<PAGE>
As filed with the Securities and Exchange Commission on February 29, 2000
File No. 333-43329
File No. 811-08581
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No.__ [ ]
Post-Effective Amendment No. 3 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 11 [X]
THE SAGE VARIABLE ANNUITY ACCOUNT A
(Exact Name of Registrant)
SAGE LIFE ASSURANCE OF AMERICA, INC.
(Name of Depositor)
300 Atlantic Street
Stamford, CT 06901
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (203) 602-6500
James F. Bronsdon
Sage Life Assurance of America, Inc.
300 Atlantic Street
Stamford, CT 06901
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
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It is proposed that this filing become effective:
__ immediately upon filing pursuant to paragraph (b) of Rule 485;
__ on May 1, 2000 pursuant to paragraph (b) of Rule 485;
__ 60 days after filing pursuant to paragraph (a)(1) of Rule 485;
X on May 1, 2000 pursuant to paragraph (a)(1) of Rule 485;
---
__ 75 days after filing pursuant to paragraph (a)(2) of Rule 485; or
__ on ___ pursuant to paragraph (a)(2) of Rule 485.
Title of Securities: Interests in a separate account under flexible payment
deferred combination fixed and variable annuity contracts.
<PAGE>
PROFILE DATED MAY 1, 2000
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE SAGE VARIABLE ANNUITY ACCOUNT A AND
SAGE LIFE ASSURANCE OF AMERICA, INC.
THIS PROFILE IS A SUMMARY OF SOME IMPORTANT POINTS THAT YOU
SHOULD KNOW AND CONSIDER BEFORE PURCHASING A CONTRACT. THE
CONTRACT IS MORE FULLY DESCRIBED IN THE FULL PROSPECTUS THAT
ACCOMPANIES THIS PROFILE. PLEASE READ THAT PROSPECTUS CAREFULLY.
"We," "us," "our," "Sage Life" or the "Company" refer to Sage Life
Assurance of America, Inc. "You" and "your" refer to the Owner of a
Contract.
1. WHAT ARE THE CONTRACTS?
The Contracts are flexible payment fixed and variable annuity contracts
offered by Sage Life Assurance of America, Inc. Your Contract is a contract
between you, the Owner, and us, Sage Life.
We designed the Contract for use in your long-term financial and retirement
planning. It provides a means for allocating amounts on a tax-deferred basis to
our Variable Account and our Fixed Account.
INVESTMENT FLEXIBILITY. You can invest among 33 subdivisions of our
Variable Account, known as "Variable Sub-Accounts," each corresponding to a
different Fund. These Funds, listed in Section 4, are professionally managed
and use a broad range of investment strategies (growth and income, aggressive
growth, etc.), styles (growth, value, etc.) and asset classes (stocks, bonds,
international, etc.). You can select a mix of Funds to meet your financial and
retirement needs and objectives, tolerance for risk, and view of the market.
Amounts you invest in these Funds will fluctuate daily based on underlying
investment performance. So, the value of your investment may increase or
decrease.
Through our Fixed Account, you can invest to receive guaranteed rates of
interest for periods we offer up to as long as 10 years ("Guarantee Periods").
We also guarantee your principal while it remains in our Fixed Account.
However, if you decide to surrender your Contract, or transfer or access amounts
in the Fixed Account before the end of a Guarantee Period you have chosen, we
ordinarily will apply a Market Value Adjustment. This adjustment reflects
changes in prevailing interest rates since your allocation to the Fixed Account.
The Market Value Adjustment may result in an increase or decrease in the amounts
surrendered, transferred, or accessed.
As your needs or financial or retirement goals change, your investment mix
can change with them. You may transfer amounts among any of the investment
choices in our Fixed or Variable Accounts while continuing to defer current
income taxes.
SAFETY OF SEPARATE ACCOUNTS. Significantly, both our Fixed and Variable
Accounts are separate investment accounts of Sage Life. This provides you with
an important safety feature: we cannot charge the assets supporting your
allocations to these Accounts with liabilities arising out of any other business
we may conduct.
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The Contract also provides you with other important features, including a
death benefit, access to your money, and income plan options.
ACCESS TO AMOUNTS INVESTED. The Contract provides access to your
investment should you need it. During the savings, or Accumulation Phase, your
investment grows tax-free until withdrawn. You decide how much to take and when
to take it (certain restrictions apply after the Accumulation Phase).
Ordinarily, once you access earnings, they are taxed as income. If you
access earnings before you are 59 1/2 years old, you may have to pay an
additional 10% federal tax penalty. Amounts you surrender or withdraw may be
subject to a surrender charge, and a Market Value Adjustment (positive or
negative) may apply if you take the amount from the Fixed Account before the end
of the applicable Guarantee Period.
PROTECTION FOR YOUR BENEFICIARIES. The Contract also provides a death
benefit feature to protect your family should you die during the Accumulation
Phase. In the event of your untimely death, the Beneficiary of your choice will
never receive less than you have invested in the Contract, and may even receive
more. Your Beneficiary decides, within certain federal tax required
limitations, how to wish to receive the death benefit. Or, if your Beneficiary
is your spouse, he or she may take over the Contract and continue deferring
taxes on any gain. Your spouse's starting Account Value would equal any death
benefits payable.
INCOME PAYMENTS. The payout, or Income Phase, of your Contract begins when
you inform us you want to start receiving regular income payments under one of
the various income plans we offer. The amount you accumulated during the
Accumulation Phase determines the amount of income payments you receive during
the Income Phase. You can use your Account Value to provide income payments
that are guaranteed, or income payments that vary with underlying investment
performance, or a combination of both. The income payments can be for life,
which means you can't outlive them!
A portion of each income payment is ordinarily considered a return of your
investment in the Contract. So, until you recover all of your investment in the
Contract, only the portion in excess of this amount is taxed as income. Other
tax consequences may apply to Qualified Contracts.
2. WHAT ARE MY INCOME PAYMENT OPTIONS?
Once the Income Phase of your Contract begins, we apply your Account Value
to provide you with regular income payments.
You can tailor your income to meet your needs by choosing from five
different income plans described below. In explaining the income plans, we are
assuming that you designate yourself as the Annuitant. Of course, you always
can designate someone other than yourself as Annuitant.
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- --------------------------------------------------------------------------------
[ ] INCOME PLAN 1 -- LIFE ANNUITY: You will receive payments for your life.
[ ] INCOME PLAN 2 -- LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN: You will
receive payments for your life. However, if you die before the end of the
guaranteed certain period you select (10 or 20 years), your Beneficiary
will receive the payments for the remainder of that period.
[ ] INCOME PLAN 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY: We will make
payments as long as either you or a second person you select (such as
your spouse) is alive.
[ ] INCOME PLAN 4 -- PAYMENTS FOR A SPECIFIED PERIOD CERTAIN: You will
receive payments for the number of years you select. However, if you die
before the end of that period, your Beneficiary will receive the payments
for the remainder of the guaranteed certain period.
[ ] INCOME PLAN 5 -- ANNUITY PLAN: You can use your Account Value to purchase
any other income plan we offer at the time you want to begin receiving
regular income payments for which you and the Annuitant are eligible.
- --------------------------------------------------------------------------------
You tell us how much of your Account Value to apply to fixed income
payments and to variable income payments. During the Income Phase, you still
have all of the investment choices you had during the Accumulation Phase.
However, we currently limit transfers among your investment choices.
We will allocate the amount of Account Value you apply to provide fixed
income payments to the Fixed Account and invest it in the Guarantee Periods you
select. We guarantee the amount of each income payment, and the amount of each
payment will remain level throughout the period you select.
We will allocate the amount of Account Value you apply to provide variable
income payments to the Variable Account and invest it in the Funds you select.
The amount of each income payment will vary according to the investment
performance of those Funds.
3. HOW DO I PURCHASE A CONTRACT?
In most cases, you may purchase a Contract with $5,000 or more ($2,000 or
more in the case of a Contract used in connection with a tax-qualified
retirement plan) through an authorized registered representative.
In addition, subject to special rules for Contracts used in connection with
tax-qualified retirement plans, you can make additional purchase payments of
$250 or more to your Contract at any time during the Accumulation Phase.
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4. WHAT ARE MY INVESTMENT OPTIONS?
There are 40 investment options under the Contracts available through our
Variable and Fixed Accounts. These choices are professionally managed and allow
for a broad range of investment strategies, styles and asset classes.
Additional investment options may be available in the future.
Through our Variable Account you can choose to invest your money in one or
more of the Variable Sub-Accounts investing in the following 33 Funds:
. AIM VARIABLE INSURANCE FUNDS, INC.
. AIM V.I. Government Securities Fund
. AIM V.I. Growth and Income Fund
. AIM V.I. International Equity Fund
. AIM V.I. Value Fund
. THE ALGER AMERICAN FUND
. Alger American MidCap Growth Portfolio
. Alger American Income and Growth Portfolio
. Alger American Small Capitalization Portfolio
. LIBERTY VARIABLE INVESTMENT TRUST
. Colonial High Yield Securities Fund, Variable Series
. Colonial Small Cap Value Fund, Variable Series
. Colonial Strategic Income Fund, Variable Series
. Colonial U.S. Growth and Income Fund, Variable Series
. Liberty All-Star Equity Fund, Variable Series
. Newport Tiger Fund, Variable Series
. Stein Roe Global Utilities Fund, Variable Series
. STEINROE VARIABLE INVESTMENT TRUST
. Stein Roe Growth Stock Fund, Variable Series
. Stein Roe Balanced Fund, Variable Series
. MFS(R) VARIABLE INSURANCE TRUST(SM)
. MFS Growth With Income Series
. MFS High Income Series
. MFS Research Series
. MFS Total Return Series
. MFS Capital Opportunities Series
. MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
. Global Equity Portfolio
. Mid Cap Value Portfolio
. Value Portfolio
. OPPENHEIMER VARIABLE ACCOUNT FUNDS
. Oppenheimer Bond Fund/VA
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. Oppenheimer Capital Appreciation Fund/VA
. Oppenheimer Small Cap Growth Fund/VA
. SAGE LIFE INVESTMENT TRUST
. EAFE(R) Equity Index Fund
. S&P 500 Equity Index Fund
. Money Market Fund
. T. ROWE PRICE EQUITY SERIES, INC.
. T. Rowe Price Equity Income Portfolio
. T. Rowe Price Mid-Cap Growth Portfolio
. T. Rowe Price Personal Strategy Balanced Portfolio
The prospectuses for the Trusts describe the Funds in detail. These Funds
do not provide any performance guarantees, and their values will increase or
decrease depending upon investment performance.
Through our Fixed Account you can choose to invest your money in one or
more of the different Guarantee Periods we offer. We guarantee your principal
and interest rate when your investment is left in the Guarantee Period until it
ends. You currently can choose periods of 1, 2, 3, 4, 5, 7, and 10 years. We
may offer different guarantee periods for our DCA Fixed Sub-Accounts. However,
if you decide to surrender your Contract, or transfer or access amounts before
the end of a period you have chosen, we ordinarily will apply a Market Value
Adjustment. This Adjustment may be positive or negative depending upon current
interest rates.
5. WHAT ARE THE EXPENSES UNDER A CONTRACT?
The Contract has insurance and investment features. Each has related
costs. Below is a brief summary of the Contract's charges:
ANNUAL ADMINISTRATION CHARGE -- During the first seven Contract Years only,
we will deduct an annual $40 administration charge. However, there is no charge
if, at the time of deduction, your Account Value is at least $50,000.
ASSET-BASED CHARGES -- Each month, we deduct Asset-Based Charges for
mortality and expense risks and for certain administrative costs from the
amounts you allocate to the Variable Account. The maximum charges equal, on an
annual basis, 1.40% of your Variable Account Value, decreasing to 1.25% after
the seventh Contract Year.
SURRENDER CHARGE -- During the first seven Contract Years only, we
ordinarily will deduct a surrender charge when you surrender your Contract or
withdraw amounts in excess of the Free Withdrawal Amount. The maximum
applicable percentage is 7% in the first Contract Year. It declines to 0% after
the seventh Contract Year. We calculate the surrender charge as a percentage of
the purchase payment(s) you surrender or withdraw.
PURCHASE PAYMENT TAX CHARGE -- We will deduct any state premium or local
tax that we incur from your Account Value. We reserve the right to defer
collection of this charge and deduct it against
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your Account Value when you surrender your Contract, make an Excess Withdrawal,
or begin receiving regular income payments. This tax charge currently ranges
from 0% to 3.0% depending upon the state or locality. We currently do not intend
to deduct this charge on or after the eighth Contract Year.
FUND FEES AND EXPENSES -- There are also Fund fees and expenses that are
based on the average daily value of the Funds. Currently, these Fund fees and
expenses range on an annual basis from .___% to _____%, depending upon the Fund.
Sage Life's business philosophy rewards our long-term customers. So, after
the seventh Contract Year we
. eliminate Surrender Charges,
. eliminate the Annual Administration Charge,
. eliminate the Purchase Payment Tax Charge, if any, and
. reduce Asset-Based Charges.
This means more of your investment is working for you over the long term!
The following chart is designed to help you understand expenses under the
Contract.
<TABLE>
<CAPTION>
Examples of
Total
Total Total Examples of Expenses as
Annual Annual Total Total Expenses Paid at the
Insurance Fund Annual Paid at the End End
FUND Charges Charges Charges of 1 Year of 10 Years
----- ----------- --------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. Government Securities Fund 1.53%
AIM V.I. Growth and Income Fund 1.53
AIM V.I. International Equity Fund 1.53
AIM V.I. Value Fund 1.53
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio 1.53
Alger American Income and Growth Portfolio 1.53
Alger American Small Capitalization Portfolio 1.53
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, 1.53
Variable Series
Colonial Small Cap Value Fund, Variable 1.53
Series
Colonial Strategic Income Fund, Variable 1.53
Series
Colonial U.S. Growth and Income Fund,
Variable Series 1.53
Liberty All-Star Equity Fund, Variable Series 1.53
Newport Tiger Fund, Variable Series 1.53
Stein Roe Global Utilities Fund, Variable 1.53
Series
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series 1.53
Stein Roe Balanced Fund, Variable Series 1.53
MFS(R) VARIABLE INSURANCE TRUST(SM):
MFS Growth With Income Series 1.53
MFS High Income Series 1.53
MFS Research Series 1.53
MFS Total Return Series 1.53
MFS Capital Opportunities Series 1.53
</TABLE>
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<TABLE>
<CAPTION>
Examples of
Total
Total Total Examples of Expenses as
Annual Annual Total Total Expenses Paid at the
Insurance Fund Annual Paid at the End End
Fund Charges Charges Charges of 1 Year of 10 Years
- ----------------------------------------------- ----------- --------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS,
INC.:
Global Equity Portfolio 1.53%
Mid Cap Value Portfolio 1.53
Value Portfolio 1.53
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA 1.53
Oppenheimer Capital Appreciation Fund/VA 1.53
Oppenheimer Small Cap Growth Fund/VA 1.53
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund 1.53
S&P 500 Equity Index Fund 1.53
Money Market Fund 1.53
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio 1.53
T. Rowe Price Mid-Cap Growth Portfolio 1.53
T. Rowe Price Personal Strategy Balanced 1.53
Portfolio
</TABLE>
Below is an explanation of what we included in each column of the chart:
The column "Total Annual Insurance Charges" shows the sum of the Asset-
Based Charges and the Annual Administration Charge (for purposes of the chart,
we assume the average Account Value is $30,000 and the Annual Administration
Charge to be 0.13% of the value of an average Contract).
The column "Total Annual Fund Charges" shows the fees and expenses for each
Fund.
The charges shown for the following funds reflect any expense reimbursement
or waiver:
. Liberty Variable Investment Trust: Colonial High Yield Securities
Fund, Variable Series; Colonial Small Cap Value Fund, Variable Series;
and Liberty All-Star Equity Fund, Variable Series.
. MFS(R) Variable Insurance Trust:SM MFS Capital Opportunity Series.
. Morgan Stanley Dean Witter Universal Funds, Inc.: Global Equity
Portfolio; Mid Cap Value Portfolio; and Value Portfolio.
. Sage Life Investment Trust: EAFE(R) Equity Index Fund; S&P 500 Equity
Index Fund; and Money Market Fund.
The column "Total Annual Charges" shows the sum of "Total Annual Insurance
Charges" and "Total Annual Fund Charges."
The last two columns show you examples of the charges, in dollars, you
could pay under a Contract for each $1,000 you invested in that Fund. The
example assumes that your Contract earns 5% annually before charges.
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For more information about expenses under a Contract, please refer to the
"Fee Table" in the full Prospectus that accompanies this Profile.
6. HOW WILL MY CONTRACT BE TAXED?
During the Accumulation Phase, your earnings are not taxed unless you take
them out. If you take money out, earnings come out first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you also may be
charged a 10% federal tax penalty on the withdrawn earnings.
Income payments during the Income Phase are considered partly a return of
your original investment. That part of each payment is not taxable as income.
However, once you have recovered all of your original investment, income
payments then will be fully taxable.
Special tax rules apply to withdrawals from Qualified Contracts, including
the Roth IRA.
7. HOW DO I ACCESS MY MONEY?
There are a number of ways to withdraw money from your Contract. You can
tailor your income to meet your near-term or lifelong liquidity needs.
During the Accumulation Phase, if you want to take money out of your
Contract, you can choose among several different options.
. You can withdraw some of your money.
. You can surrender your Contract and take all of your money.
. You can withdraw money using our systematic partial withdrawal
program.
. You can apply your Account Value to an income plan.
Keep in mind that amounts you surrender or withdraw may be subject to a
surrender charge if taken during the first seven Contract Years. However,
during that period, the Contract does provide a Free Withdrawal Amount (an
amount not subject to a surrender charge), each year equal to your cumulative
earnings, or if greater, 10% of total purchase payments you have invested. In
addition, if you take the amounts from the Fixed Account before the end of a
Guarantee Period, we ordinarily will apply a Market Value Adjustment. If you
are younger than 59 1/2 when you take money out, you may owe a 10% federal tax
penalty in addition to the income tax that will apply to any gain in your
Contract. Please remember that withdrawals will reduce your death benefit by
the proportion that the withdrawal reduces your Account Value.
Once you start receiving regular income payments and if you selected the
"payments for a specified period certain" income plan, you may request a full or
partial withdrawal.
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8. HOW IS CONTRACT PERFORMANCE PRESENTED?
Because as of December 31, 1999 our Variable Sub-Accounts have been in
operation for less than a year, we cannot show you how the Funds performed in
the Variable Account. When they have been in operation for a year or more, we
will show you the Funds' performance using standard methods prescribed by the
SEC.
Please remember that the performance data represents past performance.
Amounts you invest in the Variable Account will fluctuate daily based on
underlying Fund investment performance, so the value of your investment may
increase or decrease.
9. DOES THE CONTRACT HAVE A DEATH BENEFIT?
Your Contract provides two different types of death benefits for your
Beneficiary. There is the basic death benefit and the accidental death benefit.
BASIC DEATH BENEFIT. We will pay the basic death benefit to the
Beneficiary of your choice in the event of your untimely death prior to the
Income Phase. This provides comfort knowing your Beneficiary will receive the
greatest of the following:
. the current Account Value on the date we receive proof of death;
. the sum of all purchase payments you have invested in your Contract,
reduced proportionately by the amount that any withdrawals you have
made (including any associated surrender charge and Market Value
Adjustment incurred) reduced Account Value; or
. the highest anniversary value on or before you reach age 80.
We determine the highest anniversary value in the following manner. When
we receive proof of death, we will calculate an anniversary value for each
Contract Anniversary before the date of the Owner's death, but not beyond the
Owner's attained age 80. An anniversary value for a Contract Anniversary equals
(1) the Account Value on that Contract Anniversary, (2) increased by the dollar
amount of any purchase payments made since the Contract Anniversary, and (3)
reduced proportionately by any withdrawals (including any associated surrender
charge and Market Value Adjustment incurred) taken since that Contract
Anniversary. (By proportionately, we take the percentage by which the
withdrawal decreases the Account Value and we reduce the sum of (1) and (2) by
that percentage.) The greatest of these anniversary values is your highest
anniversary value.
ACCIDENTAL DEATH BENEFIT. The Contract also provides an accidental death
benefit during the Accumulation Phase at no additional cost. If you die as a
direct result of an accident before reaching age 81, we will pay an additional
death benefit to the Beneficiary of your choice. This additional benefit is
equal to 100% of the sum of all purchase payments you have invested in your
Contract, less any withdrawals you have made (including any associated surrender
charge and Market Value Adjustment incurred) up to a maximum of $250,000.
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10. WHAT OTHER INFORMATION SHOULD I KNOW?
The Contract has several additional features available to you at no
additional charge:
FREE LOOK RIGHT: You have the right to return your Contract to us at our
Customer Service Center or to the registered representative who sold it to you,
and have us cancel the Contract. You must return the Contract within a certain
number of days specified by your state (usually 10) from the date you received
the Contract.
If you exercise this right, we will cancel your Contract as of the Business
Day we receive it. We will send you a refund equal to your Account Value plus
any Asset-Based Charges and Purchase Payment Tax Charges we have deducted on or
before the date we received the returned Contract. If required by the law of
your state, we will refund you the greater of your Account Value plus charges we
have deducted or your initial purchase payment, less any withdraws previously
taken. In the states where we are required to return the purchase payment less
withdrawals, if you allocated amounts to the Variable Account, we will
temporarily allocate those amounts to the Money Market Sub-Account (that is, the
Variable Sub-Account investing in the Money Market Fund of Sage Life Investment
Trust) until the Free Look Period ends.
DOLLAR-COST AVERAGING PROGRAM: Under our optional Dollar-Cost Averaging
Program, you may transfer a set dollar amount systematically from the Money
Market Sub-Account and/or from specially designated Fixed Sub-Accounts (the "DCA
Fixed Sub-Accounts") to any other Variable Sub-Account, subject to certain
limitations. By investing the same amount on a regular basis, you don't have to
worry about timing the market. Since you invest the same amount each period,
you automatically acquire more units when market values fall and fewer units
when they rise. The potential benefit is to lower your average cost per unit.
This strategy does not guarantee that any Fund will gain in value. It also will
not protect against a decline in value if market prices fall. However, if you
can continue to invest regularly throughout changing market conditions, this
program can be an effective way to help meet your long-term or retirement goals.
Due to the effect of interest that continues to be paid on the amount remaining
in the Money Market Sub-Account or the DCA Fixed Sub-Account, the amounts that
we transfer will vary slightly from month to month.
ASSET ALLOCATION PROGRAM: An optional Asset Allocation Program is
available if you do not wish to make your own investment decisions. This
investment planning tool is designed to find an asset mix that attempts to
achieve the highest expected return based upon your tolerance for risk, and
consistent with your needs and objectives. Bear in mind that the use of an
asset allocation model does not guarantee investment results.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM: Our optional Automatic Portfolio
Rebalancing Program can help prevent a well-conceived investment strategy from
becoming diluted over time. Investment performance will likely cause the
allocation percentages you originally selected to shift. With this program, you
can instruct us to automatically rebalance your Variable Sub-Account allocations
to your original percentages on a quarterly, semi-annual, or annual basis.
Money invested in the Fixed Account is not part of this program.
WAIVER OF SURRENDER CHARGE RIDER: This rider, which is automatically
included in your Contract at no additional cost, permits you to withdraw money
from your Contract without a surrender charge if you need it while you are
confined to a nursing care facility or hospital, or if you have a terminal
illness. Certain restrictions apply.
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11. HOW CAN I MAKE INQUIRIES?
If you need further information about the Contracts, please contact an
authorized registered representative or write or call us at our Customer Service
Center. The address and telephone number of our Customer Service Center office
is P.O. Box 290680, Wethersfield, CT 06129-0680 and (877) 835-7243 (Toll Free).
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PROSPECTUS DATED MAY 1, 2000
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED
AND VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE SAGE VARIABLE ANNUITY ACCOUNT A AND
SAGE LIFE ASSURANCE OF AMERICA, INC.
Executive Office: Customer Service Center:
300 Atlantic Street P.O. Box 290680
Stamford, CT 06901 Wethersfield, CT 06129-0680
Telephone: (877) 835-7243 (Toll Free)
This Prospectus describes flexible payment deferred combination fixed and
variable annuity contracts for individuals and groups offered by Sage Life
Assurance of America, Inc. We designed the Contracts for use in your long-term
financial and retirement planning. The Contracts provide a means for investing
on a tax-deferred basis in our Variable Account and our Fixed Account. You can
purchase a Contract by making a minimum initial purchase payment. After
purchase, you determine the amount and timing of any additional purchase
payments.
You may allocate purchase payments and transfer Account Value to our
Variable Account and/or our Fixed Account within certain limits. The Variable
Account has 33 Sub-Accounts. Through our Fixed Account, you can choose to
invest your money in one or more of 7 different Guarantee Periods.
Each Variable Sub-Account invests in a corresponding Fund of the following
Trusts (collectively, the "Trusts"):
. AIM Variable Insurance Funds, Inc.
. The Alger American Fund
. Liberty Variable Investment Trust
. SteinRoe Variable Investment Trust
. MFS(R) Variable Insurance Trust(SM)
. Morgan Stanley Dean Witter Universal Funds, Inc.
. Oppenheimer Variable Account Funds
. Sage Life Investment Trust
. T. Rowe Price Equity Series, Inc.
Your Account Value will vary daily with the investment performance of the
Variable Sub-Accounts and any interest we credit under our Fixed Account. We do
not guarantee any minimum Account Value for amounts you allocate to the Variable
Account. We do guarantee principal and a minimum fixed rate of interest for
specified periods of time on amounts you allocate to the Fixed Account.
However, amounts you withdraw, surrender, transfer, or apply to an income plan
from the Fixed Account before the end of an applicable Guarantee Period
ordinarily will be subject to a Market Value Adjustment, which may increase or
decrease these amounts.
The Statement of Additional Information contains more information about the
Contracts and the Variable Account, is dated the same as this Prospectus, and is
incorporated herein by reference. The Table of Contents for the Statement of
Additional
<PAGE>
Information is on page ___ of this Prospectus. We filed it with the Securities
and Exchange Commission. You may obtain a copy of the Statement of Additional
Information free of charge by contacting our Customer Service Center, or by
accessing the Securities and Exchange Commission's website at
http://www.sec.gov.
THIS PROSPECTUS INCLUDES BASIC INFORMATION ABOUT THE CONTRACTS THAT YOU
SHOULD KNOW BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT
FOR FUTURE REFERENCE. THE TRUST PROSPECTUSES CONTAIN IMPORTANT INFORMATION
ABOUT THE FUNDS. YOUR REGISTERED REPRESENTATIVE CAN PROVIDE THESE PROSPECTUSES
TO YOU BEFORE YOU INVEST.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE CONTRACTS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED
OR GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
================================================================================
TABLE OF CONTENTS
================================================================================
<TABLE>
<CAPTION>
<S> <C>
INDEX OF TERMS................................................ 1
FEE TABLE..................................................... 4
1. WHAT ARE THE CONTRACTS?.................................. 8
Your Options............................................. 8
Transfers................................................ 8
2. WHAT ARE MY INCOME PAYMENT OPTIONS?...................... 9
Your Choices............................................. 9
Income Payment Amounts................................... 10
3. HOW DO I PURCHASE A CONTRACT?............................ 11
Initial Purchase Payment................................. 11
Issuance of a Contract................................... 11
Free Look Right to Cancel Your Contract.................. 11
Making Additional Purchase Payments...................... 11
When We May Cancel Your Contract......................... 12
4. WHAT ARE MY INVESTMENT OPTIONS?.......................... 12
Purchase Payment Allocations............................. 12
Variable Sub-Account Investment Options.................. 13
Fixed Account Investment Options......................... 17
Transfers................................................ 20
Transfer Programs........................................ 22
Dollar-Cost Averaging Program............................ 22
Values Under Your Contract............................... 24
5. WHAT ARE THE EXPENSES UNDER A CONTRACT?.................. 25
Surrender Charge......................................... 27
Annual Administration Charge............................. 28
Transfer Charge.......................................... 28
Asset-Based Charges...................................... 28
Purchase Payment Tax Charge.............................. 29
Fund Annual Expenses..................................... 29
Additional Information................................... 29
6. HOW WILL MY CONTRACT BE TAXED?........................... 29
Introduction............................................. 29
Taxation of Non-Qualified Contracts...................... 30
Taxation of a Qualified Contract......................... 31
Transfers, Assignments, or Exchanges of a Contract....... 32
Possible Tax Law Changes................................. 32
</TABLE>
i
<PAGE>
7. HOW DO I ACCESS MY MONEY?................................ 33
Withdrawals.............................................. 33
Requesting Payments...................................... 34
8. HOW IS CONTRACT PERFORMANCE PRESENTED?................... 35
Yield.................................................... 35
Total Return............................................. 35
Performance/Comparisons.................................. 36
9. DOES THE CONTRACT HAVE A DEATH BENEFIT?.................. 36
Owner's Death Before the Income Date..................... 37
Owner's Death After the Income Date...................... 38
Proof of Death........................................... 39
10. WHAT OTHER INFORMATION SHOULD I KNOW?.................... 39
Separate Accounts........................................ 39
Modification............................................. 40
Distribution of the Contracts............................ 41
Experts.................................................. 41
Legal Proceedings........................................ 41
Reports to Contract Owners............................... 42
Authority to Make Agreements............................. 42
Financial Statements..................................... 42
11. HOW CAN I MAKE INQUIRIES?................................ 42
12. ADDITIONAL INFORMATION ABOUT SAGE LIFE ASSURANCE OF
AMERICA, INC............................................ 42
History and Business..................................... 42
Management's Discussion and Analysis of Financial
Condition............................................... 44
Compensation............................................. 50
CONDENSED FINANCIAL INFORMATION............................... 53
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.. 54
APPENDIX A.................................................. A-1
APPENDIX B.................................................. B-1
APPENDIX C.................................................. C-1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
ii
<PAGE>
================================================================================
INDEX OF TERMS
================================================================================
We tried to make this Prospectus as readable and understandable as
possible. To help you to understand how the Contract works, we have used
certain terms with special meanings. We define these terms below.
ACCOUNT VALUE -- The Account Value is the entire amount we hold under
your Contract during the Accumulation Phase. It equals the sum of your Variable
Account Value and Fixed Account Value.
ACCUMULATION PHASE -- The Accumulation Phase is the period during which
you accumulate savings under your Contract.
ACCUMULATION UNIT -- An Accumulation Unit is the unit of measure we use
before the Income Date to keep track of the value of each Variable Sub-Account.
ANNUITANT -- The Annuitant is the natural person whose age determines the
maximum Income Date and the amount and duration of income payments involving
life contingencies. The Annuitant may also be the person to whom we will make
any payment starting on the Income Date.
ASSET-BASED CHARGES -- The Asset-Based Charges are charges for mortality
and expense risks and for administrative costs assessed monthly against the
assets of the Variable Account. After the Income Date, we call these charges
Variable Sub-Account Charges and deduct them daily from the assets of the
Variable Account.
BENEFICIARY -- The Beneficiary is the person or persons to whom we pay a
death benefit if any Owner dies before the Income Date.
BUSINESS DAY -- A Business Day is any day the New York Stock Exchange
("NYSE") is open for regular trading exclusive of (i) Federal holidays, (ii) any
day on which an emergency exists making the disposal or fair valuation of assets
in the Variable Account not reasonably practicable, and (iii) any day on which
the Securities and Exchange Commission ("SEC") permits a delay in the disposal
or valuation of assets in the Variable Account.
CONTRACTS -- The Contracts are flexible payment deferred combination
fixed and variable annuity contracts. In some jurisdictions, we issue the
Contracts directly to individuals. In most jurisdictions, however, the
Contracts are only available as a group contract. We issue a group Contract to
or on behalf of a group. Individuals who are part of a group to which we issue
a Contract receive a certificate that recites substantially all of the
provisions of the group Contract. Throughout this Prospectus and unless
otherwise stated, the term "Contract" refers to individual Contracts, group
Contracts, and certificates for group Contracts.
CONTRACT ANNIVERSARY -- A Contract Anniversary is each anniversary of the
Contract Date.
CONTRACT DATE -- The Contract Date is the date an individual Contract or
a certificate for a group Contract is issued at our Customer Service Center.
1
<PAGE>
CONTRACT YEAR -- Contract Year is each consecutive twelve-month period
beginning on the Contract Date and the anniversaries thereof.
EXCESS WITHDRAWAL -- An Excess Withdrawal is a withdrawal of Account
Value that exceeds the Free Withdrawal Amount.
EXPIRATION DATE -- The Expiration Date is the last day in a Guarantee
Period.
FIXED ACCOUNT -- The Fixed Account is The Sage Fixed Interest Account A.
It is a separate investment account of ours into which you may invest purchase
payments or transfer Account Value. In certain states we refer to the Fixed
Account as the Interest Account or Interest Separate Account.
FREE WITHDRAWAL AMOUNT -- A Free Withdrawal Amount is the maximum amount
that you can withdraw within a Contract Year during the Accumulation Phase
without being subject to a surrender charge.
FUND -- A Fund is an investment portfolio in which a Variable Sub-Account
invests.
GENERAL ACCOUNT -- An account that consists of all our assets other than
those held in any separate investment accounts.
INCOME DATE -- The Income Date is the date you select for your regular
income payments to begin.
INCOME PHASE -- The Income Phase starts on the Income Date and is the
period during which you receive regular income payments.
INCOME UNIT -- An Income Unit is the unit of measure we use to calculate
the amount of income payments under a variable income plan option.
MARKET VALUE ADJUSTMENT -- A Market Value Adjustment is a positive or
negative adjustment that ordinarily applies to a surrender, withdrawal, or
transfer, and to amounts applied to an income plan from a Fixed Sub-Account
before the end of its Guarantee Period.
NET ASSET VALUE -- Net Asset Value is the price of one share of a Fund.
OWNER -- The Owner is the person or persons who owns (or own) a Contract.
Provisions relating to action by the Owner mean, in the case of joint Owners,
both Owners acting jointly. In the context of a Contract issued on a group
basis, Owners refer to holders of certificates under the group Contract.
SATISFACTORY NOTICE -- Satisfactory Notice is a notice or request you
make or authorize, in a form satisfactory to us, received at our Customer
Service Center.
SURRENDER VALUE -- The Surrender Value is the amount we pay you upon
surrender of your Contract before the Income Date. It reflects the calculation
of any applicable charge, including the surrender charge and Market Value
Adjustment.
2
<PAGE>
VALUATION PERIOD -- The Valuation Period is the period between one
calculation of an Accumulation Unit value and the next calculation.
VARIABLE ACCOUNT -- The Variable Account is The Sage Variable Annuity
Account A. It is a separate investment account of ours into which you may
invest purchase payments or transfer Account Value.
"WE", "US", "OUR", "SAGE LIFE" or the "COMPANY" is Sage Life Assurance of
America, Inc.
"YOU" OR "YOUR" is the Owner of a Contract.
3
<PAGE>
================================================================================
FEE TABLE
================================================================================
The purpose of this Fee Table is to assist you in understanding the
expenses that you will pay directly or indirectly when you invest in the
Contract.
TRANSACTION EXPENSES
Sales Load Imposed on Purchases (as a percentage of purchase payments) None
Surrender Charge/(1)/ (as a percentage of purchase payments withdrawn or
surrendered)
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE SURRENDER
CONTRACT YEAR CHARGE PERCENTAGE
- --------------------------------------- ----------------------------
<S> <C>
1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8 and thereafter 0%
<S> <C>
Transfer Charge/(2)/..................................................... $ 0
Annual Administration Charge
Contract Years 1-7/(3)/................................................ $40
After Contract Year 7.................................................. $ 0
</TABLE>
In addition, we may deduct the amount of any state and local taxes on
purchase payments from your Account Value when we incur such taxes. We reserve
the right to defer collection of this charge and deduct it against your Account
Value when you surrender your Contract, make an Excess Withdrawal, or apply your
Account Value to provide income payments. We refer to this as the Purchase
Payment Tax Charge.
VARIABLE ACCOUNT ANNUAL EXPENSES/(4)/ (deducted monthly as percentage of the
Variable Account Value)
<TABLE>
<CAPTION>
CONTRACT YEARS
--------------------------
<S> <C> <C>
1-7 8+
---- ----
Mortality and Expense Risk Charge 1.25% 1.10%
Asset-Based Administrative Charge 0.15% 0.15%
---- ----
Total Asset-Based Charges 1.40% 1.25%
</TABLE>
4
<PAGE>
FUND CHARGES
The fees and expenses for each of the Funds (as a percentage of net assets)
for the year ended December 31, 1999 are shown in the following table. For more
information on these fees and expenses, see the prospectuses for the Trusts.
Certain figures shown are net of fee waivers or expense reimbursements. We
cannot guarantee that these fee waivers or reimbursements will continue.
FUND ANNUAL EXPENSES (as a percentage of average daily net assets of a Fund)
<TABLE>
<CAPTION>
MANAGEMENT TOTAL EXPENSES TOTAL EXPENSES
FEES OTHER EXPENSES (AFTER FEE (BEFORE FEE
(AFTER FEE (AFTER WAIVERS AND WAIVERS AND
WAIVER, REIMBURSEMENT, REIMBURSEMENTS REIMBURSEMENTS
FUND AS APPLICABLE) AS APPLICABLE) AS APPLICABLE) AS APPLICABLE)
----- ------------------- ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. Government Securities Fund...................
AIM V.I. Growth and Income Fund....................... To be updated by 485(b) filing
AIM V.I. International Equity Fund....................
AIM V.I. Value Fund...................................
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio................
Alger American Income and Growth Portfolio............
Alger American Small Capitalization Portfolio.........
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series..
Colonial Small Cap Value Fund, Variable Series........
Colonial Strategic Income Fund, Variable Series......
Colonial U.S. Growth and Income Fund, Variable Series.
Liberty All-Star Equity Fund, Variable Series.........
Newport Tiger Fund, Variable Series...................
Stein Roe Global Utilities Fund, Variable Series......
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series..........
Stein Roe Balanced Fund, Variable Series..............
MFS(R) VARIABLE INSURANCE TRUST:SM
MFS Growth with Income Series.........................
MFS High Income Series................................
MFS Research Series...................................
MFS Total Return Series...............................
MFS Capital Opportunities Series......................
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Global Equity Portfolio...............................
Mid Cap Value Portfolio...............................
Value Portfolio.......................................
OPPENHEIMER VARIABLE FUNDS:
Oppenheimer Bond Fund/VA..............................
Oppenheimer Capital Appreciation Fund/VA..............
Oppenheimer Small Cap Growth Fund/VA..................
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund*............................
S&P 500 Equity Index Fund**...........................
Money Market Fund.....................................
T. ROWE PRICE EQUITY SERIES, INC.:
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT TOTAL EXPENSES TOTAL EXPENSES
FEES OTHER EXPENSES (AFTER FEE (BEFORE FEE
(AFTER FEE (AFTER WAIVERS AND WAIVERS AND
WAIVER, REIMBURSEMENT, REIMBURSEMENTS REIMBURSEMENTS
FUND AS APPLICABLE) AS APPLICABLE) AS APPLICABLE) AS APPLICABLE)
----- ------------------- ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
T. Rowe Price Equity Income Portfolio.................
T. Rowe Price Mid-Cap Growth Portfolio................
T. Rowe Price Personal Strategy Balanced Portfolio....
</TABLE>
_____________
(1) You may withdraw a portion of your Account Value without incurring a
surrender charge. This amount is called the Free Withdrawal Amount and is
equal to the greater of (i) 10% of your total purchase payments less all
prior withdrawals (including any associated surrender charge and Market
Value Adjustment incurred) in that Contract Year, or (ii) cumulative
earnings (i.e., the excess of the Account Value on the date of withdrawal
over unliquidated purchase payments).
(2) Currently, we do not assess a transfer charge. However, we reserve the
right to charge up to $25 for the 13th and each subsequent transfer during
a Contract Year.
(3) We waive the Annual Administration Charge if the Account Value is at least
$50,000 on the date of deduction. In some states the charge is $30.
(4) On and after the Income Date we call the Asset-Based Charges Variable Sub-
Account Charges and deduct them on a daily basis. See "What Are The
Expenses Under A Contract?"
* The EAFE(R) Index is the exclusive property of Morgan Stanley Capital
International ("MSCI"). This Fund is not sponsored, endorsed, sold or
promoted by MSCI or any affiliate of MSCI.
** S&P 500(R) is a trademark of the McGraw-Hill Companies, Inc. and has been
licensed for use by Sage Advisors, Inc. The S&P 500 Equity Index Fund is
not sponsored, endorsed, sold or promoted by Standard & Poor's, and
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.
EXAMPLES
The purpose of the following examples is to demonstrate the expenses that
you would pay on a $1,000 investment in the Variable Account. We calculate the
examples based on the fees and charges shown in the tables above. For a more
complete description of these expenses, see "What Are The Expenses Under A
Contract?" and see the prospectuses for the Trusts. The examples assume that
the initial purchase payment is $30,000, and that you have invested all your
money in the Variable Account.
