Federal income tax consequences of a distribution from your policy will
depend on whether your policy is determined to be a "modified endowment." The
character of any income recognized will be ordinary income as opposed to capital
gain.
A MODIFIED ENDOWMENT IS a life insurance policy which fails to meet a
"seven-pay" test. In general, a policy will fail the seven-pay test if the
cumulative amount of premiums paid under the policy at any time during the first
seven policy years exceeds a calculated premium level. The calculated seven-pay
premium level is based on a hypothetical policy issued on the same insured
person and for the same initial death benefit which, under specified conditions
(which include the absence of expense, administrative and surrender charges),
would be fully paid for after seven level annual premiums. Your policy will be
treated as a modified endowment unless the cumulative premiums paid under your
policy, at all times during the first seven policy years, are less than or equal
to the cumulative seven-pay premiums which would have been paid under the
hypothetical policy on or before such times.
Whenever there is a "material change" under a policy, it will generally be
treated as a new contract for purposes of determining whether the policy is a
modified endowment, and subjected to a new seven-pay period and a new seven-pay
limit. The new seven-pay limit would be determined taking into account, under a
downward adjustment formula, the Policy Account value of the policy at the time
of such change. A materially changed policy would be considered a modified
endowment if it failed to satisfy the new seven-pay limit. A material change
would occur if there was a substitution of the insured person, and could also
occur as a result of a change in death benefit option, the selection of
additional benefits, an increase in Face Amount and certain other changes.
If the benefits under your policy are reduced during the first seven policy
years after entering into the policy (or within seven years after a material
change), for example, by requesting a decrease in Face Amount or in some cases
by making partial withdrawals or terminating additional benefits under a rider,
the calculated seven-pay premium level will be redetermined based on the reduced
level of benefits and applied retroactively for purposes of the seven-pay test.
If the premiums previously paid are greater than the recalculated seven-pay
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premium level limits, the policy will become a modified endowment. Generally, a
life insurance policy which is received in exchange for a modified endowment
will also be considered a modified endowment.
Changes made to a life insurance policy, for example, a decrease in benefits, a
policy lapse or the reinstatement of a lapsed policy, may have other effects on
your policy, including impacting the maximum amount of premiums that can be paid
under the policy, as well as the maximum amount of Policy Account value that may
be maintained under the policy. In some cases, action may be necessary for your
policy to continue to qualify as life insurance. See POLICY CHANGES below.
IF YOUR INCENTIVE LIFE POLICY IS NOT A MODIFIED ENDOWMENT, as long as it remains
in force, a loan under your policy will be treated as indebtedness and no part
of the loan will be subject to current Federal income tax. Interest on the loan
will generally not be tax deductible. After the first fifteen policy years, the
proceeds from a partial withdrawal will not be subject to Federal income tax
except to the extent such proceeds exceed your "Basis" in your policy. Your
Basis in your policy generally will equal the premiums you have paid less any
amounts previously recovered through tax-free policy distributions. During the
first fifteen policy years, the proceeds from a partial withdrawal could be
subject to Federal income tax to the extent your Policy Account value exceeds
your Basis in your policy. The portion subject to tax will depend upon the ratio
of your death benefit to the Policy Account value (or in some cases the premiums
paid) under your policy and the age of the insured person at the time of the
withdrawal. In addition, if at any time your policy is surrendered, the excess,
if any, of your Cash Surrender Value (which includes the amount of policy loan
and accrued loan interest) over your Basis will be subject to Federal income
tax. In addition, if a policy lapses while there is a policy loan, the
cancellation of such loan and accrued loan interest will be treated as a
distribution and could be subject to tax under the above rules. Upon the Final
Policy Date of the policy, the excess of the amount of any benefit paid, not
taking into account any reduction for any loan and accrued loan interest, over
your Basis in the policy, will be subject to Federal income tax.
IF YOUR POLICY IS A MODIFIED ENDOWMENT, any distribution from your policy will
be taxed on an "income-first" basis. Distributions for this purpose include a
loan (including any increase in the loan amount to pay interest on an existing
loan or an assignment or a pledge to secure a loan) or partial withdrawal. Any
such distributions will be considered taxable income to you to the extent your
Policy Account value exceeds your Basis in the policy. For modified endowments,
your Basis would be increased by the amount of any prior loan under your policy
that was considered taxable income to you. For purposes of determining the
taxable portion of any distribution, all modified endowments issued by the same
insurer or an affiliate to the same policyowner (excluding certain qualified
plans) during any calendar year are to be aggregated. The Secretary of the
Treasury has authority to prescribe additional rules to prevent avoidance of
"income-first" taxation on distributions from modified endowments.
A 10% penalty tax will also apply to the taxable portion of a distribution from
a modified endowment. The penalty tax will not, however, apply to distributions
(i) to taxpayers 59 1/2 years of age or older, (ii) in the case of a disability
(as defined in the Code) or (iii) received as part of a series of substantially
equal periodic annuity payments for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his
beneficiary. If your policy is surrendered, the excess, if any, of your Cash
Surrender Value over your Basis will be subject to Federal income tax and,
unless one of the above exceptions applies, the 10% penalty tax. If your policy
lapses while there is a policy loan, the cancellation of such loan and accrued
loan interest will be treated as a distribution to the extent not previously
treated as such and could be subject to tax, including the penalty tax, as
described under the above rules. In addition, upon the Final Policy Date the
excess of the amount of any benefit paid, not taking into account any reduction
for any loan and accrued loan interest, over your Basis in the policy, will be
subject to Federal income tax and, unless an exception applies, a 10% penalty
tax.
If your policy becomes a modified endowment, distributions that occur during the
policy year it becomes a modified endowment and any subsequent policy year will
be taxed as described in the two preceding paragraphs. In addition distributions
from a policy within two years before it becomes a modified endowment will be
subject to tax in this manner. THIS MEANS THAT A DISTRIBUTION MADE FROM A POLICY
THAT IS NOT A MODIFIED ENDOWMENT COULD LATER BECOME TAXABLE AS A DISTRIBUTION
FROM A MODIFIED ENDOWMENT. The Secretary of the Treasury has been authorized to
prescribe rules which would treat similarly other distributions made in
anticipation of a policy becoming a modified endowment.
DIVERSIFICATION. Under Section 817(h) of the Code, the Secretary of the Treasury
has the authority to set standards for diversification of the investments
underlying variable life insurance policies. The Treasury Department has issued
final regulations regarding the diversification requirements. Failure to meet
these requirements would disqualify your policy as a variable life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to Federal income tax on the income under the policy. The Separate
Account, through the Trust, intends to comply with these requirements.
In connection with the issuance of the then temporary diversification
regulations, the Treasury Department stated that it anticipated the issuance of
regulations or rulings prescribing the circumstances in which the ability of a
policyowner to direct his investment to particular divisions of a separate
account may cause the policyowner, rather than the insurance company, to be
treated as the owner of the assets in the account. If you were considered the
owner of the assets of the Separate Account, income and gains from the account
would be included in your gross income for Federal income tax purposes. Under
current law we believe that Equitable Variable, and not the owner of the policy,
would be considered the owner of the assets of the Separate Account.
POLICY CHANGES. For you and your beneficiary to receive the tax treatment
discussed above, your policy must initially qualify and continue to qualify as
life insurance under Sections 7702 and 817(h) of the Code. We have reserved in
the policy the right to decline to accept all or part of any premium payments,
decline to change death benefits, or decline to make partial withdrawals that we
believe would cause your policy to fail to qualify. We may also make changes in
the policy or its riders or require additional premium payments or make
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distributions from the policy to the extent we deem necessary to qualify your
policy as life insurance for tax purposes. Any such change will apply uniformly
to all policies that are affected. You will be given advance written notice of
such changes.
TAX CHANGES. The United States Congress has in the past considered, is currently
considering and may in the future consider legislation that, if enacted, could
change the tax treatment of life insurance policies. In addition, the Treasury
Department may amend existing regulations, issue new regulations, or adopt new
interpretations of existing laws. State tax laws or, if you are not a United
States resident, foreign tax laws, may affect the tax consequences to you, the
insured or your beneficiary. These laws may change from time to time without
notice and, as a result, the tax consequences may be altered. There is no way of
predicting whether, when or in what form any such change would be adopted. Any
such change could have retroactive effect regardless of the date of enactment.
We suggest you consult your legal or tax adviser.
ESTATE AND GENERATION SKIPPING TAXES. If the insured person is the policyowner,
the death benefit under Incentive Life will generally be includable in the
policyowner's estate for purposes of Federal estate tax. If the policyowner is
not the insured person, under certain conditions only the Cash Surrender Value
of the policy would be so includable. Federal estate tax is integrated with
Federal gift tax under a unified rate schedule. In general, estates less than
$600,000 will not incur a Federal estate tax liability. In addition, an
unlimited marital deduction may be available for Federal estate tax purposes.
As a general rule, if a "transfer" is made to a person two or more generations
younger than the policyowner, a generation skipping tax may be payable at rates
similar to the maximum estate tax rate in effect at that time. The generation
skipping tax provisions generally apply to "transfers" which would be subject to
the gift and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. If we believe a generation
skipping tax may be payable, we may be required to withhold tax from benefits
payable unless we receive proper written evidence that no such tax is payable.
Because these rules are complex, you should consult with your tax adviser for
specific information, especially where benefits are passing to younger
generations, as opposed to a spouse or a child.
The particular situation of each policyowner or beneficiary will determine how
ownership or receipt of policy proceeds will be treated for purposes of Federal
estate and generation skipping taxes as well as state and local estate,
inheritance and other taxes.
PENSION AND PROFIT-SHARING PLANS. If Incentive Life policies are purchased by a
fund which forms part of a pension or profit-sharing plan qualified under
Sections 401(a) or 403 of the Code for the benefit of participants covered under
the plan, the Federal income tax treatment of such policies will be somewhat
different from that described above.
If purchased as part of a pension or profit-sharing plan, the current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and is required to be included annually in the plan participant's gross income.
This cost (generally referred to as the "P.S. 58" cost) is reported to the
participant annually. If the plan participant dies while covered by the plan and
the policy proceeds are paid to the participant's beneficiary, then the excess
of the death benefit over the Policy Account value will not be subject to
Federal income tax. However, the Policy Account value will generally be taxable
to the extent it exceeds the sum of $5,000 plus the participant's cost basis in
the policy. The participant's cost basis will generally include the costs of
insurance previously reported as income to the participant. Special rules may
apply if the participant had borrowed from his Policy Account or was an
owner-employee under the plan.
There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharing plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased by
a tax qualified plan.
OTHER EMPLOYEE BENEFIT PROGRAMS. Complex rules may apply when a policy is held
by an employer or a trust, or acquired by an employee, in connection with the
provision of employee benefits. These policyowners also must consider whether
the policy was applied for by or issued to a person having an insurable interest
under applicable state law, as the lack of insurable interest may, among other
things, affect the qualification of the policy as life insurance for Federal
income tax purposes and the right of the beneficiary to death benefits.
Employees and employer-created trusts may be subject to reporting, disclosure,
and fiduciary obligations under the Employee Retirement Income Security Act of
1974 (ERISA). You should consult your legal adviser.
OUR TAXES. Under the life insurance company tax provisions of the Code, variable
life insurance is treated in a manner consistent with fixed life insurance. The
operations of the Separate Account are reported in our Federal income tax return
but we currently pay no income tax on investment income and capital gains
reflected in variable life insurance policy reserves. Therefore, no charge is
currently being made to any division of the Separate Account for taxes. We
reserve the right to make a charge in the future if we incur income tax which is
attributable to the Separate Account. If such a charge is made, it would be set
aside as a provision for taxes which we would keep in the affected division
rather than in our General Account. We anticipate that our variable life
policyowners would benefit from any investment earnings that are not needed to
maintain this provision.
We may have to pay state, local or other taxes in addition to applicable taxes
based on premiums. At present, these taxes are not substantial. If they
increase, charges may be made for such taxes when they are attributable to the
Separate Account.
WHEN WE WITHHOLD INCOME TAXES. Generally, unless you provide us with a written
election to the contrary before we make the distribution, we are required to
withhold income tax from any portion of the money you receive if the withdrawal
of money from your Policy Account or the surrender or the maturity of your
policy is a taxable transaction. If you do not wish us to withhold tax from the
payment, or if enough is not withheld, you may have to make tax payments later.
You may also have to pay penalties under the tax rules if your withholding and
estimated tax payments are insufficient. In some cases, where generation
skipping taxes may apply, we may also be required to withhold for such taxes
unless we are provided satisfactory written notification that no such taxes are
due.
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PART 3: ADDITIONAL INFORMATION
YOUR VOTING PRIVILEGES
TRUST VOTING PRIVILEGES. As explained in Part 1, we invest the assets in the
divisions of our Separate Account in shares of the corresponding Trust
portfolios. Equitable Variable is the legal owner of the shares and will attend,
and has the right to vote at, any meeting of the Trust's shareholders. Among
other things, we may vote on any matters described in the Trust's prospectus or
requiring a vote by shareholders under the Investment Company Act of 1940 (the
Act).
Even though we own the shares, to the extent required by the Act, you will have
the opportunity to tell us how to vote the number of shares that can be
attributed to your policy. We will vote those shares at meetings of Trust
shareholders according to your instructions. If we do not receive instructions
in time from all policyowners, we will vote shares in a portfolio for which no
instructions have been received in the same proportion as we vote shares for
which we have received instructions in that portfolio. We will vote any Trust
shares that we are entitled to vote directly due to amounts we have accumulated
in our Separate Account in the same proportions that all policyowners vote,
including those who participate in other separate accounts. If the Federal
securities laws or regulations or interpretations of them change so that we are
permitted to vote shares of the Trust in our own right or to restrict
policyowner voting, we may do so.
HOW WE DETERMINE YOUR VOTING SHARES. You may participate in voting only on
matters concerning the Trust portfolios corresponding to the Separate Account
divisions to which your Policy Account is allocated. The number of Trust shares
in each division that are attributable to your policy is determined by dividing
the amount in your Policy Account allocated to that division by the net asset
value of one share of the corresponding Trust portfolio as of the record date
set by the Trust's Board for the Trust's shareholders meeting. The record date
for this purpose must be at least 10 and no more than 90 days before the meeting
of the Trust. Fractional shares are counted.
If you are entitled to give us voting instructions, we will send you proxy
material and a form for providing voting instructions. In certain cases, we may
disregard instructions relating to changes in the Trust's adviser or the
investment policies of its portfolios. We will advise you if we do and detail
the reasons in the next semiannual report to policyowners.
SEPARATE ACCOUNT VOTING RIGHTS. Under the Act, certain actions (such as some of
those described under OUR RIGHT TO CHANGE HOW WE OPERATE below) may require
policyowner approval. In that case, you will be entitled to one vote for every
$100 of value you have in the divisions of the Separate Account. We will cast
votes attributable to amounts we have in the divisions of the Separate Account
in the same proportions as votes cast by policyowners.
OUR RIGHT TO CHANGE HOW WE OPERATE
In addition to changing or adding investment companies, we have the right to
modify how we or the Separate Account operate. We intend to comply with
applicable law in making any changes and, if necessary, we will seek policyowner
approval. We have the right to:
o add divisions to, or remove divisions from, the Separate Account, combine two
or more divisions within the Separate Account, or withdraw assets relating to
Incentive Life from one division and put them into another;
o register or end the registration of the Separate Account under the Act;
o operate the Separate Account under the direction of a committee or discharge
such a committee at any time (the committee may be composed entirely of
persons who are "interested persons" of Equitable Variable under the Act);
o restrict or eliminate any voting rights of policyowners or other people who
have voting rights that affect the Separate Account;
o operate the Separate Account or one or more of the divisions in any other
form the law allows, including a form that allows us to make direct
investments. Our Separate Account may be charged an advisory fee if its
investments are made directly rather than through an investment company. We
may make any legal investments we wish. In choosing these investments, we
will rely on our own or outside counsel for advice. In addition, we may
disapprove any change in investment advisers or in investment policy unless a
law or regulation provides differently.
If any changes are made that result in a material change in the underlying
investments of a division, you will be notified as required by law. We may, for
example, cause the division to invest in a mutual fund other than, or in
addition to, the Trust. If you then wish to transfer the amount you have in that
division to another division of the Separate Account or to the Guaranteed
Interest Division, you may do so, without charge, by contacting our
Administrative Office. At the same time, you may also change how your net
premiums and deductions are allocated.
OUR REPORTS TO POLICYOWNERS
Shortly after the end of each policy year you will receive a report that
includes information about your policy's current death benefit, Policy Account
value, Cash Surrender Value and policy loan. Notices will be sent to you to
confirm premium payments (except premiums paid through an automated
arrangement), transfers of amounts between investment divisions and certain
other policy transactions.
LIMITS ON OUR RIGHT TO CHALLENGE THE POLICY
We can challenge the validity of your insurance policy based on material
misstatements in your application and any application for change. However, there
are some limits on how and when we can challenge the policy.
o We cannot challenge the policy after it has been in effect, during the
insured person's lifetime, for two years from the date the policy was issued
or reinstated. Some states may require that we measure this time in some
other way.
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o We cannot challenge any policy change that requires evidence of insurability
(such as an increase in Face Amount or a substitution of insured) after the
change has been in effect for two years during the insured person's lifetime.
o We cannot challenge an additional benefit rider that provides benefits in the
event that the insured person becomes totally disabled after two years from
the later of the Issue Date or the date as of which the additional benefit
rider became effective. We can require proof of continuing disability while
such a rider is in effect as specified in the rider.
If the insured person dies within the time that we may challenge the validity of
the policy, we may delay payment until we decide whether to challenge the
policy. If the insured person's age or sex is misstated on any application, the
death benefit and any additional benefits provided will be those which would be
purchased by the most recent deduction for the cost of insurance and the cost of
any additional benefits at the insured person's correct age and sex.
If the insured person commits suicide within two years after the date on which
the policy was issued, the death benefit will be limited to the total of all
premiums that have been paid to the time of death minus any outstanding policy
loan, accrued loan interest and any partial withdrawals of Net Cash Surrender
Value. If the insured person commits suicide within two years after the
effective date of an increase in Face Amount that you requested, we will pay the
death benefit based on the Face Amount which was in effect before the increase,
plus the monthly cost of insurance deductions for the increase (including the
transaction charge for the Face Amount increase). A new two-year suicide and
contestability period will begin on the date of substitution following a
substitution of insured. (Some states require that we measure this time by some
other date.)
YOUR PAYMENT OPTIONS
Policy benefits or other payments, such as the Net Cash Surrender Value, may be
paid immediately in one sum or you may choose another form of payment for all or
part of the money. Payments under these options are not affected by the
investment experience of any division of the Separate Account. Instead, interest
accrues pursuant to the options chosen.
You will make a choice of payment option (or any later changes) and your choice
will take effect in the same way as it would if you were changing a beneficiary.
(See YOUR BENEFICIARY below). If you do not arrange for a specific form of
payment before the insured person dies, the beneficiary will be paid through the
Equitable Access Account. See WHEN WE PAY POLICY PROCEEDS below. The beneficiary
will then have a choice of payment options. However, if you do make an
arrangement with us for how the money will be paid, the beneficiary cannot
change the choice after the insured person dies. Different payment options may
result in different tax consequences.
The beneficiary or any other person who is entitled to receive payment may name
a successor to receive any amount that we would otherwise pay to that person's
estate if that person died. The person who is entitled to receive payment may
change the successor at any time.
We must approve any arrangements that involve more than one payment option, or a
payee who is not a natural person (for example, a corporation), or a payee who
is a fiduciary. Also, the details of all arrangements will be subject to our
rules at the time the arrangements are selected and take effect. This includes
rules on the minimum amount we will pay under an option, minimum amounts for
installment payments, withdrawal or commutation rights (your rights to receive
payments over time, for which we may offer a lump sum payment), the naming of
people who are entitled to receive payment and their successors, and the ways of
proving age and survival.
YOUR BENEFICIARY
You name your beneficiary when you apply for the policy. The beneficiary is
entitled to the insurance benefits of the policy. You may change the beneficiary
during the insured person's lifetime by writing to our Administrative Office. If
no beneficiary is living when the insured person dies, we will pay the death
benefit in equal shares to the insured person's surviving children. If there are
no surviving children, we will pay the death benefit to the insured person's
estate.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in the policy to someone else as
collateral for a loan or for some other reason. A copy of the assignment must be
forwarded to our Administrative Office. We are not responsible for any payment
we make or any action taken before we receive notice of the assignment or for
the validity of the assignment. An absolute assignment is a change of ownership.