You should not consider the examples a representation of past or future
expenses. Actual expenses may be greater or less than those shown. In
addition, we do not reflect Purchase Payment Tax Charges. These charges may
apply depending on the state where the Contract is sold. You might also incur
transfer fees if you make more than twelve transfers in a Contract Year. See
"Transfer Charge."
The assumed 5% annual rate of return is hypothetical. You should not
consider it to be a representation of past or future annual returns; both may be
greater or less than this assumed rate.
You would pay the following expenses on a $1,000 initial purchase payment,
assuming a 5% annual return on assets and the charges listed in the Fee Table
above.
6
<PAGE>
<TABLE>
<CAPTION>
1. IF YOU SURRENDER YOUR CONTRACT 2. IF YOU DO NOT SURRENDER YOUR
OR YOU ANNUITIZE AT THE END OF CONTRACT AT THE END OF
FUND EACH TIME PERIOD EACH TIME PERIOD
----- ----------------------------------- ---------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- -------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. Government Securities Fund......... To be updated by 485(b) filing
AIM V.I. Growth and Income Fund.............
AIM V.I. International Equity Fund..........
AIM V.I. Value Fund.........................
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio......
Alger American Income and Growth Portfolio..
Alger American Small Capitalization
Portfolio..................................
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund,
Variable Series............................
Colonial Small Cap Value Fund, Variable
Series.....................................
Colonial Strategic Income Fund, Variable
Series.....................................
Colonial U.S. Growth and Income Fund,
Variable Series............................
Liberty All-Star Equity Fund, Variable
Series.....................................
Newport Tiger Fund, Variable Series.........
Stein Roe Global Utilities Fund, Variable
Series.....................................
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series
Stein Roe Balanced Fund, Variable Series....
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Growth With Income Series...............
MFS High Income Series......................
MFS Research Series.........................
MFS Total Return Series.....................
MFS Capital Opportunities Series............
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS,
INC.:
Global Equity Portfolio.....................
Mid Cap Value Portfolio.....................
Value Portfolio.............................
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA....................
Oppenheimer Capital Appreciation Fund/VA....
Oppenheimer Small Cap Growth Fund/VA........
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund...................
S&P 500 Equity Index Fund...................
Money Market Fund...........................
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio.......
T. Rowe Price Mid-Cap Growth Portfolio......
T. Rowe Price Personal Strategy Balanced
Portfolio..................................
</TABLE>
More information about Accumulation Unit Values may be found in the Condensed
Financial Information section at the end of this Prospectus.
7
<PAGE>
================================================================================
1. WHAT ARE THE CONTRACTS?
================================================================================
The Contracts are flexible payment deferred combination fixed and variable
annuity Contracts. They are designed for use in your long-term financial and
retirement planning and provide a means for investing amounts on a tax-deferred
basis in our Variable Account and our Fixed Account.
Under the terms of the Contract, we promise to pay you (or the Annuitant,
if the Owner is other than an individual) regular income payments after the
Income Date. Until the Income Date, you may make additional purchase payments
under the Contract, and will ordinarily not be taxed on increases in the value
of your Contract as long as you do not take distributions. When you use the
Contract in connection with tax-qualified retirement plans, federal income taxes
may be deferred on your purchase payments, as well as on increases in the value
of your Contract. See "How Will My Contract Be Taxed?" The Contracts may not be
available in all states or all markets. Your Contract may differ from the
descriptions below because of the requirements of the state where we issued your
Contract. If you purchased your Contract before May 1, 2000, please see
Appendix C for certain provisions applicable to your Contract. Generally
Contracts purchased after May 1, 2000 will have the provisions described in this
Prospectus. However, in certain states the provisions described in Appendix C
will continue to apply. Please contact our Customer Service Center to see if
these provisions apply to your Contract.
YOUR OPTIONS
When you make purchase payments, you can allocate those purchase payments to
one or more of the 33 subdivisions of the Variable Account, known as "Variable
Sub-Accounts." We will invest purchase payments you allocate to a Variable Sub-
Account solely in its corresponding Fund. Your Account Value in a Variable Sub-
Account will vary according to the investment performance of that Fund.
Depending on market conditions, your value in each Variable Sub-Account could
increase or decrease. We do not guarantee a minimum value. You bear the risk
of investing in the Variable Account. We call the total of the values in the
Variable Sub-Accounts the "Variable Account Value."
You can also allocate purchase payments to our Fixed Account. See "Fixed
Account Investment Option." The Fixed Account includes "Fixed Sub-Accounts" to
which we credit fixed rates of interest for the Guarantee Periods you select.
We call the total of the values in the Fixed Sub-Accounts, the "Fixed Account
Value." We currently offer Guarantee Periods with durations of 1, 2, 3, 4, 5,
7, and 10 years. If any amount allocated or transferred remains in a Guarantee
Period until the Expiration Date, its value will equal the amount originally
allocated or transferred, multiplied, on an annually compounded basis, by its
guaranteed interest rate. We will ordinarily apply a Market Value Adjustment to
any surrender, withdrawal, transfer, or amount applied to an income plan from a
Fixed Sub-Account before its Expiration Date. The Market Value Adjustment may
increase or decrease the value of the Fixed Sub-Account (or portion thereof)
being surrendered, withdrawn, transferred, or applied to an income plan. See
"Market Value Adjustment."
TRANSFERS
Subject to certain conditions, you can transfer Account Value three ways:
. From one Variable Sub-Account to another;
8
<PAGE>
. From a Fixed Sub-Account to a Variable Sub-Account; or
. From a Variable Sub-Account to a Fixed Sub-Account.
We may offer other variable annuity contracts that also invest in the same
Funds offered under the Contracts. These contracts may have different charges
and they may offer different benefits.
================================================================================
2. WHAT ARE MY INCOME PAYMENT OPTIONS?
================================================================================
YOUR CHOICES
You have several choices to make concerning your Income Payments. First,
you choose the Income Date when you want regular income payments to begin. The
Income Date you choose must be on or before the first calendar month following
the Annuitant's 95th birthday. We reserve the right to require that your Income
Date be at least two years after the Contract Date. Then, you select an income
plan from the list below, and indicate whether you want your income payments to
be fixed or variable or a combination of fixed and variable. You must give
Satisfactory Notice of your choices at least 30 days before the Income Date, and
you must have at least $5,000 of Account Value to apply to a variable or fixed
income plan.
On the Income Date, we will use the Account Value under the Contract (adjusted
for any Market Value Adjustment, if applicable) to provide income payments.
Unless you request otherwise, we will use any Variable Account Value to provide
variable income payments, and we will use any Fixed Account Value to provide
fixed income payments. If you have not chosen an income plan by the Income
Date, a "life annuity with 10 years certain" (described below) will be used.
The available income plans are:
. INCOME PLAN 1 -- Life Annuity - You will receive payments for your
life.
. INCOME PLAN 2 -- Life Annuity with 10 or 20 Years Certain - You will
receive payments for your life. However, if you die before the end of the
guaranteed certain period you select (10 or 20 years), your Beneficiary
will receive the payments for the remainder of that period.
. INCOME PLAN 3 -- Joint and Last Survivor Life Annuity - We will make
payments as long as either you or a second person you select (such as
your spouse) is alive.
. INCOME PLAN 4 -- Payments for a Specified Period Certain - You will
receive payments for the number of years you select. However, if you die
before the end of that period, your Beneficiary will receive the payments
for the remainder of the guaranteed certain period.
. INCOME PLAN 5 -- Annuity Plan - You can use your Account Value to
purchase any other income plan we offer at the time you want to begin
receiving regular income payments for which you and the Annuitant are
eligible.
9
<PAGE>
INCOME PAYMENT AMOUNTS
We will base your first income payment, whether fixed or variable, on the
amount of proceeds applied under the income plan you have selected and on the
"annuity purchase rates." These rates vary based on the Annuitant's age and sex,
and if applicable upon the age and sex of a second person you designate. The
annuity purchase rate we apply will never be lower than the rate shown in your
Contract.
If you told us you want fixed income payments, we guarantee the amount of
each income payment, and it remains level throughout the period you selected.
If you told us you want variable income payments, the amount of each
payment will vary according to the investment performance of the Funds you
selected.
VARIABLE INCOME PAYMENTS. To calculate your initial and future variable
income payments, we need to make an assumption regarding the investment
performance of the Funds you select. We call this your assumed investment rate.
This rate is simply the total return, after expenses, you need to earn to keep
your variable income payments level. Rather than building in our own estimate,
we will allow you to tailor your variable income payments to meet your needs by
giving you a choice of rates. Currently, you may select either 2.5% or 6%; if
you do not select a rate, we will apply the 2.5% rate. (We may offer other rates
in the future). The lower the rate, the lower your initial variable income
payment, but the better your payments will keep pace with inflation (assuming
positive investment performance). Conversely, the higher the rate, the higher
your initial variable income payment, but the less likely your payments will
keep pace with inflation (assuming positive investment performance).
For example, if you select 6%, this means that if the investment
performance, after expenses, of your Funds is less than 6%, then the dollar
amount of your variable income payment will decrease. Conversely, if the
investment performance, after expenses, of your Funds is greater than 6%, then
the dollar amount of your income payments will increase.
If you told us that you want a life annuity, it is possible that you
could only receive one payment.
Your income payments will be made monthly, unless you choose quarterly,
semi-annual or annual payments by giving us Satisfactory Notice at least 30 days
before the Income Date. Payments start on the Income Date. Each payment must
be at least $100. If any payment would be less than $100, we may change the
payment frequency to the next longer interval, but in no event less frequent
than annual. Also, if on the Income Date, the Account Value is less than
$5,000, we may pay the Surrender Value on that date in one sum.
10
<PAGE>
3. HOW DO I PURCHASE A CONTRACT?
INITIAL PURCHASE PAYMENT
You may purchase a Contract for use in connection with tax-qualified
retirement plans ("Qualified Contracts") or on a non-tax qualified basis ("Non-
Qualified Contracts"). To purchase a Contract, you and the Annuitant you select
may not be more than 85 years old on the Contract Date. We require a different
minimum initial purchase payment depending on whether you are purchasing a Non-
Qualified or Qualified Contract, as shown in the following table:
====================================================
MINIMUM INITIAL
PURCHASE PAYMENT
REQUIRED
----------------
Non-Qualified Contract $5,000
Qualified Contract $2,000
====================================================
ISSUANCE OF A CONTRACT
Once we receive your initial purchase payment and your application at
our Customer Service Center, we will usually issue your Contract within two
Business Days. However, if you did not give us all the information we need, we
will try to contact you to get the needed information. If we cannot complete
the application within five Business Days, we will either send your money back
or obtain your permission to keep your money until we receive the necessary
information. Your Contract Date will be the date we issue your Contract at our
Customer Service Center.
FREE LOOK RIGHT TO CANCEL YOUR CONTRACT
During your "Free Look" Period, you may cancel your Contract. The
Free Look Period usually ends 10 days after you receive your Contract. Some
states may require a longer period. If you decide to cancel your Contract, you
must return it to our Customer Service Center or to one of our authorized
registered representatives. We will send you a refund equal to your Account
Value plus any Asset-Based Charges and Purchase Payment Tax Charges we have
deducted on or before the date we receive your returned Contract at our Customer
Service Center. If required by the law of your state, we will refund you the
greater of your Account Value plus the Asset Based Charges and Purchase Payment
Tax Charges we have deducted or your initial purchase payment, less any
withdrawals previously taken. In those latter states where this requirement
exists, we will temporarily invest amounts you allocated to the Variable Account
to the Money Market Sub-Account until we deem the Free Look Period to end. See
"What Are My Investment Options."
MAKING ADDITIONAL PURCHASE PAYMENTS
You may make additional purchase payments of $250 or more (a lesser
minimum amount may apply to Qualified Contracts; contact our Customer Service
Center) at any time before the Income Date,
11
<PAGE>
subject to the following conditions. We will accept additional purchase payments
as shown in the chart below:
<TABLE>
<CAPTION>
================================================================================
CONTRACT TYPE RESTRICTIONS ON ACCEPTANCE OF ADDITIONAL
PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
<S> <C>
Non-Qualified Accepted until the earlier of the year in
Contract which you attain age 85 or the year in which
the Annuitant attains age 85.
- --------------------------------------------------------------------------------
Qualified Contract Accepted until the year in which you attain 70
1/2, except contributions to a Roth IRA or
rollover contributions may be made until the
year in which you attain age 85.
================================================================================
</TABLE>
You must obtain our prior approval before you make a purchase payment
that causes the Account Value of all annuities that you maintain with us to
exceed $1,000,000.
We will credit any purchase payment received after the Contract Date
to your Contract as of the Business Day on which we receive it at our Customer
Service Center. We will deem purchase payments received on other than a
Business Day as received on the next following Business Day.
WHEN WE MAY CANCEL YOUR CONTRACT
If you have not made a purchase payment for more than two years and
your Account Value is less than $2,000 on a Contract Anniversary, we may cancel
your Contract and pay you the Surrender Value as though you had surrendered. We
will give you written notice at your address of record. However, we will allow
you 61 days from the date of that notice to submit an additional purchase
payment in an amount sufficient to maintain your Account Value at $2,000 or
more. If we have not received the required additional purchase payment by the
end of this period, we may cancel your Contract.
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4. WHAT ARE MY INVESTMENT OPTIONS?
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PURCHASE PAYMENT ALLOCATIONS
When you apply for a Contract, you specify the percentage of your
initial and additional purchase payments to be allocated to each Variable Sub-
Account and/or to each Fixed Sub-Account. You can change the allocation
percentages at any time by sending Satisfactory Notice to our Customer Service
Center. The change will apply to all purchase payments we receive on or after
the date we receive your request. Purchase payment allocations must be in
percentages totaling 100%, and each allocation percentage must be a whole
number.
We may, however, require that an initial purchase payment allocated to a
Variable Sub-Account be temporarily invested in the Money Market Sub-Account
during the Free Look Period. We will require this if the law of your state
requires us to refund your full initial purchase payment less any withdrawals
previously taken, should you cancel your Contract during the Free Look Period.
At the end of the Free Look Period, if we temporarily allocated your initial
purchase payment to the Money Market Sub-Account, we will transfer the value of
what is in the Money Market Sub-Account to the Variable Sub-
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Account(s) you specified in your application. Solely for the purpose of
processing this transfer from the Money Market Sub-Account, we will deem the
Free Look Period to end 15 days after the Contract Date. This transfer from the
Money Market Sub-Account to the Variable Sub-Accounts at the end of the Free
Look Period does not count as a transfer for any other purposes under the
Contract.
VARIABLE SUB-ACCOUNT INVESTMENT OPTIONS
The Variable Account has 33 Sub-Accounts, each investing in a specific
Fund. Each of the Funds is either an open-end diversified management investment
company or a separate investment portfolio of such a company, and is managed by
a registered investment adviser. The Funds, as well as brief descriptions of
their investment objectives, are provided below. There is no assurance that
these objectives will be met. Not every Fund may be available in every state or
in every market.
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. GOVERNMENT SECURITIES FUND. This Fund seeks to achieve high
current income consistent with reasonable concern for safety of principal by
investing in debt securities issued, guaranteed or otherwise backed by the
United States Government.
AIM V.I. GROWTH AND INCOME FUND. This Fund's primary objective is
growth of capital with a secondary objective of current income.
AIM V.I. INTERNATIONAL EQUITY FUND. This Fund seeks to provide long-
term growth of capital by investing in a diversified portfolio of international
equity securities whose issuers are considered to have strong earnings momentum.
AIM V.I. VALUE FUND. This Fund seeks to achieve long-term growth of
capital by investing primarily in equity securities judged by the Fund's
investment advisor to be undervalued relative to the investment adviser's
appraisal of the current or projected earnings of the companies issuing the
securities, or relative to current market values of assets owned by the
companies issuing the securities or relative to the equity market generally.
Income is a secondary objective.
A I M Advisers, Inc. advises the AIM Variable Insurance Funds,
Inc.
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO. This Fund seeks long-term
capital appreciation. It focuses on midsize companies with promising growth
potential. Under normal circumstances, the portfolio invests primarily in the
equity securities of companies having a market capitalization within the range
of companies in the S&P MidCap 400 Index.
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO. This Fund primarily seeks
to provide a high level of dividend income; its secondary goal is to provide
capital appreciation. The Portfolio invests in dividend paying equity
securities, such as common or preferred stocks, preferably those which the
Manager believes also offer opportunities for capital appreciation.
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ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO. This Fund seeks long-
term appreciation. It focuses on small, fast-growing companies that offer
innovative products, services or technologies to a rapidly expanding
marketplace. Under normal circumstances, the portfolio invests primarily in the
equity securities of small capitalization companies. A small capitalization
company is one that has a market capitalization within the range of the Russell
2000 Growth Index or the S&P SmallCap 600 Index.
Fred Alger Management, Inc. advises The Alger American Fund.
LIBERTY VARIABLE INVESTMENT TRUST
COLONIAL HIGH YIELD SECURITIES FUND, VARIABLE SERIES. This Fund seeks
high current income and total return by investing primarily in lower rated
corporate debt securities (commonly referred to as "junk bonds").
COLONIAL SMALL CAP VALUE FUND, VARIABLE SERIES. This Fund seeks long-
term growth by investing primarily in smaller capitalization equity securities.
COLONIAL STRATEGIC INCOME FUND, VARIABLE SERIES. This Fund seeks a
high level of current income, as is consistent with prudent risk and maximizing
total return, by diversifying investments primarily in U.S. and foreign
government and lower rated corporate debt securities.
COLONIAL U.S. GROWTH AND INCOME FUND, VARIABLE SERIES. This Fund
seeks long-term growth by investing primarily in large capitalization equity
securities.
LIBERTY ALL-STAR EQUITY FUND, VARIABLE SERIES. This Fund seeks total
investment return, comprised of long-term capital appreciation and current
income, through investment primarily in a diversified portfolio of equity
securities.
NEWPORT TIGER FUND, VARIABLE SERIES. This Fund seeks long-term
capital growth by investing primarily in equity securities of companies located
in the nine Tigers of Asia (Hong Kong, Singapore, South Korea, Taiwan, Malaysia,
Thailand, Indonesia, China and the Philippines).
STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES. This Fund seeks
current income and long-term growth of capital. The Global Utilities Fund
normally invests at least 65% of its total assets in U.S. and foreign equity and
debt securities of companies engaged in the manufacture, production, generation,
transmission, sale or distribution of electricity, natural gas or other types of
energy, or water or other sanitary services, and companies engaged in
telecommunication, including telephone, telegraph, satellite, microwave and
other communications media.
Liberty Advisory Services Corp. provides investment management and
advisory services to the Liberty Variable Investment Trust. Colonial Management
Associates, Inc. subadvises the High Yield Securities Fund, the U.S. Growth and
Income Fund, the Small Cap Value Fund, and the Strategic Income Fund. Stein Roe
& Farnham Incorporated subadvises the Global Utility Fund. Newport Fund
Management, Inc. subadvises the Tiger Fund. Liberty Asset Management Company
subadvises the All-Star Fund.
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STEINROE VARIABLE INVESTMENT TRUST
STEIN ROE GROWTH STOCK FUND. This Fund seeks long-term growth of
capital through investment primarily in common stocks.
STEIN ROE BALANCED FUND. This Fund seeks high total investment return
through a changing mix of equities, debt securities, and cash.
Stein Roe & Farnham Incorporated advises the SteinRoe Variable
Investment Trust.
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS GROWTH WITH INCOME SERIES. This Fund seeks to provide reasonable
current income and long-term growth of capital and income.
MFS HIGH INCOME SERIES. This Fund seeks high current income by
investing primarily in a professionally managed diversified portfolio of fixed
income securities, some of which may involve equity features.
MFS RESEARCH SERIES. This Fund seeks to provide long-term growth
of capital and future income.
MFS TOTAL RETURN SERIES. This Fund seeks primarily to provide above-
average income (compared to a portfolio invested entirely in equity securities)
consistent with the prudent employment of capital, and secondarily to provide a
reasonable opportunity for growth of capital and income.
MFS CAPITAL OPPORTUNITIES SERIES. This Fund seeks capital
appreciation. Dividend income, if any, is a consideration incidental to the
Fund's objective of capital appreciation.
MFS Investment Management(R) advises the MFS(R) Variable
Insurance Trust.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
GLOBAL EQUITY PORTFOLIO. This Fund seeks long-term capital
appreciation by investing primarily in equity securities of issuers throughout
the world, including U.S. issuers, using an approach that is oriented to the
selection of individual stocks that the Fund's investment adviser believes are
undervalued.
MID CAP VALUE PORTFOLIO. This Fund seeks above-average total return
over a market cycle of three to five years by investing in common stocks and
other equity securities of issuers with equity capitalizations in the range of
companies represented in the S&P MidCap 400 Index.
VALUE PORTFOLIO. This Fund seeks above-average return over a market
cycle of three to five years by investing primarily in a diversified portfolio
of common stocks and other equity securities that are deemed by the Fund's
investment adviser to be relatively undervalued based on the market as a whole,
as measured by the S&P 500 index.
Morgan Stanley Dean Witter Investment Management, Inc. advises the
Global Equity Portfolio. Miller Anderson & Sherrerd, LLP advises the Value
Portfolio and the Mid Cap Value Portfolio.
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OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPPENHEIMER BOND FUND/VA. This Fund seeks a high level of current
income. Secondarily, this Fund seeks capital growth when consistent with its
primary objective. The Fund will, under normal market conditions, invest at
least 65% of its total assets in investment grade debt securities.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA. This Fund seeks to achieve
capital appreciation by investing in securities of well-known, established
companies.
OPPENHEIMER SMALL CAP GROWTH FUND/VA. This Fund seeks capital
appreciation. Current income is not an objective. In seeking its investment
objective, the Fund invests mainly in securities of "growth type" companies with
market capitalizations of less than $1 billion.
Oppenheimer Funds, Inc. manages Oppenheimer Variable Account
Funds.
SAGE LIFE INVESTMENT TRUST
EAFE(R) EQUITY INDEX FUND. This Fund seeks to replicate as closely as
possible the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index before the deduction of Fund expenses.
S&P 500 EQUITY INDEX FUND. This Fund seeks to replicate as closely as
possible the performance of the S&P 500 Composite Stock Price Index before the
deduction of Fund expenses.
MONEY MARKET FUND. This Fund seeks to provide high current income
consistent with the preservation of capital and liquidity. Although the Fund
seeks to maintain a constant net asset value of $1.00 per share, there can be no
assurance that the Fund can do so on a continuous basis. An investment in the
Money Market Fund is not guaranteed.
Sage Advisors, Inc. is the investment manager to the Sage Life
Investment Trust. State Street Global Advisors subadvises the EAFE(R) Equity
Index Fund and S&P 500 Equity Index Fund. Conning Asset Management Company
subadvises the Money Market Fund.
T. ROWE PRICE EQUITY SERIES, INC.
T. ROWE PRICE EQUITY INCOME PORTFOLIO. This Fund seeks to provide
substantial dividend income as well as long-term growth of capital through
investments in the common stocks of established companies.
T. ROWE PRICE MID-CAP GROWTH PORTFOLIO. This Fund seeks to provide
long-term capital appreciation by investing in mid-cap stocks with potential for
above-average earnings.
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T. ROWE PRICE PERSONAL STRATEGY BALANCED PORTFOLIO. The Fund seeks to
provide the highest total return over time, with an emphasis on both capital
growth and income. The Personal Strategy Balanced Portfolio invests in a
diversified portfolio of stocks, bonds, and money market securities.
T. Rowe Price Associates, Inc. provides investment management to
the T. Rowe Price Equity Series, Inc.
The names, investment objectives, and policies of certain Funds may be
similar to those of other retail mutual funds which can be purchased outside of
a variable insurance product, and that are managed by the same investment
adviser or manager. The investment results of the Funds, however, may be higher
or lower than the results of such other retail mutual funds. There can be no
assurance, and no representation is made, that the investment results of any of
the Funds will be comparable to the investment results of any other retail
mutual fund, even if the other retail mutual fund has the same investment
adviser or manager.
Shares of the Funds may be sold to separate accounts of insurance
companies that are not affiliated with us or each other, a practice known as
"shared funding." They also may be sold to separate accounts to serve as the
underlying investment for both variable annuity contracts and variable life
insurance contracts, a practice known as "mixed funding." As a result, there is
a possibility that a material conflict may arise between the interests of Owners
who allocate Account Values to the Variable Account, and owners of other
contracts who allocate contract values to one or more other separate accounts
investing in any of the Funds. Shares of some of the Funds may also be sold
directly to certain qualified pension and retirement plans qualifying under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). As a
result, there is a possibility that a material conflict may arise between the
interest of Owners or owners of other contracts (including contracts issued by
other companies), and such retirement plans or participants in such retirement
plans. In the event of any material conflicts, we will consider what action may
be appropriate, including removing a Fund from the Variable Account or replacing
the Fund with another Fund. There are certain risks associated with mixed and
shared funding and with the sale of shares to qualified pension and retirement
plans, as disclosed in each Trust's prospectus.
We have entered into agreements with either the investment adviser or
distributor for each of the Funds in which the adviser or distributor pays us a
fee for administrative services we provide. The fee is ordinarily based upon an
annual percentage of the average aggregate net amount we have invested on behalf
of the Variable Account and other separate accounts. These percentages differ;
some investment advisers or distributors pay us a greater percentage than other
advisers or distributors.
More detailed information concerning the investment objectives,
policies, and restrictions of the Funds, the expenses of the Funds, the risks
attendant to investing in the Funds and other aspects of their operations is
found in the current prospectus for each Trust. You should read the Trusts'
prospectuses carefully before you decide to allocate amounts to the Variable
Sub-Accounts.
FIXED ACCOUNT INVESTMENT OPTIONS
Each time you allocate purchase payments or transfer funds to the
Fixed Account, we establish a Fixed Sub-Account. We guarantee an interest rate
(the "Guaranteed Interest Rate") for each Fixed Sub-
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Account for a period of time (a "Guarantee Period"). When you make an allocation
to the Fixed Sub-Account, we apply the Guaranteed Interest Rate then in effect.
We may establish DCA Fixed Sub-Accounts for our Dollar-Cost Averaging Program.
HOW WE DETERMINE THE GUARANTEED INTEREST RATE. We have no specific
formula for establishing the Guaranteed Interest Rates for the different
Guarantee Periods. Our determination will be influenced by, but not necessarily
correspond to, interest rates available on fixed income investments that we may
acquire with the amounts we receive as purchase payments or transfers of Account
Value under the Contracts. We will invest these amounts primarily in
investment-grade fixed income securities including: securities issued by the
U.S. Government or its agencies or instrumentalities, which issues may or may
not be guaranteed by the U.S. Government; debt securities that have an
investment grade, at the time of purchase, within the four highest grades
assigned by Moody's Investor Services, Inc., Standard & Poor's Corporation, or
any other nationally recognized rating service; mortgage-backed securities
collateralized by real estate mortgage loans, or securities collateralized by
other assets, that are insured or guaranteed by the Federal Home Loan Mortgage
Association, the Federal National Mortgage Association, or the Government
National Mortgage Association, or that have an investment grade at the time of
purchase within the four highest grades described above; other debt instruments;
commercial paper; cash or cash equivalents. You will have no direct or indirect
interest in these investments, and you do not share in the investment
performance of the assets of the Fixed Account. We will also consider other
factors in determining the Guaranteed Interest Rates, including regulatory and
tax requirements, sales commissions, administrative expenses borne by us,
general economic trends, and competitive factors. THE COMPANY'S MANAGEMENT WILL
MAKE THE FINAL DETERMINATION OF THE GUARANTEED INTEREST RATES IT DECLARES. WE
CANNOT PREDICT OR GUARANTEE THE LEVEL OF FUTURE INTEREST RATES. HOWEVER, OUR
GUARANTEED INTEREST RATES WILL BE AT LEAST 3% PER YEAR. GUARANTEED INTEREST
RATES DO NOT DEPEND UPON AND DO NOT REFLECT THE PERFORMANCE OF THE FIXED
ACCOUNT.
GUARANTEE PERIODS. We measure the length of a Guarantee Period from
the end of the calendar month in which you allocated or transferred the amount
to the Fixed Sub-Account. This means that the Expiration Date of any Guarantee
Period will always be the last day of a calendar month. The currently available
Guarantee Periods are 1, 2, 3, 4, 5, 7, and 10 years. We may offer different
Guarantee Periods in the future. Not all Guarantee Periods may be available in
all states. Any Guarantee Period you select cannot be longer than the number of
full years remaining until your Income Date.
We may offer different Guarantee Periods with special Guaranteed
Interest Rates for the DCA Fixed Sub-Accounts. In addition, we may offer
special Guaranteed Interest Rates for new purchase payments allocated to the
Fixed Sub-Accounts.
We will notify you of your renewal options at least thirty days before
each Expiration Date of your Fixed Sub-Accounts. Currently, your options are:
. Take no action and we will transfer the value of the expiring
Fixed Sub-Account to the Fixed Sub-Account with the same
Guarantee Period, but not longer than five years or extending
beyond the Income Date, as of the day the previous Fixed Sub-
Account expires. If such Guarantee Period is not currently
available, we will transfer your value to the next shortest
Guarantee Period. If there is no shorter Guarantee Period, we
will transfer your value to the Money Market Sub-Account.
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. Elect a new Guarantee Period(s) from among those we offer as of
the day the previous Fixed Sub-Account expires.
. Elect to transfer the value of the Fixed Sub-Account to one or
more Variable Sub-Accounts.
Any amounts surrendered, withdrawn, transferred or applied to an income
plan other than during the thirty days before the Expiration Date of the
Guarantee Period are subject to a Market Value Adjustment with the exception of
the following transactions:
. Transfers from DCA Fixed Sub-Accounts made automatically under
our Dollar Cost Averaging Program, and
. Withdrawals of earned interest made automatically under our
Systematic Partial Withdrawal Program.
We currently waive any Market Value Adjustment on withdrawals you take to
satisfy IRS minimum distribution requirements.
MARKET VALUE ADJUSTMENT. A Market Value Adjustment reflects the change in
interest rates since we established a Fixed Sub-Account. It compares: (l) the
current Index Rate for a period equal to the time remaining in the Guarantee
Period, and (2) the Index Rate at the time we established the Fixed Sub-Account
for a period equal to the Guarantee Period.
Ordinarily:
. If the current Index Rate for a period equal to the time
remaining in the Guarantee Period is higher than the applicable
Index Rate at the time we established the Fixed Sub-Account, the
Market Value Adjustment will be negative.
. If the current Index Rate for a period equal to the time
remaining in the Guarantee Period is lower than the applicable
Index Rate at the time we established the Fixed Sub-Account, the
Market Value Adjustment will be positive.
We will apply a Market Value Adjustment as follows:
. For a surrender, withdrawal, transfer, or amount applied to an
income plan, we will calculate the Market Value Adjustment on the
total amount (including any applicable Surrender Charge) that
must be surrendered, withdrawn, transferred or applied to an
income plan to provide the amount requested.
. If the Market Value Adjustment is negative, it reduces any
remaining value in the Fixed Sub-Account, or amount of Surrender
Value. Any remaining Market Value Adjustment then reduces the
amount withdrawn, transferred, or applied to an income plan.
. If the Market Value Adjustment is positive, it increases any
remaining value in the Fixed Sub-Account. In the case of
surrender, or if you withdraw, transfer or apply to an income
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plan, the full amount of the Fixed Sub-Account, the Market Value
Adjustment increases the amount surrendered, withdrawn,
transferred, or applied to an income plan.
A Market Value Adjustment will not be applied to any amounts payable upon
death or cancellation during the Free Look Period.
We will compute the Market Value Adjustment by multiplying the factor
below by the total amount (including any applicable surrender charge) that must
be surrendered, withdrawn, transferred, or applied to an income plan from the
Fixed Sub-Account to provide the amount you requested.
[(1+I)/(1+J+.0025)]/N/365/ - 1
Where
I is the Index Rate for a maturity equal to the Fixed Sub-
Account's Guarantee Period at the time we established the Sub-
Account;
J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period at the time of calculation; and
N is the remaining number of days in the Guarantee Period at the
time of calculation.
We currently base the Index Rate for a calendar week on the reported
rate for the preceding calendar week. We reserve the right to set it less
frequently than weekly but in no event less often than monthly. If there is no
Index Rate for the maturity needed to calculate I or J, we will use straight-
line interpolation between the Index Rate for the next highest and next lowest
maturities to determine that Index Rate. If the maturity is one year or less,
we will use the Index Rate for a one-year maturity.
In Maryland, state insurance law requires that the Market Value
Adjustment be computed by multiplying the amount being surrendered, withdrawn,
transferred, or applied to an income plan, by the greater of the factor above
and the following factor: [(1.03)/(l+K)] ((G-N)/365) - 1, where N is as defined
above, K equals the Guaranteed Interest Rate for the Guarantee Period, and G
equals the initial number of days in the Guarantee Period. In Washington, we
will not assess the Market Value Adjustment because of state insurance law
requirements. Because of these requirements, not all Guarantee Periods are
available. Contact our Customer Service Center for available Guarantee Periods.
Examples of how the Market Value Adjustment works are shown in
Appendix A.
TRANSFERS
Before the Income Date and while the Annuitant is living, you may
transfer Account Value from and among the Variable and Fixed Sub-Accounts at any
time, subject to certain conditions. However, in certain states, your right to
transfer Account Value is restricted until the Free Look Period ends. See "What
Are My Investment Options?" The minimum amount of Account Value that you may
transfer from a Sub-Account is $250, or, if less, the entire remaining Account
Value held in that Sub-Account. If a transfer would reduce the Account Value
remaining in a Sub-Account below $250, we will treat your transfer request as a
request to transfer the entire amount.
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You must give us Satisfactory Notice of the Sub-Accounts from which
and to which we are to make the transfers. Otherwise, we will not transfer your
Account Value. A transfer from a Fixed Sub-Account ordinarily will be subject
to a Market Value Adjustment. There is currently no limit on the number of
transfers from and among the Sub-Accounts.
A transfer ordinarily takes effect on the Business Day we receive
Satisfactory Notice at our Customer Service Center. We will deem requests
received on other than a Business Day as received on the next following Business
Day. We may, however, defer transfers to, from, and among the Variable Sub-
Accounts under the same conditions that we may delay paying proceeds.
In addition, we reserve the right to restrict transfers:
. if any of the Variable Sub-Accounts that would be affected by the
transfer is unable to purchase or redeem shares of the Fund in
which the Sub-Account invests; or
. if the transfer results in more than one trade involving the same
Sub-Account with a 30-day period; or
. if the transfer would adversely affect Accumulation Unit Values
(which may occur if the transfer would affect one percent or more
of the relevant Fund's total assets).
We reserve the right to impose a transfer charge of up to $25 on each
transfer in a Contract Year in excess of twelve, and to limit, upon notice, the
maximum number of transfers you may make per calendar month or per Contract
Year. For purposes of assessing any transfer charge, we will consider each
transfer request to be one transfer, regardless of the number of Sub-Accounts
affected by the transfer.
After the Income Date, you must have our prior consent to transfer
value from the Fixed Account to the Variable Account or from the Variable
Account to the Fixed Account. A Market Value Adjustment ordinarily will apply to
transfers from the Fixed Account. We reserve the right to limit the number of
transfers among the Variable Sub-Accounts to one transfer per Contract Year
after the Income Date.
TELEPHONE TRANSACTIONS. You may request transfers or withdrawals by
telephone. (We reserve the right to discontinue permitting withdrawals by
telephone.) We will not be liable for following instructions communicated by
telephone that we reasonably believe to be genuine. To request transfers or
withdrawals by telephone, you must elect the option on our authorization form.
We will use reasonable procedures to confirm that instructions communicated by
telephone are genuine. We may only be liable for any losses due to unauthorized
or fraudulent instructions where we fail to follow our procedures properly.
These procedures include: (a) asking you or your authorized representative to
provide certain identifying information; (b) tape recording all such
conversations; and (c) sending you a confirmation statement after all such
telephone transactions.
We also have a form to allow you to create a power of attorney by
authorizing another person to give telephone instructions. Unless prohibited by
state law, we will treat such power as a durable power of attorney. The Owner's
subsequent incapacity, disability, or incompetency will not affect the power of
attorney. We may cease to honor the power by sending written notice to you at
your last known address. Neither we nor any person acting on our behalf shall
be subject to liability for any act done in good faith reliance upon your power
of attorney.
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THIRD PARTY TRANSFERS. As a general rule and as a convenience to you,
we allow a third party the right to make transfers on your behalf. However,
when the same third party possesses the right to make transfers on behalf of
many Owners, the result can be simultaneous transfers involving large amounts of
Account Value. Such transfers can disrupt the orderly management of the Funds,
can result in higher costs to Owners, and are ordinarily not compatible with the
long-range goals of purchasers of the Contracts. We believe that such
simultaneous transfers made by third parties are not in the best interest of all
shareholders of the Funds. The managements of the Funds share this position.
Therefore, to the extent necessary to reduce the adverse effects of
simultaneous transfers made by Owners or third parties holding the right to make
transfers on behalf of multiple parties, we may refuse to honor third party
transfers and have instituted or will institute procedures to ensure that the
transfer requests that we receive have, in fact, been made by the Owners in
whose names they are submitted. However, our procedures will not prevent you
from making your own transfer requests.
TRANSFER PROGRAMS
DOLLAR-COST AVERAGING PROGRAM. Our optional dollar-cost averaging
program permits you to systematically transfer (monthly, or as frequently as we
allow), a set dollar amount from the Money Market Sub-Account to any combination
of Variable Sub-Accounts. We also allow dollar-cost averaging from DCA Fixed
Sub-Accounts.
The dollar-cost averaging method of investment is designed to reduce
the risk of making purchases only when the price of Accumulation Units is high.
However, you should carefully consider your financial ability to continue the
program over a long enough period of time to purchase units when their value is
low as well as when high. Dollar-cost averaging does not assure a profit or
protect against a loss. Because interest continues to be earned on the balance
in the Money Market Sub-Account or a DCA Fixed Sub-Account, the amounts we
transfer will vary slightly from month to month. An example of how our dollar-
cost averaging program works is shown in Appendix B.
You may elect to participate in the dollar-cost averaging program at
any time before the Income Date by sending us Satisfactory Notice. The minimum
transfer amount is $100 from the Money Market Sub-Account or from a DCA Fixed
Sub-Account. We will make all dollar-cost averaging transfers on the day of
each month that corresponds to your Contract Date. If that date is not a
Business Day, we will make the transfer on the next following Business Day. If
you want to dollar-cost average from more than one DCA Fixed Sub-Account at the
same time, restrictions may apply.
Once elected, dollar-cost averaging remains in effect until:
. the Income Date;
. you surrender the Contract;
. the value of the Sub-Account from which transfers are being made
is depleted; or
. you cancel the program by written request.
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If you cancel dollar-cost averaging from a DCA Fixed Sub-Account before
the end of the selected Guarantee Period, we reserve the right to treat this
request as a transfer request, and we ordinarily will assess a Market Value
Adjustment on the amount canceled. You can request changes by writing us at our
Customer Service Center. There is no additional charge for dollar-cost
averaging. A transfer under this program is not a transfer for purposes of
assessing a transfer charge. We reserve the right to discontinue offering this
program at any time and for any reason. Dollar-cost averaging is not available
while you are participating in the systematic partial withdrawal program.
ASSET ALLOCATION PROGRAM. An optional Asset Allocation Program is
available if you do not wish to make your own investment decisions. This
investment planning tool is designed to find an asset mix that attempts to
achieve the highest expected return based upon your tolerance for risk, and
consistent with your needs and objectives.
If you participate in the asset allocation program, we will automatically
allocate all initial and additional purchase payments among the Variable Sub-
Accounts indicated by the model you select. The models do not include
allocations to the Fixed Account. Although you may only use one model at a
time, you may change your selection as your tolerance for risk, and/or your
needs and objectives change. Bear in mind, the use of an asset allocation model
does not guarantee investment results. You may use a questionnaire that is
offered to determine the model that best meets your risk tolerance and time
horizons.
Because each Variable Sub-Account performs differently over time, your
portfolio mix may vary from its initial allocations. We will automatically
rebalance your Fund mix quarterly to bring your portfolio back to its original
allocation percentages.
From time to time the models are reviewed. It may be found that
allocation percentages within a particular model need to be changed. You will
be sent a notice at least 30 days before any such change is made, and you will
be given an opportunity not to make the change.
---
If you participate in the asset allocation program, the transfers made
under the program are not taken into account in determining any transfer charge.
There is no additional charge for this program. We reserve the right to
discontinue offering this program at any time and for any reason.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM. Once you allocate your money
among the Variable Sub-Accounts, the investment performance of each Variable
Sub-Account may cause your allocation to shift. Before the Income Date, you may
instruct us to automatically rebalance (on a calendar quarter, semi-annual or
annual basis) Variable Account Value to return to your original allocation
percentages. Your request will be effective on the Business Day on which we
receive your request at our Customer Service Center. We will deem requests
received on other than a Business Day as received on the next following Business
Day. Your allocation percentages must be in whole percentages. You may start
and stop automatic portfolio rebalancing at any time and make changes to your
allocation percentages by written request. There is no additional charge for
using this program. A transfer under this program is not a transfer for
purposes of assessing any transfer charge. We reserve the right to discontinue
offering this program at any time and for any reason. We do not include any
money allocated to the Fixed Account in the rebalancing.
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<PAGE>
VALUES UNDER YOUR CONTRACT
ACCOUNT VALUE. The Account Value is the entire amount we hold under
your Contract for you. The Account Value serves as a starting point for
calculating certain values under your Contract. It equals the sum of your
Variable Account Value and your Fixed Account Value. We first determine your
Account Value on the Contract Date, and after that, on each Business Day. The
Account Value will vary to reflect:
. the performance of the Variable Sub-Accounts you have selected;
. interest credited on amounts you allocated to the Fixed Account;
. any additional purchase payments; and
. charges, transfers, withdrawals, and surrenders.
Your Account Value may be more or less than purchase payments you
made.
SURRENDER VALUE. The Surrender Value on a Business Day before the
Income Date is the Account Value, plus or minus any applicable Market Value
Adjustment, reduced by any applicable surrender charge that would be deducted if
your Contract were surrendered that day, less any applicable annual
administration charge and any applicable Purchase Payment Tax Charge.
VARIABLE ACCOUNT VALUE. On any Business Day, the Variable Account
Value equals the sum of the values in each Variable Sub-Account. The value in
each Variable Sub-Account equals the number of Accumulation Units attributable
to that Variable Sub-Account multiplied by the Accumulation Unit value for that
Variable Sub-Account on that Business Day. When you allocate a purchase payment
or transfer Account Value to a Variable Sub-Account, we credit your Contract
with Accumulation Units in that Variable Sub-Account. We determine the number
of Accumulation Units by dividing the dollar amount allocated or transferred to
the Variable Sub-Account by the Sub-Account's Accumulation Unit value for that
Business Day. Similarly, when you transfer, withdraw, or surrender an amount
from a Variable Sub-Account, we cancel Accumulation Units in that Variable Sub-
Account. We determine the number of Accumulation Units canceled by dividing the
dollar amount you transferred, withdrew, or surrendered by the Variable Sub-
Account's Accumulation Unit value for that Business Day.
ACCUMULATION UNIT VALUE. Accumulation Unit Value varies to reflect
the investment experience of the underlying Fund, and may increase or decrease
from one Business Day to the next. We arbitrarily set the Accumulation Unit
value for each Variable Sub-Account at $10 when we established the Sub-Account.
For each Valuation Period after the date of establishment, we determine the
Accumulation Unit value by multiplying the Accumulation Unit value for a Sub-
Account for the prior Valuation Period by the net investment factor for the
Variable Sub-Account for the Valuation Period.
NET INVESTMENT FACTOR. The net investment factor is an index we use
to measure the investment performance of a Variable Sub-Account from one
Valuation Period to the next during the Accumulation Phase. We determine the
net investment factor for any Valuation Period by dividing (a) by (b) where:
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(a) is the net result of:
(1) the Net Asset Value of the Fund in which the Variable Sub-Account
invests determined at the end of the current Valuation Period; PLUS
(2) the per share amount of any dividend or capital gain distributions
made by the Fund on shares held in the Variable Sub-Account if the "ex-
dividend" date occurs during the current Valuation Period; PLUS OR MINUS
(3) a per share charge or credit for any taxes reserved for, which we
determine to have resulted from the operations of the Variable Sub-
Account; and
(b) is the Net Asset Value of the Fund in which the Variable Sub-Account
invests determined at the end of the immediately preceding Valuation
Period.
The net investment factor may be more or less than, or equal to, one.
FIXED ACCOUNT VALUE. The Fixed Account Value is the sum of the Fixed Account
Value in each Fixed Sub-Account (including a DCA Fixed Sub-Account) on any
particular day. The value in each Fixed Sub-Account equals:
. the portion of the purchase payment(s) allocated or amount transferred to
the Sub-Account; PLUS
. interest at the Guaranteed Interest Rate; MINUS
. any transfers from the Sub-Account; MINUS
. any withdrawals (including any associated surrender charges) from the Sub-
Account; and MINUS
. any charges allocated to the Sub-Account.
We also adjust the Fixed Sub-Account Value for any Market Value
Adjustment, the value of which could be positive or negative.
================================================================================
5. WHAT ARE THE EXPENSES UNDER A CONTRACT?
================================================================================
We deduct the charges described below. The charges are for the services
and benefits we provide, costs and expenses we incur, and risks we assume under
the Contracts.
SERVICES AND BENEFITS WE PROVIDE INCLUDE:
. the ability of Owners to make withdrawals and surrenders under the
Contracts;
. the death benefit paid on the death of the Owner;
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<PAGE>
. the available investment options, including dollar-cost averaging, asset
allocation, automatic portfolio rebalancing, and systematic partial
withdrawal programs;
. administration of the income plans available under the Contracts; and
. the distribution of various reports to Owners.
COSTS AND EXPENSES WE INCUR INCLUDE:
. those related to various overhead and other expenses associated with
providing the services and benefits guaranteed by the Contracts;
. sales and marketing expenses; and
. other costs of doing business.
RISKS WE ASSUME INCLUDE:
. the risks that Annuitants may live longer than we estimated when we
established the annuity purchase rates under the Contracts;
. that the amount of the death benefit will be greater than Account Value;
and
. that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.
We may also deduct a charge for taxes. See "Fee Table."
We may realize a profit or loss on one or more of the charges. We may use
any such profits for any corporate purpose, including, among other things, the
payment of sales expenses.
Unless we otherwise specify, we will deduct charges proportionately from
all Variable Sub-Accounts and Fixed Sub-Accounts in which you are invested.
We may reduce or eliminate charges under the Contracts when sales result in
savings, reduction of expenses and/or risks to the Company. Generally, we will
make such reductions or eliminations based on the following factors:
. the size of the group;
. the total amount of purchase payments to be received from the group;
. the purposes for which the Contracts are purchased;
. the nature of the group for which the Contracts are purchased; and
. any other circumstances that could reduce Contract costs and expenses.
26
<PAGE>
We may also sell the Contracts with lower or no charges to a person who
is an officer, director or employee of Sage Life or of certain affiliates,
distributors, or service providers of ours. Reductions or eliminations in
Contract charges will not be unfairly discriminatory against any person. Please
contact our Customer Service Center for more information about these cost
reductions and eliminations.
SURRENDER CHARGE
If you make an Excess Withdrawal or surrender your Contract during the
first seven Contract Years, we may deduct a surrender charge calculated as a
percentage of the amount of purchase payment(s) withdrawn or surrendered. The
applicable percentage is 7% in the first Contract Year, and declines until it
reaches 0% in the eighth Contract Year.
If you surrender your Contract, we deduct the surrender charge from the
Account Value in determining the Surrender Value. If you take an Excess
Withdrawal, we deduct the surrender charge from your Account Value remaining
after we pay you the amount requested. We include any surrender charge we
assess in the calculation of any applicable Market Value Adjustment for
withdrawals from the Fixed Account. Each year you may withdraw a "Free
Withdrawal Amount" without incurring a surrender charge. For a table of
surrender charges and a description of the Free Withdrawal Amount, see the "Fee
Table."
The amount you request from a Sub-Account may not exceed the value of that
Sub-Account less any applicable surrender charge.
EXAMPLE OF CALCULATION OF SURRENDER CHARGE. Assume the applicable
surrender charge is 7%, you have requested a withdrawal of $1,000, and no Market
Value Adjustment is applicable. Your initial purchase payment was $5,000, your
current Account Value is $5,250, and you made no prior withdrawals during that
Contract Year. Your Free Withdrawal Amount is the greater of (a) or (b), where:
(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals (including any associated surrender charge and Market
Value Adjustment incurred) in that Contract Year (10% x $5,000 = $500);
and
(b) is the excess of the Account Value on the date of withdrawal over the
unliquidated purchase payments ($5,250 - $5,000 = $250).
Therefore, the Free Withdrawal Amount is $500. A surrender charge will apply to
the excess of $1,000 over $500. The surrender charge equals $35 (7% x $500).
WAIVER OF SURRENDER CHARGE. We will not deduct a surrender charge if,
at the time we receive your request for a withdrawal or a surrender, we have
also received due proof that you (or the Annuitant, if the Owner is not an
individual) have a "Qualifying Terminal Illness" or have been confined
continuously to a "Qualifying Hospital or Nursing Care Facility" for at least 45
days in a 60 day period. We define "Qualifying Terminal Illness" and
"Qualifying Hospital or Nursing Care Facility" in your Contract.
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<PAGE>
ANNUAL ADMINISTRATION CHARGE
We will deduct an annual administration charge of $40 for the first
seven Contract Years (i) on each Contract Anniversary, and (ii) on the day of
any surrender if the surrender is not on the Contract Anniversary. We will
waive this charge on and after the eighth Contract Anniversary, or if the
Account Value is at least $50,000 when we would have otherwise deducted the
annual administration charge. In some states, the charge is $30, and in some
states it is deducted only from your Account Value in the Variable
Subaccounts.
TRANSFER CHARGE
We currently do not deduct this charge. However, we reserve the right
to deduct a transfer charge of up to $25 for the 13th and each subsequent
transfer during a Contract Year. The charge is at cost with no profit to us.
For the purpose of assessing the transfer charge, we consider each written or
telephone request to be one transfer, regardless of the number of Sub-Accounts
affected by the transfer. In the event that the transfer charge becomes
applicable, we will deduct it proportionately from the Sub-Accounts from which
you made the transfer. Transfers made in connection with the dollar-cost
averaging, asset allocation, and automatic portfolio rebalancing programs will
not count as transfers for purposes of assessing this charge.
ASSET-BASED CHARGES
We assess Asset-Based Charges against your Contract for assuming
mortality and expense risks and administrative costs we assume. Before the
Income Date, we deduct Asset-Based Charges monthly and calculate the charges as
a percentage of the Variable Account Value on the date of deduction. On the
Contract Date and monthly thereafter, we deduct the Asset-Based Charges
proportionately from the Variable Sub-Accounts in which you are invested. On
and after the Income Date, however, these charges are called Variable Sub-
Account Charges and we deduct them daily from the assets in each Variable Sub-
Account supporting variable income payments. The maximum charges are:
<TABLE>
<CAPTION>
=====================================================
COMBINED
ASSET-BASED CHARGES
----------------------------
ANNUAL MONTHLY DAILY
CHARGE CHARGE CHARGE
------- -------- ---------
<S> <C> <C> <C>
Contract Years 1-7 1.40% .116667% .0038626%
Contract Years 8+ 1.25% .104167% .0034462%
=====================================================
</TABLE>
We reserve the right to deduct Asset-Based Charges on the effective
date of any transfer from the Fixed Account, or allocation of purchase payment
to the Variable Account, based on the amount transferred or allocated and based
on the number of days remaining until the next date of deduction. These charges
do not apply to any Fixed Account Value.
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PURCHASE PAYMENT TAX CHARGE
We will deduct any state or local premium tax that we incur from your
Account Value. We reserve the right to defer the collection of this charge and
deduct it against your Account Value when you surrender your Contract or begin
receiving regular income payments. This tax charge currently ranges from 0% to
3.0% depending upon the state or locality.
FUND ANNUAL EXPENSES
Because the Variable Account purchases shares of the various Funds you
choose, the net assets of the Variable Account will reflect the investment
management fees and other operating expenses incurred by those Funds. A table
of each Fund's management fees and other expenses can be found in the front of
this Prospectus in the Fee Table. For a description of each Fund's expenses,
management fees, and other expenses, see the Trusts' prospectuses.
ADDITIONAL INFORMATION
The Contracts are sold by broker-dealers through registered
representatives of such broker-dealers who are also appointed and licensed as
insurance agents of Sage Life. See "Distribution of the Contracts." These
broker-dealers receive commissions for selling Contracts calculated as a
percentage of purchase payments (up to a maximum of 6.25%). You do not pay
these commissions. We do. Broker-dealers who meet certain productivity and
profitability standards may be eligible for additional compensation.
===============================================================================
6. HOW WILL MY CONTRACT BE TAXED?
===============================================================================
- -------------------------------------------------------------------------------
THIS DISCUSSION IS NOT INTENDED AS TAX ADVICE. PLEASE CONSULT COUNSEL OR OTHER
COMPETENT TAX ADVISERS FOR MORE COMPLETE INFORMATION.
- -------------------------------------------------------------------------------
INTRODUCTION
The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax adviser. No
attempt is made to consider any applicable state tax or other tax laws, or to
address any federal estate, or state and local estate, inheritance, and other
tax consequences of ownership or receipt of distributions under a Contract.
When you invest in an annuity contract, you usually do not pay taxes on
your investment gains until you withdraw the money -- generally for retirement
purposes. If you invest in a variable annuity as part of a pension plan or
employer-sponsored retirement program, your contract is called a Qualified
Contract. If your annuity is independent of any formal retirement or pension
plan, it is termed a Non-Qualified Contract.
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<PAGE>
TAXATION OF NON-QUALIFIED CONTRACTS
NON-NATURAL PERSON. A Non-Qualified Contract that is owned by a non-
natural person (such as a corporation or a trust) is generally not treated as an
annuity contract for tax purposes. There are some exceptions to this rule and a
prospective owner that is not a natural person should discuss these with a tax
adviser. The discussion in this section assumes that the Contract is owned by a
natural person.
WITHDRAWALS AND SURRENDERS. When a withdrawal from a Non-Qualified
Contract occurs, the amount received will be treated as ordinary income subject
to tax up to an amount equal to the excess (if any) of the account value
immediately before the distribution over the Owner's investment in the Contract
(generally, the premiums or other consideration paid for the Contract, reduced
by any amount previously distributed from the Contract that was not subject to
tax) at that time. In the case of a surrender under a Non-Qualified Contract,
the amount received generally will be taxable as ordinary income only to the
extent it exceeds the Owner's investment in the Contract.
SPECIAL NOTE ON WITHDRAWALS. Please read the following carefully and
consult with your tax adviser on these and other possible tax consequences
before making a withdrawal.
. It is possible that a positive Market Value Adjustment at the time of
a withdrawal may be treated as part of the Account Value immediately
before the distribution.
. We understand that it is the position of the Internal Revenue Service
that when withdrawals (other than income payments) are taken from the
cash value of an income payout option, such as that offered by this
Prospectus under the term certain option (Income Plan 4. See "What
Are My Income Payment Options?"), then all amounts received by the
taxpayer are taxable at ordinary income rates as amounts "not received
as an annuity." In addition, such amounts are taxable to the
recipient without regard to the owner's investment in the contract or
any investment gain which might be present in the current annuity
value. For example, under this view, an Owner with a cash value of
$100,000 seeking to obtain $20,000 of the cash value immediately after
annuitization under a term certain payout, would pay income taxes on
the entire $20,000 amount in that tax year. For some taxpayers, such
as those under age 59 1/2 , additional tax penalties may also apply.
This adverse tax result means that Owners of Non-Qualified Contracts
should consider carefully the tax implications of any withdrawal
requests and their need for Contract funds prior to the exercise of
this right.
PENALTY TAX ON CERTAIN WITHDRAWALS. If you make a withdrawal from or
surrender a Non-Qualified Contract, you may be subject to a federal tax penalty
equal to ten percent of the amount treated as income. However, there usually is
no penalty on distributions that are:
. made on or after the taxpayer reaches age 591/2;
. made on or after the death of an Owner;
. attributable to the taxpayer's becoming disabled; or
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<PAGE>
. made as part of a series of substantially equal periodic payments for
the life (or life expectancy) of the taxpayer.
Other exceptions may be applicable under certain circumstances and special
rules may be applicable in connection with the exceptions listed above. You
should consult a tax adviser with regard to exceptions from the penalty tax.
INCOME PAYMENTS. Although tax consequences may vary depending on the
payout option elected under an annuity contract, a portion of each income
payment is generally not taxed and the remainder is taxed as ordinary income.
The non-taxable portion of an income payment is generally determined in a
manner that is designed to allow you to recover your investment in the contract
ratably on a tax-free basis over the expected stream of income payments, as
determined when income payments start. Once your investment in the contract
has been fully recovered, however, the full amount of each income payment is
subject to tax as ordinary income.
TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a
Contract because of your death or the death of the Annuitant. Generally, such
amounts are includible in the income of the recipient as follows: (i) if
distributed in a lump sum, they are taxed in the same manner as a surrender of
the Contract, or (ii) if distributed under a payout option, they are taxed in
the same way as annuity payments.
WITHHOLDING. Annuity distributions are generally subject to withholding
for the recipient's federal income tax liability. Recipients can generally
elect, however, not to have tax withheld from distributions.
MULTIPLE CONTRACTS. All non-qualified deferred annuity contracts that are
issued by us (or our affiliates) to the same owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includible in such owner's income when a taxable distribution occurs.
FURTHER INFORMATION. We believe that the contracts will qualify as annuity
contracts for federal income tax purposes and the above discussion is based on
that assumption. Further details can be found in the Statement of Additional
Information under the heading "Tax Status of the Contracts."
TAXATION OF A QUALIFIED CONTRACT
Qualified Contracts are subject to some of the same tax rules as Non-
Qualified Contracts, but there are a number of significant differences. Some of
these differences and other important rules are highlighted here and in the
Statement of Additional Information, but please keep in mind that this
discussion provides only general information about the tax consequences of
Qualified Contracts, and Owners, Annuitants, and Beneficiaries should consult
their tax advisors for more specific information.
TYPES OF QUALIFIED CONTRACTS. A Qualified Contract can be used in
connection with the following types of retirement plans:
. Individual Retirement Annuity (IRA) -- permits eligible individuals to
make non-deductible or deductible annual contributions of up to
$2,000.
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<PAGE>
. SIMPLE IRA -- permits certain small employers to establish a plan
allowing employees to make annual pre-tax contributions of up to
$6,000, with an employer contribution or match.
. Roth IRA -- allows eligible individuals to make after-tax
contributions of up to $2,000, with no tax on qualifying
distributions.
The form of the Qualified Contract and its IRA rider have been approved by
the IRS for use as an IRA. IRS approval does not relate to the merits of the
IRA as an investment.
CONTRIBUTIONS AND DISTRIBUTIONS. Annual contributions to Qualified
Contracts are limited by tax rules and the terms of the retirement plans. For
IRAs and SIMPLE IRAs, minimum distributions generally must begin no later than
April 1 of the calendar year following the calendar year in which the Owner
reaches age 70 1/2 . Roth IRAs do not require distributions while the Owner is
alive. Upon the Owner's death, minimum distributions are required from IRAs,
SIMPLE IRAs, and Roth IRAs. Penalty taxes may apply to distributions made
before age 59 1/2 and to certain early distributions from Roth IRAs. See
"Qualified Contracts" in the Statement of Additional Information for more
information on contributions and distributions.
Distributions from Qualified Contracts generally are subject to withholding
for the Owner's federal income tax liability. The Owner will be provided the
opportunity to elect not to have tax withheld from distributions.
TERMS OF THE PLAN. Your rights under a Qualified Contract are also subject
to the terms of the retirement plan itself, although we will not be bound by the
terms of the plan if they contradict the Qualified Contract.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A CONTRACT
A transfer or assignment of ownership of a Contract, the designation of an
annuitant, the selection of certain maturity dates, or the exchange of a
Contract may result in certain tax consequences to you that are not discussed in
this prospectus. An owner contemplating any such transfer, assignment or
exchange, should consult a tax adviser as to the tax consequences.
POSSIBLE TAX LAW CHANGES
Although the likelihood of legislative changes is uncertain, there is
always the possibility that the tax treatment of the Contract could change by
legislation or otherwise. Consult a tax adviser with respect to legislative
developments and their effect on the Contract. We have the right to modify the
Contract in response to legislative changes that could otherwise diminish the
favorable tax treatment that annuity contract owners currently receive.
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<PAGE>
================================================================================
7. HOW DO I ACCESS MY MONEY?
================================================================================
You can partially withdraw from or surrender your Contract. When you
surrender your Contract, you can take the proceeds in a single sum, or you can
request that we pay the proceeds over a period of time under one of our income
plans. See "What Are My Income Payment Options?"
WITHDRAWALS
You may withdraw all or part of your Surrender Value at any time before
the Income Date while the Annuitant is still living. (If you have elected the
"payments for a specified period certain" income plan option, you may request a
full or partial withdrawal after the Income Date; otherwise, no withdrawals are
permitted after the Income Date.) There may be adverse tax consequences if you
make a withdrawal from or surrender your Contract. Also, there may be adverse
tax consequences if you make a partial withdrawal during the Income Phase. See
"How Will My Contract Be Taxed?" You may make your withdrawal request in
writing or by telephone. See "Requesting Payments." Any withdrawal must be at
least $250. If a withdrawal request would reduce your Account Value remaining
in a Sub-Account below $250, we will treat the withdrawal request as a request
to withdraw the entire amount. We will pay you the withdrawal amount in one
sum. Under certain circumstances, we may delay this payment. See "Requesting
Payments."
When you request a withdrawal, you can direct how we deduct the withdrawal from
your Account Value. If you provide no directions, we will deduct the withdrawal
from your Account Value in the Sub-Accounts on a pro-rata basis.
A PARTIAL WITHDRAWAL WILL REDUCE YOUR DEATH BENEFIT PROPORTIONATELY BY THE
AMOUNT YOUR WITHDRAWAL (INCLUDING ANY APPLICABLE SURRENDER CHARGE AND MARKET
VALUE ADJUSTMENT) REDUCES ACCOUNT VALUE AND MAY BE SUBJECT TO FEDERAL INCOME
TAX. SEE "WHAT ARE THE EXPENSES UNDER A CONTRACT?" "HOW WILL MY CONTRACT BE
TAXED?" AND "DOES THE CONTRACT HAVE A DEATH BENEFIT?"
Please note that if your requested withdrawal would reduce your Account
Value below $2,000, we reserve the right to treat the request as a withdrawal of
only the excess over $2,000.
SYSTEMATIC PARTIAL WITHDRAWAL PROGRAM. The systematic partial withdrawal
program provides automatic monthly, quarterly, semi-annual, or annual payments
to you from the amounts you have accumulated in the Sub-Accounts. You select the
day we take withdrawals, but this day can be no later than the 28th day of the
month. If you do not select a day, we will use the day of each month that
corresponds to your Contract Date. If that date is not a Business Day, we will
use the next following Business Day. The minimum payment is $100. You can
elect to withdraw either earnings in a prior period (for example, prior month
for monthly withdrawals or prior quarter for quarterly withdrawals) or a
specified dollar amount.
. If you elect earnings, we will deduct the withdrawals from the Sub-
Accounts in which you are invested on a pro-rata basis.
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<PAGE>
. If you elect a specified dollar amount, we will deduct the withdrawals
from the Sub-Accounts in which you are invested on a pro-rata basis unless
you tell us otherwise. Any amount in excess of the Free Withdrawal Amount
may be subject to a surrender charge. See "Surrender Charge." Also, any
amount in excess of interest earned on a Fixed Sub-Account in the prior
period ordinarily will be subject to a Market Value Adjustment. See
"Market Value Adjustment."
You may participate in the systematic partial withdrawal program at any
time before the Income Date by providing Satisfactory Notice. Once we receive
your request, the program will begin and will remain in effect until your
Account Value drops to zero. You may cancel or make changes in the program at
any time by providing us with Satisfactory Notice. We do not deduct any other
charges for this program. We reserve the right to discontinue the systematic
partial withdrawal program at any time and for any reason. Systematic partial
withdrawals are not available while you are participating in the dollar-cost
averaging program.
IRA PARTIAL WITHDRAWAL PROGRAM. If your Contract is an IRA Contract
(other than a Roth IRA Contract) and you will attain age 70 1/2 in the current
calendar year, distributions may be made to satisfy requirements imposed by
federal tax law. An IRA partial withdrawal provides payout of amounts required
to be distributed by the IRS rules governing mandatory distributions under
qualified plans. We will send a notice before distributions must commence, and
you may elect this program at that time, or at a later date. You are, however,
ultimately responsible for determining that IRA distributions comply with
applicable tax code rules.
You may not elect the IRA Partial Withdrawal program while you are
participating in the systematic partial withdrawal program. You may take IRA
partial withdrawals on a monthly, quarterly, semi-annual, or annual basis. We
require a minimum withdrawal of $100. You select the day we make the
withdrawals, but this day can be no later than the 28th day of the month. If
you do not elect a day, we will use the day of each month that corresponds to
your Contract Date.
REQUESTING PAYMENTS
You must provide us with Satisfactory Notice of your request for payment.
We will ordinarily pay any death benefit, withdrawal, or surrender proceeds
within seven days after receipt at our Customer Service Center of all the
requirements for payment. We will determine the amount as of the date our
Customer Service Center receives all requirements.
We may delay making a payment, applying Account Value to an income plan,
or processing a transfer request if:
. the disposal or valuation of the Variable Account's assets is not
reasonably practicable because the New York Stock Exchange is closed for
other than a regular holiday or weekend, trading is restricted by the SEC,
or the SEC declares that an emergency exists; or
. the SEC, by order, permits postponement of payment to protect our Owners.
We also may defer making payments attributable to a check that has not
cleared (which may take up to 15 days), and we may defer payment of proceeds
from the Fixed Account for a withdrawal, surrender, or transfer request for up
to six months from the date we receive the request.
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If we defer payment 30 days or more, the amount deferred will earn
interest at a rate not less than the minimum required in the jurisdiction in
which we delivered the Contract.
================================================================================
8. HOW IS CONTRACT PERFORMANCE PRESENTED?
================================================================================
We may advertise or include in sales literature yields, effective yields,
and total returns for the Variable Sub-Accounts. Effective yields and total
returns for the Variable Sub-Accounts are based on the investment performance of
the corresponding Funds. WE BASE THESE FIGURES ON HISTORICAL PERFORMANCE, AND
THEY DO NOT INDICATE OR PROJECT FUTURE RESULTS. We may also advertise or
include in sales literature a Variable Sub-Account's performance compared to
certain performance rankings and indexes compiled by independent organizations,
and we may present performance rankings and indexes without such a comparison.
YIELD
The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in the Sub-Account over a specified seven-day period.
We calculate the yield by assuming that the income generated for that seven-day
period is generated each seven-day period over a 52-week period. We calculate
the effective yield similarly but, when annualized, the income earned by an
investment in the Money Market Sub-Account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of a Variable Sub-Account (except the Money Market Sub-Account)
refers to the annualized income generated by an investment in the Variable Sub-
Account over a specified 30-day or one-month period. We calculate the yield by
assuming that the income generated by the investment during that 30-day or one-
month period is generated over a 12-month period.
TOTAL RETURN
The total return of a Variable Sub-Account refers to return quotations
assuming an investment under a Contract has been held in the Variable Sub-
Account for the stated times. Average annual total return of a Variable Sub-
Account tells you the return you would have experienced if you allocated a
$1,000 purchase payment to a Variable Sub-Account for the specified period.
Standard average annual total return reflects all historical investment results
for the Variable Sub-Account, less all charges and deductions applied against
the Variable Sub-Account, including any Surrender Charge that would apply if you
surrendered your Contract at the end of each period indicated, but excluding any
deductions for purchase payment tax charges. Standard total return may be
quoted for various periods including 1 year, 5 years, and 10 years, or from
inception of the Variable Sub-Account if any of those periods are not available.
"Non-Standard" average annual total return information may be presented,
computed on the same basis as described above, except that deductions will not
include the Surrender Charge. In addition, we may from time to time disclose
average annual total return for non-standard periods and cumulative total return
for a Variable Sub-Account.
35
<PAGE>
PERFORMANCE/COMPARISONS
We may, from time to time, also disclose yield, standard total returns, and
non-standard total returns for the Funds. We may also disclose yield, standard
total returns, and non-standard total returns of funds or other accounts managed
by the Adviser or Subadviser with investment objectives similar to those of the
Funds, and Variable Sub-Account performance based on that performance data. We
will accompany non-standard performance by standard performance.
In advertising and sales literature, we may compare the performance of each
Variable Sub-Account to the performance of other variable annuity issuers in
general or to the performance of particular types of variable annuities
investing in mutual funds, or investment series of mutual funds with investment
objectives similar to each of the Variable Sub-Accounts. Advertising and sales
literature may also compare the performance of a Variable Sub-Account to the S&P
500 Composite Stock Price Index, a widely used measure of stock performance.
This unmanaged index assumes the reinvestment of dividends but does not reflect
any deduction for the expense of operating or managing an investment portfolio.
Other independent ranking services and indexes may also be used as a source of
performance comparison. We may also report other information, including the
effect of tax-deferred compounding on a Variable Sub-Account's investment
returns, or returns in general, which may be illustrated by tables, graphs, or
charts.
================================================================================
9. DOES THE CONTRACT HAVE A DEATH BENEFIT?
================================================================================
Your Contract provides two different types of death benefits for your
Beneficiary if you die before the Income Date. There is the basic death benefit
and the accidental death benefit.
BASIC DEATH BENEFIT. If any Owner dies before the Income Date, we will pay
the Beneficiary the greatest of:
. the Account Value determined as of the Business Day we receive proof of
death (if proof of death is received on other than a Business Day, we
will deem the proof as received on the next following Business Day);
. 100% of the sum of all purchase payments made under the Contract, reduced
proportionately by the amount that any prior withdrawal (including any
associated surrender charge and Market Value Adjustment incurred) reduced
Amount Value; or
. the highest anniversary value (the "Highest Anniversary Value").
The Highest Anniversary Value is the greatest anniversary value attained
in the following manner. When we receive proof of death, we will calculate an
anniversary value for each Contract Anniversary prior to the date of the Owner's
death, but not beyond the Owner's attained age 80. An anniversary value for a
Contract Anniversary equals:
(1) the Account Value on that Contract Anniversary;
(2) increased by the dollar amount of any purchase payments made since the
Contract Anniversary; and
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(3) reduced proportionately by any withdrawals (including any associated
surrender charge and Market Value Adjustment incurred) taken since that
Contract Anniversary. (By proportionately, we take the percentage by
which the withdrawal decreases the Account Value and we reduce the sum
of (1) and (2) by that percentage.)
If there are multiple Owners, we will use the age of the oldest Owner to
determine the applicable death benefit. If there is an Owner who is not a
natural person (that is, an individual), we will treat the Annuitant as an Owner
for the purpose of determining when an Owner dies and the Annuitant's age will
determine the death benefit payable to the Beneficiary in the event of such
Annuitant's death. We will consider any rider benefits payable upon death of
the Owner (or Annuitant, if no natural Owner) part of the death benefit.
OWNER'S DEATH BEFORE THE INCOME DATE
If an Owner dies before the Income Date, the Beneficiary has up to five
years from the Owner's date of death to request that the death benefit be paid
in one lump sum. If the Beneficiary elects the lump sum and we pay it, the
Contract will terminate, and we will have no further obligations under the
Contract. Alternatively, the Beneficiary may provide us with Satisfactory
Notice and request that the Contract continue, in which case we will continue
the Contract subject to the following conditions:
(1) If there are joint Owners, the surviving Owner becomes the new
Owner. Otherwise, the Beneficiary becomes the new Owner.
(2) Unless the new Owner otherwise tells us, we will allocate any
excess of the Death Benefit over the Account Value to and among
the Variable and Fixed Accounts in proportion to their values as
of the date on which we determine the death benefit. We will
establish a new Fixed Sub-Account for any allocation to the Fixed
Account based on the Guarantee Period the new Owner then elects.
However, certain distribution rules will apply to the continued
Contract. If the sole new Owner is not the deceased Owner's spouse, we must
distribute the entire interest in the Contract either: (i) over the life of the
new Owner, but not extending beyond the life expectancy of the new Owner, with
distributions beginning within one year of the prior Owner's death; or (ii)
within five years of the deceased Owner's death. These distributions, if from
the Fixed Account, are subject to our Market Value Adjustment rules. In
addition, no additional purchase payments may be applied to the Contract.
Alternatively, if the sole new Owner is the deceased Owner's spouse, the
Contract will continue with the surviving spouse as the new Owner. The Account
Value will be the Death Benefit that otherwise would be paid in a lump sum as of
the Business Day we receive proof of death, and the surviving spouse may make
additional purchase payments under the Contract. The surviving spouse may name
a new Beneficiary. If no Beneficiary is named, the surviving spouse's estate
will be the Beneficiary. Upon the death of the surviving spouse, the death
benefit will equal the Account Value as of the Business Day we receive proof of
the spouse's death. We will distribute the entire interest in the Contract to
the new Beneficiary in accordance with the provisions that apply in the case
when the new Owner is not the surviving spouse.
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If there is more than one Beneficiary, the distribution provisions will
apply independently to each Beneficiary.
If no Owner of the Contract is an individual, we will treat the death of
any Annuitant under the Contract as the death of an Owner.
In all events, for Non-Qualified Contracts we will make death benefit
distributions in accordance with section 72(s) of the Code, or any applicable
successor provision. Other rules may apply to a Qualified Contract.
OWNER'S DEATH AFTER THE INCOME DATE
If any Owner dies on or after the Income Date, but before the time we
have distributed the entire interest in the Contract, we will distribute the
remaining portion at least as rapidly as under the method of distribution being
used as of the date of the Owner's death.
If income payments have been selected based on an income plan providing
for payments for a guaranteed period and the Annuitant dies on or after the
Income Date, we will make the remaining guaranteed payments to the Beneficiary.
We will make any remaining payments as rapidly as under the method of
distribution being used as of the date of the Annuitant's death. If no
Beneficiary is living, we will commute any unpaid guaranteed payments to a
single sum (on the basis of the interest rate used in determining the payments)
and pay that single sum to the estate of the last to die of the Annuitant or the
Beneficiary.
ACCIDENTAL DEATH BENEFIT. Under certain circumstances, if the Owner
dies before the Income Date, we will provide an additional death benefit called
the accidental death benefit.
This additional benefit will equal:
. the purchase payments made; MINUS
. any withdrawals (including any associated surrender charge and Market
Value Adjustment incurred),
each determined as of the date of the Owner's death (or the next
Business Day if the Owner dies on other than a Business Day), up to a
maximum of $250,000.
To qualify for this benefit, the Owner's death must occur:
(1) before the first Contract Anniversary after the Owner attains age 80;
and
(2) as a direct result of accidental bodily injury, independent of all
other causes.
If there is no Owner who is a natural person (that is, an individual), we
will treat the Annuitant as Owner and use the Annuitant's age for purposes of
determining whether the accidental death benefit is payable.
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Further, all the terms and conditions described in the Contract must be
satisfied, including the requirement that we receive satisfactory proof of
accidental death at our Customer Service Center within 30 days after an
accidental death or as soon thereafter as reasonably possible. We will pay the
accidental death benefit to the Beneficiary or the person entitled to receive
the death benefit under the Contract, after receipt of satisfactory proof of
accidental death. The deceased Owner's spouse may continue the Contact (and
this benefit) according to the terms set forth in the Contract and accidental
death benefit rider.
We terminate the accidental death benefit provision:
. when we pay the benefit after the death of the surviving spouse;
. when you surrender the Contract or apply the entire Account Value to
an income plan;
. when we distribute the interest in the Contract due to the death of an
Owner; or
. when you request termination of the benefit.
PROOF OF DEATH
We must receive satisfactory proof of death at our Customer Service Center
before we will pay any death benefit. We will accept one of the following
items:
1. An original certified copy of an official death certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
================================================================================
10. WHAT OTHER INFORMATION SHOULD I KNOW?
================================================================================
SEPARATE ACCOUNTS
THE SAGE VARIABLE ANNUITY ACCOUNT A. We established the Variable Account
as a separate investment account under Delaware law on December 3, 1997. The
Variable Account may invest in mutual funds, unit investment trusts, and other
investment portfolios. We own the assets in the Variable Account and are
obligated to pay all benefits under the Contracts. We use the Variable Account
to support the Contracts as well as for other purposes permitted by law. We
registered the Variable Account with the SEC as a unit investment trust under
the 1940 Act and it qualifies as a "separate account" within the meaning of the
federal securities laws. Such registration does not involve any supervision by
the SEC of the management of the Variable Account or Sage Life.
We divided the Variable Account into Variable Sub-Accounts, each of which
currently invests in shares of a specific Fund of AIM Variable Insurance Funds,
Inc., The Alger American Fund, Liberty Variable Investment Trust, SteinRoe
Variable Investment Trust, MFS(R) Variable Investment Trust(SM), Morgan Stanley
Dean Witter Universal Funds, Inc., Oppenheimer Variable Account Funds, Sage Life
Investment
39
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Trust, and T. Rowe Price Equity Series, Inc. Variable Sub-Accounts buy and
redeem Fund shares at net asset value without any sales charge. We reinvest any
dividends from net investment income and distributions from realized gains from
security transactions of a Fund at net asset value in shares of the same Fund.
Income, gains and losses, realized or unrealized, of the Variable Account are
credited to or charged against the Variable Account without regard to any other
income, gains or losses of Sage Life. Assets equal to the reserves and other
Contract liabilities with respect to the Variable Account are not chargeable
with liabilities arising out of any other business or account of Sage Life. If
the assets exceed the required reserves and other liabilities, we may transfer
the excess to our General Account.
VOTING OF FUND SHARES. We are the legal owner of shares held by
the Variable Sub-Accounts and as such, have the right to vote on all matters
submitted to shareholders of the Funds. However, as required by law, we will
vote shares held in the Variable Sub-Accounts at regular and special meetings of
shareholders of the Funds according to instructions received from Owners with
Account Value in the Variable Sub-Accounts. To obtain your voting instructions
before a Fund shareholder meeting, we will send you voting instruction
materials, a voting instruction form, and any other related material. We will
vote shares held by a Variable Sub-Account for which we received no timely
instructions in the same proportion as those shares for which we received voting
instructions. Should the applicable federal securities laws, regulations, or
interpretations thereof change so as to permit us to vote shares of the Funds in
our own right, we may elect to do so.
THE SAGE FIXED INTEREST ACCOUNT A. The Fixed Account is a separate
investment account under state insurance law. We maintain it separate from our
General Account and separate from any other separate account that we may have.
We own the assets in the Fixed Account, and may offer the Fixed Account in our
variable life insurance products. Assets equal to the reserves and other
liabilities of the Fixed Account will not be charged with liabilities that arise
from any other business that we conduct. Thus, the Fixed Account represents
pools of assets that provide an additional measure of assurance that Owners will
receive full payment of benefits under the Contracts. We may transfer to our
General Account assets that exceed the reserves and other liabilities of the
Fixed Account. However, our obligations under (and values and benefits under)
the Fixed Account do not vary as a function of the investment performance of the
Fixed Account. Owners and Beneficiaries with rights under the Contracts do not
participate in the investment gains or losses of the assets of the Fixed
Account. These gains or losses accrue solely to us. We retain the risk that
the value of the assets in the Fixed Account may fall below the reserves and
other liabilities that we must maintain in connection with our obligations under
the Fixed Account. In such an event, we will transfer assets from our General
Account to the Fixed Account to make up the difference. We are not required to
register the Fixed Account as an investment company under the 1940 Act.
MODIFICATION
When permitted by applicable law, we may modify the Contracts as follows:
. deregister the Variable Account under the 1940 Act;
. operate the Variable Account as a management company under the 1940 Act if
it is operating as a unit investment trust;
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. operate the Variable Account as a unit investment trust under the 1940 Act
if it is operating as a managed separate account;
. restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Variable Account;
. combine the Variable Account with other separate accounts; and
. combine a Variable Sub-Account with another Variable Sub-Account.
We also reserve the right, subject to applicable law, to make additions
to, deletions from, or substitutions of shares of a Fund that are held by the
Variable Account or that the Variable Account may purchase shares of the new
Fund may have higher fees and charges than the replaced Fund; not all Funds may
be available to all classes of contracts; and to establish additional Variable
Sub-Accounts or eliminate Variable Sub-Accounts, if marketing, tax, or
investment conditions so warrant. Subject to any required regulatory approvals,
we reserve the right to transfer assets of a Variable Sub-Account that we
determine to be associated with the class of Contracts to which the Contract
belongs, to another separate account or to another separate account sub-account.
If the actions we take result in a material change in the underlying
investments of a Variable Sub-Account in which you are invested, we will notify
you of the change. You may then make a new choice of Variable Sub-Accounts.
DISTRIBUTION OF THE CONTRACTS
Sage Distributors, Inc. ("Sage Distributors"), acts as the distributor
(principal underwriter) of the Contracts. Sage Distributors is a corporation
organized under Delaware law in 1997, is registered as a broker-dealer under the
Securities Exchange Act of 1934, and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"). Sage Distributors is a wholly owned
subsidiary of Sage Insurance Group Inc. We compensate Sage Distributors for
acting as principal underwriter under a distribution agreement. We offer the
Contracts on a continuous basis, and do not anticipate discontinuing their sale.