BECAUSE THERE MAY BE TAX CONSEQUENCES INCLUDING THE LOSS OF INCOME TAX-FREE
TREATMENT FOR ANY DEATH BENEFIT PAYABLE TO THE BENEFICIARY, YOU SHOULD CONSULT
YOUR TAX ADVISER PRIOR TO MAKING AN ASSIGNMENT.
WHEN WE PAY POLICY PROCEEDS
We will pay any death benefits, maturity benefit, Net Cash Surrender Value or
loan proceeds within seven days after we receive the last required form or
request (and other documents that may be required for payment of death benefits)
at our Administrative Office. Death benefits are determined as of the date of
death of the insured person and will not be affected by subsequent changes in
the unit values of the divisions of the Separate Account. Death benefits will
generally be paid through the Equitable Access Account, an interest bearing
checking account. A beneficiary will have immediate access to the proceeds by
writing a check on the account. We pay interest from the date of death to the
date the Equitable Access Account is closed. If an Equitable agent helps the
beneficiary of a policy to prepare the documents that are required for payment
of the death benefit, we will send the Equitable Access Account checkbook to the
agent within seven days after we receive the required documents. The agent will
deliver the checkbook to the beneficiary.
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We may, however, delay payment if we contest the policy. We may also delay
payment if we cannot determine the amount of the payment because the New York
Stock Exchange is closed, because trading in securities has been restricted by
the SEC, or because the SEC has declared that an emergency exists. In addition,
if necessary to protect our policyowners, we may delay payment where permitted
under applicable law.
We may defer payment of any Net Cash Surrender Value or loan amount (except a
loan to pay a premium to us) from the Guaranteed Interest Division for up to six
months after we receive your request. We will pay interest of at least 3% a year
from the date we receive your request if we delay more than 30 days in paying
you such amounts from the Guaranteed Interest Division.
DIVIDENDS
No dividends are paid on the policy described in this prospectus.
REGULATION
We are regulated and supervised by the New York State Insurance Department. In
addition, we are subject to the insurance laws and regulations in every
jurisdiction where we sell policies. As a result, the provisions of the
Incentive Life policy may vary somewhat from jurisdiction to jurisdiction. State
variations will be covered by a supplement to this prospectus or policy
endorsement as appropriate.
The Second Series Incentive Life policy (Plan No. 88-300) has been filed with
and approved by insurance officials in 50 states, Puerto Rico and the Virgin
Islands. No Incentive Life policy is available in the District of Columbia. We
submit annual reports on our operations and finances to insurance officials in
all the jurisdictions where we sell policies. The officials are responsible for
reviewing our reports to be sure that we are financially sound.
SPECIAL CIRCUMSTANCES
Equitable Variable may vary the charges and other terms of Incentive Life where
special circumstances result in sales or administrative expenses or mortality
risks that are different than those normally associated with Incentive Life
policies. These variations will be made only in accordance with uniform rules
that we establish.
OUR SPECIAL OFFER POLICY. In 1989, Equitable Variable introduced its Second
Series Incentive Life policy, which is the policy described in this prospectus.
Subject to the rules discussed below, Equitable Variable will offer a modified
version of the First Series Incentive Life policy (the "Special Offer Policy")
to qualified offerees. Set forth below are modifications to the discussion in
this prospectus which are appropriate with respect to the Special Offer Policy.
o ADDING INTEREST IN THE GUARANTEED INTEREST DIVISION (page 6). Interest
credited to any loaned amounts in the Guaranteed Interest Division is
allocated to the unloaned portion of the Guaranteed Interest Division at the
end of the policy month.
o FLEXIBLE PREMIUMS (page 7). We have not reserved the right to limit the
amount of any premium payments which are in addition to your planned premium.
o TRANSFERS OF POLICY ACCOUNT VALUE (page 10). You may tell us how much of the
charge, if any, for transfers of Policy Account value to allocate to your
values in each of the divisions of the Separate Account or to the unloaned
value in the Guaranteed Interest Division. If you do not provide specific
instructions, we will allocate the charge as described under HOW POLICY
ACCOUNT CHARGES ARE ALLOCATED on page 13.
o BORROWING FROM YOUR POLICY ACCOUNT (page 11). You may borrow up to 100% of
your policy's Net Cash Surrender Value.
o PARTIAL WITHDRAWALS FROM YOUR POLICY ACCOUNT (page 11). We have not reserved
the right to decline a request for a partial withdrawal. However, any such
request will be subject to our approval and the conditions listed on page 11.
o ALLOCATION OF WITHDRAWALS AND CHARGES (page 12). You may specify how much of
the withdrawal you want taken from your amounts in each of the divisions of
the Separate Account and your unloaned amounts in the Guaranteed Interest
Division. If you do not provide specific instructions or we cannot make the
withdrawal in accordance with your directions, we will withdraw the amount in
the manner described for deductions under HOW POLICY ACCOUNT CHARGES ARE
ALLOCATED on page 13. Unless you specify otherwise, the charge for partial
withdrawals will also be deducted in this manner.
o DEDUCTIONS FROM YOUR PREMIUMS (page 12). Regardless of the mode of premium
payment selected on your application, a $250 administrative charge will be
deducted from your initial premium.
o CURRENT COST OF INSURANCE RATES are generally less than those under the
Second Series Incentive Life policy. However, the current rates for females
at certain ages and for females who do not qualify as non-smokers are higher
than those that are applicable to females under the Second Series Incentive
Life policy. Moreover, the current annual cost of insurance rates under the
Special Offer Policy for male non-smokers at certain issue ages in later
policy years may be higher than rates under the Second Series Incentive Life
policy for these insureds, but over the life of the contract the cumulative
current cost of insurance rates for the Special Offer Policy are lower than
those under the Second Series Incentive Life policy. Also, if the Face Amount
of a Special Offer Policy is reduced below $200,000, higher current cost of
insurance rates will apply.
The current rates for the Special Offer Policy, unlike those for the Second
Series Incentive Life policy, do not vary depending on duration. This means
that the current rate is the same for all Special Offer Policies of the same
Face Amount on an insured person of the same age, rating class and smoker
status -- regardless of how many policy years the policies have been in
effect.
THE MAXIMUM COST OF INSURANCE RATES under the Special Offer Policy are the
same as those that apply to males under the Second Series policy. As a
result, a female would have higher maximum rates under the Special Offer
Policy than under the Second Series policy. The maximum rates will be set
forth in the Special Offer Policy when it is issued. See COST OF INSURANCE
CHARGE on page 12.
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o THE SURRENDER CHARGES imposed on face amount decreases will be modified by
shortening to five years the period to which the pro-rata surrender charge
applies, and by not imposing this charge unless the cumulative reduction in
Face Amount for a policy exceeds 20% of the initial Face Amount. The modified
surrender charges will be set forth in the Special Offer Policy when it is
issued. See SURRENDER CHARGE on page 13.
Under Equitable Variable's current rules, the Special Offer Policy will be
offered where the following conditions are met:
o an employer-employee relationship is present;
o a minimum of five policies are issued, each on the life of a different
eligible insured person;
o the persons proposed to be insured under the policies are deemed by us to be
highly compensated individuals;
o the initial Face Amount of each of the policies is $500,000 or greater;
o the minimum initial premium under each of the policies is remitted to
Equitable Variable by the employer; and
o certain undertakings, which may be required by Equitable Variable in certain
situations, have been submitted to Equitable Variable.
EQUITABLE VARIABLE MAY MODIFY THESE RULES FROM TIME TO TIME AND MAY ALSO
TERMINATE OFFERING THE SPECIAL OFFER POLICY AT ANY TIME.
DISTRIBUTION
Prior to May 1, 1994, we were the principal underwriter of the Trust under a
Distribution Agreement. In addition, Equitable distributed our policies under a
Sales Agreement. Effective May 1, 1994, these underwriting and distribution
responsibilities will be transferred to Equico Securities, Inc. (Equico), a
wholly-owned subsidiary of Equitable, whose principal business address is 1755
Broadway, New York, NY 10019. Equico is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 (the Exchange Act) and
is a member of the National Association of Securities Dealers, Inc. Equico will
be paid a fee for its services as distributor of our policies.
We sell our policies through agents who are licensed by state insurance
officials to sell our variable life policies. These agents are also registered
representatives of Equico. The agent who sells you this policy receives sales
commissions from Equitable. We reimburse Equitable from our own resources,
including any Surrender Charges we might collect. Generally, during the first
policy year, the agent will receive an amount equal to a maximum of 40% of the
premiums paid up to a certain amount and 3% of the premiums paid in excess of
that amount. For policy years two through ten, the agent receives an amount up
to a maximum of 8% of the premiums paid up to a certain amount and 3% of the
premiums paid in excess of that amount; and, for years eleven and later, the
agent receives an amount up to 3% of the premiums paid. Following a Face Amount
increase, commissions on a portion of the premium will be calculated using first
year commission rates. Agents with limited years of service may be paid
differently. Commissions paid to agents based upon refunded premiums may be
recovered.
We also sell our policies through independent brokers who are licensed by state
insurance officials to sell our variable life policies. They will also be
registered representatives either of Equico or of another company registered
with the SEC as a broker-dealer under the Exchange Act. The commissions for
independent brokers will be no more than those for agents and the same policy
for recovery of commissions applies. Commissions will be paid through the
registered broker-dealer.
Equitable performs certain sales and administrative duties for us, pursuant to a
written agreement which is automatically renewed each year, unless either party
terminates. Under this agreement, we pay Equitable for salary costs and other
services and an amount for indirect costs incurred through our use of Equitable
personnel and facilities. We also reimburse Equitable for sales expenses related
to business other than variable life insurance policies. The amounts paid and
accrued to Equitable by us under the sales and services agreements totalled
approximately $355.7 million in 1993, $374.9 million in 1992, and $336.6 million
in 1991.
LEGAL PROCEEDINGS
We are not involved in any material legal proceedings.
ACCOUNTING AND ACTUARIAL EXPERTS
The financial statements of Equitable Variable and of the Separate Account
included in this prospectus have been audited for the year ended December 31,
1993 by Price Waterhouse and for the years ended December 31, 1992 and 1991 by
Deloitte & Touche, as stated in their respective reports. The financial
statements of the Separate Account and Equitable Variable for the year ended
December 31, 1993 included in this prospectus have been so included in reliance
on the report of Price Waterhouse, independent accountants, given on the
authority of such firm as experts in accounting and auditing. The financial
statements of the Separate Account and Equitable Variable for the years ended
December 31, 1992 and 1991 included in this prospectus have been so included in
reliance on the reports of Deloitte & Touche, independent accountants, given
upon the authority of such firm as experts in accounting and auditing.
The financial statements of Equitable Variable contained in this prospectus
should be considered only as bearing upon the ability of Equitable Variable to
meet its obligations under the Incentive Life policies. They should not be
considered as bearing upon the investment experience of the divisions of the
Separate Account.
Actuarial matters in this prospectus have been examined by Barbara Fraser,
F.S.A., M.A.A.A., who is a Vice President and Actuary of Equitable. Her opinion
on actuarial matters is filed as an exhibit to the Registration Statement we
filed with the SEC.
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ADDITIONAL INFORMATION
We have filed a Registration Statement relating to the Separate Account and the
variable life insurance policy described in this prospectus with the SEC. The
Registration Statement, which is required by the Securities Act of 1933,
includes additional information that is not required in this prospectus under
the rules and regulations of the SEC. If you would like the additional
information, you may obtain it from the SEC's main office in Washington, D.C.
You will have to pay a fee for the material.
MANAGEMENT
Here is a list of our directors and principal officers and a brief statement of
their business experience for the past five years. Unless otherwise noted, the
following persons have been involved in the management of Equitable and its
subsidiaries in various positions for the last five years. Unless otherwise
noted, their address is 787 Seventh Avenue, New York, New York 10019.
<TABLE>
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NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
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DIRECTORS
<S> <C>
Michel Beaulieu.............. Director of Equitable Variable since February 1992. Senior Vice President, Equitable, since
September 1991; prior thereto, Chief Life Actuary AXA group 1989 to 1991; Managing Director
Blondeau & CIE (France) 1986 to 1989. Director, Equity & Law (London).
Jerry de St Paer............. Director of Equitable Variable since April 1992. Executive Vice President & Chief Financial
Officer, Equitable, since April 1992; prior thereto, Executive Vice President since December
1990; Senior Vice President & Treasurer June 1990 to December 1990; Senior Vice President,
Equitable Investment Corporation January 1987 to January 1991; Executive Vice President & Chief
Financial Officer, Equitable Companies Inc. since May 1992; Director, Economic Services
Corporation & various Equitable subsidiaries.
William T. McCaffrey......... Director of Equitable Variable since February 1987. Executive Vice President, Equitable, since
February 1986 and Chief Administrative Officer since February 1988; prior thereto, various
other Equitable positions. Director, Equitable Foundation since September 1986.
Harvey Blitz................. Director of Equitable Variable since October 1992. Senior Vice President, Equitable since
September 1987. Senior Vice President, The Equitable Companies, Incorporated, since July 1992.
Director, Equico Securities, Inc., since September 1992; The Equitable of Colorado, since
September 1992; Traditional Equinet Business Corporation of New York and its subsidiaries since
October 1992.
Christophe Dupont-Madinier... Director of Equitable Variable since February 1993. Senior Vice President, AXA (Paris, France),
since 1988. Director, Donaldson, Lufkin & Jenrette, Inc.; Alliance Capital Management
Corporation, Equitable Real Estate Investment Management, Inc.
Pascal Thebe................. Director of Equitable Variable since February 1993. Vice President, Equitable, since March
1993. Prior thereto, Vice President, AXA (Paris), since March 1992; Vice President, Alpha
Assurances, since June 1989; Actuary, Drout Assurances, since 1986.
OFFICERS--DIRECTORS
James M. Benson.............. President, Equitable Variable since December, 1993; Vice Chairman of the Board, Equitable
Variable since July 1993. President and Chief Operating Officer, Equitable, February 1994 to
present; Senior Executive Vice President, April 1993 to February 1994. Prior thereto,
President, Management Compensation Group, 1983 to February 1993.
Gordon Dinsmore.............. Senior Vice President, Equitable Variable, since February 1991. Senior Vice President,
Equitable since September 1989; prior thereto, various other Equitable positions. Director and
Senior Vice President, March 1991 to present, Equitable of Colorado; Director, FHJV Holdings,
Inc., December 1990 to present; Director, Equitable Capital Securities Corporation, August 1993
to present, and Director Equitable Foundation, May 1991 to present.
Richard H. Jenrette.......... Senior Investment Officer, Equitable Variable, since September 1988; Chairman and Chief
Executive Officer, The Equitable Companies Incorporated, since May 1992; Chairman of Executive
Committee, Equitable, since February 1994. Prior thereto, Chairman since May 1987. Chairman and
Chief Executive Officer from May 1990 to September 1992. Chairman, Donaldson, Lufkin and
Jenrette, Inc., since December 1973. Director, AXA since July 1991 and various other Equitable
subsidiaries. Director, McGraw-Hill, Inc., since January 1993.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS WITHIN PAST FIVE YEARS
- ---------------- ----------------------
<S> <C>
OFFICERS--DIRECTORS (Continued)
James S. Kalmer.............. Senior Vice President, Equitable Variable, since February 1991. Vice President since December
1987. Senior Vice President, Equitable, since September 1989, prior thereto, Vice President.
Director, Traditional Equinet Business Corporation of New York (TRAEBCO) and its subsidiaries
since March 1991.
Joseph J. Melone............. Chairman of the Board and Chief Executive Officer, Equitable Variable, since November 1990;
Chairman of the Board and Chief Executive Officer, Equitable, February 1994 to present;
President and Chief Executive Officer, September 1992 to February 1994; President and Chief
Operating Officer from November 1990 to September 1992. President and Chief Operating Officer
of The Equitable Companies Incorporated since July 1992. Prior thereto, President, The
Prudential Insurance Company of America, since December 1984. Director, Equity & Law (United
Kingdom) and various other Equitable subsidiaries.
Brian O'Neil................. Senior Vice President and Chief Investment Officer, Equitable Variable, since October 1992.
Executive Vice President & Chief Investment Officer, Equitable, since April 1992; prior
thereto; Senior Vice President since February 1989; Vice President from July 1988 to February
1989. Senior Vice President, Equitable Capital, from November 1987 to March 1989.
Samuel B. Shlesinger......... Senior Vice President, Equitable Variable, since February 1988. Senior Vice President and
Actuary, Equitable; prior thereto, Vice President and Actuary.
Dennis D. Witte.............. Senior Vice President, Equitable Variable, since February 1991; Senior Vice President,
Equitable, since July 1990; prior thereto, various other Equitable positions.
OFFICERS
J. Thomas Liddle, Jr......... Senior Vice President and Chief Financial Officer, Equitable Variable, since February 1986.
Senior Vice President, Equitable since April 1991; prior thereto, Vice President and Actuary,
Equitable.
Franklin Kennedy, III........ Vice President, Equitable Variable, since August 1981. Senior Vice President, Alliance Capital
1345 Avenue of the Americas Management Corporation, July 1993 to present; Senior Vice President, Equitable Capital
New York, New York 10105 Management Corporation, March 1987 to July 1993. Vice President, The Hudson River Trust.
Managing Director and Chief Investment Officer, Equitable Investment Management Corporation,
from November 1983 to January 1987.
William A. Narducci.......... Vice President and Chief Claims Officer, Equitable Variable since February 1989. Vice
200 Plaza Drive President, Equitable since February 1988; prior thereto, Assistant Vice President.
Secaucus, New Jersey 07096
John P. Natoli............... Vice President and Chief Underwriting Officer, Equitable Variable, since February 1988. Vice
2 Penn Plaza President, Equitable.
New York, New York 10121
Molly K. Heines.............. Secretary, Equitable Variable, since February 1991; Vice President and Secretary, Equitable,
since July 1990; prior thereto, Vice President & Counsel.
Kevin R. Byrne............... Treasurer, Equitable Variable, since September 1990; Vice President and Treasurer, Equitable
Life since September 1993; prior thereto, Vice President from March 1989 to September 1993.
Vice President and Treasurer, The Equitable Companies Incorporated, September 1993 to present;
Frontier Trust since August 1990; Traditional Equinet Business Corporation of New York
(TRAEBCO) and its subsidiaries October 1990 to present.
Stephen Hogan................ Vice President and Controller, Equitable Variable, February 1994 to present. Vice President,
Equitable, January 1994 to present; prior thereto, Controller, John Hancock subsidiaries, from
1987 to December 1993.
</TABLE>
23
<PAGE>
PART 4: ILLUSTRATIONS OF POLICY BENEFITS
To help clarify how the key financial elements of the policy work, a series of
tables has been prepared. The tables show how death benefits, Policy Account and
Cash Surrender Values ("policy benefits") under hypothetical Incentive Life
policies could vary over time if the divisions of our Separate Account had
CONSTANT hypothetical gross annual investment returns of 0%, 6% or 12% over the
years covered by each table. Actual policy benefits will differ from those shown
in the tables if the annual investment returns AVERAGE 0%, 6% or 12% over a
period of years but go above or below those figures in individual policy years.
Actual policy benefits will also differ, depending on your premium allocations
to each division, if the overall actual rates of return averaged 0%, 6% or 12%,
but went above or below those figures for the individual investment divisions.
The tables are for a 40 year old standard risk male non-smoker. Planned premium
payments of $3,000 for an initial Face Amount of $200,000 are assumed to be paid
at the beginning of each policy year. The difference between the Policy Account
and the Cash Surrender Values in the first ten years is the surrender charge.
See SURRENDER Charge on page 14.
The tables illustrate cost of insurance and expense charges (policy cost
factors) at both the current rates and at the maximum rates guaranteed in the
policies. Beginning in year eleven, the current charges reflect the lower
current cost of insurance rates applicable to policies in effect for longer than
ten policy years. The amounts shown at the end of each policy year reflect a
daily charge against the Separate Account investment divisions of .60% for
mortality and expense risks, .50% for investment management and .10% for direct
Trust expenses. The assumption for investment management fees is no less than
the average of the effective annual advisory fees applicable to each Trust
portfolio during 1993 and the maximum advisory fee for the Equity Index
Portfolio. The charge reflected for direct Trust expenses is no less than the
aggregate actual charges incurred by the portfolios of the Trust as a percentage
of aggregate average daily Trust net assets during 1993. The effect of these
adjustments is that on a 0% gross rate of return the net rate of return would be
- -1.20%, on 6% it would be 4.73%, and on 12% it would be 10.66%. Remember,
however, that investment management fees and direct Trust expenses vary by
portfolio. See THE TRUST'S INVESTMENT ADVISER on page 4.