The Contracts may not be available in all states.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements for each of the years ended December 31, 1999, 1998 and 1997, as set
forth in their report, which is included in this Prospectus. [To be updated by
485(b) filing]. We included our financial statements in this Prospectus in
reliance on their report, given on their authority as experts in accounting and
auditing.
LEGAL PROCEEDINGS
Sage Life and its subsidiaries, as of the date of this Prospectus, are not
involved in any lawsuits. However, Sage Life's direct and indirect parent
companies, like other companies, are involved in lawsuits. In some lawsuits
involving insurers, substantial damages have been sought and/or material
settlement payments have been made. Although the outcome of any litigation
cannot be predicted with certainty, Sage Life believes that at the present time
there are no pending or threatened lawsuits that are reasonably
41
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likely to have a material adverse impact on the Variable Account, the Fixed
Account, the General Account, or Sage Life.
REPORTS TO CONTRACT OWNERS
We maintain records and accounts of all transactions involving the
Contracts, the Variable Account, and the Fixed Account at our Customer Service
Center. Each year, or more often if required by law, we will send you a report
showing information about your Contract for the period covered by the report.
We will also send you an annual and a semi-annual report for each Fund
underlying a Variable Sub-Account in which you are invested as required by the
1940 Act. In addition, when you make purchase payments, or if you make
transfers or withdrawals, we will send you a confirmation of these transactions.
AUTHORITY TO MAKE AGREEMENTS
One of our officers must sign all agreements we make. No other person,
including an insurance agent or registered representative, can change the terms
of your Contract or make changes to it without our consent.
FINANCIAL STATEMENTS
Financial statements are presented in the Statement of Additional
Information for the Variable Account from its commencement of operations in
February, 1999.
We included the audited financial statements for Sage Life for the years
ended December 31, 1999 and 1998 in this Prospectus. [To be added by 485(b)
filing]. You should consider these financial statements only as bearing on the
ability of Sage Life to meet its obligations under the Contracts. You should
not consider them as bearing on the investment performance of the assets held in
the Variable Account.
================================================================================
11. HOW CAN I MAKE INQUIRIES?
================================================================================
You may make inquiries about your Contract by contacting one of our
authorized registered representatives or by writing or calling us at our
Customer Service Center.
================================================================================
12. ADDITIONAL INFORMATION ABOUT SAGE LIFE ASSURANCE OF AMERICA, INC.
================================================================================
[THIS SECTION WILL BE UPDATED IN 485(B) FILING].
HISTORY AND BUSINESS
OWNERSHIP. Sage Life was incorporated under the laws of the state of
Delaware in 1981. The Company is authorized to write general life insurance and
fixed and variable annuity contracts in all states except New York, and also is
licensed to conduct variable life insurance business in all but ____ states.
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Fidelity Mutual Life Insurance Company, a Pennsylvania insurer, sponsored
the Company's formation in 1981 under the name of Fidelity Standard Life
Insurance Company ("Fidelity Life"). Security First Life Insurance Company
("Security First") of Los Angeles, California acquired Fidelity Life in December
1984. In January 1997, Sage Insurance Group Inc. ("Sage Insurance Group")
(formerly Finplan Investment Corp.), a Delaware corporation and a wholly owned
indirect subsidiary of Sage Group Limited ("Sage Group"), a South African
corporation and the Company's ultimate parent, acquired Fidelity Life. The
Company changed to its present name in September 1997. In December 1998, Sage
Insurance Group formed a new company, Sage Life Holdings of America, Inc.
("Sage Life Holdings"), to act as the new immediate parent of the Company. The
transaction is discussed more fully in the section below entitled "Holding
Company Structure and Background."
PRIOR BUSINESS OPERATIONS. As a Security First subsidiary, the Company
specialized in the marketing of annuities qualifying under Section 403(b) of the
Code. Under an assumption reinsurance agreement, Fidelity Life's annuity
business was irrevocably transferred to Security First in January 1997 except
for a small number of contracts. During 1998, Security First assumption
reinsured all of the remaining annuity business of Fidelity Life. Security
First is now a subsidiary of The Metropolitan Life Insurance Company.
HOLDING COMPANY STRUCTURE AND BACKGROUND. We are an indirect, wholly
owned subsidiary of Sage Insurance Group, which is a holding company for us and
affiliated entities conducting life and annuity insurance business in the United
States. We also are an indirect, wholly owned subsidiary of Sage Group Limited,
a corporation quoted on the Johannesburg Stock Exchange ("Sage Group"). Sage
Group is a holding company with a thirty-year history of extensive operating
experience in mutual funds, life assurance and investment management. Sage
Group has directly and indirectly engaged in insurance marketing activities in
the United States since 1977 through its financial interests in Independent
Financial Marketing Group Inc., a financial planning and bank insurance
marketing company. Sage Group sold its interest in Independent Financial
Marketing Group in March 1996 to the Liberty Financial Companies of Boston.
Sage Group entered into an agreement with Swiss Re Life and Health
America, Inc. ("Swiss Re") on December 1, 1998, whereby Swiss Re will enter into
reinsurance arrangements with us. In addition, Swiss Re invested $12.5 million
in non-voting non-redeemable cumulative preferred stock in a newly formed
company, Sage Life Holdings, that became our immediate parent and a wholly-owned
subsidiary of Sage Insurance Group. It is anticipated that, during the second
quarter of 2000, Swiss Re will exchange part of its preferred stock for a voting
interest of not more that 9.9% in Sage Life Holdings with an effective date of
April 1999. Swiss Re's ultimate parent is Swiss Reinsurance Company,
Switzerland, one of the world's largest life and health reinsurance groups. The
arrangements contemplated by the agreement may be subject to regulatory
approval.
SELECTED FINANCIAL DATA. We cannot compare our historical financial
results for the calendar year 1996 and all prior years, to the results for the
years 1997, 1998 and 1999 due to the substantial change in our business
operations. We effectively disposed of all in-force business existing as of
December 31, 1996 and, therefore, on January 1, 1997, had no insurance
liabilities under any of our policies other than the small number of policies
that were not 100% assumption reinsured to our former parent company. We
subsequently novated these insurance liabilities during 1998. Effectively,
therefore, since January 1997, we became comparable to a new company that had
not yet begun its business activities.
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We present the following selected financial data as of December 31, 1999,
1998 and 1997 and for the years then ended, taken from our audited financial
statements. Please read the information below along with the financial
statements, including related notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" we included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
===============================================================================================================
SELECTED FINANCIAL DATA
(in thousands)
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
-------------- --------------- --------------
<S> <C> <C> <C>
Income Statement Data:
Revenues:
Net investment income............................
Miscellaneous income.............................
Total income.......................................
Expenses:
Amortization expense.............................
General and administrative expenses..............
Total expenses.....................................
Loss before taxes..................................
Income tax expense.................................
Net Loss...........................................
Balance Sheet Data:
Total Assets.....................................
Stockholder's Equity.............................
- ----------------------------------------------------------------------------------------------------
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS'
INTRODUCTION. The following discussion highlights the significant factors
that influence our operations. Please read this discussion along with our
financial statements and the related notes included in this Prospectus.
HISTORY AND BUSINESS OVERVIEW. During February 1999, we began to market,
on a limited basis, our new variable insurance products. Sage Insurance Group
acquired the Company on December 31, 1996, and since that date, we have prepared
for the recommencement of our insurance underwriting and marketing activities.
(Before the acquisition of the Company, all new business production and
marketing ended in October 1996.) We totally reengineered our products, systems
and administration since the change of ownership. All of our current senior
management are experienced in the insurance industry (either in the United
States or in South Africa). We recruited most of them since January 1997. Our
ongoing business strategy is to focus on the development, underwriting, and
marketing of variable insurance products. Our obligations under these contracts
are supported by (1) variable accounts - determined by the value of investments
held in separate accounts, and (2) fixed accounts -- backed by
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investments held in separate accounts. We may not use the assets of these
separate accounts that equal the reserves and other liabilities supporting the
contracts to which they relate, to pay any of our other obligations or
creditors. Currently, we distribute the contracts through banks. We anticipate
that, over the long-term, our distribution channels will expand to include
wirehouses, regional broker-dealers, and financial planners.
RESULTS OF OPERATIONS. Net losses for the years ended December 31, 1999,
1998 and 1997 were $_______________, $568,974 and $351,786, respectively. As
the Company conducted minimal underwriting and marketing of insurance products
during 1999, virtually all revenue came from investing activities in the General
Account. Investment income in the General Account was the only source of
revenue for the years 1999, 1998 and 1997. Investment yields of _____%, 5.1%
and 5.4% were earned for the years ended 1999, 1998 and 1997, respectively.
General expenses incurred in financing our daily activities more than offset
investment revenue. As we recommence business on a broader scope in 2000, we
anticipate that our revenues will increase primarily by charges and fees
associated with products we offer, while our expenses will increase by
acquisition expenses, the cost of administering this new business and the
payment of benefits.
In April 1998, Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" (SOP 98-5) was issued. SOP 98-5 requires entities to
charge to expense all start-up costs as incurred. SOP 98-5 is effective for
years beginning after December 15, 1998 (i.e., January 1, 1999). In addition,
SOP 98-5 requires entities upon adoption to write-off as the cumulative effect
of a change in accounting principle any previously unamortized capitalized
start-up costs. Accordingly, $4,269,488 of unamortized capitalized development
costs were written off on January 1, 1999. The amount of start-up costs
incurred during 1999 was $________________, all of which was charged to
expenses.
LIQUIDITY AND CAPITAL RESOURCES. Since the beginning of 1997, we have
needed money primarily to develop our insurance products and related
infrastructure, and to fund our daily operations. We have met our cash needs
through interest income and capital contributions from Sage Insurance Group.
During 2000, we expect our cash needs will continue to increase as our
underwriting and marketing activities begin. As discussed below, we intend to
enter into a reinsurance arrangement with Swiss Re that will provide an
additional source of cash. We still anticipate that we will be unable to meet
all of our liquidity requirements in 2000 without capital contributions from
Sage Insurance Group. However, as discussed above, Swiss Re has made an equity
investment in a newly formed holding company that will provide an additional
source of funds to us for new business expenses. In addition, although not
required to do so, we believe that Sage Insurance Group will continue to provide
capital to us for our non-recurring costs associated with new products and
business development during 2000. Our future marketing efforts could be
hampered in the unlikely event that Swiss Re, Sage Insurance Group and/or their
affiliates are unwilling to commit additional funding.
SEGMENT INFORMATION. We currently plan to conduct our business as a
single segment, and anticipate that this segment will eventually include all of
the following products:
. Combination fixed and variable deferred annuities;
. Combination fixed and variable immediate annuities; and
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. Combination fixed and variable life insurance products.
REINSURANCE. We entered into a coinsurance reinsurance arrangement with
Swiss Re, pursuant to which Swiss Re will reinsure a significant portion of our
liabilities under our variable insurance contracts with an effective date of
April 1, 1999. This arrangement provides additional capacity for growth of our
variable insurance business.
In addition, we intend to reinsure certain mortality risks associated with
the guaranteed minimum death benefit and accidental death benefit features of
the Contracts. We intend to use only highly rated reinsurance companies to
reinsure these risks.
Reinsurance does not relieve us from our obligations to Owners. We remain
primarily liable to our Owners to the extent that any reinsurer does not meet
its obligations under the reinsurance agreements.
RESERVES. The insurance laws and regulations under which we operate
obligate us to carry on our books, as liabilities, actuarially determined
reserves to meet our obligations on outstanding Contracts. We base our reserves
involving life contingencies on mortality tables in general use in the United
States. Where applicable, we compute our reserves to equal amounts which,
together with interest on such reserves computed annually at certain assumed
rates, will be sufficient to meet our Contract obligations at their maturities
or in the event of the Owner's death. In the financial statements included in
this Prospectus, all reserves have been determined in accordance with generally
accepted accounting principles. As previously noted, all of Fidelity Life's
existing annuity business has been irrevocably transferred to Security First,
resulting in no remaining contract obligations at December 31, 1998.
INVESTMENTS. Our General Account cash and invested assets of $____
million, $25.5 million and $25.3 million at December 31, 1999, 1998 and 1997,
respectively, was invested entirely in investment grade securities and money
market funds. It is our stated policy to refrain from investing in securities
having speculative characteristics. Our entire portfolio is classified as
available-for sale, and is reported at fair value, with resulting unrealized
gains or losses included as a separate component of stockholder's equity.
DIVIDEND RESTRICTIONS. We are subject to state regulatory restrictions
that limit the maximum amount of dividends payable. Subject to certain net
income carryforward provisions described below, we must obtain approval of the
Insurance Commissioner of the State of Delaware to pay, in any 12-month period,
"extraordinary" dividends which are defined as those in excess of the greater of
10% of surplus as regard to shareholders as of the prior year-end and statutory
net income less realized capital gains for such prior year. We may pay
dividends only out of unassigned surplus. In addition, we must provide notice to
the Insurance Commissioner of the State of Delaware of all dividends and other
distributions to shareholders within five business days after declaration and at
least ten days prior to payment. At December 31, 1999 the maximum amount of
dividends we could have paid out to our parent without prior approval from state
regulatory authorities was $______________.
COMPETITION. We are engaged in a business that is highly competitive due
to the large number of stock and mutual life insurance companies as well as
other entities marketing insurance products comparable to our products. There
are approximately 1,600 stock, mutual, and other types of insurers in
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the life insurance business in the United States, a substantial number of which
are significantly larger than we are. We are unique in that we are one of the
few life insurers confining its activities to the marketing of separate account
variable insurance products.
TRANSACTIONS WITH SAGE INSURANCE GROUP, INC. In 1997, we entered into a
Cost Sharing Agreement with Sage Insurance Group to share personnel costs,
office rent, and equipment costs. These costs are allocated between the
companies based upon the estimated time worked, square footage of space utilized
and upon monitored usage of the equipment, respectively. Under this agreement,
we have received $_______ and $_______ for the years ended December 31, 1999 and
1998, respectively, and we have paid expenses of $76,048 for the year ended
December 31, 1997. In addition, Sage Insurance Group provides funds to us to
meet various operating expenses. We pay these amounts back to Sage Insurance
Group at the end of each quarter.
Sage Insurance Group has also incurred expenditures in connection with the
costs of establishing new systems, new products, and premises for us. The
amount of these developmental costs paid for by companies affiliated with Sage
Life on December 31, 1999, 1998 and 1997 were $_________, $3,270,219 and
$1,504,558, respectively. Sage Insurance Group regards these expenditures as
being of a developmental nature and does not intend to recover these
expenditures from us.
EMPLOYEES. Due to our business strategy of outsourcing our primary
administrative and investment functions to organizations that specialize in
these areas, the number of full time personnel we employ is limited. The
Company had 26, 14 and 8 full time employees at December 31, 1999, 1998, and
1997, respectively.
STATE REGULATION. We are subject to the laws of the State of Delaware
governing insurance companies and to the regulations of the Delaware Department
of Insurance (the "Insurance Department"). We file a detailed financial
statement in the prescribed form (the "Statement") with the Insurance Department
each year covering our operations for the preceding year and our financial
condition as of the end of that year. Regulation by the Insurance Department
means that the Insurance Department may examine us and our books and records to
determine, among other things, whether contract liabilities and reserves as we
state them are correct. The Insurance Department, under the auspices of the
National Association of Insurance Commissioners ("NAIC"), will periodically
conduct a full examination of our operations.
In addition, we are subject to regulation under the insurance laws of all
jurisdictions in which we operate. The laws of the various jurisdictions
establish supervisory agencies with broad administrative powers with respect to
various matters, including licensing to transact business, overseeing trade
practices, licensing agents, approving contract forms, establishing reserve
requirements, fixing maximum interest rates on life insurance contract loans and
minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulating the type and amounts of
investments permitted. We must file the Statement with supervisory agencies in
each of the jurisdictions in which we do business, and our operations and
accounts are subject to examination by these agencies at regular intervals.
The NAIC has adopted several regulatory initiatives designed to improve
the surveillance and financial analysis regarding the solvency of insurance
companies in general. These initiatives include the development and
implementation of a risk-based capital formula for determining adequate levels
of capital and surplus. Insurance companies are required to calculate their
risk-based capital in accordance
47
<PAGE>
with this formula and to include the results in their Statements. We anticipate
that these standards will have no significant effect upon us.
Further, many states regulate affiliated groups of insurers like us and
our affiliates, under insurance holding company legislation. Under such laws,
inter-company transfers of assets and dividend payments from insurance
subsidiaries may be subject to prior notice or approval, depending on the size
of the transfers and payments in relation to the financial positions of the
companies involved.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed (up to prescribed limits) for contract owner losses
incurred when other insurance companies have become insolvent. Most of these
laws provide that an assessment may be excused or deferred if it would threaten
an insurer's own financial strength.
Although the federal government ordinarily does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Our insurance products are subject to various federal
securities laws and regulations. In addition, current and proposed federal
measures that may significantly affect the insurance business include:
. regulation of insurance company solvency,
. employee benefit regulation,
. tax law changes affecting the taxation of insurance companies, and
. tax treatment of insurance products and its impact on the relative
desirability of various personal investment vehicles.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION HELD WITH THE OTHER PRINCIPAL POSITIONS
NAME (AGE) COMPANY/YEAR COMMENCED DURING PAST FIVE YEARS
- ------------ ------------------------------------ ----------------------------------------
<S> <C> <C>
Ronald S. Scowby(1) Director, 1/97 to present, Chairman and Trustee, Sage Life
Age 61 Chairman, 2/98 to present Investment Trust, 7/98 to present;
Director, Sage Life Assurance Company
of New York, 5/98 to present; Deputy
Chairman 2/98 to present, President,
1/97 to 2/98, Director, 1/97 to
present, Sage Insurance Group Inc.;
Director, Sage Advisors, Inc., 1/98 to
present; President, Chief Executive
Officer, Sage Life Assurance of America
Inc., 1/97-2/98; Director, Sage
Distributors, Inc., 1/98 to present,
Director, President, Chief Executive
Officer, Sage Management Services
(USA),
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Inc., 6/96 to present; Owner,
Sheldon Scowby Resources 7/95-6/96.
Robin I. Marsden(1) Director, 1/97 to present, Director and President, Sage Life
Age 34 President and Chief Executive (Bermuda) Ltd., 1/2000 to present;
Officer, 2/98 to present President and Trustee, Sage Life
Investment Trust, 7/98 to present;
Director, Sage Life Assurance Company
of New York, 5/98 to present; Director,
President, Sage Advisors, Inc., 1/98 to
present; Director, Sage Distributors,
Inc., 1/98 to present; Director, 1/97
to present, President and Chief
Executive Officer, 2/98 to present,
Sage Insurance Group, Inc.; Chief
Investment Officer, Sage Life Holdings,
Ltd., 11/94 to 1/98; and
Executive-Strategic Developments, Sage
Group Ltd., 11/94 to 1/98.
H. Louis Shill(2) Director, 1/97 to Director, Sage Life Assurance Company
Age 69 present of New York, 5/98 to present; Chairman,
Sage Life Assurance of America, Inc.,
1/97 to 2/98; Chairman, Sage Insurance
Group, Inc., 1/97 to present; Founder,
Chairman, Sage Group Limited, 1965 to
present.
Paul C. Meyer(3) Director, 1/97 to Director, Sage Life Assurance Company
Age 47 present of New York, 5/98 to present; Partner,
Rogers & Wells, 1986 to present.
Richard D. Starr(4) Director, 1/97 to Director, Sage Life Assurance Company
Age 55 present of New York, 5/98 to present;
President, First Interstate Securities,
1/95 to 12/95; Chairman & Chief
Executive Officer, Financial
Institutions Group, Inc., 10/78 to
present.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mitchell R. Katcher(1) Director, 12/97 to present, Senior Director, Chief Financial Officer and
Age 46 Executive Vice President, Chief Chief Actuary, Sage Life (Bermuda),
Financial Officer, Chief Actuary Ltd., 1/2000 to present; Vice
5/97 to present President, Sage Life Investment Trust,
7/98 to present; Director, Sage Life
Assurance Company of New York, 5/98 to
present; Director, Treasurer, Sage
Advisors, Inc., 1/98 to present;
Director, Sage Distributors, Inc., 1/98
to present; Treasurer, 7/97 to present,
Senior Executive Vice President, 12/97
to present, Sage Insurance Group, Inc.;
Executive Vice President, Golden
American Life Insurance Company,
7/93-2/97.
Meyer Feldberg [To be added by 485(b) filing].
</TABLE>
________________
(1) The principal business address of these persons is 300 Atlantic Street,
Stamford, CT 06901.
(2) Mr. Shill's principal business address is Sage Centre, 10 Fraser Street,
Johannesburg, South Africa 2000.
(3) Mr. Meyer's principal business address is 200 Park Avenue, New York, N.Y.
10166.
(4) Mr. Starr's principal business address is 22507 SE 47th Place, Issaquah, WA
98029.
COMPENSATION
Our executive officers also serve as officers of our parent and of certain
affiliated companies. Cost allocations have been made to us as to the time
these individuals devoted to their duties with us. No allocation was made
during 1997 nor was any made for 1998 for the services of Mr. Shill. No
allocation was made during 1997 for the services of Mr. Marsden.
The following table includes compensation paid by us for services rendered
in all capacities for the years indicated for the Chief Executive Officer and
the other Executive Officers compensated more than $100,000 for the year ended
December 31, 1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
--------- ------------ ------------- ------------------
<S> <C> <C> <C> <C>
Ronald S. Scowby.................................. 1997 $337,500 $100,000
Chairman(1) 1998 $350,000 $100,000 $22,097
Robin I. Marsden..................................
President and Chief Executive Officer(1) 1998 $275,000 $100,000 $20,956
Mitchell R. Katcher............................... 1997 $114,583 $265,000
Senior Executive Vice President, 1998 $250,000 $125,000 $19,037
Chief Financial Officer
and Chief Actuary(1)
</TABLE>
________________
(1) All salaries and bonuses are paid by Sage Insurance Group.
50
<PAGE>
We pay outside directors $12,000 and $2,000 per meeting attended. For
meetings attended in the year ended December 31, 1999, we paid each outside
director $20,000. We do not compensate directors who are officers or employees
of ours or our affiliates for serving on the Board. Directors do not receive
retirement benefits.
51
<PAGE>
Audited Financial Statements
Sage Life Assurance of America, Inc.
Years ended December 31, ____, ____,and ____
with Report of Independent Auditors
52
<PAGE>
================================================================================
CONDENSED FINANCIAL INFORMATION
================================================================================
The Accumulation Unit Values and the number of accumulation units outstanding
for each Variable Sub-Account for the periods shown are as follows:
<TABLE>
<CAPTION>
Accumulation
Unit Values
Fund as of 12/31/99
------- -----------------
<S> <C>
AIM VARIABLE INSURANCE FUNDS, INC.:
AIM V.I. Government Securities Fund...................................
AIM V.I. Growth and Income Fund.......................................
AIM V.I. International Equity Fund....................................
AIM V.I. Value Fund...................................................
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio................................
Alger American Income and Growth Portfolio............................
Alger American Small Capitalization Portfolio.........................
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series..................
Colonial Small Cap Value Fund, Variable Series........................
Colonial Strategic Income Fund, Variable Series.......................
Colonial U.S. Growth and Income Fund, Variable Series.................
Liberty All-Star Equity Fund, Variable Series.........................
Newport Tiger Fund, Variable Series...................................
Stein Roe Global Utilities Fund, Variable Series......................
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series..........................
Stein Roe Balanced Fund, Variable Series..............................
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Growth With Income Series.........................................
MFS High Income Series................................................
MFS Research Series...................................................
MFS Total Return Series...............................................
MFS Capital Opportunities.............................................
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Global Equity Portfolio...............................................
Mid Cap Value Portfolio...............................................
Value Portfolio.......................................................
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA..............................................
Oppenheimer Capital Appreciation Fund/VA..............................
Oppenheimer Small Cap Growth Fund/VA..................................
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund.............................................
S&P 500 Equity Index Fund.............................................
Money Market Fund.....................................................
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio.................................
T. Rowe Price Mid-Cap Growth Portfolio................................
T. Rowe Price Personal Strategy Balanced Portfolio....................
</TABLE>
53
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Additional information about the Contracts and The Sage Variable Annuity
Account A is contained in the Statement of Additional Information. You can
obtain a free copy of the Statement of Additional Information by writing to us
at the address shown on the front cover or by calling (877) 835-7243 (Toll
Free). The following is the Table of Contents for the Statement of Additional
Information.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Assignment
Change of Owner, Beneficiary or Annuitant
Misstatement and Proof of Age, Sex or Survival
Incontestability
Participation
Beneficiary Designation
Tax Status of the Contracts
Diversification Requirements
Owner Control
Required Distribution from Non-Qualified Contracts
Qualified Contracts
Taxation of Withdrawals
Individual Retirement Accounts (IRAs)
SIMPLE IRAs
Roth IRAs
Calculation of Historical Performance Data
Money Market Sub-Account Yields
Other Variable Sub-Account Yields
Average Annual Total Returns
Other Total Returns
Effect of the Annual Administration Charge on Performance Data
Use of Indexes
Other Information
Income Payment Provisions
Amount of Fixed Income Payments
Amount of Variable Income Payments
Income Units
Income Unit Value
54
<PAGE>
Exchange of Income Units
Safekeeping of Account Assets
Legal Matters
Other Information
Financial Statements
55
<PAGE>
To obtain a Statement of Additional Information for this Prospectus, please
complete the form below and mail to:
Sage Life Assurance of America, Inc.
Customer Service Center
P.O. Box 290680
Wethersfield, CT 06129-0680
Please send a Statement of Additional Information to me at the following
address:
_______________________________________________________
Name
_______________________________________________________
Address
_______________________________________________________
City/State Zip Code
56
<PAGE>
================================================================================
APPENDIX A
================================================================================
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment to amounts surrendered, withdrawn,
transferred or applied to an income plan when taken from a Fixed Sub-Account
more than 30 days before its Expiration Date. We apply a Market Value
Adjustment separately to each Fixed Sub-Account. Surrender charges also may
apply.
For a surrender, withdrawal, transfer or amount applied to an income plan,
we will calculate the Market Value Adjustment by applying the factor below to
the total amount (including any applicable surrender charge) that must be
surrendered, withdrawn, transferred or applied to an income plan in order to
provide the amount requested.
[(1+I)/(1+J+.0025)]/(N/365)/ - 1
Where
. I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period at the time that we established the
Sub-Account;
. J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period, at the time of surrender, withdrawal, transfer, or
application to an income plan; and
. N is the remaining number of days in the Guarantee Period at the time
of calculation.
We will apply Market Value Adjustments as follows:
If the Market Value Adjustment is negative, we first deduct it from any
remaining value in the Fixed Sub-Account. We then deduct any remaining negative
Market Value Adjustment from the amount you surrender, withdraw, transfer, or
apply to an income plan.
If the Market Value Adjustment is positive, we add it to any remaining value in
the Fixed Sub-Account or the amount you surrender. If you withdraw, transfer or
apply to an income plan the full amount of the Fixed Sub-Account, we add the
Market Value Adjustment to the amount you withdraw, transfer, or apply to an
income plan.
A-1
<PAGE>
MVA EXAMPLES
Example #1: Surrender -- Example of a Negative Market Value Adjustment
- -------------------------------------------------------------------------
Assume you invest $100,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of 7.0%
based on the U.S. Treasury Constant Maturity Series at the time we established
the Sub-Account. You request a surrender three years into the Guarantee Period,
the Index Rate based on the U.S. Treasury Constant Maturity Series for a seven-
year Guarantee Period ("J") is 8.0% at the time of the surrender, no prior
transfers or withdrawals affecting this Fixed Sub-Account have been made, and no
surrender charge is applicable.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Account Value of the Fixed Sub-Account on the date of surrender is
$124,230 ($100,000 x 1.075/3/)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $124,230 x {[(1.07)/(1.0825)] /2555/365/ -1) =
- $9,700
Therefore, the amount paid on full surrender is $114,530 ($124,230 - $9,700).
Example #2: Surrender -- Example of a Positive Market Value Adjustment
- -------------------------------------------------------------------------
Assume you invest $100,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of 7.0%
based on the U.S. Treasury Constant Maturity Series at the time we established
the Sub-Account. You request a surrender three years into the Guarantee Period,
the Index Rate based on the U.S. Treasury Constant Maturity Series for a seven-
year Guarantee Period ("J") is 6.0% at the time of the surrender, no prior
transfers or withdrawals affecting this Fixed Sub-Account have been made, and no
surrender charge is applicable.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Account Value of the Fixed Sub-Account on the date of surrender is
$124.230 ($100,000 x 1.075/3/)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $124,230 x {[(1.07)/(1.0625)] /2555/365/ -1) =
+ $6,270
Therefore, the amount paid on full surrender is $130,500 ($124,230 + $6,270).
Example #3: Withdrawal -- Example of a Negative Market Value Adjustment
- --------------------------------------------------------------------------
Assume you invest $200,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an Index Rate ("I") of 7.0%
based on the U.S. Treasury Constant
A-2
<PAGE>
Maturity Series at the time we established the Sub-Account. You request a
withdrawal of $100,000 three years into the Guarantee Period, the Index Rate
based on the U.S. Treasury Constant Maturity Series for a seven-year Guarantee
Period ("J") is 8.0% at the time of withdrawal, no prior transfers or
withdrawals affecting this Fixed Sub-Account have been made and no surrender
charge is applicable.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Account Value of the Fixed Sub-Account on the date of withdrawal is
$248,459 ($200,000 x 1.075/3/).
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $100,000 x {[(1.07)/(1.0825)]/2555/365/ -1) =
-$7,808
Therefore, the amount of the withdrawal paid is $100,000, as requested. The
Fixed Sub-Account will be reduced by the amount of the withdrawal paid
($100,000) and by the Market Value Adjustment ($7,808), for a total reduction in
the Fixed Sub-Account of $107,808.
Example #4: Withdrawal - Example of a Positive Market Value Adjustment
- ------------------------------------------------------------------------
Assume you invest $200,000 in a Fixed Sub-Account with a Guarantee Period of ten
years, with a Guaranteed Interest Rate of 7.5% and an initial Index Rate ("I")
of 7.0% based on the U.S. Treasury Constant Maturity Series at the time we
established the Sub-Account. You request a withdrawal of $100,000 three years
into the Guarantee Period, the Index Rate based on the U.S. Treasury Constant
Maturity Series for a seven-year Guarantee Period ("J") is 6.0% at the time of
the withdrawal, no prior transfers or withdrawals affecting this Fixed Sub-
Account have been made, and no surrender charge is applicable.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Account Value of the Fixed Sub-Account on the date of withdrawal is
$248,459 ($200,000 x 1.075/3/)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $100,000 x {[(1.07)/(1.0625)]/2555/365/ - 1) =
+$5,047
Therefore, the amount of the withdrawal paid is $100,000, as requested. The
Fixed Sub-Account will be reduced by the amount of the withdrawal paid
($100,000) and increased by the amount of the Market Value Adjustment ($5,047),
for a total reduction of $94,953.
A-3
<PAGE>
================================================================================
APPENDIX B
================================================================================
DOLLAR-COST AVERAGING PROGRAM
Below is an example of how the Dollar-Cost Averaging Program works.
Assume that the Dollar-Cost Averaging Program has been elected and that
$24,000 is invested in a DCA Fixed Sub-Account with a Guarantee Period of two
years and an annual Guaranteed Interest Rate of 6.0%.
<TABLE>
(1) (2) (4)
Beginning of Dollar Cost (3) Interest (5)
Beginning Month Account Averaging Amount Dollar Credited End of Month
of Month Value Monthly Factor Cost Averaged For Month Account Value
- -------------- --------------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
1 24,000 - - 117 24,117
2 24,117 1 / 24 1,005 112 23,224
3 23,224 1 / 23 1,010 108 22,323
4 22,323 1 / 22 1,015 104 21,412
5 21,412 1 / 21 1,020 99 20,492
6 20,492 1 / 20 1,025 95 19,562
7 19,562 1 / 19 1,030 90 18,622
8 18,622 1 / 18 1,035 86 17,673
9 17,673 1 / 17 1,040 81 16,715
10 16,715 1 / 16 1,045 76 15,746
11 15,746 1 / 15 1,050 72 14,768
12 14,768 1 / 14 1,055 67 13,780
13 13,780 1 / 13 1,060 62 12,782
14 12,782 1 / 12 1,065 57 11,774
15 11,774 1 / 11 1,070 52 10,756
16 10,756 1 / 10 1,076 47 9,727
17 9,727 1 / 9 1,081 42 8,688
18 8,688 1 / 8 1,086 37 7,639
19 7,639 1 / 7 1,091 32 6,580
20 6,580 1 / 6 1,097 27 5,510
21 5,510 1 / 5 1,102 21 4,429
22 4,429 1 / 4 1,107 16 3,338
23 3,338 1 / 3 1,113 11 2,236
24 2,236 1 / 2 1,118 5 1,124
25 1,124 1 / 1 1,124 - -
</TABLE>
Note:
Column (3) = Column (1) x Column (2)
Column (5) = Column (1) - Column (3) + Column (4)
B-1
<PAGE>
================================================================================
APPENDIX C
================================================================================
The purpose of this Appendix is to show certain benefits for Contracts
issued before May 1, 2000. Generally, Contracts purchased after May 1, 2000,
will have the provisions described in the Prospectus. However, in certain
states the provisions described in this Appendix will continue to apply. Please
contact our Customer Service Center to see if these provisions apply to your
Contract.
VARIABLE INCOME BENEFITS
To calculate your initial and future variable income payments, we need
to make an assumption regarding the investment performance of the Funds you
select. We call this your assumed investment rate. We currently allow assumed
investment rates of 3% and 6%. If you do not specify an assumed investment
rate, we will apply the 3.0% rate.
TRANSFERS RESTRICTIONS
We may defer transfers to, from, and among the Variable Sub-Accounts
under the same conditions that we delay paying proceeds. The additional
transfer restrictions relating to the affected Variable Sub-Accounts' ability to
purchase and redeem shares of a Fund, transfers involving the same Sub-Account,
and transfer that adversely affect Accumulation Unit Value do not apply to your
Contract.
WITHDRAWALS
A partial withdrawal will reduce your death benefit and may be subject
to federal income tax, a surrender charge, and a Market Value Adjustment. See
"What Are The Expenses Under A Contract?" "How Will My Contract Be Taxed?" and
"Does The Contract Have a Death Benefit?"
BASIC DEATH BENEFIT
If any Owner dies before the Income Date, we will pay the Beneficiary the
greatest of the following:
. the Account Value determined as of the day we receive proof of death; or
. 100% of the sum of all purchase payments made under the Contract, reduced
by any prior withdrawals (including any associated surrender charge and
Market Value Adjustment incurred); or
. the Highest Anniversary Value.
The Highest Anniversary Value is the greatest anniversary value attained in the
following manner. When we receive proof of death, we will calculate an
anniversary value for each Contract Anniversary prior to the date of the Owner's
death, but not beyond the Owner's attained age 80. An anniversary value for a
Contract Anniversary equals:
(1) the Account Value on that Contract Anniversary;
C-1
<PAGE>
(2) increased by the dollar amount of any purchase payments made since the
Contract Anniversary; and
(3) reduced proportionately by any withdrawals (including any associated
surrender charge and Market Value Adjustment incurred) taken since that
Contract Anniversary. (By proportionately, we take the percentage by
which the withdrawal decrease the Account Value and we reduce the sum
of (1) and (2) by that percentage.)
C-2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 2000
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY
CONTRACTS
issued by:
THE SAGE VARIABLE ANNUITY ACCOUNT A AND SAGE LIFE ASSURANCE OF
AMERICA, INC.
Customer Service Center:
P.O. Box 290680
Wethersfield, CT 06129-0680
Telephone: (877) 835-7243
(Toll Free)
This Statement of Additional Information expands upon subjects we discussed in
the current Prospectus for the Flexible Payment Deferred Combination Fixed and
Variable Annuity Contracts (the "Contracts") offered by Sage Life Assurance of
America, Inc. ("we," "us," "our," "Sage Life," or the "Company"). You may
obtain a copy of the Prospectus dated May 1, 2000 by calling 1-877-835-7243
(Toll Free) or by writing to our Customer Service Center at the above address.
You may also obtain a copy of the Prospectus by accessing the Securities and
Exchange Commission's website at http://www.sec.gov. The terms we used in the
current Prospectus for the Contracts are incorporated into and made a part of
this Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
SHOULD BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR
THE CONTRACTS AND THE PROSPECTUSES FOR THE TRUSTS.
<PAGE>
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Assignment......................................................... 1
Change of Owner, Beneficiary, or Annuitant......................... 1
Misstatement and Proof of Age, Sex or Survival..................... 1
Incontestability................................................... 1
Participation...................................................... 1
Beneficiary Designation............................................ 1
Tax Status of the Contracts........................................ 1
Diversification Requirements.................................... 2
Owner Control................................................... 2
Required Distribution from Non-Qualified Contracts.............. 2
Qualified Contracts................................................ 2
Taxation of Withdrawals......................................... 2
Individual Retirement Accounts (IRAs)........................... 3
SIMPLE IRAs..................................................... 3
Roth IRAs....................................................... 3
Calculation of Historical Performance Data......................... 3
Money Market Sub-Account Yields................................. 3
Other Variable Sub-Account Yields............................... 5
Average Annual Total Returns.................................... 5
Other Total Returns............................................. 6
Effect of the Annual Administration Charge on Performance Data.. 6
Use of Indexes.................................................. 6
Other Information............................................... 7
Income Payment Provisions.......................................... 7
Amount of Fixed Income Payments................................. 7
Amount of Variable Income Payments.............................. 7
Income Units.................................................... 7
Income Unit Value............................................... 7
Exchange of Income Units........................................ 8
Safekeeping of Account Assets...................................... 9
Legal Matters...................................................... 9
Other Information.................................................. 9
Financial Statements............................................... 10
</TABLE>
<PAGE>
ASSIGNMENT
You may assign your Contract at any time before the Income Date. No
assignment will be binding on us unless we receive Satisfactory Notice. We will
not be liable for any payments made or actions we take before we accept the
assignment. An absolute assignment will revoke the interest of any revocable
Beneficiary. We are not responsible for the validity of any assignment. AN
ASSIGNMENT MAY BE A TAXABLE EVENT.
CHANGE OF OWNER, BENEFICIARY, OR ANNUITANT
During your lifetime and while your Contract is in force, you can transfer
ownership of your Contract, change the Beneficiary, or change the Annuitant.
However, you cannot change the Annuitant after the Income Date. To make any of
these changes, you must send us Satisfactory Notice. If accepted, any change in
Owner, Beneficiary, or Annuitant will take effect on the date you signed the
notice. Any of these changes will not affect any payment made or action we took
before our acceptance. A CHANGE IN OWNER MAY BE A TAXABLE EVENT AND MAY ALSO
AFFECT THE AMOUNT OF DEATH BENEFIT PAYABLE UNDER YOUR CONTRACT.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL
We may require proof of age, sex, or survival of any person upon whose age,
sex, or survival any payments depend. If the age or sex of the Annuitant has
been misstated, or if the age of the Owner has been misstated, the benefits will
be those that the Account Value applied would have provided for the correct age
and sex. If we have made incorrect income payments, we will pay the amount of
any underpayments. We will deduct the amount of any overpayment from future
income payments.
INCONTESTABILITY
Your Contract is incontestable from its Contract Date.
PARTICIPATION
The Contracts do not participate in our surplus or profits, and we do not pay
dividends on the Contracts.
BENEFICIARY DESIGNATION
This is as shown in the application. It includes the name of the Beneficiary
and the order and method of payment. If you name "estate" as a Beneficiary, it
means the executors or administrators of your estate. If you name "children" of
a person as a Beneficiary, only children born to or legally adopted by that
person as of an Owner's date of death will be included.
We may rely on an affidavit as to the ages, names, and other facts about all
Beneficiaries. We will incur no liability if we act on such affidavit.
TAX STATUS OF THE CONTRACTS
Tax law imposes several requirements that variable annuities must satisfy in
order to receive the tax treatment normally accorded to annuity contracts.
SAI-1
<PAGE>
DIVERSIFICATION REQUIREMENTS. The Internal Revenue Code (Code) requires that
the investments of each investment division of the separate account underlying
the Contracts be "adequately diversified" in order for the Contracts to be
treated as annuity contracts for federal income tax purposes. It is intended
that each investment division, through the fund in which it invests, will
satisfy these diversification requirements.
OWNER CONTROL. In certain circumstances, owners of variable annuity contracts
have been considered for Federal income tax purposes to be the owners of the
assets of the separate account supporting their contracts due to their ability
to exercise investment control over those assets. When this is the case, the
contract owners have been currently taxed on income and gains attributable to
the variable account assets. There is little guidance in this area, and some
features of our Contracts, such as the flexibility of an owner to allocate
premium payments and transfer amounts among the investment divisions of the
separate account, have not been explicitly addressed in published rulings.
While we believe that the Contracts do not give Owners investment control over
separate account assets, we reserve the right to modify the Contracts as
necessary to prevent an Owner from being treated as the Owner of the separate
account assets supporting the Contract.