The Tables assume an initial administrative charge of $250 and an applicable tax
rate of 2% of premiums for the deduction for premium taxes. There are tables for
both death benefit Option A and death benefit Option B and each option is
illustrated using current and guaranteed policy cost factors. The current tables
assume that the monthly administrative charge remains constant at $6. The
guaranteed tables assume that the monthly charge is $6 in the first year and $8
thereafter. The tables reflect the fact that no charge is currently made for
Federal taxes. If a charge is made for those taxes in the future, it will take a
higher rate of return to produce after-tax returns of 0%, 6% or 12%.
The second column of each table shows the effect of an amount equal to the
premiums invested to earn interest, after taxes, of 5% compounded annually.
These tables show that if a policy is returned in its very early years for
payment of its Cash Surrender Value, that Cash Surrender Value will be low in
comparison to the amount of the premiums accumulated with interest. Thus, the
cost of owning your policy for a relatively short time will be high.
The internal rate of return on Cash Surrender Value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the Cash Surrender Value of
the Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated premiums
could have been invested outside the Policy to arrive at the death benefit of
the Policy. The internal rate of return is compounded annually, and the premiums
are assumed to be paid at the beginning of each policy year.
INDIVIDUAL ILLUSTRATIONS. On request, we will furnish you with a comparable
illustration based on the age and sex of the proposed insured person, standard
risk assumptions and an initial Face Amount and planned premium of your choice.
If you purchase a policy, we will, on request, deliver an individualized
illustration reflecting the planned premium you have chosen and the insured
person's actual risk class. Upon request after issuance, we will also provide a
comparable illustration reflecting your actual Policy Account value. If you
request illustrations more than once in any policy year, we may charge for the
illustration.
24
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION A
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $200,000 $200,000 $200,000 $ 2,223 $ 2,369 $ 2,515 $ 1,474 $ 1,620 $ 1,766
2 6,458 200,000 200,000 200,000 4,648 5,093 5,555 3,629 4,074 4,536
3 9,930 200,000 200,000 200,000 7,016 7,918 8,892 5,876 6,778 7,752
4 13,577 200,000 200,000 200,000 9,332 10,853 12,563 8,192 9,713 11,423
5 17,406 200,000 200,000 200,000 11,593 13,901 16,599 10,453 12,761 15,459
6 21,426 200,000 200,000 200,000 13,800 17,068 21,044 12,660 15,928 19,904
7 25,647 200,000 200,000 200,000 15,930 20,337 25,919 15,018 19,425 25,007
8 30,080 200,000 200,000 200,000 17,986 23,716 31,275 17,302 23,032 30,591
9 34,734 200,000 200,000 200,000 19,976 27,219 37,174 19,520 26,763 36,718
10 39,620 200,000 200,000 200,000 21,899 30,850 43,677 21,671 30,622 43,449
15 67,972 200,000 200,000 200,000 31,113 51,852 88,626 31,113 51,852 88,626
20 104,158 200,000 200,000 220,001 39,113 78,063 164,180 39,113 78,063 164,180
25 (age 65) $150,340 $200,000 $200,000 $353,037 $44,977 $110,499 $289,375 $44,977 $110,499 $289,375
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -50.85% -46.00% -41.14% 6,566.67% 6,566.67% 6,566.67%
2 6,458 -29.18 -23.19 -17.25 668.03 668.03 668.03
3 9,930 -19.85 -13.52 -7.28 267.20 267.20 267.20
4 13,577 -14.70 -8.28 -1.96 153.63 153.63 153.63
5 17,406 -11.81 -5.34 1.01 103.51 103.51 103.51
6 21,426 -9.98 -3.48 2.88 76.08 76.08 76.08
7 25,647 -8.39 -1.95 4.37 59.05 59.05 59.05
8 30,080 -7.33 -0.92 5.37 47.57 47.57 47.57
9 34,734 -6.57 -0.18 6.09 39.36 39.36 39.36
10 39,620 -6.01 0.37 6.64 33.24 33.24 33.24
15 67,972 -4.77 1.75 8.08 17.17 17.17 17.17
20 104,158 -4.28 2.44 8.85 10.46 10.46 11.23
25 (age 65) $150,340 -4.21% 2.86% 9.28% 6.90% 6.90% 10.53%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
25
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION A
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $200,000 $200,000 $200,000 $ 2,223 $ 2,369 $ 2,515 $ 1,474 $ 1,620 $ 1,766
2 6,458 200,000 200,000 200,000 4,368 4,804 5,258 3,349 3,785 4,239
3 9,930 200,000 200,000 200,000 6,440 7,307 8,247 5,300 6,167 7,107
4 13,577 200,000 200,000 200,000 8,436 9,878 11,504 7,296 8,738 10,364
5 17,406 200,000 200,000 200,000 10,356 12,520 15,060 9,216 11,380 13,920
6 21,426 200,000 200,000 200,000 12,193 15,229 18,943 11,053 14,089 17,803
7 25,647 200,000 200,000 200,000 13,948 18,011 23,189 13,036 17,099 22,277
8 30,080 200,000 200,000 200,000 15,618 20,865 27,838 14,934 20,181 27,154
9 34,734 200,000 200,000 200,000 17,199 23,792 32,933 16,743 23,336 32,477
10 39,620 200,000 200,000 200,000 18,685 26,792 38,523 18,457 26,564 38,295
15 67,972 200,000 200,000 200,000 24,383 42,756 76,001 24,383 42,756 76,001
20 104,158 200,000 200,000 200,000 26,069 59,873 137,900 26,069 59,873 137,900
25 (age 65) $150,340 $200,000 $200,000 $295,407 $21,697 $77,659 $242,137 $21,697 $77,659 $242,137
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -50.85% -46.00% -41.14% 6,566.67% 6,566.67% 6,566.67%
2 6,458 -33.11 -27.05 -21.04 668.03 668.03 668.03
3 9,930 -24.23 -17.74 -11.35 267.20 267.20 267.20
4 13,577 -18.94 -12.29 -5.78 153.63 153.63 153.63
5 17,406 -15.82 -9.07 -2.48 103.51 103.51 103.51
6 21,426 -13.80 -6.96 -0.31 76.08 76.08 76.08
7 25,647 -11.95 -5.14 1.48 59.05 59.05 59.05
8 30,080 -10.67 -3.87 2.74 47.57 47.57 47.57
9 34,734 -9.75 -2.93 3.67 39.36 39.36 39.36
10 39,620 -9.07 -2.22 4.39 33.24 33.24 33.24
15 67,972 -8.14 -0.64 6.31 17.17 17.17 17.17
20 104,158 -8.84 -0.02 7.39 10.46 10.46 10.46
25 (age 65) $150,340 -11.66% 0.27% 8.14% 6.90% 6.90% 9.41%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
26
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION B
ASSUMING CURRENT CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $202,219 $202,364 $202,510 $ 2,219 $ 2,364 $ 2,510 $ 1,470 $ 1,615 $ 1,761
2 6,458 204,634 205,077 205,538 4,634 5,077 5,538 3,615 4,058 4,519
3 9,930 206,987 207,884 208,854 6,987 7,884 8,854 5,847 6,744 7,714
4 13,577 209,281 210,793 212,491 9,281 10,793 12,491 8,141 9,653 11,351
5 17,406 211,513 213,802 216,477 11,513 13,802 16,477 10,373 12,662 15,337
6 21,426 213,684 216,919 220,853 13,684 16,919 20,853 12,544 15,779 19,713
7 25,647 215,767 220,120 225,630 15,767 20,120 25,630 14,855 19,208 24,718
8 30,080 217,766 223,411 230,853 17,766 23,411 30,853 17,082 22,727 30,169
9 34,734 219,687 226,802 236,575 19,687 26,801 36,575 19,231 26,346 36,119
10 39,620 221,528 230,294 242,847 21,528 30,294 42,847 21,300 30,066 42,619
15 67,972 230,213 250,198 285,575 30,213 50,198 85,575 30,213 50,198 85,575
20 104,158 237,352 274,100 355,145 37,352 74,100 155,145 37,352 74,100 155,145
25 (age 65) $150,340 $241,716 $301,502 $467,469 $41,716 $101,502 $267,469 $41,716 $101,502 $267,469
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -51.00% -46.16% -41.31% 6,640.62% 6,645.47% 6,650.32%
2 6,458 -29.37 -23.40 -17.47 677.41 678.31 679.23
3 9,930 -20.07 -13.75 -7.52 271.92 272.51 273.16
4 13,577 -14.93 -8.52 -2.21 156.99 157.52 158.12
5 17,406 -12.05 -5.60 0.74 106.25 106.78 107.39
6 21,426 -10.24 -3.75 2.60 78.47 79.02 79.67
7 25,647 -8.67 -2.23 4.08 61.22 61.79 62.51
8 30,080 -7.62 -1.21 5.07 49.58 50.19 50.97
9 34,734 -6.88 -0.49 5.77 41.25 41.90 42.75
10 39,620 -6.34 0.04 6.30 35.03 35.72 36.66
15 67,972 -5.17 1.35 7.68 18.70 19.61 21.05
20 104,158 -4.77 1.97 8.38 11.84 12.99 15.04
25 (age 65) $150,340 -4.88% 2.25% 8.78% 8.13% 9.54% 12.26%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
27
<PAGE>
INCENTIVE LIFE
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
PLANNED PREMIUM $3,000 INITIAL FACE AMOUNT $200,000
MALE AGE 40
NON-SMOKER DEATH BENEFIT OPTION B
ASSUMING GUARANTEED CHARGES
<TABLE>
<CAPTION>
DEATH BENEFIT(2) POLICY ACCOUNT(2) CASH SURRENDER VALUE(2)
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
POLICY ACCUMULATED ------------------------------ ----------------------------- -----------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -------- -------- -------- ------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 $202,219 $202,364 $202,510 $ 2,219 $ 2,364 $ 2,510 $ 1,470 $ 1,615 $ 1,761
2 6,458 204,348 204,782 205,234 4,348 4,782 5,234 3,329 3,763 4,215
3 9,930 206,396 207,257 208,189 6,396 7,257 8,189 5,256 6,117 7,049
4 13,577 208,358 209,785 211,394 8,358 9,785 11,394 7,218 8,645 10,254
5 17,406 210,233 212,367 214,873 10,233 12,367 14,873 9,093 11,227 13,733
6 21,426 212,014 214,998 218,646 12,014 14,998 18,646 10,874 13,858 17,506
7 25,647 213,700 217,677 222,744 13,700 17,677 22,744 12,788 16,765 21,832
8 30,080 215,286 220,401 227,194 15,286 20,401 27,194 14,602 19,717 26,510
9 34,734 216,768 223,166 232,028 16,768 23,166 32,028 16,312 22,710 31,572
10 39,620 218,139 225,965 237,277 18,139 25,965 37,277 17,911 25,737 37,049
15 67,972 222,944 240,071 270,986 22,944 40,071 70,986 22,944 40,071 70,986
20 104,158 223,042 252,752 321,068 23,042 52,752 121,068 23,042 52,752 121,068
25 (age 65) $150,340 $216,376 $260,970 $395,276 $16,376 $60,970 $195,276 $16,376 $60,970 $195,276
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
<TABLE>
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON CASH SURRENDER VALUES ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY ACCUMULATED --------------------------- ---------------------------------
YEAR PREMIUMS(1) 0% 6% 12% 0% 6% 12%
------ ----------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 3,150 -51.00% -46.16% -41.31% 6,640.62% 6,645.47% 6,650.32%
2 6,458 -33.39 -27.35 -21.35 676.84 677.71 678.62
3 9,930 -24.58 -18.11 -11.73 271.52 272.10 272.72
4 13,577 -19.33 -12.70 -6.19 156.66 157.16 157.73
5 17,406 -16.24 -9.51 -2.93 105.95 106.45 107.02
6 21,426 -14.25 -7.43 -0.79 78.19 78.70 79.31
7 25,647 -12.43 -5.63 0.97 60.95 61.47 62.14
8 30,080 -11.18 -4.39 2.21 49.31 49.86 50.59
9 34,734 -10.29 -3.48 3.11 40.98 41.57 42.36
10 39,620 -9.65 -2.81 3.80 34.76 35.38 36.25
15 67,972 -9.01 -1.46 5.51 18.35 19.16 20.48
20 104,158 -10.36 -1.24 6.29 11.34 12.34 14.24
25 (age 65) $150,340 -15.27% -1.63% 6.74% 7.41% 8.62% 11.23%
<FN>
(1) Assumes net interest of 5% compounded annually.