REQUIRED DISTRIBUTIONS FROM NON-QUALIFIED CONTRACTS. In order to be treated
as an annuity contract for Federal income tax purposes, section 72(s) of the
Code requires any Non-Qualified Contract to contain certain provisions
specifying how your interest in the Contract will be distributed in the event of
the death of an owner of the Contract. Specifically, section 72(s) requires
that (a) if any owner dies on or after the annuity starting date, but prior to
the time the entire interest in the contract has been distributed, the entire
interest in the contract will be distributed at least as rapidly as under the
method of distribution being used as of the date of such owner's death; and (b)
if any owner dies prior to the annuity starting date, the entire interest in the
contract will be distributed within five years after the date of such owner's
death. These requirements will be considered satisfied as to any portion of an
owner's interest which is payable to or for the benefit of a designated
beneficiary and which is distributed over the life of such designated
beneficiary or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
owner's death. The designated beneficiary refers to a natural person designated
by the owner as a beneficiary and to whom ownership of the contract passes by
reason of death. However, if the designated beneficiary is the surviving spouse
of the deceased owner, the contract may be continued with the surviving spouse
as the new owner.
The Non-Qualified Contracts contain provisions that are intended to comply
with these Code requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise.
QUALIFIED CONTRACTS
TAXATION OF WITHDRAWALS. When you take a withdrawal from a Qualified
Contract, a pro-rata portion of the amount you receive is taxable. This portion
is based on the ratio of your investment in the contract (such as non-deductible
purchase payments or other consideration paid for the Contract) to your total
accrued benefit balance under the retirement plan. As a result, the investment
in the contract for a Qualified Contract can be zero. Special tax rules apply
to distributions from a Roth IRA.
SAI-2
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INDIVIDUAL RETIREMENT ACCOUNTS (IRAS). IRAs are defined in Section 408 of the
Code and permit individuals to make annual contributions of up to the lesser of
$2,000 or the amount of compensation includible in the individual's gross income
for the year. The contributions may be deductible in whole or in part,
depending on the individual's income. Distributions from certain pension plans
may be "rolled over" into an IRA on a tax-deferred basis without regard to these
limits. Amounts in the IRA (other than nondeductible contributions) are taxed
when distributed from the IRA. A 10% penalty tax generally applies to
distributions made before age 59 1/2, unless certain exceptions apply.
SIMPLE IRAs. SIMPLE IRAs permit certain small employers to establish SIMPLE
plans as provided by Section 408(p) of the Code, under which employees may elect
to defer to a SIMPLE IRA a percentage of compensation up to $6,000 (as increased
for cost of living adjustments). The sponsoring employer is required to make
matching or non-elective contributions on behalf of employees. Distributions
from SIMPLE IRAs are subject to the same restrictions that apply to IRA
distributions and are taxed as ordinary income. Subject to certain exceptions,
premature distributions prior to age 59 1/2 are subject to a 10 percent penalty
tax, which is increased to 25 percent if the distribution occurs within the
first two years after the commencement of the employee's participation in the
plan.
ROTH IRAs. Roth IRAs are described in Code section 408A. They permit certain
eligible individuals to contribute to make non-deductible contributions to a
Roth IRA in cash or as a rollover or transfer from another Roth IRA or other
IRA. A rollover from or conversion of an IRA to a Roth IRA is generally subject
to tax and other special rules apply. The Owner may wish to consult a tax
adviser before combining any converted amounts with any other Roth IRA
contributions, including any other conversion amounts from other tax years.
Distributions from a Roth IRA generally are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax and a
10% penalty tax may apply to distributions made (1) before age 59 1/2 (subject
to certain exceptions) or (2) during the five taxable years starting with the
year in which the first contribution is made to any Roth IRA. A 10% penalty tax
may apply to amounts attributable to a conversion from an IRA if they are
distributed during the five taxable years beginning with the year in which the
conversion was made.
CALCULATION OF HISTORICAL PERFORMANCE DATA
From time to time, we may disclose yields, total returns, and other
performance data of the Variable Sub-Accounts and the Funds. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC.
MONEY MARKET SUB-ACCOUNT YIELDS
From time to time, advertisements and sales literature may quote the current
annualized yield of the Variable Sub-Account investing in the Money Market Fund
(the "Money Market Sub-Account") of the Sage Life Investment Trust for a seven-
day period in a manner that does not take into consideration any realized or
unrealized gains or losses on shares of the Money Market Fund.
We compute the current annualized yield by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven-day period in the value
of a hypothetical account under a Contract having a balance of one Accumulation
Unit of the Money Market Sub-Account at the beginning of the period, dividing
such net change in Account Value by the value of the hypothetical account at the
beginning of the period to determine the base period return, and annualizing
this quotient on a 365-day basis. The net change in Account Value reflects (1)
net income from the Money Market Fund attributable to the
SAI-3
<PAGE>
hypothetical account; and (2) charges and deductions imposed under a Contract
which are attributable to the hypothetical account. The charges and deductions
include the per unit charges for the hypothetical account for the annual
administration charge and the Asset-Based Charges. For purposes of calculating
current yields for a Contract, an average per unit annual administration charge
is used based on the $40 Annual Administration Charge. We calculate current
yield according to the following formula:
Current Yield = ((NCS - ES)/UV) (365/7)
Where:
NCS = the net change in the value of the Money Market Fund
(exclusive of realized gains or losses on the sale of
securities, unrealized appreciation and depreciation, and
income other than investment income) for the seven-day
period attributable to a hypothetical account having a
balance of one Accumulation Unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
Effective Yield = (1+((NCS - ES)/UV))(365/7)-1
Where:
NCS = the net change in the value of the Money Market Fund
(exclusive of realized gains or losses on the sale of
securities, unrealized appreciation and depreciation and
income other than investment income) for the seven-day
period attributable to a hypothetical account having a
balance of one Accumulation Unit.
ES = per unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
Because of the charges and deductions imposed under the Contracts, the yield
for the Money Market Sub-Account is lower than the yield for the Money Market
Fund. Yield calculations do not take into account the surrender charge that we
assess on certain withdrawals and surrender of Account Value.
The current and effective yields on amounts held in the Money Market Sub-
Account normally fluctuate on a daily basis. THEREFORE, THE DISCLOSED YIELD FOR
ANY GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS OR
RATES OF RETURN. The Money Market Sub-Account's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the Money Market Fund, the types and quality of portfolio securities held by
the Money Market Fund and the Money Market Fund's operating expenses. Yields on
amounts held in the Money Market Sub-Account may also be presented for periods
other than a seven-day period. Yield calculations for the Money Market Sub-
Account as of December 31, 1999 are as follows:
Current: __________
Effective: __________
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<PAGE>
OTHER VARIABLE SUB-ACCOUNT YIELDS
We compute the yield by: 1) dividing the net investment income of the Fund
attributable to the Variable Sub-Account units less expenses allocated to a
Variable Sub-Account for the period; by 2) the maximum offering price per unit
on the last day of the period times the daily average number of Accumulation
Units outstanding for the period; and then 3) compounding that yield for a six-
month period; and then 4) multiplying that result by two (2). Expenses
allocated to a Variable Sub-Account include the Annual Administration Charge and
the Asset-Based Charges. The yield calculation assumes an annual administration
charge of $40 per Contract deducted at the end of each Contract Year on the
Contract Anniversary. For purposes of calculating the 30-day or one-month
yield, we use an average administration cost charge based on the average Account
Value in the Variable Sub-Account to determine the amount of the charge
attributable to the Variable Sub-Account for the 30-day or one-month period. We
calculate the 30-day or one-month yield according to the following formula:
Yield = 2 x ((((NI - ES)/(U x UV)) + 1)/6/-1)
Where:
NI = net income of the portfolio for the 30-day or one-month period
attributable to the Variable Sub-Account's units.
ES = expenses of the Variable Sub-Account for the 30-day or one-
month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the
30-day or one-month period.
Because of the charges and deductions imposed under the Contracts, the yield
for the Variable Sub-Account is lower than the yield for the corresponding Fund.
The yield on amounts invested in the Variable Sub-Accounts normally fluctuates
over time. THEREFORE, THE DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN
INDICATION OR REPRESENTATION OF FUTURE YIELDS OR RATES OF RETURN. A Variable
Sub-Account's actual yield is affected by the types and quality of securities
held by the corresponding Fund and that Fund's operating expenses.
Yield calculations do not take into account the surrender charge that is
assessed on certain withdrawals and surrenders of Account Value.
AVERAGE ANNUAL TOTAL RETURNS
From time to time, sales literature or advertisements may also quote average
annual total returns for one or more of the Variable Sub-Accounts for various
periods of time.
When a Variable Sub-Account or Fund has been in operation for 1, 5, and 10
years, respectively, the average annual total return for these periods will be
provided. Otherwise, average annual total return will be shown from inception
of the Variable Sub-Account. Average annual total returns for other periods of
time may, from time to time, also be disclosed.
Standard average annual total returns represent the average annual compounded
rates of return that would equate an initial investment of $1,000 under a
Contract to the Surrender Value of that investment as of the last day of each of
the periods. The ending date for each period for which total return quotations
are provided will be for the most recent calendar quarter-end practicable,
considering the type of the communication and the media through which it is
communicated.
SAI-5
<PAGE>
We calculate standard average annual total returns using Variable Sub-Account
unit values which we calculate on each Business Day based on the performance of
the Variable Sub-Account's underlying Fund. The calculation assumes that annual
Asset-Based Charges of 1.40% during the first seven Contract Years (decreasing
to 1.25% during Contract Years 8 and later) are deducted monthly beginning on
the Contract Date. The calculation also assumes that the Annual Administration
Charge is $40 per year per Contract deducted at the end of each Contract Year
during the first seven Contract Years. For purposes of calculating average
annual total return, we use an average per-dollar per-day annual administration
charge attributable to the hypothetical account for the period. The calculation
also assumes surrender of Account Value at the end of the period for the return
quotation taking into account any applicable Free Withdrawal Amount. We
calculate the total return according to the following formula:
TR = (ESV/P)/1/N/-1
Where:
TR = the average annual total return for the period.
ESV = the Surrender Value of the hypothetical account at the end of
the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
OTHER TOTAL RETURNS
We may disclose cumulative total returns in conjunction with the standard
formats described above. We will calculate the cumulative total returns using
the following formula:
CTR = (ESV/P) - 1
Where:
CTR = The cumulative total return for the period.
ESV = The ending Surrender Value of the hypothetical investment at
the end of the period net of recurring charges.
P = A hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL ADMINISTRATION CHARGE ON PERFORMANCE DATA
The Contracts provide for a $40 Annual Administration Charge (waived for
Contracts with Account Value of at least $50,000, or beginning on and after the
eighth Contract Year) that is deducted from the Sub-Accounts proportionately.
For purposes of reflecting the Annual Administration Charge in yield and total
return quotations, the average Account Value is assumed to be $30,000, so that
the annual administration charge is .1333%.
USE OF INDEXES
From time to time, we may present the performance of certain historical
indexes in advertisements or sales literature. We may compare the performance
of these indexes to the performance of certain Variable Sub-Accounts or Funds,
or we may present without such a comparison.
SAI-6
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OTHER INFORMATION
The following is a partial list of those publications which we may note in the
Funds' sales literature and/or shareholder materials which contain articles
describing investment results or other data relative to one or more of the
Variable Sub-Accounts. We also may cite other publications.
Broker World Financial World
Across the Board Advertising Age
American Banker Barron's
Best's Review Business Insurance
Business Month Business Week
Changing Times Consumer Reports
The Economist Financial Planning
Forbes Fortune
Inc. Institutional Investor
Insurance Forum Insurance Sales
Insurance Week Journal of Accountancy
Journal of Financial Service Professionals Journal of Commerce
Life Insurance Selling Life Association News
MarketFacts Manager's Magazine
National Underwriter Money
Morningstar, Inc. Nation's Business
New Choices (formerly 50 Plus) The New York Times
Pension World Pensions & Investments
Rough Notes Round the Table
U.S. Banker VARDs
The Wall Street Journal Working Woman
INCOME PAYMENT PROVISIONS
AMOUNT OF FIXED INCOME PAYMENTS. On the Income Date, the amount you have
chosen to apply to provide fixed income payments will be applied under the
income plan you have chosen. The monthly income payment factor in effect on the
Income Date times that amount and then divided by $1,000 will be the dollar
amount of each monthly payment. Each of these payments are guaranteed and
remain level throughout the period you selected.
The monthly income payment factor used to determine the amount of the fixed
income payments will not be less than the guaranteed minimum monthly income
payment factor shown in your Contract.
AMOUNT OF VARIABLE INCOME PAYMENTS. These payments will vary in amount. The
dollar amount of each payment attributable to each Variable Sub-Account is the
number of Income Units for each Variable Sub-Account times the Income Unit value
of that Sub-Account. The sum of the dollar amounts for each Variable Sub-
Account is the amount of the total variable income payment. We will determine
the Income Unit values for each payment no earlier than five Business Days
preceding the due date of the variable income payment (except for Option 4,
which we determine on the due date). We guarantee the payment will not vary due
to changes in mortality or expenses.
INCOME UNITS. On the Income Date, the number of Income Units for an
applicable Variable Sub-Account is determined by multiplying (1) by (2),
dividing the result by (3), and then dividing that result by (4) where:
(1) is the amount you have chosen to allocate to that Variable Sub-Account;
(2) is the monthly income payment factor for the income plan chosen;
(3) is $1,000; and
SAI-7
<PAGE>
(4) is the Income Unit value for the Variable Sub-Account for the Valuation
Period ending on that date.
INCOME UNIT VALUE. We calculate the value of an Income Unit at the same time
that the value of an Accumulation Unit is calculated and is based on the same
values for Fund shares and other assets and liabilities. The Income Unit value
for a Variable Sub-Account's first Business Day was set at $10. After that, we
determine the Income Unit value for every Business Day by multiplying (a) by
(b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate that you have
selected and that is shown in your Contract for the number of days in
the Valuation Period.
After the Income Date, we calculate the net investment factor slightly
differently than before the Income Date. Before the Income Date, we calculate
Asset-Based Charges as a percentage of the Variable Account Value on the date of
deduction. These charges are equal on an annual basis to 1.40%, decreasing to
1.25% after the seventh Contract Year. However, on and after the Income Date,
we call these charges Variable Sub-Account Charges and deduct them from the
assets in each Variable Sub-Account on a daily basis. Therefore, the "net
investment factor" in (b), above, is determined by dividing (i) by (ii), and
then subtracting (iii) where:
(i) is the Accumulation Unit value for the current Valuation Period;
(ii) is the Accumulation Unit value for the immediately preceding Valuation
Period; and
(iii) is the daily Variable Sub-Account Charges (adjusted for the number of
days in the Valuation Period).
ILLUSTRATION OF CALCULATION OF INCOME UNIT VALUE
<TABLE>
<S> <C>
1. Accumulation Unit value for current Valuation Period............................... 10.0026116
2. Accumulation Unit value for immediately preceding Valuation Period................. 10.0000000
3. Net Investment Factor prior to the Income date (1)/(2)............................. 1.00026116
4. Adjustment for Variable Sub-Account Charges........................................ 0.000038626
5. Net Investment Factor on and after the Income Date (3)-(4)......................... 1.00022253
6. Income Unit value for the immediately preceding Valuation Period................... 10.00000000
7. Daily equivalent of the assumed investment rate for the number of days in the
Valuation Period (assuming you select 3%)=(1.03/1/365/)........................... 1.00008099
8. Income Unit value for current Valuation Period
[(5) x (6)]/(7)................................................................... 10.00141533
</TABLE>
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ILLUSTRATION OF VARIABLE INCOME PAYMENTS
<TABLE>
<S> <C>
1. Number of Accumulation Units.................................. 1,000
2. Accumulation Unit value....................................... 10.0026116
3. Account Value (1) x (2)....................................... 10,002.61
4. Minimum monthly income payment factor per $1,000 applied...... 10.50
5. First monthly variable income payment [(3) x (4)]/$1,000...... 105.03
6. Income Unit value............................................. 10.00141533
7. Number of Income Units (5)/(6)................................ 10.50151
8. Assume Income Unit value at the end of the second month is.... 10.05
9. Second monthly variable income payment (7) x (8).............. 105.54
10. Assume Income Unit value at the end of the third month is.... 10.10
11. Third monthly variable income payment (7) x (10)............. 106.07
</TABLE>
EXCHANGE OF INCOME UNITS. After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of the
income payment made on the date of exchange will be unaffected by the exchange.
SAFEKEEPING OF ACCOUNT ASSETS
We hold the title to the assets of the Variable Account. The assets are kept
physically segregated and held separate and apart from our General Account
assets and from the assets in any other separate account.
We maintain records of all purchases and redemptions of Fund shares held by
each of the Variable Sub-Accounts.
A fidelity bond in the amount of approximately $10 million per occurrence
covering the Company's directors, officers, and employees has been issued by
Lloyd's of London.
LEGAL MATTERS
All matters relating to Delaware law pertaining to the Contracts, including
the validity of the Contracts and the Company's authority to issue the
Contracts, have been passed upon by James F. Bronsdon, the Company's Vice
President, Legal and Compliance. Sutherland Asbill & Brennan LLP has provided
advice on certain matters relating to the federal securities laws.
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities Act
of 1933, as amended, with respect to the Contracts discussed in this Statement
of Additional Information. Not all the information set forth in the registration
statement, amendments and exhibits thereto has been included in this Statement
of Additional Information. Statements contained in this Statement of Additional
Information concerning the content of the Contracts and other legal instruments
are intended to be summaries. For a complete statement of the terms of these
documents, reference should be made to the instruments filed with the SEC.
SAI-9
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FINANCIAL STATEMENTS
The Variable Account began operations in February, 1999, and financial
statements for the Variable Account since that date are provided. Financial
statements of the Company are presented in the Prospectus.
SAI-10
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PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part A. Financial
statements for The Sage Variable Annuity Account A (the "Variable Account") are
included in Part B.
(b) Exhibits
(1)(a) Resolutions of the Board of Directors of Sage Life Assurance of
America, Inc. establishing The Sage Variable Annuity Account
A./1//
(2) Not Applicable.
(3) Form of Distribution Agreement with Sage Distributors, Inc.
and Form of Selling Agreement./2//
(4)(a)(i)(B) Amended Form of Individual Contract./3//
(i)(C) Second Amended Form of Individual Contract.*
(ii)(B) Amended Form of Individual Contract with Interest Account./4//
(ii)(C) Second Amended Form of Individual Contract with Interest
Account.*
(iii)(B) Amended Form of Group Contract./3//
(iii)(C) Second Amended Form of Group Contract.*
(iv)(B) Amended Form of Group Certificate./3//
(iv)(C) Second Amended Form of Group Certificate.*
(b)(i)(B) Amended Form of Individual IRA Rider./3//
(ii)(B) Amended Form of Group IRA Rider./3//
(iii)(B) Amended Form of Individual SIMPLE IRA Rider./3//
(iv)(B) Amended Form of Group SIMPLE IRA Rider./3//
(v)(A) Form of Individual Roth IRA Rider./5//
(vi)(A) Form of Group Roth IRA Rider./5//
(vii) Form of Individual Waiver of Surrender Charge Rider./5//
(viii) Form of Group Waiver of Surrender Charge Rider./5//
(ix)(A) Form of Individual Accidental Death Benefit Rider./5//
(ix)(B) Amended Form of Individual Accidental Death Benefit Rider.*
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<PAGE>
(x)(A) Form of Group Accidental Death Benefit Rider./5//
(x)(B) Amended Form of Group Accidental Death Benefit Rider.*
(5) (i) Form of Individual Contract Application./6//
(ii) Form of Group Certificate Application./7//
(6)(a) Articles of Incorporation of the Company./8//
(b) By-Laws of the Company./8//
(7) Not Applicable.
(8)(a)(i) Form of Participation Agreement with AIM Variable Insurance
Funds, Inc./9//
(ii) Form of Participation Agreement with The Alger American
Fund./9//
(iii) Form of Participation Agreement with Liberty Variable
Investment Trust./10//
(iv) Form of Participation Agreement with MFS(R) Variable Insurance
Trust.(SM)/9//
(v) Form of Participation Agreement with Morgan Stanley Universal
Funds, Inc./10//
(vi) Form of Participation Agreement with Oppenheimer Variable
Account Funds./10//
(vii) Form of Participation Agreement with Sage Life Investment
Trust./9//
(viii) Form of Participation Agreement with SteinRoe Variable
Investment Trust./10//
(ix) Form of Participation Agreement with T. Rowe Price Equity
Series, Inc./10//
(b) Form of Services Agreement with Financial Administration
Services, Inc./10//
(9) (i) Opinion and Consent of James F. Bronsdon./11//
(ii) Consent of Sutherland Asbill & Brennan.
(10) Consent of Ernst & Young LLP.
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Power of Attorney for Paul C. Meyer./12//
(14)(b) Power of Attorney for Ronald S. Scowby./13//
(14)(c) Power of Attorney for Richard D. Starr./13//
(14)(d) Power of Attorney for H. Louis Shill./14//
(14)(e) Power of Attorney for Mitchell R. Katcher./14//
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(14)(f) Power of Attorney for Robin I. Marsden. /15//
(14)(g) Power of Attorney for Paul C. Meyer, Ronald S. Scowby,
Richard D. Starr, H. Louis Shill and Meyer Feldberg.*
*Filed herewith.
_______________________
/1/ This exhibit was previously filed in Exhibit 1 to the Registration Statement
on Form N-4 dated December 24, 1997 (File No. 333-43329), and is incorporated
herein by reference.
/2/ This exhibit was previously filed in Exhibit No. 3 to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4 (File No. 333-43329)
dated December 31, 1998, and is incorporated herein by reference.
/3/ This exhibit was previously filed in Exhibit No. 4 to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4 (File No. 333-43329)
dated December 31, 1998, and is incorporated herein by reference.
/4/ This exhibit was previously filed in Exhibit No. 4 to the Registration
Statement on Form N-4 (File No. 333-43329) dated January 28, 1999, and is
incorporated herein by reference.
/5/ This exhibit was previously filed in Exhibit No. 4 to the Registration
Statement on Form N-4 (File No. 333-43329) dated December 24, 1997, and is
incorporated herein by reference.
/6/ This exhibit was previously filed in Exhibit No. 5 to Pre-Effective
Amendment No. 1 to the Registration Statement filed on Form N-4 (File No. 333-
43329) dated December 31, 1998, and is incorporated herein by reference.
/7/ This exhibit was previously filed in Exhibit No. 5 to the Registration
Statement filed on Form N-4 (File No. 33-43329) dated December 24, 1997, and is
incorporated herein by reference.
/8/ This exhibit was previously filed in Exhibit No. 6 to the Registration
Statement filed on Form N-4 (File No. 33-43329) dated December 24, 1997, and is
incorporated herein by reference.
/9/ This exhibit was previously filed in Exhibit No. 8 to Pre-Effective
Amendment No. 1 to the Registration Statement filed on Form N-4 (File No. 333-
43329) dated December 31, 1998, and is incorporated herein by reference.
/10/ This exhibit was previously filed in Exhibit No. 8 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1999, and is incorporated herein by reference.
/11/ This exhibit was previously filed in Exhibit No. 9 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1999, and is incorporated herein by reference.
/12/ This exhibit was previously filed in Exhibit No. 14(a) to Pre-Effective
Amendment No. 1 to the Registration Statement filed on Form N-4 (File No. 333-
44751) dated January 12, 1999, and is incorporated herein by reference.
/13/ This exhibit was previously filed in Exhibit No. 14 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-43329)
dated January 28, 1999, and is incorporated herein by reference.
PC-3
<PAGE>
/14/ This exhibit was previously filed in Exhibit No. 14 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 333-44751)
dated February 10, 1999, and is incorporated herein by reference.
/15/ This exhibit was previously filed in Exhibit No. 14 to the Registration
Statement on Form N-4 (File No. 333-43329) dated February 26, 1999, and is
incorporated herein by reference.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Incorporated herein by reference to the section titled "Directors and
Executive Officers" of the Prospectus filed as Part A of this Registration
Statement.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The registrant is a segregated asset account of the Company and therefore
is owned and controlled by the Company. The Company is a stock life insurance
company of which all the voting securities are owned by Sage Life Holdings of
America, Inc., a Delaware corporation, ("Sage Life Holdings"), all of the voting
securities of which are owned by Sage Insurance Group Inc., a Delaware
corporation. (The Company in turn owns all of the voting securities of Sage
Life Assurance Company of New York, a New York domiciled company which is
pursuing a license to conduct insurance business in that state.) In addition to
Sage Life Holdings, Sage Insurance Group also owns all of the voting securities
of Sage Distributors, Inc. (a broker-dealer), Sage Advisors, Inc. (a registered
investment adviser), and Finplan Holdings, Inc. (a financing company), all of
which are Delaware corporations, and Sage Life (Bermuda) Ltd. (an insurer), a
Bermudian corporation. All the voting securities of Sage Insurance Group Inc.
are owned by Sage Insurance Holdings, Inc, a Delaware corporation. Sage
Insurance Holdings, Inc. is a wholly owned subsidiary of Sage Holdings (USA),
Inc., a Delaware corporation. (Sage Holdings (USA), Inc. also owns all of the
voting securities of Sage Properties (USA), Inc., a Virginia corporation whose
principal assets are real estate.) Sage Holdings (USA), Inc. is a wholly owned
subsidiary of Sage Life Holdings Limited, a South African corporation. The
nature of the business of the companies listed above is insurance and financial
services. Sage Life Holdings is 100% owned by Sage Group Limited, a South
African corporation that is the ultimate holding company. Sage Group Limited is
a controlling company operating in life insurance, mutual funds and investment
management. Various companies and other entities controlled by Sage Group
Limited may be considered to be under common control with the registrant or the
Company. Such other companies and entities and the nature of their businesses
are set forth below. These companies are incorporated in South Africa and are
wholly owned subsidiaries unless otherwise noted.
Sage Life Holdings was formed pursuant to a letter of intent between Sage
Group Limited and Swiss Re Life and Health America, Inc. ("Swiss Re"). Swiss
Re's ultimate parent company is Swiss Reinsurance Company, Switzerland, one of
the world's largest life and health reinsurance groups. Under the letter of
intent, Swiss Re made an equity investment into Sage Life Holdings. The
arrangements contemplated by the letter of intent may be subject to regulatory
approval.
DIRECT AND INDIRECT SUBSIDIARIES OF SAGE GROUP LIMITED
------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY NAME PRINCIPAL BUSINESS
<S> <C>
Bentley Office Park (Pty) Ltd Property development & investment
Blackreef Properties (Pty) Ltd Property holding
Consumer Classics (Pty) Ltd Manufacturing & distribution
Edenston Properties (Pty) Ltd Property development
Educational Information Services (Pty) Ltd Publishing
Ensiklopedie Afrikana (Edms) Beperk Publishing
Estromin Properties & Investments (Pty) Ltd Property investment
Everest Construction (Pty) Ltd Construction
FPS (South Vaal) Investments (Pty) Ltd Property investment
FPS (Vaal) Investments (Pty) Ltd Investment holding
</TABLE>
PC-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FPS Investment Holdings Ltd Investment holding
FPS Investments (Pty) Ltd Investment holding
FPS Ltd Investment consultants
Fraser Street Registrars (Pty) Ltd Transfer secretaries
Hatfield Primary Square (Pty) Ltd. Property investment
Hatfield Properties (Block A) (Pty) Ltd Property investment
Hatfield Properties (Block B) (Pty) Ltd Property investment
Hatfield Properties (Block C) (Pty) Ltd Property investment
Hatfield Properties (Block D) (Pty) Ltd Property investment
Highrise Home Investments (Pty) Ltd Property investment
Home Mortgage Investments (Pty) Ltd (50% owner) Financing
J van Streepen (Kempton Park) (Pty) Ltd (51% Property development
owner)
Kemparkto (Pty) Ltd Property investment &
development
Lakeview Management Properties (Pty) Ltd (75% Property management
owner)
Marlands Flats (Pty) Ltd Property holding
Meumann & Heyneke (Pty) Ltd Retail merchants
Nedrep Investments Ltd Investment holding
New Smal Construction Co. (Pty) Ltd Construction
Palmiet Townships (Pty) Ltd Property development
R/E 105 Rosebank (Pty) Ltd Investment holding
Residential Mortgage Investments (Pty) Ltd Financing
S A Cultural Holdings (Pty) Ltd Investment
S A Kultuur Beleggings (Edms) Beperk Investment
S.B. Plant Hire (Pty) Ltd Plant hire
SACI Finance (Pty) Ltd Finance company
Sage Structured Options (Eight) (Pty) Ltd Investment holding
Sage Structured Options (Five) (Pty) Ltd Investment holding
Sage Structured Options (Four) (Pty) Ltd Investment holding
Sage Structured Options (Nine) (Pty) Ltd Investment holding
Sage Structured Options (One) (Pty) Ltd Investment holding
Sage Structured Options (Seven) (Pty) Ltd Investment holding
Sage Structured Options (Six) (Pty) Ltd Investment holding
Sage Structured Options (Three) (Pty) Ltd Investment holding
Sage Structured Options (Two) (Pty) Ltd Investment holding
Sage Centre (Pty) Ltd Investment holding
Sage Corporate Services (Pty) Ltd Investment holding
Sage Family Benefits (Pty) Ltd Insurance consultants
Sage Holdings Ltd Financial, investment & management
Sage Investment Trust Ltd Insurance & investment
Sage Land Finance (Pty) Ltd Financiers
Sage Land Holdings (Pty) Ltd Investment holding
Sage Library Gardens Ltd Investment holding
Sage Life Holdings Ltd Investment holding
Sage Life Ltd Life insurance
Sage Management Services (Pty) Ltd Management
Sage Parking (Pty) Ltd Own & operate parking garages
Sage Personal Investment Marketing (Pty) Ltd Investment consultants
Sage Properties (549 Sandown) (Pty) Ltd Property holding
Sage Properties (Menlyn) (Pty) Ltd Property investment
Sage Properties (Rivonia Four) (Pty) Ltd Property holding
Sage Properties (Sunnyside) (Pty) Ltd Property holding
Sage Properties Ltd Investment holding
Sage Property Holdings Ltd Property holding
</TABLE>
PC-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Sage Property Management Services (Pty) Ltd Property management
Sage Property Trust Managers, Ltd. (77.2% owner) Management of unit trusts
Sage Schachat Developments (Pty) Ltd Builders
Sage Schachat Ltd Investment holding
Sage Selections (Pty) Ltd Investment
Sage Specialized Insurances Ltd Short term insurance
Sage Strategic Investments (Pty) Ltd Investment holding
Sage Trustees (Pty) Ltd Trustees
Sage Unit Trusts Ltd Management of unit trusts
Sagemed (Pty) Ltd Health & medical insurance
SAK Holdings (Pty) Ltd Investment holding
Sandhurst Properties (Block A) (Pty) Ltd Property investment & management
Sandhurst Properties (Block C) (Pty) Ltd Property investment & management
Sandhurst Properties (Block D) (Pty) Ltd Property investment & management
Sandhurst Properties (Block E) (Pty) Ltd Property investment & management
Sandhurst Properties (Block F) (Pty) Ltd Property investment & management
Sandhurst Properties (Block G) (Pty) Ltd Property investment & management
Sandown Development Holdings (Pty) Ltd Property holding
Sandown Developments (Pty) Ltd Property development
Schachat Ciskei (Pty) Ltd Property development
Schachat Construction (Pty) Ltd Construction
Schachat Cullum (Pty) Ltd Property development & management
Schachat Finance Company (Pty) Ltd Financiers
Schachat Land Resources (Pty) Ltd Investment holding
Schachat Natal (Pty) Ltd Farming & other
Schalab Townships (Pty) Ltd (51% owner) Property development
Sectional Title (Pty) Ltd Property development
SLR Land Development (Pty) Ltd Building contractors
SMH Land Development (Pty) Ltd Property investment
SPTM Holdings (Pty) Ltd Investment holding
SSI Securities (Pty) Ltd Financiers
Stonehouse Investments (Pty) Ltd Property investment
Sunnyside Erf 26 (Block D) (Pty) Ltd Property investment & management
Table Classics (Pty) Ltd Deal in tableware products
The Gold Jewelry Corporation (Pty) Ltd Manufacture & sale of coins & jewelry
Townhomes (Pty) Ltd Building contractors
Von Brandis Square Development Co. (Pty) Ltd Property development
Wereldspekium (Edms) Beperk Distributors & publishers of books
Witch Construction Company (Pty) Ltd Property investment & development
Witch Construction Company (Transvaal) (Pty) Ltd Property investment & development
Sage International B.V. (Netherlands Holding
corporation)
Sage International Assets Ltd (BVI corporation) Holding
Sage Management Services (USA), Inc. (New York Management services
corporation)
</TABLE>
Item 27. Number of Contract Owners
As of ______________ __, 2000, the Registrant had _________________Contract
Owners.
Sage Life's Articles of Incorporation provide that a director of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary
PC-6
<PAGE>
duty as a director, except that (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which would involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived any personal benefit.
Notwithstanding the foregoing, the Articles provide that if the Delaware General
Corporation Law is amended to authorize further limitations of the liability of
a director or a corporation, then a director of the Company, in addition to
circumstances in which a director is not personally liable as set forth in the
preceding sentence, shall be held free from liability to the fullest extent
permitted by the Delaware General Corporation Law as amended.
Sage Life's Bylaws provide that the Company shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of Delaware.
Further, Section 145 of Delaware General Corporation Law provides that a
corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had a reasonable cause to believe that his conduct was not unlawful.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Sage Distributors, Inc. ("Sage Distributors") is the registrant's
principal underwriter.
(b) Officers and Directors of Sage Distributors
The principal business address of all of the persons listed below is 300
Atlantic Street, Stamford, CT 06901.
Name and Principal Business Address Positions and Offices With Sage
- ----------------------------------- -------------------------------
Distributors
------------
Robin I. Marsden Director
PC-7
<PAGE>
Mitchell R. Katcher Director
James F. Bronsdon President, Chief Executive Officer, Chief
Legal Officer
James F. Renz Chief Financial Officer, Treasurer,
Assistant Secretary
Lincoln B. Yersin Senior Vice-President, National Sales
Manager
ITEM 30. LOCATION OF BOOKS AND RECORDS
All of the accounts, books, records or other documents required to be kept
by Section 31(a) of the Investment Company Act of 1940 and rules thereunder, are
maintained at our Customer Service Center.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B of this
registration statement.
ITEM 32. UNDERTAKINGS AND REPRESENTATIONS
(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in the
statement are never more than 16 months old for as long as
purchase payments under the Contracts offered herein are being
accepted.
(b) The registrant undertakes that it will include either (1) as part
of any application to purchase a Contract offered by the
prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the prospectus
that the applicant can remove and send to the Company for a
Statement of Additional Information.
Additional Information.
(c) The registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form N-4 promptly upon written or oral
request to the Company at the address or phone number listed in
the prospectus.
(d) The Company represents that the fees and charges under the
Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
PC-8
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act
of 1940, the registrant has caused this Post-Effective Amendment No. 3 to be
signed on its behalf, in the City of Stamford, in the State of Connecticut, on
this 29th day of February, 2000.
The Sage Variable Annuity Account A
(Registrant)
By: Sage Life Assurance of America, Inc.
Attest:
/s/ James F. Bronsdon By: /s/ Robin I. Marsden
- --------------------- -------------------------------------
Robin I. Marsden
Director, President, Chief Executive
Officer
By: Sage Life Assurance of America, Inc.
(Depositor)
Attest:
/s/ James F. Renz By: /s/ Robin I. Marsden
- ------------------ -------------------------------------
Robin I. Marsden
Director, President, Chief Executive
Officer
<PAGE>
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 3 has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ---------------- ----------------------
<S> <C> <C>
/s/ Ronald S. Scowby* Chairman February 29, 2000
----------------------
Ronald S. Scowby
/s/ H. Louis Shill* Director February 29, 2000
-----------------------
H. Louis Shill
/s/ Paul C. Meyer* Director February 29, 2000
-----------------------
Paul C. Meyer
/s/ Richard D. Starr* Director February 29, 2000
-----------------------
Richard D. Starr
/s/ Mitchell R. Katcher Director, February 29, 2000
------------------------
Mitchell R. Katcher Senior Executive Vice
President, Chief Financial
Officer, Chief Actuary
/s/ Meyer Feldberg* Director February 29, 2000
-------------------
Meyer Feldberg
</TABLE>
(*)By: /s/ Mitchell R. Katcher
------------------------
Mitchell R. Katcher
As Attorney-In-Fact pursuant to a
Power of Attorney as dated below.
<TABLE>
<CAPTION>
Director Date
-------- ----
<S> <C>
Meyer Feldberg February 28, 2000
Ronald S. Scowby February 24, 2000
H. Louis Shill February 25, 2000
Paul C. Meyer February 23, 2000
Richard D. Starr February 25, 2000
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit (4)(a)(i)(C) Second Amended Form of Individual Contract.
Exhibit (4)(a)(ii)(C) Second Amended Form of Individual Contract with
Interest Account.
Exhibit (4)(a)(iii)(C) Second Amended Form of Group Contract.
Exhibit (4)(a)(iv)(C) Second Amended Form of Group Certificate.
Exhibit (4)(b)(ix)(B) Amended Form of Individual Accidental Death Benefit
Rider.
Exhibit (4)(b)(x)(B) Amended Form of Group Accidental Death Benefit Rider.
Exhibit (14)(g) Power of Attorney for Paul C. Meyer, Ronald S. Scowby,
Richard D. Starr, H. Louis Shill and Meyer Feldberg.
</TABLE>
<PAGE>
Exhibit 4(a)(i)(c)
[LOGO OF SAGE]
A Stock Company
Home Office Customer Service Center
300 Atlantic Street 1290 Silas Deane Highway
Stamford, CT 06901 Wethersfield, CT 06109
1-877-TEL-SAGE
PLEASE READ THIS CONTRACT CAREFULLY. This Contract is a legal contract
between the Contractholder (you) and Sage Life Assurance of America, Inc. You
have the rights described in the Contract. We will make Income Payments
beginning on the Income Date shown in the Schedule if the Annuitant is living on
that date.
RIGHT TO EXAMINE THIS CONTRACT:
IF FOR ANY REASON YOU ARE NOT SATISFIED WITH THIS CONTRACT, YOU MAY RETURN IT TO
US OR THE AGENT WHO SOLD IT TO YOU WITHIN 10 DAYS AFTER YOU RECEIVE IT (THE FREE
LOOK PERIOD). WHEN WE RECEIVE IT, WE WILL PROMPTLY REFUND YOU THE ACCOUNT VALUE
PLUS ANY CHARGES SHOWN IN THE SCHEDULE THAT WE HAVE DEDUCTED FROM THE ACCOUNT
VALUE ON OR BEFORE THE DATE THE RETURNED CONTRACT WAS RECEIVED BY US, OR IF
REQUIRED BY THE LAW OF YOUR STATE, THE INITIAL PURCHASE PAYMENT (MINUS ANY
WITHDRAWALS).
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE
ACCOUNT, MAY INCREASE OR DECREASE, DEPENDING ON THIS CONTRACT'S INVESTMENT
RESULTS AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. ALL PAYMENTS AND VALUES
BASED ON THE FIXED ACCOUNT MAY BE SUBJECT TO A MARKET VALUE ADJUSTMENT, THE
OPERATION OF WHICH MAY CAUSE SUCH PAYMENTS AND VALUES TO INCREASE OR DECREASE.
/s/ Ronald S. Scowby
----------------
Chairman
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
DVA1-9712
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SCHEDULE................................................................ 3
DEFINITIONS............................................................. 7
MAKING PURCHASE PAYMENTS................................................ 9
VARIABLE ACCOUNT........................................................ 9
FIXED ACCOUNT........................................................... 11
TRANSFERS AMONG ACCOUNTS................................................ 12
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE................. 13
CHARGES................................................................. 13
OWNER, ANNUITANT AND BENEFICIARY........................................ 13
DEATH BENEFITS.......................................................... 14
GENERAL PROVISIONS...................................................... 16
ANNUITY INCOME BENEFITS................................................. 17
</TABLE>
DVA1-9712
Page 2
<PAGE>
SCHEDULE
Contract No.: 123456789
Owner: JOHN DOE Contract Date: 1/1/1998
Issue Age/Sex: 35/MALE
Annuitant: JOHN DOE Income Date: 1/1/2038
Issue Age/Sex: 35/MALE
Initial Purchase
Payment: $[10,000]
This Schedule sets forth additional information that relates to the provisions
in this Contract with the corresponding headings.
MAKING PURCHASE PAYMENTS
The Designated Sub-Account is the [Money Market Sub-Account].
No purchase payment, whether initial or additional, may be allocated such that
any Sub-Account would have a value less than $250.
Additional purchase payments are subject to the following limits:
1. [Non-qualified plan: Additional purchase payments may be made until the
earlier of the year in which you attain age 85 or the year in which the
Annuitant attains age 85.]