(2) Assumes no policy loan has been made.
</FN>
</TABLE>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE VALUES FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE VALUES
FOR A POLICY WOULD ALSO BE DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE
INVESTMENT ALLOCATIONS MADE TO THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT
AND THE DIFFERENT RATES OF RETURN OF THE TRUST PORTFOLIOS, IF THE ACTUAL RATES
OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6% OR 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL DIVISIONS. NO REPRESENTATIONS CAN BE
MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
28
<PAGE>
APPENDIX A
COMMUNICATING PERFORMANCE DATA
In reports or other communications to policyowners or in advertising material,
we may describe general economic and market conditions affecting the Separate
Account and the Trust and may compare the performance or ranking of the Separate
Account investment divisions and Trust portfolios with (1) that of other
insurance company separate accounts or mutual funds included in the rankings
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or similar
investment services that monitor the performance of insurance company separate
accounts or mutual funds, (2) other appropriate indices of investment securities
and averages for peer universes of funds, or (3) data developed by us derived
from such indices or averages. Advertisements or other communications furnished
to present or prospective policyowners may also include evaluations of a
Separate Account Division or Trust portfolio by financial publications that are
nationally recognized such as Barron's, Morningstar's Variable Annuity/Life
Sourcebook, Business Week, Forbes, Fortune, Institutional Investor, Money,
Kiplinger's Personal Finance, Financial Planning, Investment Adviser, Investment
Management Weekly, Money Management Letter, Investment Dealers Digest, National
Underwriter, Pension & Investments Age, USA Today, Investor's Daily, the New
York Times, The Wall Street Journal, the Los Angeles Times and the Chicago
Tribune.
Performance data for peer universes of funds with similar investment objectives
are compiled by Lipper Analytical Services, Inc. (Lipper) in its Lipper Variable
Insurance Products Performance Analysis Service (Lipper Survey) and Morningstar,
Inc. in the Morningstar Variable Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 funds
underlying variable annuity and life insurance products. The Lipper Survey
divides these actively managed funds into 25 categories by portfolio objectives.
The Lipper Survey contains two different universes, which differ in terms of the
types of fees reflected in performance data. The "Separate Account" universe
reports performance data net of investment management fees, direct operating
expenses and asset-based charges applicable under variable insurance and annuity
contracts. The "Mutual Fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects
asset-based charges that relate only to the underlying mutual fund. This means
that the performance data reported by the Trust may appear relatively more
favorable than the performance data reported by the Separate Account divisions.
The Morningstar Report consists of nearly 700 variable life and annuity funds,
all of which report their data net of investment management fees, direct
operating expenses and separate account level charges.
LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following chart presents historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the investment divisions of the Separate Account
or the Trust portfolios, may help to provide a perspective on the potential
returns of different asset classes over different periods of time. By combining
this information with your knowledge of your own financial needs, you may be
able to better determine how you wish to allocate your Incentive Life premiums.
Historically, the investment performance of common stocks over the long term has
generally been superior to that of long or short-term debt securities, although
common stocks have been subject to more dramatic changes in value over short
periods of time. The Common Stock Division of the Separate Account may,
therefore, be a desirable selection for policyowners who are willing to accept
such risks. Policyowners who have a need to limit short-term risk, may find it
preferable to allocate a smaller percentage of their net premiums to those
investment divisions that invest primarily in common stock. Any investment in
securities, whether equity or debt, involves varying degrees of potential risk,
in addition to offering varying degrees of potential reward.
The chart on page A-2 illustrates the average annual compound rates of return
over selected time periods between December 31, 1925 and December 31, 1993 for
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds and Treasury Bills. The Consumer Price Index
is shown as a measure of inflation for comparison purposes. The average annual
returns assume the reinvestment of dividends, capital gains and interest.
The information presented is an historical record of unmanaged groups of
securities and is neither an estimate nor a guarantee of future results. In
addition, investment management fees and expenses and charges associated with a
variable life insurance policy, are not reflected.
The rates of return illustrated do not represent returns of the Separate Account
or the Trust and do not constitute a representation that the performance of the
investment divisions of the Separate Account or the Trust will correspond to
rates of return such as those illustrated in the chart. For a comparative
illustration of performance results of The Hudson River Trust, see page A-1 of
the Trust's prospectus.
A-1
<PAGE>
AVERAGE ANNUAL RATES OF RETURN
<TABLE>
<CAPTION>
INTER-
LONG-TERM LONG-TERM MEDIATE- U.S. CONSUMER
COMMON GOVT. CORPORATE TERM GOVT. TREAS. PRICE
STOCKS BONDS BONDS BONDS BILLS INDEX
------ ----- ----- ----- ----- -----
FOR THE
FOLLOWING
PERIODS ENDING
12/31/93:
- --------
<S> <C> <C> <C> <C> <C> <C>
1 year .......... 9.99% 18.24% 13.19% 11.24% 2.90% 3.00%
3 years ......... 15.63 15.08 14.07 11.25 3.99 2.99
5 years ......... 14.50 13.84 13.00 11.35 5.61 3.94
10 years ......... 14.94 14.41 14.00 11.43 6.35 3.73
20 years ......... 12.76 10.10 10.16 9.85 7.49 5.92
30 years ......... 10.46 7.37 7.69 8.17 6.65 5.32
40 years ......... 11.80 6.01 6.43 6.80 5.55 4.32
50 years ......... 12.30 5.21 5.57 5.74 4.61 4.35
60 years ......... 11.42 5.11 5.54 5.43 3.86 4.10
Since 1926 ....... 10.33 5.02 5.59 5.25 3.69 3.13
Inflation Adjusted
Since 1926 ....... 6.98 1.83 2.38 2.06 0.54 N/A
- ----------
<FN>
*Source: Ibbotson, Roger G. and Rex A. Sinquefield, STOCKS, BONDS, BILLS, AND
INFLATION (SBBI), 1982, updated in STOCKS, BONDS, BILLS, AND INFLATION 1994
YEARBOOK(TM), Ibbotson Associates, Inc., Chicago. All rights reserved.
Common Stocks (S&P 500)--Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
Long-term Government Bonds--Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty year maturity and a
reasonably current coupon.
Long-term Corporate Bonds--For the period 1969-1993, represented by the Salomon
Brothers Long-Term, High-Grade Corporate Bond Index; for the period 1946-1968,
the Salomon Brothers' Index was backdated using Salomon Brothers' monthly yield
data and a methodology similar to that used by Salomon for 1969-1993; for the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate
Composite yield data were used, assuming a 4 percent coupon and a twenty year
maturity.
Intermediate-term Government Bonds--Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five year
maturity.
U.S. Treasury Bills--Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
Inflation--Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
</FN>
</TABLE>
A-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VM 485
HRT 102 (5/90)
- --------------------------------------------------------------------------------
---------------
BULK RATE
U.S. POSTAGE
PAID
Mailing Address: NEW YORK, N.Y.
2 Penn Plaza PERMIT NO. 8048
New York, New York 10121 ---------------
ADDRESS CORRECTION REQUESTED
RETURN POSTAGE GUARANTEED
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Reconciliation and Tie (included in Post-Effective Amendment No. 19).
The Supplement dated May 1, 1996 (for inforce business) consisting of 49 pages.
The Prospectus consisting of 65 pages.
Undertaking to file reports (included in original Registration Statement).
Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933
(included in original Registration Statement).
The signatures.
Written Consents of the following persons:
Freedman, Levy, Kroll & Simonds (see Exhibit 6(b))
John H. Jacobus, Vice President and Associate General Counsel (see
Exhibit 3(a)(ii))
Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable (see
Exhibit 3(b))
Independent Public Accountants (see Exhibit 6(a))
<TABLE>
<CAPTION>
The following exhibits required by Article IX of Form N-8B-2:
<S> <C> <C>
1-A(1)(a)(i) Certified resolutions re organization of Separate Account FP. (Exhibit 1-A(1)(a) to original
Registration Statement in File No. 2-98590.)