2. [Qualified plan: Additional purchase payments may be made until the
year in which you attain age 70 1/2, except rollover contributions may
be made until the year in which you attain age 85.]
3. The minimum additional purchase payment we will accept is $250.
4. Our prior approval is required before you make a purchase payment that
causes the Account Value of all annuities that you maintain with us to
exceed $1,000,000.
VARIABLE ACCOUNT
The Variable Account for this Contract is [The Sage Variable Annuity Account A].
[It is a unit investment trust variable account.]
FIXED ACCOUNT
The Fixed Account for this Contract is [The Sage Fixed Interest Account A.]
The Minimum Guaranteed Interest Rate is 3%.
The Minimum Deferral Interest Rate is 3%.
Index Rate: The Index Rate is the U.S. Treasury Constant Maturity Series as
reported in Federal Reserve Bulletin Release H.15. We currently base the Index
Rate for a calendar week on the reported rate for the preceding calendar week.
We reserve the right to set it less frequently but in no event less often than
monthly.
DVA1-9712
Page 3
<PAGE>
TRANSFERS AMONG ACCOUNTS
The minimum amount that can be transferred is $250. However, if less remains in
a Sub-Account, that amount may be transferred. If a transfer request would
reduce the Account Value remaining in a Sub-Account below $250, we will treat
the transfer request as a request to transfer the entire amount.
Your transfer request must clearly state the Sub-Accounts from which and to
which transfers are to be made.
We reserve the right to limit, upon notice, the maximum number of transfers you
may make to one per calendar month or 12 per Contract Year.
After the Income Date, we reserve the right to:
1. disallow transfers from the Fixed Account to the Variable Account, or
from the Variable Account to the Fixed Account; and
2. limit the maximum number of transfers between Variable Sub-Accounts to
1 per Contract Year.
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
The Free Withdrawal Amount is the greater of (a) and (b) where:
(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals including any associated surrender charge and Market
Value Adjustment incurred in that Contract Year; and
(b) is the excess of the Account Value on the date of withdrawal over the
unliquidated purchase payments.
The minimum amount that can be withdrawn is $250. If a withdrawal request would
reduce the Account Value remaining in a Sub-Account below $250, we will treat
the withdrawal request as a request to withdraw the entire amount.
If a requested withdrawal would reduce the Account Value below $2,000, we
reserve the right to treat the request as a withdrawal of only the excess over
$2,000.
Unless you specify otherwise, we will make withdrawals proportionately from all
Sub-Accounts in which you are invested.
CHARGES
SURRENDER CHARGE - A surrender charge may be imposed upon surrender of this
Contract or when an Excess Withdrawal is made. The surrender charge is applied
to each purchase payment and is a percentage of each purchase payment as
follows:
<TABLE>
<CAPTION>
Maximum
Contract Surrender Charge
Year Percentage
------ ------------
<S> <C>
[1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8+ 0%]
</TABLE>
DVA1-9712
Page 4
<PAGE>
TRANSFER CHARGE - We reserve the right to charge a maximum of $25 for each
transfer after the 12th in a Contract Year. Each request is considered to be
one transfer regardless of the number of Sub-Accounts affected by the transfer.
The transfer charge will be deducted proportionately from all Sub-Accounts from
which the transfer is made.
ADMINISTRATION CHARGE - $40 a year. This charge is incurred at the beginning
of each Contract Year and deducted on each Contract Anniversary or upon
surrender. The charge will be waived:
1. if the Account Value is at least $50,000 at the time of deduction; or
2. beginning on and after the 8th Contract Anniversary.
PURCHASE PAYMENT TAX CHARGE - The amount of any state and local taxes levied by
any governmental entity on purchase payments may be deducted from the Account
Value when such taxes are incurred. We reserve the right to defer the
collection of this charge and deduct it against your Account Value on the
surrender of this Contract, or Excess Withdrawal, or application of the Account
Value to provide income payments.
ASSET-BASED CHARGES - We deduct asset-based charges to compensate us for
assuming mortality and expense risks, and certain administrative expenses.
Prior to the Income Date asset-based charges are calculated as a percentage of
the Variable Account Value on the date of deduction. On this Contract Date, and
monthly thereafter, the asset-based charges are deducted in proportion to the
Variable Sub-Accounts in which you are invested. The maximum charges are:
<TABLE>
<CAPTION>
Asset-Based Charges Annual Charge Monthly Charge
------------------- ------------- --------------
<S> <C> <C>
Contract Years 1-7 1.40% .116667%
Contract Years 8+ 1.25% .104167%
</TABLE>
We also reserve the right to deduct asset-based charges on the effective date of
any transfer from the Fixed Account, or allocation of purchase payment to the
Variable Account, based on the amount transferred or allocated, and based on the
number of days remaining until the next date of deduction.
VARIABLE SUB-ACCOUNT CHARGES - On and after the Income Date we deduct the asset-
based charges above from the assets in each Variable Sub-Account on a daily
basis. The maximum charges are:
<TABLE>
<CAPTION>
Variable Sub-Account Charges Annual Charge Daily Charge
---------------------------- ------------- ------------
<S> <C> <C>
Contract Years 1-7 1.40% .0038626%
Contract Years 8+ 1.25% .0034462%
</TABLE>
CHARGE DEDUCTION RULES - Unless otherwise specified above, charges are deducted
from the Account Value proportionately from all Sub-Accounts in which you are
invested.
ANNUITY INCOME BENEFITS
If you have not chosen an income plan, Life Annuity with 10 Years Certain will
automatically apply.
The Maximum Income Date is the first day of the first calendar month following
the Annuitant's 95/th/ birthday.
We reserve the right to require that the Income Date be at least 2 years after
this Contract Date.
The minimum amount that can be applied under any Variable or Fixed Income
Annuity is $5,000.
The minimum income payment is $100.
We currently allow assumed investment rates of 2.5% and 6%. If you do not
specify one of these rates when you choose an income plan, the assumed
investment rate will be 2.5%.
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer (Tables below show the minimum income
values and are based on 2.5% interest and the Annuity 2000 Mortality Tables) are
available on request. Monthly income payments are shown for each $1,000
applied.
DVA1-9712
Page 5
<PAGE>
INCOME TABLE FOR A FIXED PERIOD
<TABLE>
<CAPTION>
Fixed Period Monthly Income Fixed Period Monthly Income Fixed Period Monthly Income
of Years Payment of Years Payment of Years Payment
------------ -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
11 $8.66 21 $5.09
12 8.03 22 4.91
13 7.50 23 4.75
14 7.05 24 4.61
5 17.73 15 6.65 25 4.47
6 14.96 16 6.31 26 4.35
7 12.98 17 6.01 27 4.23
8 11.49 18 5.74 28 4.13
9 10.34 19 5.50 29 4.03
10 9.41 20 5.29 30 3.94
</TABLE>
INCOME TABLE FOR LIFE
<TABLE>
<CAPTION>
Male/Female Male/Female Male/Female
Age Life Only 10 Years Certain 20 Years Certain
--- ----------- ---------------- ----------------
<S> <C> <C> <C>
50 3.81/3.55 $3.78/3.54 $3.68/3.49
55 4.20/3.89 4.15/3.86 3.98/3.77
60 4.72/4.33 4.62/4.28 4.31/4.10
65 5.43/4.93 5.24/4.83 4.64/4.47
70 6.42/5.76 5.99/5.54 4.93/4.82
75 7.79/6.99 6.86/6.44 5.13/5.08
80 9.70/8.80 7.74/7.45 5.24/5.22
85 12.38/11.52 8.49/8.35 5.28/5.27
</TABLE>
RIDERS
Accidental Death Benefit Rider
The Maximum Accidental Death Benefit is $250,000.
DVA1-9712
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<PAGE>
DEFINITIONS
- --------------------------------------------------------------------------------
"ACCOUNT VALUE" is the entire amount we hold under this Contract for you before
the Income Date. It is equal to the sum of the Variable Account Value and the
Fixed Account Value.
"ACCUMULATION UNIT" is the unit of measure we use before the Income Date to keep
track of the value of each Variable Sub-Account.
"ANNUITANT" is the natural person whose age determines the Maximum Income Date
and the amount and duration of income payments involving life contingencies.
The Annuitant may also be the person to whom any payment will be made starting
on the Income Date. The Annuitant's name appears in the Schedule.
"BENEFICIARY" is the person or persons to whom we pay a death benefit if any
Owner dies prior to the Income Date.
"CONTRACT DATE" is the date this Contract is issued at our Customer Service
Center. The Contract Date is shown in the Schedule. While this Contract is in
force, every anniversary of the Contract Date is the CONTRACT ANNIVERSARY, and
each and every consecutive twelve-month period beginning on the Contract Date
and each Contract Anniversary is a CONTRACT YEAR.
"CONTINGENT ANNUITANT" is the natural person who becomes the Annuitant if the
Annuitant dies prior to the Income Date.
"CONTINGENT BENEFICIARY" is the person that becomes the Beneficiary if the named
Beneficiary dies prior to the Income Date.
"CUSTOMER SERVICE CENTER" is where we provide service to you. The mailing
address and telephone number of the Customer Service Center are shown on the
first page of this Contract.
"EXCESS WITHDRAWAL" is a withdrawal of Account Value that exceeds the Free
Withdrawal Amount.
"EXPIRY DATE" is the last day in a Guarantee Period.
"FIXED ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred.
"FIXED ACCOUNT VALUE" is the sum of the value of each Fixed Sub-Account on any
particular day.
A "FIXED SUB-ACCOUNT" is established when purchase payments are invested or
amounts are transferred to the Fixed Account. The value of each Fixed Sub-
Account is equal to the amount invested, increased by interest and reduced by
any withdrawals or transfers from, or charges assessed against the Fixed Sub-
Account.
"FREE WITHDRAWAL AMOUNT" is the maximum amount that can be withdrawn in the
Contract Year without being subject to a surrender charge. This amount is
described in the Schedule.
"GENERAL ACCOUNT" consists of all our assets other than those held in any
separate investment accounts.
"GUARANTEED INTEREST RATE" is the effective annual interest rate we will credit
for a specified Guarantee Period. The Guaranteed Interest Rate will never be
less than the minimum shown in the Schedule.
"GUARANTEE PERIOD" is a period of years for which a specified effective annual
interest rate is guaranteed by us. Interest is credited daily at a rate to
yield the declared annual Guaranteed Interest Rate.
"HOME OFFICE" is our main office. The mailing address is shown on the first
page of this Contract.
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<PAGE>
"INCOME DATE" is the date when income payments under this Contract commence.
This date is shown in the Schedule.
"INCOME UNIT" is the unit of measure we use to calculate the amount of income
payments under the Variable Income Annuity.
"MARKET VALUE ADJUSTMENT" is a positive or negative adjustment that may apply to
surrender, withdrawals, transfers, and amounts applied to an income plan, from a
Fixed Sub-Account before the end of a Guarantee Period.
"NET ASSET VALUE" is the price of one share of an investment portfolio.
"SATISFACTORY NOTICE" is a notice or request authorized by you, in a form
satisfactory to us, received at our Customer Service Center.
"SUB-ACCOUNT" includes both Variable Sub-Accounts and Fixed Sub-Accounts, unless
the context indicates otherwise.
"SURRENDER VALUE" is the amount you receive upon surrender of this Contract
before the Income Date. It is your Account Value, plus or minus any applicable
Market Value Adjustment, and less any applicable surrender charges or other
charges shown in the Schedule.
"VALUATION DATE" is the date at the end of a Valuation Period when each Variable
Sub-Account is valued.
"VALUATION PERIOD" is the period between one calculation of an Accumulation Unit
value and the next calculation. Normally, we calculate Accumulation Units daily
when the New York Stock Exchange is open for trading and we are open for
business. We can delay this calculation if an emergency exists, making disposal
or fair valuation of assets in the Variable Account not reasonably practicable,
or the Securities and Exchange Commission (SEC) permits the delay. We may
change when we calculate the Accumulation Unit value by giving you 30 days
notice, or such notice as may be required by law.
"VARIABLE ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred. The Variable
Account is shown in the Schedule.
"VARIABLE ACCOUNT VALUE" is the sum of the value of each Variable Sub-Account on
a Valuation Date.
"VARIABLE SUB-ACCOUNT" is a division of the Variable Account that invests in
shares of a particular investment portfolio. The value of a Variable Sub-
Account is determined by multiplying (a) times (b) where:
(a) equals the number of Accumulation Units held in the Variable Sub-
Account; and
(b) equals the value of the Accumulation Unit for the Variable Sub-
Account.
"WE", "US" OR "OUR" is Sage Life Assurance of America, Inc.
"YOU" OR "YOUR" is the Owner of this Contract. Your name appears in the
Schedule. You are entitled to exercise all rights under this Contract.
However, if you designate an irrevocable beneficiary, you may need that
beneficiary's consent before you exercise your rights under this Contract. The
death of any Owner before the Income Date initiates payment of the death
benefit.
DVA1-9712
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<PAGE>
MAKING PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT - You must make the initial purchase payment in order
to put this Contract in force. The amount of your initial purchase payment is
shown in the Schedule.
ADDITIONAL PURCHASE PAYMENTS - After the initial purchase payment, additional
purchase payments may be made at any time while this Contract is in force and
before the Income Date. The amount of any additional purchase payments may vary
but are subject to limits described in the Schedule.
ALLOCATION OF PURCHASE PAYMENTS AMONG THE VARIABLE AND FIXED ACCOUNTS - Subject
to limits described in the Schedule, you tell us how to allocate your purchase
payment, less any applicable taxes, by notifying us of your choices. You
specified how to allocate your initial purchase payment in your application for
this Contract. Initial purchase payments allocated to the Fixed Account will be
invested in Fixed Sub-Accounts with the Guarantee Periods that you specified in
your application. We may, however, require that an initial purchase payment
allocated to a Variable Sub-Account be invested in the Designated Sub-Account
shown in the Schedule during the Free Look Period. At the end of the Free Look
Period, if your initial purchase payment was allocated to the Designated Sub-
Account by us, we will transfer the value of the Designated Sub-Account to the
Sub-Account(s) you specified in your application. For the purpose of processing
transfers from the Designated Sub-Account, the Free Look Period will end 15 days
after the Contract Date.
Subject to our rules, you may tell us how to allocate any additional purchase
payments. If you do not tell us, they will be allocated in the same manner as
your most recent purchase payment.
CANCELLATION OF CONTRACT - If you have not made a purchase payment for more than
2 years and your Account Value is less than $2,000 on a Contract Anniversary, we
may cancel this Contract and pay you the Surrender Value as though you had made
a full withdrawal. We will send you written notice at your address of record.
You will be allowed 61 days from the date we mail you the notice to submit an
additional purchase payment to us in an amount not less than the difference
between $2,000 and the Account Value on the last Contract Anniversary. The
additional purchase payment is subject to the limits and minimums shown in the
Schedule.
VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
VARIABLE ACCOUNT - A variable account is an investment account we maintain
separate from our General Account and any other separate investment accounts we
may have. We own the assets in a variable account. A variable account will not
be charged with liabilities that arise from any other business that we conduct.
We may transfer to our General Account assets that exceed the reserves and other
liabilities of a variable account.
A variable account may invest in mutual funds, unit investment trusts and other
investment portfolios. Such a variable account is treated as a unit investment
trust under Federal securities laws and is registered with the SEC under the
Investment Company Act of 1940.
We may offer certain series or variable accounts that may not be registered with
the SEC under the Securities Act of 1933. Any such series or variable account,
if offered, will be described in the applicable offering document.
The Variable Account for this Contract is shown in the Schedule. The laws of
our state of domicile govern this Variable Account.
VARIABLE SUB-ACCOUNTS - A unit investment trust variable account includes
variable sub-accounts, each investing in a designated investment portfolio. The
sub-accounts and the investment portfolios in which they invest are specified in
the prospectus or offering document. Income, gains or losses, realized and
unrealized from assets in each variable sub-account are credited to or charged
against that variable sub-account without regard to other income, gains or
losses in the other sub-accounts or our other income, gains or losses.
DVA1-9712
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<PAGE>
CHANGES WITHIN THE VARIABLE ACCOUNT - We may, from time to time, make additional
Variable Sub-Accounts available to you. These Sub-Accounts will invest in
investment portfolios we find suitable for this Contract. We also have the
right to eliminate Sub-Accounts, to combine two or more Sub-Accounts or to
substitute a new investment portfolio for the portfolio in which a Sub-Account
invests. Such an action may become necessary if, in our judgment, a portfolio or
Sub-Account no longer suits the purposes of this Contract. This may happen due
to a change in laws or regulations, or a change in a portfolio's or Sub-
Account's investment objectives or restrictions, or because the portfolio or
Sub-Account is no longer available for investment, or for some other reason. We
will get prior approval from the insurance department of our state of domicile
before taking such action. If required, this approval process will be on file
with the insurance department of the jurisdiction in which this Contract is
delivered. We will also get any required approval from the SEC and any other
required approvals before taking such an action.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Sub-Accounts that we determine to be associated with the
class of contracts to which this Contract belongs, to another variable account
or variable sub-account.
When permitted by law, we reserve the right to:
1. Deregister the Variable Account under the Investment Company Act of
1940;
2. Operate the Variable Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit investment
trust;
3. Operate the Variable Account as a unit investment trust under the
Investment Company Act of 1940, if it is operating as a Managed
Separate Account;
4. Restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Variable Account;
5. Combine the Variable Account with other separate investment accounts;
and
6. Combine a Variable Sub-Account with another Variable Sub-Account.
If any actions we take result in a material change in the underlying investments
of a Variable Sub-Account in which you are invested, we will notify you of the
change. You may then choose a new Sub-Account.
ACCUMULATION UNITS - We keep track of the value of each of your Variable Sub-
Accounts by crediting you with Accumulation Units for each Sub-Account. The
number of Accumulation Units credited to you for each Sub-Account is determined
by dividing (a) by (b) where:
(a) is the dollar amount allocated to that Sub-Account; and
(b) is the value of the Accumulation Unit for that Sub-Account for the
Valuation Date on which the purchase payment or transferred amount is
invested in that Sub-Account.
Accumulation Units will be adjusted for any transfers and will be canceled on
payment of a death benefit, a withdrawal, a surrender, the application of
Account Value to an income plan on the Income Date, or assessment of charges
shown in the Schedule (other than the variable sub-account charges) based on
their value for the Valuation Period in which the transaction occurs.
VALUE OF ACCUMULATION UNITS - The Accumulation Unit value for any Valuation
Period is determined by multiplying (a) by (b) where:
(a) is the Accumulation Unit value for the immediately preceding Valuation
Period; and
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined.
The value of an Accumulation Unit may increase, decrease or remain the same from
one Valuation Period to the next.
DVA1-9712
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<PAGE>
NET INVESTMENT FACTOR - The net investment factor for a Variable Sub-Account is
an index that measures the investment performance of that Sub-Account from one
Valuation Period to the next. The net investment factor for any Valuation Period
is determined by dividing (a) by (b), and then subtracting (c) where:
(a) is the net result of:
(i) the Net Asset Value per share of the investment portfolio share
in which the Sub-Account invests determined at the end of the
current Valuation Period; plus
(ii) the per share amount of any dividend or capital gains
distribution made by that investment portfolio on shares held in
the Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period; and plus or minus
(iii) a per share charge or credit for any taxes reserved for, which
is determined by us to have resulted from the operations of that
Sub-Account;
(b) is the Net Asset Value per share of the investment portfolio share in
which the Sub-Account invests determined at the end of the immediately
preceding Valuation Period; and
(c) is the daily variable sub-account charges shown in the Schedule
(adjusted for the number of days in the Valuation Period).
The net investment factor may be more or less than, or equal to, one.
FIXED ACCOUNT
- --------------------------------------------------------------------------------
FIXED ACCOUNT - The Fixed Account is a separate investment account under state
insurance law. It is maintained separate from our General Account and separate
from any other separate investment account that we may have. We own the assets
in the Fixed Account. Notwithstanding the foregoing, our obligations under (and
the values and benefits under) the Fixed Account option of this Contract do not
vary as a function of the investment performance of the Fixed Account. Owners
and Beneficiaries with rights under this Contract do not participate in the
investment gains or losses of the assets of the Fixed Account. Such gains or
losses accrue solely to us. We retain the risk that the value of the assets in
the Fixed Account may fall below the reserves and other liabilities that we must
maintain in connection with our obligations under the Fixed Account option of
this Contract. In such event, we will transfer assets from our General Account
to the Fixed Account to make up the difference. The Fixed Account will not be
charged with liabilities that arise from any other business that we conduct. We
may transfer to our General Account assets that exceed the reserves and other
liabilities of the Fixed Account. The Fixed Account is not required to be
registered with the SEC as an investment company under the Investment Company
Act of 1940.
FIXED SUB-ACCOUNT - We will establish a separate Fixed Sub-Account for you each
time you allocate amounts to the Fixed Account. Amounts invested in these Fixed
Sub-Accounts earn interest at the Guaranteed Interest Rate in effect on the date
the amounts are allocated.
GUARANTEE PERIODS - Each Fixed Sub-Account is guaranteed an interest rate for a
period we refer to as a Guarantee Period. The Guaranteed Interest Rate for a
Fixed Sub-Account is effective for the entire Guarantee Period. The length of a
Guarantee Period is measured from the end of the calendar month in which the
amount is allocated to the Fixed Sub-Account. The last day of the Guarantee
Period is its Expiry Date. Surrender, or withdrawals or transfers from all or
part of a Fixed Sub-Account, and amounts applied to an income plan, made prior
to the Expiry Date of a Guarantee Period may be subject to a Market Value
Adjustment.
We will notify you at least thirty days prior to an Expiry Date of your options
for renewal, which include:
1. electing a new Guarantee Period from among those then offered by us,
but excluding any that extend beyond your Income Date; or
2. transferring the value of the Fixed Sub-Account to one or more
Variable Sub-Accounts.
DVA1-9712
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<PAGE>
If we do not receive Satisfactory Notice prior to the Expiry Date, we will
transfer the value of the expiring Fixed Sub-Account to a Fixed Sub-Account with
the same Guarantee Period, but not longer than 5 years, nor extending beyond
your Income Date. This transfer will be effective as of the Expiry Date of the
previous Guarantee Period.
GUARANTEED INTEREST RATES - Periodically, we will declare Guaranteed Interest
Rates for then available Guarantee Periods. These rates will be guaranteed for
the duration of the respective Guarantee Periods. Guaranteed Interest Rates will
never be less than the Minimum Guaranteed Interest Rate shown in the Schedule.
MARKET VALUE ADJUSTMENT - A Market Value Adjustment may be applied to surrender,
withdrawals, transfers or amounts applied to an income plan when taken from a
Fixed Sub-Account other than the thirty-day period prior to its Expiry Date. A
Market Value Adjustment is applied separately to each Fixed Sub-Account.
A Market Value Adjustment is determined by multiplying the amount surrendered,
withdrawn, transferred or applied to an income plan by the following factor:
[(1+I)/(1+J+.0025)]/N/365/-- 1
Where:
. I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period;
. J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period; and
. N is the remaining number of days in the Guarantee Period at the time
of calculation.
If there is no Index Rate for the maturity needed to calculate I or J, straight
line interpolation between the Index Rate of the next highest and next lowest
maturities will be used to determine that Index Rate. If the maturity is one
year or less, we will use the Index Rate for a one-year maturity.
Market Value Adjustments will be applied as follows:
1. For a surrender, withdrawal, transfer or amount applied to an income
plan, the Market Value Adjustment will be calculated on the total
amount that must be surrendered, withdrawn, transferred or applied to
an income plan in order to provide the amount requested.
2. If the Market Value Adjustment is negative, it is deducted from any
remaining value in the Fixed Sub-Account or amount surrendered. Any
remaining Market Value Adjustment is deducted from the amount
withdrawn, transferred or applied to an income plan.
3. If the Market Value Adjustment is positive, it is added to any
remaining value in the Fixed Sub-Accountor or amount surrendered. If
the full amount of the Fixed Sub-Account is withdrawn, transferred or
applied to an income plan, the Market Value Adjustment is added to the
amount withdrawn, transferred or applied to an income plan.
TRANSFERS AMONG ACCOUNTS
- --------------------------------------------------------------------------------
Prior to the Income Date and while the Annuitant is living, you may transfer
Account Value among Sub-Accounts. Certain restrictions may apply during the Free
Look Period. To make a transfer, you must give us Satisfactory Notice. Transfers
generally take effect when we receive the notice. The number of free transfers
that we allow each Contract Year is shown in the Charges section of the
Schedule. Restrictions for transfers are shown in the Schedule. A transfer from
a Fixed Sub-Account may be subject to a Market Value Adjustment. In addition to
the restrictions on transfers shown in the Schedule, we also may restrict
transfers:
. If any of the Sub-Accounts that would be affected by the transfer is unable
to purchase or redeem
DVA1-9712
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<PAGE>
shares of the Fund in which the Sub-Account invests; or
. If the transfer results in more than one trade involving the same Sub-
Account within a 30-day period; or
. If the transfer would adversely affect Accumulation Unit values (which may
occur if the transfer would affect one percent or more of the relevant
Fund's total assets).
Where permitted by law, we may accept your authorization of third party
transfers on your behalf. We may restrict the Sub-Accounts that will be
available to you for transfers of purchase payments during any period in which
you authorize such third party to act on your behalf. We will give you prior
notice of any such restrictions. However, we will not enforce such restrictions
if you provide us with satisfactory evidence that (i) such third party has been
appointed by a court of competent jurisdiction to act on your behalf, or (ii)
such third party has been appointed by you to act on your behalf for all your
financial affairs.
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
- --------------------------------------------------------------------------------
Prior to the Income Date and while the Annuitant is living, you may withdraw all
or part of your Account Value by giving us Satisfactory Notice. The minimum
withdrawal is shown in the Schedule.
If you request a surrender, we will terminate this Contract and pay you the
Surrender Value. This amount may also be applied to the income plans subject to
any restrictions described in this Contract. Unless specified otherwise, we will
make partial withdrawals as described in the Schedule. Surrender and withdrawals
generally take effect on the date we receive Satisfactory Notice.
If you make a withdrawal from this Contract in excess of the Free Withdrawal
Amount described in the Schedule, a surrender charge may be assessed. Surrender
charges are described in the Schedule. A withdrawal from the Fixed Account may
also be subject to a Market Value Adjustment.
EXCESS WITHDRAWALS - If a partial withdrawal is made for an amount greater than
the Free Withdrawal Amount, a surrender charge may be applicable. For purposes
of calculating the surrender charge only, purchase payments will be liquidated
in whole or in part on a "first-in-first-out-basis." This means we liquidate
purchase payments in the order they were made: the oldest unliquidated purchase
payment first, the next oldest unliquidated purchase payment second, etc., until
all purchase payments have been liquidated.
The surrender charge as to any liquidated purchase payment is determined by
multiplying the amount of the purchase payment being liquidated by the
applicable percentage shown in the Schedule. The total surrender charge will be
the sum of the surrender charges for each purchase payment being liquidated.
In a partial withdrawal, the surrender charge is deducted from the Account Value
remaining after you are paid the amount requested. The amount requested from a
Sub-Account may not exceed the value of that Sub-Account less any applicable
surrender charge. In a complete withdrawal (or surrender of this Contract), it
is deducted from the amount otherwise payable.
CHARGES
- --------------------------------------------------------------------------------
The types and amounts of charges and when and how they are deducted are
described in the Schedule.
OWNER, ANNUITANT AND BENEFICIARY
- --------------------------------------------------------------------------------
THE OWNER - You are the Owner of this Contract. You have the rights and options
described in this Contract, including but not limited to the right to receive
the income payments beginning on the Income
Page 13
DVA1-9712
<PAGE>
Date. One or more people may own this Contract.
THE ANNUITANT - Unless another Annuitant is shown in the Schedule, you are also
the Annuitant. You may name a Contingent Annuitant. You will be the Contingent
Annuitant unless you name someone else. If there are joint Owners, we will treat
the youngest Owner as the Contingent Annuitant, unless you elect otherwise.
If you are not the Annuitant and the Annuitant dies before the Income Date, the
Contingent Annuitant becomes the Annuitant. If the Annuitant dies and no
Contingent Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as Annuitant.
THE BENEFICIARY - We pay the death benefit to the primary Beneficiary (unless
there are joint Owners in which case proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death benefit is
paid to the Contingent Beneficiary, if any. If there is no surviving
Beneficiary, we pay the death benefit to the Owner's estate.
One or more persons may be named as primary Beneficiary or Contingent
Beneficiary. We will assume any death benefit is to be paid in equal shares to
the multiple surviving Beneficiaries unless you specify otherwise.
You have the right to change Beneficiaries. However, if you designate the
primary Beneficiary as irrevocable, you may need the consent of that irrevocable
Beneficiary to exercise the rights and options under this Contract.
CHANGE OF OWNER, BENEFICIARY OR ANNUITANT - During your lifetime and while this
Contract is in force you can transfer ownership of this Contract or change the
Beneficiary, or change the Annuitant. (However, the Annuitant cannot be changed
after the Income Date.) To make any of these changes, you must send us
Satisfactory Notice. If accepted, any change in Owner, Beneficiary or Annuitant
will take effect on the date you signed the notice. Any of these changes will
not affect any payment made or action taken by us before our acceptance. A
CHANGE OF OWNER MAY BE A TAXABLE EVENT and may also affect the amount of death
benefit payable under this Contract.
DEATH BENEFITS
- --------------------------------------------------------------------------------
DEATH BENEFIT BEFORE THE INCOME DATE - If any Owner dies before the Income Date,
we will pay the Beneficiary the greatest of the following:
(a) the Account Value determined as of the day we receive proof of death;
or
(b) 100% of the sum of all purchase payments made to this Contract, reduced
proportionately by any prior withdrawals (including any associated
surrender charge and Market Value Adjustment incurred); or
(c) the Highest Anniversary Value.
In addition, we will pay the Beneficiary any rider benefits that become due upon
the death of the Owner (or Annuitant, if no natural Owner). For the purposes of
the provisions entitled "Required Distributions of Proceeds on the Death of the
Owner" and "Proof of Death," any rider benefits payable will be considered part
of the "Death Benefit."
HIGHEST ANNIVERSARY VALUE - The Highest Anniversary Value is equal to the
greatest anniversary value attained from the following:
Upon our receipt of proof of death, we will calculate an anniversary value
for each Contract Anniversary before the Owner's death excluding, however,
Contract Anniversaries that come after the Owner attains age 80. An
anniversary value is equal to the Account Value on a Contract
Page 14
DVA1-9712
<PAGE>
Anniversary, increased by the dollar amount of any purchase payments made
since that Contract Anniversary and reduced for any withdrawals (including
any associated surrender charge and Market Value Adjustment incurred) taken
since that anniversary. This reduction will be made in proportion to the
reduction in the Account Value that results from a withdrawal.
MULTIPLE OWNERS - If there are multiple Owners, the age of the oldest Owner will
be used to determine the death benefit.
DEATH BENEFIT WHEN NO NATURAL OWNERS - If there is no Owner who is a natural
person, we will treat the Annuitant as Owner for the purpose of paying the death
benefit and any rider benefits, and the Annuitant's age will determine the death
benefit payable to the Beneficiary.
REQUIRED DISTRIBUTION OF PROCEEDS ON THE DEATH OF THE OWNER - The three sub-
sections indented below are required to qualify this Contract as an annuity
contract under Section 72(s) of the Internal Revenue Code of 1986, as amended.
Where the terms of these three sub-sections are in conflict with any other
sections or sub-sections of this Contract, these three sub-sections will
control. We reserve the right to amend or administer this Contract as necessary
to comply with the applicable tax requirements. These three sub-sections and
this Contract should be construed so that they comply with the applicable tax
requirements.
DEATH BENEFIT OPTIONS BEFORE INCOME DATE - In the event any Owner dies
before the Income Date, the death benefit may be taken in one sum, in which
case this Contract will terminate. Such sum shall be paid within five
years of the Owner's death unless one of the options for continuation of
this Contract below is elected by the person entitled to make that
election.
CONTRACT CONTINUATION OPTION - If the death benefit is not taken in one sum
immediately, this Contract will continue subject to the following
provisions:
1. If there are joint Owners, the surviving Owner becomes the new
Owner. Otherwise, the Beneficiary becomes the new Owner.
2. Unless specified otherwise, any excess of the death benefit over
the Account Value will be allocated to and among the Variable and
Fixed Accounts in proportion to their values as of the date on
which the death benefit is determined. We will establish a new
Fixed Sub-Account for any allocation to the Fixed Account based on
the Guarantee Period you then elect.
3. If the new Owner is not the deceased Owner's spouse, no additional
purchase payments may be applied to this Contract after the death
of the deceased Owner and the entire interest in this Contract
must be distributed under one of the following options:
a. The entire interest in this Contract must be distributed over
the life of the new Owner, or over a period not extending
beyond the life expectancy of the new Owner, with distributions
beginning within one year of the Owner's death; or
b. The entire interest in this Contract must be distributed within
5 years of the Owner's death.
4. If the new Owner is the deceased Owner's spouse, this Contract
will continue according to its terms and conditions with the
surviving spouse as the new Owner. The death benefit that would
otherwise be paid in a lump sum will become the Account Value as
of the Business Day we receive proof of death. The surviving
spouse may make additional purchase payments. The surviving spouse
may also name a new Beneficiary and choose a new Income Date. If
no Beneficiary is so named, the surviving spouse's estate will be
the Beneficiary. Upon the death of the surviving spouse before the
Income Date, the death benefit will be determined as provided in
the provision entitled, "Death Benefit Before the Income Date."
For this purpose only, item (b) is initially set equal to the
Account Value as of the Business Day we receive proof of death.
The entire interest in this Contract must be distributed to the
new Beneficiary in accordance with the provisions of 3.a. or 3.b.
above.
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DVA1-9712
<PAGE>
If there is more than one Beneficiary, the foregoing provisions will
independently apply to each Beneficiary.
DEATH BENEFIT ON OR AFTER THE INCOME DATE - If any Owner dies on or after
the Income Date but before the time the entire interest in this Contract
has been distributed, the remaining portion will be distributed at least as
rapidly as under the method of distribution being used as of the date of
the Owner's death.
If income payments have been selected based on an income plan providing for
payments for a guaranteed period, and the Annuitant dies on or after the
Income Date, we will make the remaining guaranteed payments to the
Beneficiary. Any remaining payments will be made as rapidly as under the
method of distribution being used as of the date of the Annuitant's death.
If no Beneficiary is living, we will commute any unpaid guaranteed payments
to a single sum (on the basis of the interest rate used in determining the
payments) and pay that single sum to the estate of the last to die of the
Annuitant or the Beneficiary.
PROOF OF DEATH - Proof of death must be received at our Customer Service Center
before we will pay any death benefit. We will accept one of the following
items:
1. An original certified copy of an official death Certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
ENTIRE CONTRACT - This Contract including any attached riders, endorsements,
amendments and the application, if one is attached to this contract when issued,
constitutes the entire contract between you and us. All statements made by you,
or any Owner, or any Annuitant will be deemed representations and not
warranties.
ASSIGNMENT - You may assign this Contract at any time prior to the Income Date.
No assignment will be binding on us unless we receive Satisfactory Notice. We
will not be liable for any payments made or actions we take before the
assignment is accepted by us. An absolute assignment will revoke the interest
of any revocable Beneficiary. We will not be responsible for the validity of
any assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
CLAIMS OF CREDITORS - To the extent permitted by law, no benefits payable under
this Contract will be subject to the claims of your, the Beneficiary's, or the
Annuitant's creditors.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL - We may require proof of age,
sex or survival of any person upon whose age, sex or survival any payments
depend. If the age or sex of the Annuitant has been misstated, or if the age of
the Owner has been misstated, the benefits will be those that the Account Value
applied would have provided for the correct age and sex. If we have made
incorrect income payments, the amount of any underpayment will be paid
immediately. The amount of any overpayment will be deducted from future income
payments.
NO DIVIDENDS PAYABLE - This Contract is non-participating and does not share in
any distribution of our surplus. We will not pay any dividends.
INCONTESTABILITY - This Contract is incontestable from its Contract Date.
REQUIRED REPORTS - We will furnish a report to you as often as required by law,
but at least once each Contract Year before the Income Date. The report will
show the number of Accumulation Units credited to each Variable Sub-Account in
which you are invested and the corresponding Accumulation Unit value as of the
date of the report. It will also show your Fixed Account Value.
Page 16
DVA1-9712
<PAGE>
MORTALITY AND EXPENSES - Our actual mortality and expense experience will not
affect the amount of any income payments or any other values under this
Contract.
TAXES BASED UPON PURCHASE PAYMENT OR VALUE - If there is a law or change in law
assessing taxes against us based upon purchase payments or value of this
Contract, we reserve the right to charge you and all similarly situated Owners
proportionately for that tax. This would include a tax based upon our realized
net capital gains in the Variable Sub-Accounts and on earnings in the Fixed
Account, on which we are not currently taxed.
PAYMENTS WE MAY DEFER - We may not be able to determine the value of the assets
of the Variable Sub-Accounts because:
1. The New York Stock Exchange is closed for trading;
2. The SEC determines that a state of emergency exists;
3. An order or pronouncement of the SEC permits a delay for the
protection of Owners; or
4. The check used to pay the purchase payment has not cleared through the
banking system. This may take up to 15 days.
If this happens, we may delay:
1. Determination and payment of the Surrender Value or any withdrawal;
2. Determination and payment of any death benefit if death occurs before
the Income Date;
3. Transfers of the Account Value; or
4. Application of the Account Value under an income plan.
We reserve the right to delay payment of amounts from the Fixed Account for up
to six months. If deferred 30 days or more, the amount deferred will earn
interest at a rate not less than the Minimum Deferral Interest Rate shown in the
Fixed Account section of the Schedule.
AUTHORITY TO MAKE AGREEMENTS - All agreements made by us must be signed by one
of our officers. No other person, including an insurance agent or broker, can
change the terms of this Contract or make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS - We have filed a detailed statement of our
computations with the insurance supervisory officials in the appropriate
jurisdictions. The values are not less than those required by the laws of those
states or jurisdictions. Any benefit provided by an attached rider will not
increase these values unless otherwise stated in that rider.
ANNUITY INCOME BENEFITS
- --------------------------------------------------------------------------------
CHOOSING AN INCOME DATE AND INCOME PLAN - On the Income Date, if the Annuitant
is alive and this Contract is in force, income payments will begin under the
income plan you have chosen. If you have not chosen an income plan, the option
shown in the Schedule will automatically apply. If you have not selected an
Income Date, the Maximum Income Date shown in the Schedule will automatically
apply.
You may choose or change an income plan or the Income Date by giving us
Satisfactory Notice at least 30 days before the Income Date. However, any
Income Date must meet the restrictions described in the Schedule.
Once income payments have begun, we reserve the right to disallow further
changes without our prior approval.
MINIMUM AMOUNTS - If the amount available to apply under any variable or fixed
option is less than the minimum amount shown in the Schedule, we reserve the
right to pay such amount in a lump sum in lieu of the payment otherwise provided
for.
Page 17
DVA1-9712
<PAGE>
Income payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by giving us Satisfactory Notice at least 30 days before the
Income Date. However, if at any time the payment becomes less than the minimum
income payment shown in the Schedule, we reserve the right to reduce the
frequency of payment to an interval that results in each payment being at least
equal to the minimum income payment. In no event will the interval be less
frequent than annual.
ALLOCATION OF ANNUITY - At the time you elect the income plan, you may also
elect to have the Account Value applied to provide a Variable Income Annuity, a
Fixed Income Annuity, or a combination of both. Unless you specify otherwise,
we will provide either variable or fixed, or a combination of variable and fixed
income payments in proportion to the Sub-Accounts in which you are invested as
of a date not more than 5 Valuation Days before the due date of the first income
payment. If any applicable purchase payment taxes are then due us, we will also
deduct them proportionately.
VARIABLE INCOME ANNUITY
AMOUNT OF FIRST VARIABLE PAYMENT - The Income Tables shown in the Schedule are
used to determine the first monthly variable income payment for an assumed
investment rate of 3%. The Income Tables show the dollar amount of the first
monthly variable income payment that can be purchased with each $1,000 applied.
The assumed investment rates we currently allow are shown on the Schedule.
VALUE OF INCOME UNITS - The Income Unit value for any Valuation Period is
determined by multiplying (a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate for the number
of days in the Valuation Period.
The value of an Income Unit may increase, decrease or remain the same from one
Valuation Period to the next.
NUMBER OF INCOME UNITS - We determine the number of Income Units in each
Variable Sub-Account by dividing the first monthly variable income payment
attributable to that Sub-Account by its Income Unit value as of a date not more
than 5 Valuation Days before the due date of the first variable income payment.
AMOUNT OF SECOND AND SUBSEQUENT VARIABLE PAYMENTS - The dollar amount of the
second and subsequent variable income payments may change with the investment
performance of the Variable Sub-Accounts. The total amount of each variable
income payment will be equal to the sum of the variable income payments in each
Variable Sub-Account. The dollar amount of each payment for a Variable Sub-
Account is determined by multiplying the number of Income Units by the Income
Unit value for the Variable Sub-Account for the Valuation Period which ends on a
consistently applied date not more than 5 Valuation Days before the payment is
due.
We guarantee that the dollar amount of each payment after the first will not be
affected by variations in our expenses or mortality experience.
EXCHANGE OF INCOME UNITS - After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of income
payment made on the date of exchange would be unaffected by the exchange.
DVA1-9712 Page 18
<PAGE>
FIXED INCOME ANNUITY
A Fixed Income Annuity is an annuity with income payments that remain fixed as
to dollar amount throughout the payment period. The Income Tables shown in the
Schedule are used to determine the monthly fixed income payment. The Income
Tables show the dollar amount of the monthly fixed income payment that can be
purchased with each $1,000 applied.
INCOME PLANS
The following is a list of income plans we guarantee to make available.
INCOME PLAN 1. LIFE ANNUITY - An annuity payable during the lifetime of the
Annuitant and terminating with the last payment preceding the death of the
Annuitant.
INCOME PLAN 2. LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN - An annuity payable
during the lifetime of the Annuitant with the provision that payments will be
made for a minimum of 10 or 20 years, as elected.
INCOME PLAN 3. JOINT AND LAST SURVIVOR ANNUITY - An annuity payable during the
joint lifetime of the Annuitant and a designated second person, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
prior to the death of the survivor.
INCOME PLAN 4. PAYMENTS FOR A SPECIFIED PERIOD CERTAIN - An amount payable for
the number of years selected which may be from 5 to 30 years.
INCOME PLAN 5. ANNUITY PLAN - An amount can be used to purchase any single
premium annuity we offer on the Income Date for which you and the Annuitant are
eligible.
DVA1-9712 Page 19
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
DVA1-9712 Page 20
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
DVA1-9712 Page 21
<PAGE>
[LOGO OF SAGE APPEARS HERE]
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CONTRACT
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
DVA1-9712
<PAGE>
Exhibit 4(a)(ii)(c)
[LOGO OF SAGE]
A Stock Company
Home Office Customer Service Center
300 Atlantic Street 1290 Silas Deane Highway
Stamford, CT 06901 Wethersfield, CT 06109
1-877-TEL-SAGE
PLEASE READ THIS CONTRACT CAREFULLY. This Contract is a legal contract between
the Contractholder (you) and Sage Life Assurance of America, Inc. You have the
rights described in the Contract. We will make Income Payments beginning on the
Income Date shown in the Schedule if the Annuitant is living on that date.
RIGHT TO EXAMINE THIS CONTRACT:
IF FOR ANY REASON YOU ARE NOT SATISFIED WITH THIS CONTRACT, YOU MAY RETURN IT TO
US OR THE AGENT WHO SOLD IT TO YOU WITHIN 10 DAYS AFTER YOU RECEIVE IT (THE FREE
LOOK PERIOD). WHEN WE RECEIVE IT, WE WILL PROMPTLY REFUND YOU THE ACCOUNT VALUE
PLUS ANY CHARGES SHOWN IN THE SCHEDULE THAT WE HAVE DEDUCTED FROM THE ACCOUNT
VALUE ON OR BEFORE THE DATE THE RETURNED CONTRACT WAS RECEIVED BY US, OR IF
REQUIRED BY THE LAW OF YOUR STATE, THE INITIAL PURCHASE PAYMENT (MINUS ANY
WITHDRAWALS).
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE
ACCOUNT, MAY INCREASE OR DECREASE, DEPENDING ON THIS CONTRACT'S INVESTMENT
RESULTS AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. ALL PAYMENTS AND VALUES
BASED ON THE INTEREST SEPARATE ACCOUNT MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT, THE OPERATION OF WHICH MAY CAUSE SUCH PAYMENTS AND VALUES TO
INCREASE OR DECREASE.
/s/ Ronald S. Scowby
------------------------------
Chairman
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Accidental Death Benefit
Nonparticipating
DVA1-9712OR
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SCHEDULE 3
DEFINITIONS 7
MAKING PURCHASE PAYMENTS 9
VARIABLE ACCOUNT 9
INTEREST SEPARATE ACCOUNT 11
TRANSFERS AMONG ACCOUNTS 12
SURRENDERING OR WITHDRAWING PART OF YOUR ACCOUNT VALUE 13
CHARGES 13
OWNER, ANNUITANT AND BENEFICIARY 14
DEATH BENEFITS 14
GENERAL PROVISIONS 16
ANNUITY INCOME BENEFITS 17
ACCIDENTAL DEATH BENEFIT 19
</TABLE>
DVA1-9712OR
Page 2
<PAGE>
SCHEDULE
Contract No.: 123456789
Owner: JOHN DOE Contract Date: 1/1/1998
Issue Age/Sex: 35/MALE :
Annuitant: JOHN DOE Income Date: 1/1/2038
Issue Age/Sex: 35/MALE
Initial Purchase :
Payment: $[10,000]
This Schedule sets forth additional information that relates to the provisions
in this Contract with the corresponding headings.
MAKING PURCHASE PAYMENTS
The Designated Sub-Account is the [Money Market Sub-Account].
No purchase payment, whether initial or additional, may be allocated such that
any Sub-Account would have a value less than $250.
Additional purchase payments are subject to the following limits:
1. [Non-qualified plan: Additional purchase payments may be made until the
earlier of the year in which you attain age 85 or the year in which the
Annuitant attains age 85.]
2. [Qualified plan: Additional purchase payments may be made until the
year in which you attain age 70 1/2, except rollover contributions may
be made until the year in which you attain age 85.]
3. The minimum additional purchase payment we will accept is $250.
4. Our prior approval is required before you make a purchase payment that
causes the Account Value of all annuities that you maintain with us to
exceed $1,000,000.
VARIABLE ACCOUNT
The Variable Account for this Contract is [The Sage Variable Annuity Account A].
[It is a unit investment trust variable account.]
INTEREST SEPARATE ACCOUNT
The Interest Separate Account for this Contract is [The Sage Fixed Interest
Account A.]
The Minimum Guaranteed Interest Rate is 3%.
The Minimum Deferral Interest Rate is 3%.
Index Rate: The Index Rate is the U.S. Treasury Constant Maturity Series as
reported in Federal Reserve Bulletin Release H.15. We currently base the Index
Rate for a calendar week on the reported rate for the preceding calendar week.
We reserve the right to set it less frequently but in no event less often than
monthly.
A Market Value Adjustment will not be applied to any amounts payable on the
Income Date or upon death.
An Interest Sub-Account with a Guarantee Period longer than 7 years is not
available in Oregon.
DVA1-9712OR
Page 3
<PAGE>
TRANSFERS AMONG ACCOUNTS
The minimum amount that can be transferred is $250. However, if less remains in
a Sub-Account, that amount may be transferred. If a transfer request would
reduce the Account Value remaining in a Sub-Account below $250, we will treat
the transfer request as a request to transfer the entire amount.
Your transfer request must clearly state the Sub-Accounts from which and to
which transfers are to be made.
We reserve the right to limit, upon notice, the maximum number of transfers you
may make to one per calendar month or 12 per Contract Year.
After the Income Date, we reserve the right to:
1. disallow transfers from the Interest Separate Account to the Variable
Account, or from the Variable Account to the Interest Separate
Account; and
2. limit the maximum number of transfers between Variable Sub-Accounts to
1 per Contract Year.
SURRENDERING OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
The Free Withdrawal Amount is the greater of (a) and (b) where:
(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals including any associated surrender charge and Market
Value Adjustment incurred in that Contract Year; and
(b) is the excess of the Account Value on the date of withdrawal over the
unliquidated purchase payments.
The minimum amount that can be withdrawn is $250. If a withdrawal request would
reduce the Account Value remaining in a Sub-Account below $250, we will treat
the withdrawal request as a request to withdraw the entire amount.
If a requested withdrawal would reduce the Account Value below $2,000, we
reserve the right to treat the request as a withdrawal of only the excess over
$2,000.
Unless you specify otherwise, we will make withdrawals proportionately from all
Sub-Accounts in which you are invested.
CHARGES
SURRENDER CHARGE - A surrender charge may be imposed upon surrender of this
Contract or when an Excess Withdrawal is made. A surrender charge will not be
imposed upon any amounts payable on the Income Date or upon death. The surrender
charge is applied to each purchase payment and is a percentage of each purchase
payment as follows:
Maximum
Contract Surrender Charge
Year Percentage
---- ----------
1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8+ 0%
DVA1-9712OR
Page 4
<PAGE>
TRANSFER CHARGE - We reserve the right to charge a maximum of $25 for each
transfer after the 12/th/ in a Contract Year. Each request is considered to be
one transfer regardless of the number of Sub-Accounts affected by the transfer.
The transfer charge will be deducted proportionately from all Sub-Accounts from
which the transfer is made.
ADMINISTRATION CHARGE - $40 a year. This charge is incurred at the beginning of
each Contract Year and deducted on each Contract Anniversary or upon surrender.
The charge will be waived:
1. if the Account Value is at least $50,000 at the time of deduction; or
2. beginning on and after the 8th Contract Anniversary.
PURCHASE PAYMENT TAX CHARGE - The amount of any state and local taxes levied by
any governmental entity on purchase payments may be deducted from the Account
Value when such taxes are incurred. We reserve the right to defer the collection
of this charge and deduct it against your Account Value on the surrender of this
Contract, or Excess Withdrawal, or application of the Account Value to provide
income payments.
THERE ARE NO PREMIUM TAXES LEVIED ON ANNUITIES BY THE STATE OF OREGON.
ASSET-BASED CHARGES - We deduct asset-based charges to compensate us for
assuming mortality and expense risks, and certain administrative expenses. Prior
to the Income Date asset-based charges are calculated as a percentage of the
Variable Account Value on the date of deduction. On this Contract Date, and
monthly thereafter, the asset-based charges are deducted in proportion to the
Variable Sub-Accounts in which you are invested. The maximum charges are:
Asset-Based Charges Annual Charge Monthly Charge
------------------- ------------- --------------
Contract Years 1-7 1.40% .116667%
Contract Years 8+ 1.25% .104167%
We also reserve the right to deduct asset-based charges on the effective date of
any transfer from the Interest Separate Account, or allocation of purchase
payment to the Variable Account, based on the amount transferred or allocated,
and based on the number of days remaining until the next date of deduction.
VARIABLE SUB-ACCOUNT CHARGES - On and after the Income Date we deduct the asset-
based charges above from the assets in each Variable Sub-Account on a daily
basis. The maximum charges are:
Variable Sub-Account Charges Annual Charge Daily Charge
---------------------------- ------------- ------------
Contract Years 1-7 1.40% .0038626%
Contract Years 8+ 1.25% .0034462%
CHARGE DEDUCTION RULES - Unless otherwise specified above, charges are deducted
from the Account Value proportionately from all Sub-Accounts in which you are
invested.
ANNUITY INCOME BENEFITS
If you have not chosen an income plan, Life Annuity with 10 Years Certain will
automatically apply.
The Maximum Income Date is the first day of the first calendar month following
the Annuitant's 95/th/ birthday.
We reserve the right to require that the Income Date be at least 2 years after
this Contract Date.
The minimum amount that can be applied under any Variable or Fixed Income
Annuity is $5,000.
The minimum income payment is $100.
We currently allow assumed investment rates of 2.5% and 6%. If you do not
specify one of these rates when you choose an income plan, the assumed
investment rate will be 2.5%.
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer (Tables below show the minimum income
values and are based on 2.5% interest and
DVA1-9712OR
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<PAGE>
the Annuity 2000 Mortality Tables) are available on request. Monthly income
payments are shown for each $1,000 applied.
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer are available on request. Monthly
income payments are shown for each $1,000 applied.
INCOME TABLE FOR A FIXED PERIOD
<TABLE>
<CAPTION>
Variable or Fixed Income Payment (2.5%) Variable Income Payment Only (5%)
Fixed Fixed Fixed Fixed Fixed Fixed
Period Monthly Period Monthly Period Monthly Period Monthly Period Monthly Period Monthly
Of Income Of Income Of Income Of Income Of Income Of Income
- -------- -------- ------ -------- -------- --------
Years Payment Years Payment Years Payment Years Payment Years Payment Years Payment
- -------- --------- -------- ---------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11 $ 8.66 21 $ 5.09 11 $ 9.81 21 $ 6.36
12 8.03 22 4.91 12 9.19 22 6.19
13 7.50 23 4.75 13 8.67 23 6.04
14 7.05 24 4.61 14 8.23 24 5.91
5 17.73 15 6.65 25 4.47 5 18.82 15 7.85 25 5.78
6 14.96 16 6.31 26 4.35 6 16.05 16 7.52 26 5.67
7 12.98 17 6.01 27 4.23 7 14.08 17 7.23 27 5.56
8 11.49 18 5.74 28 4.13 8 12.61 18 6.97 28 5.47
9 10.34 19 5.50 29 4.03 9 11.46 19 6.74 29 5.38
10 9.41 20 5.29 30 3.94 10 10.55 20 6.54 30 5.30
</TABLE>
INCOME TABLE FOR LIFE
<TABLE>
<CAPTION>
Variable or Fixed Income Annuity (2.5%) Variable Income Annuity Only (5%)
Male/Female Male/Female Male/Female Male/Female
Age Male/Female 10 Years 20 Years Male/Female 10 Years 20 Years
---
Life Only Certain Certain Life Only Certain Certain
--------- ------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
50 $ 3.81 / 3.55 $3.78 / 3.54 $3.68 / 3.49 $ 5.32 / 5.07 $5.28 / 5.04 $5.15 / 4.98
55 4.20 / 3.89 4.15 / 3.86 3.98 / 3.77 5.69 / 5.37 5.62 / 5.33 5.41 / 5.22
60 4.72 / 4.33 4.62 / 4.28 4.31 / 4.10 6.20 / 5.79 6.06 / 5.72 5.69 / 5.50
65 5.43 / 4.93 5.24 / 4.83 4.64 / 4.47 6.91 / 6.37 6.65 / 6.23 5.98 / 5.82
70 6.42 / 5.76 5.99 / 5.54 4.93 / 4.82 7.91 / 7.21 7.36 / 6.91 6.23 / 6.13
75 7.79 / 6.99 6.86 / 6.44 5.13 / 5.08 9.30 / 8.44 8.17 / 7.77 6.40 / 6.36
80 9.70 / 8.80 7.74 / 7.45 5.24 / 5.22 11.25 / 10.30 9.00 / 8.72 6.49 / 6.48
85 12.38 / 11.52 8.49 / 8.35 5.28 / 5.27 13.98 / 13.08 9.69 / 9.56 6.53 / 6.53
</TABLE>
INCOME TABLE FOR JOINT AND LAST SURVIVOR
<TABLE>
<CAPTION>
Variable or Fixed Income Variable Income Annuity
Annuity (2.5%) Only (5%)
Male/Female Monthly Income Monthly Income
Age of Each Payee Payment Payment
----------------- ------- -------
<S> <C> <C>
50/50 $ 3.26 4.76
55/55 3.51 4.98
60/60 3.85 5.28
65/65 4.30 5.69
70/70 4.92 6.29
75/75 5.79 7.15
80/80 7.04 8.39
85/85 8.84 10.20
</TABLE>
RIDERS
Accidental Death Benefit Rider
DVA1-9712OR
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<PAGE>
The Covered Person is either the Annuitant or the Owner as required by
IRS Code Section 72s. The Maximum Accidental Death Benefit is
$250,000.
DEFINITIONS
- --------------------------------------------------------------------------------
"ACCOUNT VALUE" is the entire amount we hold under this Contract for you before
the Income Date. It is equal to the sum of the Variable Account Value and the
Interest Separate Account Value.
"ACCUMULATION UNIT" is the unit of measure we use before the Income Date to keep
track of the value of each Variable Sub-Account.
"ANNUITANT" is the natural person whose age determines the Maximum Income Date
and the amount and duration of income payments involving life contingencies.
The Annuitant may also be the person to whom any payment will be made starting
on the Income Date. The Annuitant's name appears in the Schedule.
"BENEFICIARY" is the person or persons to whom we pay a death benefit if any
Owner dies prior to the Income Date.
"CONTRACT DATE" is the date this Contract is issued at our Customer Service
Center. The Contract Date is shown in the Schedule. While this Contract is in
force, every anniversary of the Contract Date is the CONTRACT ANNIVERSARY, and
each and every consecutive twelve-month period beginning on the Contract Date
and each Contract Anniversary is a CONTRACT YEAR.
"CONTINGENT ANNUITANT" is the natural person who becomes the Annuitant if the
Annuitant dies prior to the Income Date.
"CONTINGENT BENEFICIARY" is the person that becomes the Beneficiary if the named
Beneficiary dies prior to the Income Date.
"CUSTOMER SERVICE CENTER" is where we provide service to you. The mailing
address and telephone number of the Customer Service Center are shown on the
first page of this Contract.
"EXCESS WITHDRAWAL" is a withdrawal of Account Value that exceeds the Free
Withdrawal Amount.
"EXPIRY DATE" is the last day in a Guarantee Period.
"FREE WITHDRAWAL AMOUNT" is the maximum amount that can be withdrawn in the
Contract Year without being subject to a surrender charge. This amount is
described in the Schedule.
"GUARANTEED INTEREST RATE" is the effective annual interest rate we will credit
for a specified Guarantee Period. The Guaranteed Interest Rate will never be
less than the minimum shown in the Schedule.
"GUARANTEE PERIOD" is a period of years for which a specified effective annual
interest rate is guaranteed by us. Interest is credited daily at a rate to
yield the declared annual Guaranteed Interest Rate.
"HOME OFFICE" is our main office. The mailing address is shown on the first
page of this Contract.
"INCOME DATE" is the date when income payments under this Contract commence.
This date is shown in the Schedule.
"INCOME UNIT" is the unit of measure we use to calculate the amount of income
payments under the Variable Income Annuity.
"INTEREST SEPARATE ACCOUNT" is a separate investment account of ours into which
purchase payments
DVA1-9712OR
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<PAGE>
may be invested or Account Value may be transferred.
"INTEREST SEPARATE ACCOUNT VALUE" is the sum of the value of each Interest Sub-
Account on any particular day.
An "INTEREST SUB-ACCOUNT" is established when purchase payments are invested or
amounts are transferred to the Interest Separate Account. The value of each
Interest Sub-Account is equal to the amount invested, increased by interest and
reduced by any withdrawals or transfers from, or charges assessed against the
Interest Sub-Account.
"MARKET VALUE ADJUSTMENT" is a positive or negative adjustment that may apply to
surrender, withdrawals, transfers and amounts applied to an income plan, from an
Interest Sub-Account before the end of a Guarantee Period.
"NET ASSET VALUE" is the price of one share of an investment portfolio.
"SATISFACTORY NOTICE" is a notice or request authorized by you, in a form
satisfactory to us, received at our Customer Service Center.
"SUB-ACCOUNT" includes both Variable Sub-Accounts and Interest Sub-Accounts,
unless the context indicates otherwise.
"SURRENDER VALUE" is the amount you receive upon surrender of this Contract
before the Income Date. It is your Account Value, plus or minus any applicable
Market Value Adjustment, and less any applicable surrender charges or other
charges shown in the Schedule.
"VALUATION DATE" is the date at the end of a Valuation Period when each Variable
Sub-Account is valued.
"VALUATION PERIOD" is the period between one calculation of an Accumulation Unit
value and the next calculation. Normally, we calculate Accumulation Units daily
when the New York Stock Exchange is open for trading. We can delay this
calculation if the Securities and Exchange Commission (SEC) permits the delay.
We may change when we calculate the Accumulation Unit value, subject to any
required regulatory approvals, by giving you 30 days notice, or such notice as
may be required by law.
"VARIABLE ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred. The Variable
Account is shown in the Schedule.
"VARIABLE ACCOUNT VALUE" is the sum of the value of each Variable Sub-Account on
a Valuation Date.
"VARIABLE SUB-ACCOUNT" is a division of the Variable Account that invests in
shares of a particular investment portfolio. The value of a Variable Sub-
Account is determined by multiplying (a) times (b) where:
(a) equals the number of Accumulation Units held in the Variable Sub-
Account; and
(b) equals the value of the Accumulation Unit for the Variable Sub-
Account.
"WE", "US" OR "OUR" is Sage Life Assurance of America, Inc.
"YOU" OR "YOUR" is the Owner of this Contract. Your name appears in the
Schedule. You are entitled to exercise all rights under this Contract.
However, if you designate an irrevocable beneficiary, you may need that
beneficiary's consent before you exercise your rights under this Contract. The
death of any Owner before the Income Date initiates payment of the death
benefit.
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MAKING PURCHASE PAYMENTS
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INITIAL PURCHASE PAYMENT - You must make the initial purchase payment in order
to put this Contract in force. The amount of your initial purchase payment is
shown in the Schedule.
ADDITIONAL PURCHASE PAYMENTS - After the initial purchase payment, additional
purchase payments may be made at any time while this Contract is in force and
before the Income Date. The amount of any additional purchase payments may vary
but are subject to limits described in the Schedule.
ALLOCATION OF PURCHASE PAYMENTS AMONG THE VARIABLE AND INTEREST SEPARATE
ACCOUNTS - Subject to limits described in the Schedule, you tell us how to
allocate your purchase payment, less any applicable taxes, by notifying us of
your choices. You specified how to allocate your initial purchase payment in
your application for this Contract. Initial purchase payments allocated to the
Interest Separate Account will be invested in Interest Sub-Accounts with the
Guarantee Periods that you specified in your application. We may, however,
require that an initial purchase payment allocated to a Variable Sub-Account be
invested in the Designated Sub-Account shown in the Schedule during the Free
Look Period. At the end of the Free Look Period, if your initial purchase
payment was allocated to the Designated Sub-Account by us, we will transfer the
value of the Designated Sub-Account to the Sub-Account(s) you specified in your
application. For the purpose of processing transfers from the Designated Sub-
Account, the Free Look Period will end 15 days after the Contract Date.
Subject to limits described in the Schedule, you may tell us how to allocate any
additional purchase payments. If you do not tell us, they will be allocated in
the same manner as your most recent purchase payment.
CANCELLATION OF CONTRACT - If you have not made a purchase payment for more than
2 years and your Account Value is less than $2,000 on a Contract Anniversary, we
may cancel this Contract and pay you the Surrender Value as though you had made
a full withdrawal. We will send you written notice at your address of record.
You will be allowed 61 days from the date we mail you the notice to submit an
additional purchase payment to us in an amount not less than the difference
between $2,000 and the Account Value on the last Contract Anniversary. The
additional purchase payment is subject to the limits and minimums shown in the
Schedule.
VARIABLE ACCOUNT
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VARIABLE ACCOUNT - A variable account is an investment account we maintain
separate from our General Account and any other separate investment accounts we
may have. We own the assets in a variable account. A variable account will not
be charged with liabilities that arise from any other business that we conduct.
We may transfer to our General Account assets that exceed the reserves and other
liabilities of a variable account.
A variable account may invest in mutual funds, unit investment trusts and other
investment portfolios. Such a variable account is treated as a unit investment
trust under Federal securities laws and is registered with the SEC under the
Investment Company Act of 1940.
Subject to regulatory approval, we may offer certain series or variable accounts
that may not be registered with the SEC under the Securities Act of 1933. Any
such series or variable account, if offered, will be described in the applicable
offering document.
The Variable Account for this Contract is shown in the Schedule. The laws of
our state of domicile govern this Variable Account.
VARIABLE SUB-ACCOUNTS - A unit investment trust variable account includes
variable sub-accounts, each investing in a designated investment portfolio. The
sub-accounts and the investment portfolios in which they invest are specified in
the prospectus or offering document. Income, gains or losses, realized and
unrealized from assets in each variable sub-account are credited to or charged
against that variable sub-account without regard to other income, gains or
losses in the other sub-accounts or our other income, gains or losses.
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CHANGES WITHIN THE VARIABLE ACCOUNT - We may, from time to time, make additional
Variable Sub-Accounts available to you. These Sub-Accounts will invest in
investment portfolios we find suitable for this Contract. We also have the
right to eliminate Sub-Accounts, to combine two or more Sub-Accounts or to
substitute a new investment portfolio for the portfolio in which a Sub-Account
invests. Such an action may become necessary if, in our judgment, a portfolio or
Sub-Account no longer suits the purposes of this Contract. This may happen due
to a change in laws or regulations, or a change in a portfolio's or Sub-
Account's investment objectives or restrictions, or because the portfolio or
Sub-Account is no longer available for investment, or for some other reason. We
will get prior approval from the insurance department of our state of domicile
before taking such action. If required, this approval process will be on file
with the insurance department of the jurisdiction in which this Contract is
delivered. We will also get any required approval from the SEC and any other
required approvals before taking such an action.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Sub-Accounts that we determine to be associated with the
class of contracts to which this Contract belongs, to another variable account
or variable sub-account.
When permitted by law, we reserve the right to:
1. Deregister the Variable Account under the Investment Company Act of
1940;
2. Operate the Variable Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit
investment trust;
3. Operate the Variable Account as a unit investment trust under the
Investment Company Act of 1940, if it is operating as a Managed
Separate Account;
4. Restrict or eliminate any voting rights of Owners, or other persons
who have voting rights as to the Variable Account;
5. Combine the Variable Account with other separate investment accounts;
and
6. Combine a Variable Sub-Account with another Variable Sub-Account.
If any actions we take result in a material change in the underlying investments
of a Variable Sub-Account in which you are invested, we will notify you of the
change. You may then choose a new Sub-Account.
ACCUMULATION UNITS - We keep track of the value of each of your Variable Sub-
Accounts by crediting you with Accumulation Units for each Sub-Account. The
number of Accumulation Units credited to you for each Sub-Account is determined
by dividing (a) by (b) where:
(a) is the dollar amount allocated to that Sub-Account; and
(b) is the value of the Accumulation Unit for that Sub-Account for the
Valuation Date on which the purchase payment or transferred amount is
invested in that Sub-Account.
Accumulation Units will be adjusted for any transfers and will be canceled on
payment of a death benefit, a withdrawal, a surrender, the application of
Account Value to an income plan on the Income Date, or assessment of charges
shown in the Schedule (other than the variable sub-account charges) based on
their value for the Valuation Period in which the transaction occurs.
VALUE OF ACCUMULATION UNITS - The Accumulation Unit value for any Valuation
Period is determined by multiplying (a) by (b) where:
(a) is the Accumulation Unit value for the immediately preceding Valuation
Period; and
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined.
The value of an Accumulation Unit may increase, decrease or remain the same from
one Valuation Period to the next.
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NET INVESTMENT FACTOR - The net investment factor for a Variable Sub-Account is
an index that measures the investment performance of that Sub-Account from one
Valuation Period to the next. The net investment factor for any Valuation
Period is determined by dividing (a) by (b), and then subtracting (c) where:
(a) is the net result of:
(i) the Net Asset Value per share of the investment portfolio share
in which the Sub-Account invests determined at the end of the
current Valuation Period; plus
(ii) the per share amount of any dividend or capital gains
distribution made by that investment portfolio on shares held
in the Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period; and plus or minus
(iii) a per share charge or credit for any taxes reserved for, which
is determined by us to have resulted from the operations of
that Sub-Account;
(b) is the Net Asset Value per share of the investment portfolio share in
which the Sub-Account invests determined at the end of the immediately
preceding Valuation Period; and
(c) is the daily variable sub-account charges shown in the Schedule
(adjusted for the number of days in the Valuation Period).
The net investment factor may be more or less than, or equal to, one.
INTEREST SEPARATE ACCOUNT
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INTEREST SEPARATE ACCOUNT - The Interest Separate Account is a separate
investment account under state insurance law. It is maintained separate from
our General Account and separate from any other separate investment account that
we may have. We own the assets in the Interest Separate Account.
Notwithstanding the foregoing, our obligations under (and the values and
benefits under) the Interest Separate Account option of this Contract do not
vary as a function of the investment performance of the Interest Separate
Account. Owners and Beneficiaries with rights under this Contract do not
participate in the investment gains or losses of the assets of the Interest
Separate Account. Such gains or losses accrue solely to us. We retain the risk
that the value of the assets in the Interest Separate Account may fall below the
reserves and other liabilities that we must maintain in connection with our
obligations under the Interest Separate Account option of this Contract. In
such event, we will transfer assets from our General Account to the Interest
Separate Account to make up the difference. The Interest Separate Account will
not be charged with liabilities that arise from any other business that we
conduct. We may transfer to our General Account assets that exceed the reserves
and other liabilities of the Interest Separate Account. The Interest Separate
Account is not required to be registered with the SEC as an investment company
under the Investment Company Act of 1940.
INTEREST SUB-ACCOUNT - We will establish a separate Interest Sub-Account for you
each time you allocate amounts to the Interest Separate Account. Amounts
invested in these Interest Sub-Accounts earn interest at the Guaranteed Interest
Rate in effect on the date the amounts are allocated.
GUARANTEE PERIODS - Each Interest Sub-Account is guaranteed an interest rate for
a period we refer to as a Guarantee Period. The Guaranteed Interest Rate for an
Interest Sub-Account is effective for the entire Guarantee Period. The length
of a Guarantee Period is measured from the end of the calendar month in which
the amount is allocated to the Interest Sub-Account. The last day of the
Guarantee Period is its Expiry Date. Surrender, or withdrawals or transfers
from all or part of an Interest Sub-Account, and amounts applied to an income
plan, made prior to the Expiry Date of a Guarantee Period may be subject to a
Market Value Adjustment.
We will notify you at least thirty days prior to an Expiry Date of your options
for renewal, which include:
1. electing a new Guarantee Period from among those then offered by us,
but excluding any that extend beyond your Income Date; or
2. transferring the value of the Interest Sub-Account to one or more
Variable Sub-Accounts.
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If we do not receive Satisfactory Notice prior to the Expiry Date, we will
transfer the value of the expiring Interest Sub-Account to a Interest Sub-
Account with the same Guarantee Period, but not longer than 5 years, nor
extending beyond your Income Date. The transfer will be effective as of the
Expiry Date of the previous Guarantee Period.
GUARANTEED INTEREST RATES - Periodically, we will declare Guaranteed Interest
Rates for then available Guarantee Periods. These rates will be guaranteed for
the duration of the respective Guarantee Periods. Guaranteed Interest Rates will
never be less than the Minimum Guaranteed Interest Rate shown in the Schedule.
MARKET VALUE ADJUSTMENT - A Market Value Adjustment may be applied to surrender,
withdrawals, transfers or amounts applied to an income plan when taken from an
Interest Sub-Account other than during the thirty-day period prior to its Expiry
Date. A Market Value Adjustment is applied separately to each Interest Sub-
Account. A Market Value Adjustment does not apply to the One Year Guarantee
Period.
A Market Value Adjustment is determined by multiplying the amount surrendered,
withdrawn, transferred or applied to an income plan by the following factor:
[(1+I)/(1+J+.0025)]/N/365/____1
Where:
. I is the Index Rate for a maturity equal to the Interest Sub-Account's
Guarantee Period;
. J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Interest Sub-Account's
Guarantee Period; and
. N is the remaining number of days in the Guarantee Period at the time
of calculation.
If there is no Index Rate for the maturity needed to calculate I or J, straight
line interpolation between the Index Rate of the next highest and next lowest
maturities will be used to determine that Index Rate. If the maturity is one
year or less, we will use the Index Rate for a one-year maturity.
Market Value Adjustments will be applied as follows:
1. For a surrender, withdrawal, transfer or amount applied to an income
plan, the Market Value Adjustment will be calculated on the total
amount that must be surrendered, withdrawn, transferred or applied to
an income plan in order to provide the amount requested.
2. If the Market Value Adjustment is negative, it is deducted from any
remaining value in the Interest Sub-Account or amount surrendered. Any
remaining Market Value Adjustment is deducted from the amount
withdrawn, transferred or applied to an income plan.
3. If the Market Value Adjustment is positive, it is added to any
remaining value in the Interest Sub-Account or amount surrendered. If
the full amount of the Interest Sub-Account is withdrawn, transferred
or applied to an income plan, the Market Value Adjustment is added to
the amount withdrawn, transferred or applied to an income plan.
TRANSFERS AMONG ACCOUNTS
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Prior to the Income Date and while the Annuitant is living, you may transfer
Account Value among Sub-Accounts. Certain restrictions may apply during the Free
Look Period. To make a transfer, you must give us Satisfactory Notice. Transfers
generally take effect when we receive the notice. The number of free transfers
that we allow each Contract Year is shown in the Charges section of the
Schedule. Restrictions for transfers are shown in the Schedule. A transfer from
an Interest Sub-Account may be subject to a Market Value Adjustment. In addition
to the restrictions on transfers shown in the Schedule,
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we also may restrict transfers:
. If any of the Sub-Accounts that would be affected by the transfer is
unable to purchase or redeem shares of the Fund in which the Sub-
Account invests; or
. If the transfer results in more than one trade involving the same Sub-
Account within a 30-day period; or
. If the transfer would adversely affect Accumulation Unit values (which
may occur if the transfer would affect one percent or more of the
relevant Fund's total assets).
Where permitted by law, we may accept your authorization of third party
transfers on your behalf. We may restrict the Sub-Accounts that will be
available to you for transfers of purchase payments during any period in which
you authorize such third party to act on your behalf. We will give you prior
notice of any such restrictions. However, we will not enforce such restrictions
if you provide us with satisfactory evidence that (i) such third party has been
appointed by a court of competent jurisdiction to act on your behalf, or (ii)
such third party has been appointed by you to act on your behalf for all your
financial affairs.
SURRENDERING OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
- --------------------------------------------------------------------------------
Prior to the Income Date and while the Annuitant is living, you may withdraw all
or part of your Account Value by giving us Satisfactory Notice. The minimum
withdrawal is shown in the Schedule.
If you request a surrender, we will terminate this Contract and pay you the
Surrender Value. This amount may also be applied to the income plans subject to
any restrictions described in this Contract. Unless specified otherwise, we will
make partial withdrawals as described in the Schedule. Surrender and withdrawals
generally take effect on the date we receive Satisfactory Notice.
If you make a withdrawal from this Contract in excess of the Free Withdrawal
Amount described in the Schedule, a surrender charge may be assessed. Surrender
charges are described in the Schedule. A withdrawal from the Interest Separate
Account may also be subject to a Market Value Adjustment.
EXCESS WITHDRAWALS - If a partial withdrawal is made for an amount greater than
the Free Withdrawal Amount, a surrender charge may be applicable. For purposes
of calculating the surrender charge only, purchase payments will be liquidated
in whole or in part on a "first-in-first-out-basis." This means we liquidate
purchase payments in the order they were made: the oldest unliquidated purchase
payment first, the next oldest unliquidated purchase payment second, etc., until
all purchase payments have been liquidated.
The surrender charge as to any liquidated purchase payment is determined by
multiplying the amount of the purchase payment being liquidated by the
applicable percentage shown in the Schedule. The total surrender charge will be
the sum of the surrender charges for each purchase payment being liquidated.
In a partial withdrawal, the surrender charge is deducted from the Account Value
remaining after you are paid the amount requested. The amount requested from a
Sub-Account may not exceed the value of that Sub-Account less any applicable
surrender charge. In a complete withdrawal (or surrender of this Contract), it
is deducted from the amount otherwise payable.
CHARGES
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The types and amounts of charges and when and how they are deducted are
described in the Schedule.
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OWNER, ANNUITANT AND BENEFICIARY
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THE OWNER - You are the Owner of this Contract. You have the rights and options
described in this Contract, including but not limited to the right to receive
the income payments beginning on the Income Date. One or more people may own
this Contract.
THE ANNUITANT - Unless another Annuitant is shown in the Schedule, you are also
the Annuitant. You may name a Contingent Annuitant. You will be the Contingent
Annuitant unless you name someone else. If there are joint Owners, we will
treat the youngest Owner as the Contingent Annuitant, unless you elect
otherwise.
If you are not the Annuitant and the Annuitant dies before the Income Date, the
Contingent Annuitant becomes the Annuitant. If the Annuitant dies and no
Contingent Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as Annuitant.
THE BENEFICIARY - We pay the death benefit to the primary Beneficiary (unless
there are joint Owners in which case proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death benefit is
paid to the Contingent Beneficiary, if any. If there is no surviving
Beneficiary, we pay the death benefit to the Owner's estate.
One or more persons may be named as primary Beneficiary or Contingent
Beneficiary. We will assume any death benefit is to be paid in equal shares to
the multiple surviving Beneficiaries unless you specify otherwise.
You have the right to change Beneficiaries. However, if you designate the
primary Beneficiary as irrevocable, you may need the consent of that irrevocable
Beneficiary to exercise the rights and options under this Contract.
CHANGE OF OWNER, BENEFICIARY OR ANNUITANT - During your lifetime and while this
Contract is in force you can transfer ownership of this Contract or change the
Beneficiary, or change the Annuitant. (However, the Annuitant cannot be changed
after the Income Date.) To make any of these changes, you must send us
Satisfactory Notice. If accepted, any change in Owner, Beneficiary or Annuitant
will take effect on the date you signed the notice. Any of these changes will
not affect any payment made or action taken by us before our acceptance. A
CHANGE OF OWNER MAY BE A TAXABLE EVENT and may also affect the amount of death
benefit payable under this Contract.
DEATH BENEFITS
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DEATH BENEFIT BEFORE THE INCOME DATE - If any Owner dies before the Income Date,
we will pay the Beneficiary the greatest of the following:
(a) the Account Value determined as of the day we receive proof of death;
or
(b) 100% of the sum of all purchase payments made to this Contract,
reduced proportionately by any prior withdrawals (including any
associated surrender charge and Market Value Adjustment incurred); or
(c) the Highest Anniversary Value.
In addition, we will pay the Beneficiary any rider benefits that become due upon
the death of the Owner (or Annuitant, if no natural Owner). For the purposes of
the provisions entitled "Required Distributions of Proceeds on the Death of the
Owner" and "Proof of Death," any rider benefits payable will be considered part
of the "Death Benefit."
HIGHEST ANNIVERSARY VALUE - The Highest Anniversary Value is equal to the
greatest anniversary value attained from the following:
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Upon our receipt of proof of death, we will calculate an anniversary value
for each Contract Anniversary before the Owner's death excluding, however,
Contract Anniversaries that come after the Owner attains age 80. An
anniversary value is equal to the Account Value on this Contract
Anniversary, increased by the dollar amount of any purchase payments made
since that Contract Anniversary and reduced for any withdrawals (including
any associated surrender charge and Market Value Adjustment incurred) taken
since that anniversary. This reduction will be made in proportion to the
reduction in the Account Value that results from a withdrawal.
MULTIPLE OWNERS - If there are multiple Owners, the age of the oldest Owner will
be used to determine the death benefit.
DEATH BENEFIT WHEN NO NATURAL OWNERS - If there is no Owner who is a natural
person, we will treat the Annuitant as Owner for the purpose of paying the death
benefit and any rider benefits, and the Annuitant's age will determine the death
benefit payable to the Beneficiary.
REQUIRED DISTRIBUTION OF PROCEEDS ON THE DEATH OF THE OWNER - The three sub-
sections indented below are required to qualify this Contract as an annuity
contract under Section 72(s) of the Internal Revenue Code of 1986, as amended.
Where the terms of these three sub-sections are in conflict with any other
sections or sub-sections of this Contract, these three sub-sections will
control. We reserve the right to amend or administer this Contract as necessary
to comply with the applicable tax requirements. These three sub-sections and
this Contract should be construed so that they comply with the applicable tax
requirements.
DEATH BENEFIT OPTIONS BEFORE INCOME DATE - In the event any Owner dies
before the Income Date, the death benefit may be taken in one sum, in which
case this Contract will terminate. Such sum shall be paid within five
years of the Owner's death unless one of the options for continuation of
this Contract below is elected by the person entitled to make that
election.
CONTRACT CONTINUATION OPTION - If the death benefit is not taken in one sum
immediately, this Contract will continue subject to the following
provisions:
1. If there are joint Owners, the surviving Owner becomes the new
Owner. Otherwise, the Beneficiary becomes the new Owner.
2. Unless specified otherwise, any excess of the death benefit over
the Account Value will be allocated to and among the Variable and
Interest Separate Accounts in proportion to their values as of
the date on which the death benefit is determined. We will
establish a new Interest Sub-Account for any allocation to the
Interest Separate Account based on the Guarantee Period you then
elect.
3. If the new Owner is not the deceased Owner's spouse, no
additional purchase payments may be applied to this Contract
after the death of the deceased Owner and the entire interest in
this Contract must be distributed under one of the following
options:
a. The entire interest in this Contract must be distributed
over the life of the new Owner, or over a period not
extending beyond the life expectancy of the new Owner, with
distributions beginning within one year of the Owner's
death; or
b. The entire interest in this Contract must be distributed
within 5 years of the Owner's death.