1-A(1)(a)(ii) Certified resolutions re divisions of Separate Account FP. (Exhibit 1-A(1)(a)(ii) to Post-Effective
Amendment No. 3 in File No. 2-98590.)
1-A(1)(a)(iii) Certified resolution re Asset Allocation Divisions of Separate Account FP. (Exhibit 1-A(1)(a)(iii) to
Post-Effective Amendment No. 15 in File No. 2-98590.)
1-A(1)(a)(iv) Certified resolution re Short-Term World Income and Intermediate Government Securities Divisions of
Separate Account FP (Exhibit 1-A(1)(a)(iv) to Post-Effective Amendment No. 16 in File No. 2-98590.)
1-A(1)(a)(v) Certified resolution re Growth & Income and Quality Bond Divisions of Separate Account FP (Exhibit
1-A(1)(a)(v) to Post-Effective Amendment No.20 in File No. 2-98590.)
<FN>
- ---------------------------
*Incorporated by reference.
</FN>
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* 1-A(1)(a)(vi) Certified resolution re Equity Index Division of Separate Account FP. (Exhibit 1-A(1)(a)(vi) to
Post-Effective Amendment No. 6 in File No. 33-40590.)
* 1-A(1)(a)(vii) Certified resolution re International Division of Separate Account FP. (Exhibit 1-A(1)(a)(vii) to
Post-Effective Amendment No. 2 in File No. 33-83948.)
1-A(2) Inapplicable.
1-A(3)(a) Sales Agreement between The Equitable Life Assurance
Society of the United States ("Equitable") and
Equitable Variable Life Insurance Company ("Equitable
Variable"), dated December 23, 1985, including
schedule of commissions, as amended on November 4,
1986, August 31, 1987, October 1, 1988 and May 1,
1990. (Exhibit 1-A(3)(a) to Post-Effective Amendment
No. 15 in File No. 2-98590.)
* 1-A(3)(a)(i) Amendment No. 5 to Sales Agreement dated as of October 31, 1991 (Exhibit 1-A(3)(a)(i) to Pre-Effective
Amendment No. 1 in File No. 33-38594.)
* 1-A(3)(a)(ii) Amendment No. 6 to Sales Agreement dated as of July 23, 1992 (Exhibit 1-A(3)(a)(ii) to Pre-Effective
Amendment No. 1 in File No. 33-47928.)
* 1-A(3)(a)(iii) Amendment No. 7 to Sales Agreement dated as of December 1, 1992 (Exhibit 1-A(3)(a)(iii) to Pre-Effective
Amendment No. 3 in File No. 33-38594.)
* 1-A(3)(b) Form of Broker-Dealer and General Agent Sales Agreement (Exhibit 1-A(3)(b) to Post-Effective Amendment
No. 7 in File No.33-47928.)
1-A(3)(c) See Exhibit 1-A(3)(a)(i).
1-A(4) Inapplicable.
1-A(5)(a)(i) Flexible Premium Life Insurance Policy (85-300). (Exhibit 1-A(5)(a) to Pre-Effective Amendment No. 1
in File No. 2-98590.)
1-A(5)(a)(ii) Flexible Premium Life Insurance Policy (88-300). Exhibit 1-A(5)(a) (ii) to Post-Effective Amendment
No. 9 in File No.2-98590.)
1-A(5)(b) Accidental Death Benefit Rider (R85-401), including state variation. (Exhibit 1-A(5)(b) to original
Registration Statement in File No. 2-98590.)
1-A(5)(c) Term Insurance Rider (R85-403), including state variation. (Exhibit 1-A(5)(c) to original Registration
Statement in File No. 2-98590.)
1-A(5)(d) Children's Term Insurance Rider (R85-404), including state variations. (Exhibit 1-A(5)(d) to original
Registration Statement in File No. 2-98590.)
1-A(5)(e) Exchange Privilege Rider (R85-405), including state variations. (Exhibit 1-A(5)(e) to original
Registration Statement in File No. 2-98590.)
1-A(5)(f) Limitation on Amount of Insurance Rider (85-406). (Exhibit 1-A(5)(f) to original Registration Statement
in File No.2-98590.)
<FN>
- ---------------------------
*Incorporated by reference.
</FN>
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1-A(5)(g) Disability Rider - Waiver of Monthly Deductions, including state variations (R85-408). (Exhibit 1-A(5)
(g) to Pre-Effective Amendment No. 1 in File No. 2-98590.)
1-A(5)(h) Universal Life Exchange Program Riders.(Exhibit 1-A(5)(h) to Post-Effective Amendment No. 5 in File
No. 2-98590.)
1-A(5)(i) Pro Rata Surrender Charge Endorsement (S.87-289). (Exhibit 1-A(5)(i) to Post-Effective Amendment No. 8
in File No.2-98590.)
1-A(5)(j) Premium Tax Endorsement (S.88-294). (Exhibit 1-A(5)(j) to Post-Effective Amendment No. 10 in File
No. 2-98590.)
1-A(5)(k) Monthly Cost of Insurance Endorsement (S.88-295, Non-Smoker, Standard Risk). (Exhibit 1-A(5)(k) to
Post-Effective Amendment No. 10 in File No. 2-98590.)
1-A(5)(l) Asset Allocation Endorsement (S.89-301). (Exhibit 1-A(5)(l) to Post-Effective Amendment No. 11 in File
No. 2-98590.)
1-A(5)(m) Guaranteed Interest Division Transfer Endorsement (S.89-303) and Guaranteed Interest Division Transfer
Rider (R.89-303) for use with Policy No. 85-300. (Exhibit 1-A(5)(m) to Post-Effective Amendment
No. 14 in File No. 2-98590.)
* 1-A(5)(n) Accelerated Death Benefit Rider (Exhibit 1-A(5)(q) to Post-Effective Amendment No. 5 in File
No. 33-40590.)
* 1-A(5)(o) Free Look Rider (Exhibit 1-A(5)(f) to Post-Effective Amendment No. 4 in File No. 33-47928.)
1-A(6)(a) Declaration and Charter of Equitable Variable, as amended. (Exhibit 1-A(6)(a) to original Registration
Statement in File No. 2-98590.)
1-A(6)(b) By-Laws of Equitable Variable, as amended. (Exhibit 1-A(6)(b) to original Registration Statement in File
No. 2-98590.)
1-A(7) Inapplicable.
* 1-A(8) Distribution and Servicing Agreement among Equico Securities, Inc., Equitable and Equitable Variable
dated as of May 1,1994. (Exhibit 1-A(8) to Post-Effective Amendment No. 12 in File No. 33-8237.)
1-A(9)(a) Agreement, dated February 8, 1973, between Equitable Variable and Equitable for cooperative and joint use
of Personnel, Property and Services. (Exhibit 1-A(9)(a) to original Registration Statement in File
No. 2-98590.)
1-A(9)(b) Agreement dated as of January 1, 1977, between Equitable and Equitable Variable for cooperative and joint
use of Personnel,Property and Services. (Exhibit 1-A(9)(b) to original Registration Statement in File
No. 2-98590.)
* 1-A(9)(c)(i) Agreement, dated as of April 1, 1976, between Equitable and Equitable Variable regarding policy changes
between the companies (the "Policy Change Agreement"). (Exhibit 1-A(9)(e)(i) to Pre-Effective Amendment
No. 1 in File No. 33-8237.)
<FN>
- ---------------------------
*Incorporated by reference.
</FN>
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* 1-A(9)(c)(ii) Amendment, dated August 30, 1982, to the Policy Change Agreement. (Exhibit 1-A(9)(e)(i) to Pre-Effective
Amendment No. 1 in File No. 33-8237.)
Other Exhibits:
1-A(10)(a) Application EV4-200T. (Exhibit 1-A(10)(a) to Post-Effective Amendment No. 14 in File No. 2-98590.)
1-A(10)(b) The Universal Life Exchange Program Application. (Exhibit 1-A(10)(b) to Post-Effective Amendment
No. 5 in File No.2-98590.)
2 See Exhibit 1-A(5)(a) above.
3(a)(i) Opinion and Consent of Herbert P. Shyer, Executive Vice President and General Counsel of Equitable.
(Exhibit 3(a) to Pre-Effective Amendment No. 1 in File No. 2-98590.)
3(a)(ii) Opinion and Consent of John H. Jacobus, Vice President and Associate General Counsel of Equitable.
(Exhibit 3(a)(ii) to Post-Effective Amendment No. 9 in File No. 2-98590.)
3(b)(i) Opinion and Consent of Joseph O. North, Jr., F.S.A., M.A.A.A., Vice President. (Exhibit 3(b)(iii) to
Post-Effective Amendment No. 14 in File No. 2-98590.)
3(b)(ii) Opinion and Consent of Joseph O. North, Jr., F.S.A., M.A.A.A., Vice President. (Exhibit 3(b)(ii) to
Post-Effective Amendment No. 16 in File No. 2-98590.)
3(b)(iii) Opinion and Consent of Joseph O. North, Jr., F.S.A., M.A.A.A., Vice President of Equitable.
(Exhibit 3(b)(iii) to Post-Effective Amendment No. 19 in File No. 2-98590.)
3(b)(iv) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable. (Exhibit 3(b)(iv)
to Post-Effective Amendment No. 21 in File No. 2-98590.)
3(b)(v) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable. (Exhibit 3(b)(v)
to Post-Effective Amendment No. 23 in File No. 2-98590.)
3(b)(vi) Opinion and Consent of Barbara Fraser, F.S.A., M.A.A.A., Vice President of Equitable. (Exhibit 3(b)(vi)
to Post-Effective Amendment No. 25 in File No. 2-98590.)
4 Inapplicable.
5 Inapplicable.
6(a) Consent of Independent Public Accountant.
6(b) Consent of Freedman, Levy, Kroll & Simonds. (Exhibit 6(b) to Post-Effective Amendment No. 9 in File
No. 2-98590.)
7(a) Powers of Attorney. (Exhibit 7(e) to Post-Effective Amendment No. 15 in File No. 2-98590.)
<FN>
- ---------------------------
*Incorporated by reference.
</FN>
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* 7(b) Powers of Attorney. (Exhibit 7(b) to original Registration Statement in File No. 33-38594.)
* 7(c) Powers of Attorney. (Exhibit 7(c) to original Registration Statement in File No. 33-40590.)
* 7(d) Powers of Attorney. (Exhibit 7(d) to original Registration Statement in File No. 33-47928.)
* 7(e) Powers of Attorney. (Exhibit 7(e) to Post-Effective Amendment No. 1 in File No. 33-47928.)
* 7(f) Powers of Attorney. (Exhibit 7(f) to Post-Effective Amendment No. 5 in File No. 33-40590.)
7(g) Powers of Attorney. (Exhibit 7(g) to Post-Effective Amendment No. 23 in File No. 2-98590.)
7(h) Powers of Attorney. (Exhibit 7(h) to Post-Effective Amendment No. 24 in File No. 2-98590.)
7(i) Powers-of-Attorney.
8 Description of Equitable Variable's Issuance, Transfer and Redemption Procedures for Policies pursuant
to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940. (Exhibit 8 to Post-Effective
Amendment No. 25 in File No. 2-98590.)
9(a)(i) Notice of Cancellation Right Pursuant to Rule 6e-3(T)(b)(13)(viii) under the Investment Company Act
of 1940 ("Cancellation Notice"), including state variations. (Exhibit 9 to Pre-Effective Amendment
No. 1 in File No. 2-98590.)
9(a)(ii) Revised Cancellation Notice, including state variation. (Exhibit 9(a)(ii) to Post-Effective Amendment
No. 9 in File No. 2-98590.)
9(b) Cancellation Notice for the Guaranteed Issue Program. (Exhibit 9(b) to Post-Effective Amendment No. 4
in File No. 2-98590.)
9(c) Cancellation Notice for the Universal Life Exchange Program. (Exhibit 9(c) to Post-Effective Amendment
No. 5 in File No. 2-98590.)
10 Representation, description and undertaking pursuant to Rule 6e-3(T)(b)(13)(iii)(F) under the Investment
Company Act of 1940. (Exhibit 10 to Pre-Effective Amendment No. 1 in File No. 2-98590.)
* 11(a) Undertaking to Guarantee Obligation of Principal Underwriters pursuant to Rule 6e-3(T)(b)(vi) of The
Investment Company Act of 1940, dated as of May 1, 1996. (Exhibit 11(a) to Post-Effective Amendment
No. 4 in File No. 33-83948.)
* 11(b) Statement of Equitable Variable pursuant to Rule 27d-2 under the Investment Company Act of 1940 for the
Year Ended December 31, 1995. (Exhibit 11(b) to Post-Effective Amendment No. 4 in File No. 33-83948.)
27 Financial Data Schedule.
<FN>
- ---------------------------
*Incorporated by reference.
</FN>
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it meets all the requirements for effectiveness of
this amendment to the registration statement pursuant to paragraph (b) of Rule
485 under the Securities Act of 1933 and it has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City and State of New York on the 25th day of April, 1996.
SEPARATE ACCOUNT FP OF EQUITABLE
VARIABLE LIFE INSURANCE COMPANY
By: EQUITABLE VARIABLE LIFE
INSURANCE COMPANY, DEPOSITOR
By: /s/ Samuel B. Shlesinger
------------------------
(Samuel B. Shlesinger)
Senior Vice President
Attest: /s/Linda Galasso
----------------
(Linda Galasso)
Assistant Secretary
April 25, 1996
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it meets all the requirements for effectiveness of
this amendment to the registration statement pursuant to paragraph (b) of Rule
485 under the Securities Act of 1933 and it has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York on the 25th day of
April, 1996.
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
By: /s/ Samuel B. Shlesinger
------------------------
(Samuel B. Shlesinger)
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the date indicated:
PRINCIPAL EXECUTIVE OFFICERS:
Joseph J. Melone Chairman of the Board and Chief Executive Officer
James M. Benson President and Chief Operating Officer
PRINCIPAL FINANCIAL OFFICER:
J. Thomas Liddle, Jr. Senior Vice President and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
Stephen F. Hogan Vice President and Controller
DIRECTORS:
Michel Beaulieu Gordon Dinsmore Michael J. Rich
James M. Benson William T. McCaffrey Samuel B. Shlesinger
Harvey Blitz Joseph J. Melone Jose S. Suquet
Laurent Clamagirand Peter D. Noris Dennis D. Witte
Jerry de St. Paer
By: /s/ Samuel B. Shlesinger
-----------------------
(Samuel B. Shlesinger)
Attorney-in-Fact
April 25, 1996
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TAG VALUE
- ----------- ---------
6(a) Consent of Independent Public Accountant. EX-99.6a CONSENT
7(i) Powers of Attorney. EX-99.7i POW ATTY
27 Financial Data Schedule, Separate Account FP. EX-27
II-8
Consent of Independent Accountants
We hereby consent to the use in the Prospectus Supplement
constituting part of this Post-Effective Amendment No. 26
to the Registration Statement No. 2-98590 on Form S-6 of
our report dated February 7, 1996, relating to the
financial statements of Equitable Variable Life Insurance
Company Separate Account FP, and our report dated February
7, 1996, relating to the consolidated financial statements
of Equitable Variable Life Insurance Company, which
reports appear in such Prospectus Supplement. We also
consent to the references to us under the heading
"Financial Statements" in such Prospectus Supplement.
/S/ Price Waterhouse
PRICE WATERHOUSE LLP
New York, New York
April 22, 1996
POWER OF ATTORNEY
The undersigned director and/or officer of Equitable Variable Life
Insurance Company, a New York corporation (the "Company"), hereby constitutes
and appoints Joseph J. Melone, James T. Liddle, Jr., and Samuel B. Shlesinger
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
him and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 or the Investment Company Act of 1940 (the "Acts"):
registration statements on any form or forms under the Acts, and any and all
amendments and supplements thereto (including post-effective amendments), with
all exhibits and all agreements, consents, exemptive applications and other
documents and instruments necessary or appropriate in connection therewith, each
of said attorneys-in -fact and agents being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 27th day of
November, 1995.
/s/ Peter D. Noris
------------------------------
Peter D. Noris
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of Equitable Variable Life
Insurance Company, a New York corporation (the "Company"), hereby constitutes
and appoints Joseph J. Melone, James T. Liddle, Jr., and Samuel B. Shlesinger
and each of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
him and on his behalf and in his name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 or the Investment Company Act of 1940 (the "Acts"):
registration statements on any form or forms under the Acts, and any and all
amendments and supplements thereto (including post-effective amendments), with
all exhibits and all agreements, consents, exemptive applications and other
documents and instruments necessary or appropriate in connection therewith, each
of said attorneys-in -fact and agents being empowered to act with or without the
others or other, and to have full power and authority to do or cause to be done
in the name and on behalf of the undersigned each and every act and thing
requisite and necessary or appropriate with respect thereto to be done in and
about the premises in order to effectuate the same, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, may do or
cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this 28th day of
November, 1995.
/s/ Michael J. Rich
------------------------------
Michael J. Rich
<TABLE> <S> <C>
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<MULTIPLIER> 1
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<PERIOD-TYPE> Year
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<PERIOD-START> Jan-01-1995
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<INVESTMENTS-AT-VALUE> 207,638,095
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 207,133,531
<DIVIDEND-INCOME> 9,225,401
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 954,556
<NET-INVESTMENT-INCOME> 8,270,845
<REALIZED-GAINS-CURRENT> (432,347)
<APPREC-INCREASE-CURRENT> 57,216
<NET-CHANGE-FROM-OPS> 7,895,714
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,270,845
<DISTRIBUTIONS-OF-GAINS> (375,131)
<DISTRIBUTIONS-OTHER> 61,778,372
<NUMBER-OF-SHARES-SOLD> 0
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<NET-CHANGE-IN-ASSETS> 69,637,446
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 04
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<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<EXCHANGE-RATE> 1
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<INVESTMENTS-AT-VALUE> 556,029,378
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<OTHER-ITEMS-ASSETS> 800,569
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<OTHER-ITEMS-LIABILITIES> 520,201
<TOTAL-LIABILITIES> 1,641,816
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<NET-ASSETS> 555,188,131
<DIVIDEND-INCOME> 1,268,689
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<EXPENSES-NET> 2,702,978
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<SERIES>
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<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
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<NET-INVESTMENT-INCOME> 6,147,199
<REALIZED-GAINS-CURRENT> (179,454)
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<NET-CHANGE-FROM-OPS> 10,664,829
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<DISTRIBUTIONS-OF-GAINS> 4,517,630
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</TABLE>
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<ARTICLE> 6
<CIK> 0000771726
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<SERIES>
<NUMBER> 07
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<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 297,303,481
<INVESTMENTS-AT-VALUE> 333,829,077
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 421,042
<TOTAL-ASSETS> 334,250,119
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 506,731
<TOTAL-LIABILITIES> 753,099
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 333,497,020
<DIVIDEND-INCOME> 5,152,442
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 1,743,898
<NET-INVESTMENT-INCOME> 3,408,544
<REALIZED-GAINS-CURRENT> 12,264,394
<APPREC-INCREASE-CURRENT> 33,395,316
<NET-CHANGE-FROM-OPS> 49,068,254
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,408,544
<DISTRIBUTIONS-OF-GAINS> 45,659,710
<DISTRIBUTIONS-OTHER> 42,687,015
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 91,658,549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 08
<NAME> Conservative Investors Division
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 162,300,470
<INVESTMENTS-AT-VALUE> 172,662,590
<RECEIVABLES> 76,736
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172,739,326
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 652,227
<TOTAL-LIABILITIES> 652,227
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 172,087,099
<DIVIDEND-INCOME> 8,169,109
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 921,294
<NET-INVESTMENT-INCOME> 7,247,815
<REALIZED-GAINS-CURRENT> 689,721
<APPREC-INCREASE-CURRENT> 19,129,817
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 09
<NAME> Growth Investors Division
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 12
<NAME> Intermed Gov Securities Div
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
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<INVESTMENTS-AT-VALUE> 37,681,989
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 13
<NAME> Growth & Income Division
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
<EXCHANGE-RATE> 1
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 14
<NAME> Quality Bond Division
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Dec-31-1995
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 15
<NAME> Equity Index
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Apr-01-1995
<PERIOD-END> Dec-31-1995
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000771726
<NAME> Sep Acct FP EVLICO
<SERIES>
<NUMBER> 16
<NAME> International Fund Division
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Apr-01-1995
<PERIOD-END> Dec-31-1995
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</TABLE>