4. If the new Owner is the deceased Owner's spouse, this Contract
will continue according to its terms and conditions with the
surviving spouse as the new Owner. The death benefit that would
otherwise be paid in a lump sum will become the Account Value as
of the Business Day we receive proof of death. The surviving
spouse may make additional purchase payments. The surviving
spouse may also name a new Beneficiary and choose a new Income
Date. If no Beneficiary is so named, the surviving spouse's
estate will be the Beneficiary. Upon the death of the surviving
spouse before the Income Date, the death benefit will be
determined as provided in the provision entitled, "Death Benefit
Before the Income Date." For this purpose only, item (b) is
initially set equal to the
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Account Value as of the Business Day we receive proof of death.
The entire interest in this Contract must be distributed to the
new Beneficiary in accordance with the provisions of 3.a. or 3.b.
above.
If there is more than one Beneficiary, the foregoing provisions will
independently apply to each Beneficiary.
DEATH BENEFIT ON OR AFTER THE INCOME DATE - If any Owner dies on or after
the Income Date but before the time the entire interest in this Contract
has been distributed, the remaining portion will be distributed at least as
rapidly as under the method of distribution being used as of the date of
the Owner's death.
If income payments have been selected based on an income plan providing for
payments for a guaranteed period, and the Annuitant dies on or after the
Income Date, we will make the remaining guaranteed payments to the
Beneficiary. Any remaining payments will be made as rapidly as under the
method of distribution being used as of the date of the Annuitant's death.
If no Beneficiary is living, we will commute any unpaid guaranteed payments
to a single sum (on the basis of the interest rate used in determining the
payments) and pay that single sum to the estate of the last to die of the
Annuitant or the Beneficiary.
PROOF OF DEATH - Proof of death must be received at our Customer Service Center
before we will pay any death benefit. We will accept one of the following
items:
1. An original certified copy of an official death Certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
ENTIRE CONTRACT - This Contract including any attached riders, endorsements,
amendments and the application, if one is attached to this contract when issued,
constitutes the entire contract between you and us. All statements made by you,
or any Owner, or any Annuitant will be deemed representations and not
warranties.
ASSIGNMENT - You may assign this Contract at any time prior to the Income Date.
No assignment will be binding on us unless we receive Satisfactory Notice. We
will not be liable for any payments made or actions we take before the
assignment is accepted by us. An absolute assignment will revoke the interest
of any revocable Beneficiary. We will not be responsible for the validity of
any assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
CLAIMS OF CREDITORS - To the extent permitted by law, no benefits payable under
this Contract will be subject to the claims of your, the Beneficiary's, or the
Annuitant's creditors.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL - We may require proof of age,
sex or survival of any person upon whose age, sex or survival any payments
depend. If the age or sex of the Annuitant has been misstated, or if the age of
the Owner has been misstated, the benefits will be those that the Account Value
applied would have provided for the correct age and sex. If we have made
incorrect income payments, the amount of any underpayment will be paid
immediately. The amount of any overpayment will be deducted from future income
payments.
NO DIVIDENDS PAYABLE - This Contract is non-participating and does not share in
any distribution of our surplus. We will not pay any dividends.
INCONTESTABILITY - This Contract is incontestable from its Contract Date.
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REQUIRED REPORTS - We will furnish a report to you as often as required by law,
but at least once each Contract Year before the Income Date. The report will
show the number of Accumulation Units credited to each Variable Sub-Account in
which you are invested and the corresponding Accumulation Unit value as of the
date of the report. It will also show your Interest Separate Account Value.
MORTALITY AND EXPENSES - Our actual mortality and expense experience will not
affect the amount of any income payments or any other values under this
Contract.
TAXES BASED UPON PURCHASE PAYMENT OR VALUE - If there is a law or change in law
assessing taxes against us based upon purchase payments or value of this
Contract, we reserve the right to charge you and all similarly situated Owners
proportionately for that tax. This would include a tax based upon our realized
net capital gains in the Variable Sub-Accounts and on earnings in the Interest
Separate Account, on which we are not currently taxed.
PAYMENTS WE MAY DEFER - We may not be able to determine the value of the assets
of the Variable Sub-Accounts because:
1. The New York Stock Exchange is closed for trading;
2. The SEC determines that a state of emergency exists;
3. An order or pronouncement of the SEC permits a delay for the
protection of Owners; or
4. The check used to pay the purchase payment has not cleared through the
banking system. This may take up to 15 days.
If this happens, we may delay:
1. Determination and payment of the Surrender Value or any withdrawal;
2. Determination and payment of any death benefit if death occurs before
the Income Date;
3. Transfers of the Account Value; or
4. Application of the Account Value under an income plan.
We reserve the right to delay payment of amounts from the Interest Separate
Account for up to six months. If deferred 30 days or more, the amount deferred
will earn interest at a rate not less than the Minimum Deferral Interest Rate
shown in the Interest Separate Account section of the Schedule.
AUTHORITY TO MAKE AGREEMENTS - All agreements made by us must be signed by one
of our officers. No other person, including an insurance agent or broker, can
change the terms of this Contract or make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS - We have filed a detailed statement of our
computations with the insurance supervisory officials in the appropriate
jurisdictions. The values are not less than those required by the laws of those
states or jurisdictions. Any benefit provided by an attached rider will not
increase these values unless otherwise stated in that rider.
ANNUITY INCOME BENEFITS
- --------------------------------------------------------------------------------
CHOOSING AN INCOME DATE AND INCOME PLAN - On the Income Date, if the Annuitant
is alive and this Contract is in force, income payments will begin under the
income plan you have chosen. If you have not chosen an income plan, the option
shown in the Schedule will automatically apply. If you have not selected an
Income Date, the Maximum Income Date shown in the Schedule will automatically
apply.
You may choose or change an income plan or the Income Date by giving us
Satisfactory Notice at least 30 days before the Income Date. However, any Income
Date must meet the restrictions described in the
DVA1-9712OR
Page 17
<PAGE>
Schedule.
Once income payments have begun, we reserve the right to disallow further
changes without our prior approval.
MINIMUM AMOUNTS - If the amount available to apply under any variable or fixed
option is less than the minimum amount shown in the Schedule, we reserve the
right to pay such amount in a lump sum in lieu of the payment otherwise provided
for.
Income payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by giving us Satisfactory Notice at least 30 days before the
Income Date. However, if at any time the payment becomes less than the minimum
income payment shown in the Schedule, we reserve the right to reduce the
frequency of payment to an interval that results in each payment being at least
equal to the minimum income payment. In no event will the interval be less
frequent than annual.
ALLOCATION OF ANNUITY - At the time you elect the income plan, you may also
elect to have the Account Value applied to provide a Variable Income Annuity, a
Fixed Income Annuity, or a combination of both. Unless you specify otherwise,
we will provide either variable or fixed, or a combination of variable and fixed
income payments in proportion to the Sub-Accounts in which you are invested as
of a date not more than 5 Valuation Days before the due date of the first income
payment.
VARIABLE INCOME ANNUITY
AMOUNT OF FIRST VARIABLE PAYMENT - The Income Tables shown in the Schedule are
used to determine the first monthly variable income payment for an assumed
investment rate of 3%. The Income Tables show the dollar amount of the first
monthly variable income payment that can be purchased with each $1,000 applied.
The assumed investment rates we currently allow are shown on the Schedule.
VALUE OF INCOME UNITS - The Income Unit value for any Valuation Period is
determined by multiplying (a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate for the number
of days in the Valuation Period.
The value of an Income Unit may increase, decrease or remain the same from one
Valuation Period to the next.
NUMBER OF INCOME UNITS - We determine the number of Income Units in each
Variable Sub-Account by dividing the first monthly variable income payment
attributable to that Sub-Account by its Income Unit value as of a date not more
than 5 Valuation Days before the due date of the first variable income payment.
AMOUNT OF SECOND AND SUBSEQUENT VARIABLE PAYMENTS - The dollar amount of the
second and subsequent variable income payments may change with the investment
performance of the Variable Sub-Accounts. The total amount of each variable
income payment will be equal to the sum of the variable income payments in each
Variable Sub-Account. The dollar amount of each payment for a Variable Sub-
Account is determined by multiplying the number of Income Units by the Income
Unit value for the Variable Sub-Account for the Valuation Period which ends on a
consistently applied date not more than 5 Valuation Days before the payment is
due.
We guarantee that the dollar amount of each payment after the first will not be
affected by variations in our expenses or mortality experience.
DVA1-9712OR
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<PAGE>
EXCHANGE OF INCOME UNITS - After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of income
payment made on the date of exchange would be unaffected by the exchange.
FIXED INCOME ANNUITY
A Fixed Income Annuity is an annuity with income payments that remain fixed as
to dollar amount throughout the payment period. The Income Tables shown in the
Schedule are used to determine the monthly fixed income payment. The Income
Tables show the dollar amount of the monthly fixed income payment that can be
purchased with each $1,000 applied.
INCOME PLANS
The following is a list of income plans we guarantee to make available.
INCOME PLAN 1. LIFE ANNUITY - An annuity payable during the lifetime of the
Annuitant and terminating with the last payment preceding the death of the
Annuitant.
INCOME PLAN 2. LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN - An annuity payable
during the lifetime of the Annuitant with the provision that payments will be
made for a minimum of 10 or 20 years, as elected.
INCOME PLAN 3. JOINT AND LAST SURVIVOR ANNUITY - An annuity payable during the
joint lifetime of the Annuitant and a designated second person, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
prior to the death of the survivor.
INCOME PLAN 4. PAYMENTS FOR A SPECIFIED PERIOD CERTAIN - An amount payable for
the number of years selected which may be from 5 to 30 years.
INCOME PLAN 5. ANNUITY PLAN - An amount can be used to purchase any single
premium annuity we offer on the Income Date for which you and the Annuitant are
eligible.
ACCIDENTAL DEATH BENEFIT
- --------------------------------------------------------------------------------
Benefit - The Accidental Death Benefit is equal to the purchase payments made
minus any withdrawals (including any associated Market Value Adjustment and
surrender charge incurred) determined as of the date of the Covered Person's
death, up to a maximum amount shown in the Contract Schedule.
The Covered Person is the person whose death causes the death benefit to be
paid. (See Death Benefits provision on page 14.)
Conditions - The following conditions must be satisfied before the Accidental
Death Benefit becomes payable:
1. The Covered Person's death must be an accidental death.
2. The accidental death must occur while this Contract is in force and
prior to the first Contract Anniversary after which the Covered Person
attains age 80.
3. The accidental death must occur prior to the Income Date.
4. We must receive satisfactory proof of accidental death.
Accidental Death Definition - Accidental death means a death resulting from a
bodily injury effected solely through external, violent, and accidental means
independently and exclusively of all other causes, with death occurring within
180 days after such injury
DVA1-9712OR
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<PAGE>
Exclusions - This Rider does not provide an additional benefit in the event that
death results from or relates to any of the following:
1. Sickness of mind and/or body, including related medical or surgical
treatment.
2. Overdose due to voluntary ingestion of non-prescribed drugs and/or
legal intoxication.
3. Suicide, while sane or insane.
4. Air travel, in any type of vehicle, except as a fare paying passenger
traveling on a regularly scheduled airline.
5. War, or any act of war, whether or not the Covered Person is serving
in the military, naval or air forces of any country or international
organization.
6. Voluntarily committing and/or attempting to commit an assault or
felony, including participation in a riot.
7. Resisting or fleeing from arrest.
SATISFACTORY PROOF OF CLAIM - We must receive written proof that the Covered
Person died an accidental death while this Contract is in force and prior to the
first Contract Anniversary after which the Covered Person attains age 80.
We will have the right to have the Covered Person's body examined and to request
an autopsy, at our expense, unless law prohibits us from doing so.
Notice of Claim - Written notice of claim must be given to us within 30 days
after an accidental death or as soon as reasonably possible. Notice given to us
at our Customer Service Center with information sufficient to identify the
Covered Person will be considered notice to us.
Payment of Claim - The Accidental Death Benefit will be paid to the person or
persons entitled to receive the death benefit according to the Contract upon
receipt of the written proof of accidental death. If we elect to have the
Covered Person's body examined and/or perform an autopsy, payment may be made
after satisfactory conclusion of the examination.
Termination - This Accidental Death Benefit provision will end and the
Accidental Death Benefit will not be paid on and after the date of the first to
occur of the following events:
1. The Accidental Death Benefit is paid.
2. The Contract is surrendered or the entire Account Value is applied
under an income option.
3. The interest in the Contract is distributed due to the death of the
Covered Person.
DVA1-9712OR
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<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
DVA1-9712OR
<PAGE>
[LOGO OF SAGE APPEARS HERE]
FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Accidental Death Benefit
Nonparticipating
DVA1-9712OR
<PAGE>
EXHIBIT 4(a)(iii)(c)
[LOGO OF SAGE]
A Stock Company
Home Office Customer Service Center
300 Atlantic Street 1290 Silas Deane Highway
Stamford, CT 06901 Wethersfield CT 06109
1-877-TEL-SAGE
PLEASE READ THIS CONTRACT CAREFULLY. This group contract is a legal contract
between the Contractholder and Sage Life Assurance of America, Inc. The
Contractholder has the rights described in the Contract. The Owner and
Annuitant are named in each Certificate. We will make Income Payments beginning
on the Income Date shown in each Certificate if the Annuitant is living on that
date.
RIGHT TO EXAMINE A CERTIFICATE:
EACH OWNER MAY RETURN HIS OR HER CERTIFICATE TO US OR THE AGENT WHO SOLD IT TO
THE OWNER WITHIN 10 DAYS AFTER RECEIPT OF IT (THE FREE LOOK PERIOD). WHEN WE
RECEIVE THE RETURNED CERTIFICATE, WE WILL PROMPTLY REFUND TO THE OWNER HIS OR
HER ACCOUNT VALUE PLUS ANY CHARGES SHOWN IN THE SCHEDULE THAT WE HAVE DEDUCTED
FROM SUCH ACCOUNT VALUE ON OR BEFORE THE DATE THE RETURNED CERTIFICATE WAS
RECEIVED BY US, OR IF REQUIRED BY THE LAW OF THE OWNER'S STATE, THE INITIAL
PURCHASE PAYMENT (MINUS ANY WITHDRAWALS).
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE
ACCOUNT, MAY INCREASE OR DECREASE, DEPENDING ON INVESTMENT RESULTS AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. ALL PAYMENTS AND VALUES BASED ON THE FIXED
ACCOUNT MAY BE SUBJECT TO A MARKET VALUE ADJUSTMENT, THE OPERATION OF WHICH MAY
CAUSE SUCH PAYMENTS AND VALUES TO INCREASE OR DECREASE.
/s/ Ronald S. Scowby
---------------------------
Chairman
GROUP FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACT
Surrender Values while the Owner is living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
DVA(MGC)-9712
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SCHEDULE...................................................... 3
DEFINITIONS................................................... 7
MAKING PURCHASE PAYMENTS...................................... 9
VARIABLE ACCOUNT.............................................. 9
FIXED ACCOUNT................................................. 11
TRANSFERS AMONG ACCOUNTS...................................... 13
SURRENDERING, OR WITHDRAWING PART OF THE ACCOUNT VALUE........ 13
CHARGES....................................................... 14
OWNER, ANNUITANT AND BENEFICIARY.............................. 14
DEATH BENEFITS................................................ 14
GENERAL PROVISIONS............................................ 17
ANNUITY INCOME BENEFITS....................................... 18
</TABLE>
DVA(MGC)-9712
Page 2
<PAGE>
SCHEDULE
Group Contract No.: 123456789 Effective Date: 1/1/1998
Contractholder: ABC Trust
Issued In: Illinois (and subject to its laws)
This Schedule sets forth additional information that relates to the provisions
in this Group Contract with the corresponding headings.
MAKING PURCHASE PAYMENTS
The Designated Sub-Account is the [Money Market Sub-Account].
No purchase payment, whether initial or additional, may be allocated such that
any Sub-Account would have a value less than [$250].
Additional purchase payments are subject to the following limits:
1. [Non-qualified plan: Additional purchase payments may be made until
the earlier of the year in which the Owner attains age [85] or the
year in which the Annuitant attains age [85].]
[Qualified plan: Additional purchase payments may be made until the
year in which the Owner attains age [70 1/2], except rollover
contributions may be made until the year in which the Owner attains
age [85].]
2. The minimum additional purchase payment we will accept is [$250;
$1,000(for Certificate without surrender charge)].
3. Our prior approval is required before the Owner makes a purchase
payment that causes the Account Value of all annuities that the Owner
maintains with us to exceed [$1,000,000].
VARIABLE ACCOUNT
The Variable Account for a Certificate is [The Sage Variable Annuity Account A].
[It is a unit investment trust variable account.]
FIXED ACCOUNT
The Fixed Account for a Certificate is [The Sage Fixed Interest Account A.]
The Minimum Guaranteed Interest Rate is [3%].
The Minimum Deferral Interest Rate is [3%].
Index Rate: [The Index Rate is the U.S. Treasury Constant Maturity Series as
reported in Federal Reserve Bulletin Release H.15. We currently base the Index
Rate for a calendar week on the reported rate for the preceding calendar week.
We reserve the right to set it less frequently but in no event less often than
monthly.]
TRANSFERS AMONG ACCOUNTS
The minimum amount that can be transferred is [$250]. However, if less remains
in a Sub-Account, that amount may be transferred. If a transfer request would
reduce the Account Value remaining in a Sub-Account below [$250], we will treat
the transfer request as a request to transfer the entire amount.
DVA(MGC)-9712
Page 3
<PAGE>
The Owner's transfer request must clearly state the Sub-Accounts from which and
to which transfers are to be made.
We reserve the right to limit, upon notice, the maximum number of transfers the
Owner may make to [one] per calendar month or [12] per Certificate Year.
After the Income Date, we reserve the right to:
1. disallow transfers from the Fixed Account to the Variable Account, or
from the Variable Account to the Fixed Account; and
2. limit the maximum number of transfers between Variable Sub-Accounts to
[1] per Certificate Year.
SURRENDERING, OR WITHDRAWING PART OF THE ACCOUNT VALUE
The Free Withdrawal Amount is the greater of (a) and (b) where:
[(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals (including any associated surrender charge and
Market Value Adjustment incurred) in that Certificate Year; and
(b) is the excess of the Account Value on the date of withdrawal over the
unliquidated purchase payments.]
The minimum amount that can be withdrawn is [$250]. If a withdrawal request
would reduce the Account Value remaining in a Sub-Account below [$250], we will
treat the withdrawal request as a request to withdraw the entire amount.
If a requested withdrawal would reduce the Account Value below [$2,000], we
reserve the right to treat the request as a withdrawal of only the excess over
[$2,000].
Unless the Owner specifies otherwise, we will make withdrawals [proportionately
from all Sub-Accounts in which the Owner is invested].
CHARGES
Surrender Charge - A surrender charge may be imposed upon surrender of a
Certificate or when an Excess Withdrawal is made. The surrender charge is
applied to each purchase payment and is a percentage of each purchase payment as
follows:
Complete Years Maximum
Elapsed Since Surrender Charge
Payment Accepted Percentage
---------------- ----------
[0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%]
OR
DVA(MGC)-9712
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<PAGE>
Maximum
Certificate Surrender Charge
Year Percentage
---- ----------
[1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8+ 0%]
OR
[The maximum surrender charge percentage is 0% for all Certificate Years.]
TRANSFER CHARGE - We reserve the right to charge a maximum of [$25] for each
transfer after the [12th] in a Certificate Year. Each request is considered to
be one transfer regardless of the number of Sub-Accounts affected by the
transfer. The transfer charge will be deducted proportionately from the Sub-
Accounts from which the transfer is made.
ADMINISTRATION CHARGE - [$40] a year. This charge is incurred at the beginning
of each Certificate Year and deducted on each Certificate Anniversary or upon
surrender. The charge will be waived:
1. if the Account Value is at least [$50,000] at the time of deduction;
or
2. beginning on and after the [8th] Certificate Anniversary.
PURCHASE PAYMENT TAX CHARGE - The amount of any state and local taxes levied by
any governmental entity on purchase payments may be deducted from the Account
Value when such taxes are incurred. We reserve the right to defer the
collection of this charge and deduct it against the Owner's Account Value on the
surrender of a Certificate, or Excess Withdrawal, or application of the Account
Value to provide income payments.
ASSET-BASED CHARGES - We deduct asset-based charges to compensate us for
assuming mortality and expense risks, and certain administrative expenses.
[Prior to the Income Date] asset-based charges are calculated as a percentage of
the Variable Account Value on the date of deduction. On the Certificate Date,
and monthly thereafter, the asset-based charges are deducted in proportion to
the Variable Sub-Accounts in which the Owner is invested. The maximum charges
are:
Asset-Based Charges Annual Charge Monthly Charge
------------------- ------------- --------------
Certificate Years 1-7 [1.40% .116667%
Certificate Years 8+ 1.25% .104167%]
We also reserve the right to deduct asset-based charges on the effective date of
any transfer from the Fixed Account, or allocation of purchase payment to the
Variable Account, based on the amount transferred or allocated, and based on the
number of days remaining until the next date of deduction.
VARIABLE SUB-ACCOUNT CHARGES - [On and after the Income Date] we deduct the
asset-based charges above from the assets in each Variable Sub-Account on a
daily basis. The maximum charges are:
Variable Sub-Account Charges Annual Charge Daily Charge
---------------------------- -------------- -------------
Certificate Years 1-7 [1.40% .0038626%
Certificate Years 8+ 1.25% .0034462%]
CHARGE DEDUCTION RULES - Unless otherwise specified above, charges are deducted
from the Account Value [proportionately from all Sub-Accounts in which you are
invested.]
DVA(MGC)-9712
Page 5
<PAGE>
ANNUITY INCOME BENEFITS
If you have not chosen an income plan, [Life Annuity with 10 Years Certain] will
automatically apply.
The Maximum Income Date is the first day of the first calendar month following
the Annuitant's [95th] birthday.
We reserve the right to require that the Income Date be at least [2 years] after
the Certificate Date.
The minimum amount that can be applied under any Variable or Fixed Income
Annuity is [$5,000].
The minimum income payment is [$100].
We currently allow assumed investment rates of [2.5%] and [6%]. If you do not
specify one of these rates when you choose an income plan, the assumed
investment rate will be [2.5%].
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer (Tables below show the minimum income
values and are based on 2.5% interest and the Annuity 2000 Mortality Tables) are
available on request. Monthly income payments are shown for each $1,000
applied.
INCOME TABLE FOR A FIXED PERIOD
<TABLE>
<CAPTION>
Monthly Monthly Monthly
Fixed Period Income Fixed Period Income Fixed Period Income
of Years Payment of Years Payment of Years Payment
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
11 $8.66 21 $5.09
12 8.03 22 4.91
13 7.50 23 4.75
14 7.05 24 4.61
5 17.73 15 6.65 25 4.47
6 14.96 16 6.31 26 4.35
7 12.98 17 6.01 27 4.23
8 11.49 18 5.74 28 4.13
9 10.34 19 5.50 29 4.03
10 9.41 20 5.29 30 3.94
</TABLE>
INCOME TABLE FOR LIFE
<TABLE>
<CAPTION>
Male/Female Male/Female Male/Female
Age Life Only 10 Years Certain 20 Years Certain
--- --------- ---------------- ----------------
<S> <C> <C> <C>
50 3.81 / 3.55 $3.78 / 3.54 $3.68 / 3.49
55 4.20 / 3.89 4.15 / 3.86 3.98 / 3.77
60 4.72 / 4.33 4.62 / 4.28 4.31 / 4.10
65 5.43 / 4.93 5.24 / 4.83 4.64 / 4.47
70 6.42 / 5.76 5.99 / 5.54 4.93 / 4.82
75 7.79 / 6.99 6.86 / 6.44 5.13 / 5.08
80 9.70 / 8.80 7.74 / 7.45 5.24 / 5.22
85 12.38 / 11.52 8.49 / 8.35 5.28 / 5.27
</TABLE>
RIDERS
Accidental Death Benefit Rider
The Maximum Accidental Death Benefit is [$250,000].
DVA(MGC)-9712
Page 6
<PAGE>
DEFINITIONS
- --------------------------------------------------------------------------------
"ACCOUNT VALUE" is the entire amount we hold under a Certificate for the Owner
before the Income Date. It is equal to the sum of the Variable Account Value
and the Fixed Account Value.
"ACCUMULATION UNIT" is the unit of measure we use before the Income Date to keep
track of the value of each Variable Sub-Account.
"ANNUITANT" is the natural person whose age determines the Maximum Income Date
and the amount and duration of income payments involving life contingencies.
The Annuitant may also be the person to whom any payment will be made starting
on the Income Date. The Annuitant's name appears in the Certificate Schedule.
"BENEFICIARY" is the person or persons to whom we pay a death benefit if any
Owner dies prior to the Income Date.
"CERTIFICATE DATE" is the date the Certificate is issued at our Customer Service
Center. The Certificate Date is shown in the Certificate Schedule. While a
Certificate is in force, every anniversary of the Certificate Date is a
CERTIFICATE ANNIVERSARY, and each and every consecutive twelve-month period
beginning on the Certificate Date and each Certificate Anniversary is a
CERTIFICATE YEAR.
"CONTINGENT ANNUITANT" is the natural person who becomes the Annuitant if the
Annuitant dies prior to the Income Date.
"CONTINGENT BENEFICIARY" is the person that becomes the Beneficiary if the named
Beneficiary dies prior to the Income Date.
"CUSTOMER SERVICE CENTER" is where we provide service to the Owner. The mailing
address and telephone number of the Customer Service Center are shown on the
first page of a Certificate.
"EXCESS WITHDRAWAL" is a withdrawal of Account Value that exceeds the Free
Withdrawal Amount.
"EXPIRY DATE" is the last day in a Guarantee Period.
"FIXED ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred.
"FIXED ACCOUNT VALUE" is the sum of the value of each Fixed Sub-Account on any
particular day.
A "FIXED SUB-ACCOUNT" is established when purchase payments are invested or
amounts are transferred to the Fixed Account. The value of each Fixed Sub-
Account is equal to the amount invested, increased by interest and reduced by
any withdrawals or transfers from, or charges assessed against the Fixed Sub-
Account.
"FREE WITHDRAWAL AMOUNT" is the maximum amount that can be withdrawn in a
Certificate Year without being subject to a surrender charge. This amount is
described in the Schedule.
"GENERAL ACCOUNT" consists of all our assets other than those held in any
separate investment accounts.
"GUARANTEED INTEREST RATE" is the effective annual interest rate we will credit
for a specified Guarantee Period. The Guaranteed Interest Rate will never be
less than the minimum shown in the Schedule.
"GUARANTEE PERIOD" is a period of years for which a specified effective annual
interest rate is guaranteed by us. Interest is credited daily at a rate to
yield the declared annual Guaranteed Interest Rate.
DVA(MGC)-9712
Page 7
<PAGE>
"HOME OFFICE" is our main office. The mailing address is shown on the first
page of a Certificate.
"INCOME DATE" is the date when income payments under a Certificate commence.
This date is shown in the Certificate Schedule.
"INCOME UNIT" is the unit of measure we use to calculate the amount of income
payments under the Variable Income Annuity.
"MARKET VALUE ADJUSTMENT" is a positive or negative adjustment that may apply to
surrender, withdrawals, transfers and amounts applied to an income plan, from a
Fixed Sub-Account before the end of a Guarantee Period.
"NET ASSET VALUE" is the price of one share of an investment portfolio.
"OWNER" is the Owner of a Certificate. The Owner's name appears in the
Certificate Schedule. The Owner is entitled to exercise all rights under his or
her Certificate. However, if the Owner designates an irrevocable beneficiary,
the Owner may need that beneficiary's consent before he or she may exercise the
Owner's rights under a Certificate. The death of any Owner before the Income
Date initiates payment of the death benefit.
"SATISFACTORY NOTICE" is a notice or request authorized by the Owner, in a form
satisfactory to us, received at our Customer Service Center.
"SUB-ACCOUNT" includes both Variable Sub-Accounts and Fixed Sub-Accounts, unless
the context indicates otherwise.
"SURRENDER VALUE" is the amount the Owner receives upon surrender of his or her
Certificate before the Income Date. It is the Owner's Account Value, plus or
minus any applicable Market Value Adjustment, and less any applicable surrender
charges or other charges shown in the Schedule.
"VALUATION DATE" is the date at the end of a Valuation Period when each Variable
Sub-Account is valued.
"VALUATION PERIOD" is the period between one calculation of an Accumulation Unit
value and the next calculation. Normally, we calculate Accumulation Units daily
when the New York Stock Exchange is open for trading and we are open for
business. We can delay this calculation if an emergency exists, making disposal
or fair valuation of assets in the Variable Account not reasonably practicable,
or the Securities and Exchange Commission (SEC) permits the delay. We may
change when we calculate the Accumulation Unit value by giving the Owner 30 days
notice, or such notice as may be required by law.
"VARIABLE ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred. The Variable
Account is shown in the Schedule.
"VARIABLE ACCOUNT VALUE" is the sum of the value of each Variable Sub-Account on
a Valuation Date.
"VARIABLE SUB-ACCOUNT" is a division of the Variable Account that invests in
shares of a particular investment portfolio. The value of a Variable Sub-
Account is determined by multiplying (a) times (b) where:
(a) equals the number of Accumulation Units held in the Variable Sub-
Account; and
(b) equals the value of the Accumulation Unit for the Variable Sub-
Account.
"WE", "US" OR "OUR" is Sage Life Assurance of America, Inc.
DVA(MGC)-9712
Page 8
<PAGE>
MAKING PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT - The Owner must make the initial purchase payment in
order to put a Certificate in force. The amount of the Owner's initial purchase
payment is shown in the Certificate Schedule.
ADDITIONAL PURCHASE PAYMENTS - After the initial purchase payment, additional
purchase payments may be made at any time while a Certificate is in force and
before the Income Date. The amount of any additional purchase payments may vary
but are subject to limits described in the Schedule.
ALLOCATION OF PURCHASE PAYMENTS AMONG THE VARIABLE AND FIXED ACCOUNTS - Subject
to limits described in the Schedule, the Owner tells us how to allocate the
Owner's purchase payment, less any applicable taxes, by notifying us of the
Owner's choices. The Owner specified how to allocate the Owner's initial
purchase payment in the Owner's application for a Certificate. Initial purchase
payments allocated to the Fixed Account will be invested in Fixed Sub-Accounts
with the Guarantee Periods that the Owner specified in the Owner's application.
We may, however, require that an initial purchase payment allocated to a
Variable Sub-Account be invested in the Designated Sub-Account shown in the
Schedule during the Free Look Period. At the end of the Free Look Period, if
the Owner's initial purchase payment was allocated to the Designated Sub-Account
by us, we will transfer the value of the Designated Sub-Account to the Sub-
Account(s) the Owner specified in the Owner's application. For the purpose of
processing transfers from the Designated Sub-Account, the Free Look Period will
end 15 days after the Certificate Date.
Subject to our rules, the Owner may tell us how to allocate any additional
purchase payments. If the Owner does not tell us, they will be allocated in the
same manner as the Owner's most recent purchase payment.
CANCELLATION OF CERTIFICATE - If the Owner has not made a purchase payment for
more than [2] years and the Owner's Account Value is less than [$2,000] on a
Certificate Anniversary, we may cancel a Certificate and pay the Owner the
Surrender Value as though the Owner had made a full withdrawal. We will send
the Owner written notice at the Owner's address of record. The Owner will be
allowed 61 days from the date we mail the Owner the notice to submit an
additional purchase payment to us in an amount not less than the difference
between [$2,000] and the Account Value on the last Certificate Anniversary. The
additional purchase payment is subject to the limits and minimums shown in the
Schedule.
VARIABLE ACCOUNT
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VARIABLE ACCOUNT - A variable account is an investment account we maintain
separate from our General Account and any other separate investment accounts we
may have. We own the assets in a variable account. A variable account will not
be charged with liabilities that arise from any other business that we conduct.
We may transfer to our General Account assets that exceed the reserves and other
liabilities of a variable account.
A variable account may invest in mutual funds, unit investment trusts and other
investment portfolios. Such a variable account is treated as a unit investment
trust under Federal securities laws and is registered with the SEC under the
Investment Company Act of 1940.
We may offer certain series or variable accounts that may not be registered with
the SEC under the Securities Act of 1933. Any such series or variable account,
if offered, will be described in the applicable offering document.
The Variable Account for a Certificate is shown in the Schedule. The laws of
our state of domicile govern this Variable Account.
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VARIABLE SUB-ACCOUNTS - A unit investment trust variable account includes
variable sub-accounts, each investing in a designated investment portfolio. The
sub-accounts and the investment portfolios in which they invest are specified in
the prospectus or offering document. Income, gains or losses, realized and
unrealized from assets in each variable sub-account are credited to or charged
against that variable sub-account without regard to other income, gains or
losses in the other sub-accounts or our other income, gains or losses.
CHANGES WITHIN THE VARIABLE ACCOUNT - We may, from time to time, make additional
Variable Sub-Accounts available to the Owner. These Sub-Accounts will invest in
investment portfolios we find suitable for the Group Contract. We also have the
right to eliminate Sub-Accounts, to combine two or more Sub-Accounts or to
substitute a new investment portfolio for the portfolio in which a Sub-Account
invests. Such an action may become necessary if, in our judgment, a portfolio or
Sub-Account no longer suits the purposes of the Group Contract. This may happen
due to a change in laws or regulations, or a change in a portfolio's or Sub-
Account's investment objectives or restrictions, or because the portfolio or
Sub-Account is no longer available for investment, or for some other reason. We
will get prior approval from the insurance department of our state of domicile
before taking such action. If required, this approval process will be on file
with the insurance department of the jurisdiction in which the Group Contract is
delivered. We will also get any required approval from the SEC and any other
required approvals before taking such an action.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Sub-Accounts that we determine to be associated with the
class of Group Contracts to which the Group Contract belongs, to another
variable account or variable sub-account.
When permitted by law, we reserve the right to:
1. Deregister the Variable Account under the Investment Company Act of
1940;
2. Operate the Variable Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit
investment trust;
3. Operate the Variable Account as a unit investment trust under the
Investment Company Act of 1940, if it is operating as a Managed
Separate Account;
4. Restrict or eliminate any voting rights of Owners, or other persons
who have voting rights as to the Variable Account;
5. Combine the Variable Account with other separate investment accounts;
and
6. Combine a Variable Sub-Account with another Variable Sub-Account.
If any actions we take result in a material change in the underlying investments
of a Variable Sub-Account in which an Owner is invested, we will notify the
Owner of the change. The Owner may then choose a new Sub-Account.
ACCUMULATION UNITS - We keep track of the value of each of the Owner's Variable
Sub-Accounts by crediting the Owner with Accumulation Units for each Sub-
Account. The number of Accumulation Units credited to the Owner for each Sub-
Account is determined by dividing (a) by (b) where:
(a) is the dollar amount allocated to that Sub-Account; and
(b) is the value of the Accumulation Unit for that Sub-Account for the
Valuation Date on which the purchase payment or transferred amount is
invested in that Sub-Account.
Accumulation Units will be adjusted for any transfers and will be canceled on
payment of a death benefit, a withdrawal, a surrender, the application of
Account Value to an income plan on the Income Date, or assessment of charges
shown in the Schedule (other than the variable sub-account charges) based on
their value for the Valuation Period in which the transaction occurs.
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VALUE OF ACCUMULATION UNITS - The Accumulation Unit value for any Valuation
Period is determined by multiplying (a) by (b) where:
(a) is the Accumulation Unit value for the immediately preceding Valuation
Period; and
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined.
The value of an Accumulation Unit may increase, decrease or remain the same from
one Valuation Period to the next.
NET INVESTMENT FACTOR - The net investment factor for a Variable Sub-Account is
an index that measures the investment performance of that Sub-Account from one
Valuation Period to the next. The net investment factor for any Valuation
Period is determined by dividing (a) by (b), and then subtracting (c) where:
(a) is the net result of:
(i) the Net Asset Value per share of the investment portfolio share
in which the Sub-Account invests determined at the end of the
current Valuation Period; plus
(ii) the per share amount of any dividend or capital gains
distribution made by that investment portfolio on shares held in
the Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period; and plus or minus
(iii) a per share charge or credit for any taxes reserved for, which
is determined by us to have resulted from the operations of that
Sub-Account;
(b) is the Net Asset Value per share of the investment portfolio share in
which the Sub-Account invests determined at the end of the immediately
preceding Valuation Period; and
(c) is the daily variable sub-account charges shown in the Schedule
(adjusted for the number of days in the Valuation Period).
The net investment factor may be more or less than, or equal to, one.
FIXED ACCOUNT
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FIXED ACCOUNT - The Fixed Account is a separate investment account under state
insurance law. It is maintained separate from our General Account and separate
from any other separate investment account that we may have. We own the assets
in the Fixed Account. Notwithstanding the foregoing, our obligations under (and
the values and benefits under) the Fixed Account option of a Certificate do not
vary as a function of the investment performance of the Fixed Account. Owners
and Beneficiaries with rights under a Certificate do not participate in the
investment gains or losses of the assets of the Fixed Account. Such gains or
losses accrue solely to us. We retain the risk that the value of the assets in
the Fixed Account may fall below the reserves and other liabilities that we must
maintain in connection with our obligations under the Fixed Account option of a
Certificate. In such event, we will transfer assets from our General Account to
the Fixed Account to make up the difference. The Fixed Account will not be
charged with liabilities that arise from any other business that we conduct. We
may transfer to our General Account assets that exceed the reserves and other
liabilities of the Fixed Account. The Fixed Account is not required to be
registered with the SEC as an investment company under the Investment Company
Act of 1940.
FIXED SUB-ACCOUNT - We will establish a separate Fixed Sub-Account for the Owner
each time the Owner allocate amounts to the Fixed Account. Amounts invested in
these Fixed Sub-Accounts earn interest at the Guaranteed Interest Rate in effect
on the date the amounts are allocated.
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GUARANTEE PERIODS - Each Fixed Sub-Account is guaranteed an interest rate for a
period we refer to as a Guarantee Period. The Guaranteed Interest Rate for a
Fixed Sub-Account is effective for the entire Guarantee Period. The length of a
Guarantee Period is measured from the end of the calendar month in which the
amount is allocated to the Fixed Sub-Account. The last day of the Guarantee
Period is its Expiry Date. Surrender, or withdrawals or transfers from all or
part of a Fixed Sub-Account, and amounts applied to an income plan, made prior
to the Expiry Date of a Guarantee Period may be subject to a Market Value
Adjustment.
We will notify the Owner at least thirty days prior to an Expiry Date of the
Owner's options for renewal, which include:
1. electing a new Guarantee Period from among those then offered by us,
but excluding any that extend beyond the Owner's Income Date; or
2. transferring the value of the Fixed Sub-Account to one or more
Variable Sub-Accounts.
If we do not receive Satisfactory Notice prior to the Expiry Date, we will
transfer the value of the expiring Fixed Sub-Account to a Fixed Sub-Account with
the same Guarantee Period, but not longer than 5 years, nor extending beyond the
Owner's Income Date. The transfer will be effective as of the Expiry Date of the
previous Guarantee Period.
GUARANTEED INTEREST RATES - Periodically, we will declare Guaranteed Interest
Rates for then available Guarantee Periods. These rates will be guaranteed for
the duration of the respective Guarantee Periods. Guaranteed Interest Rates will
never be less than the Minimum Guaranteed Interest Rate shown in the Schedule.
MARKET VALUE ADJUSTMENT - A Market Value Adjustment may be applied to surrender,
withdrawals, transfers or amounts applied to an income plan when taken from a
Fixed Sub-Account other than during the thirty-day period prior to its Expiry
Date. A Market Value Adjustment is applied separately to each Fixed Sub-Account.
A Market Value Adjustment is determined by multiplying the amount surrendered,
withdrawn, transferred or applied to an income plan by the following factor:
[(1+I)/(1+J+.0025)]/N/365/ -- 1
Where:
. I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period;
. J is the Index Rate for a maturity equal to the time remaining
(rounded up to the next full year) in the Fixed Sub-Account's
Guarantee Period; and
. N is the remaining number of days in the Guarantee Period at the time
of calculation.
If there is no Index Rate for the maturity needed to calculate I or J, straight
line interpolation between the Index Rate of the next highest and next lowest
maturities will be used to determine that Index Rate. If the maturity is one
year or less, we will use the Index Rate for a one-year maturity.
Market Value Adjustments will be applied as follows:
. For a surrender, withdrawal, transfer or amount applied to an income
plan, the Market Value Adjustment will be calculated on the total
amount that must be surrendered, withdrawn, transferred or applied to
an income plan in order to provide the amount requested.
. If the Market Value Adjustment is negative, it is deducted from any
remaining value in the Fixed Sub-Account or amount surrendered. Any
remaining Market Value Adjustment is
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deducted from the amount withdrawn, transferred or applied to an
income plan.
. If the Market Value Adjustment is positive, it is added to any
remaining value in the Fixed Sub-Account or amount surrendered. If the
full amount of the Fixed Sub-Account is withdrawn, transferred or
applied to an income plan, the Market Value Adjustment is added to the
amount withdrawn, transferred or applied to an income plan.
TRANSFERS AMONG ACCOUNTS
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Prior to the Income Date and while the Annuitant is living, you may transfer
Account Value among Sub-Accounts. Certain restrictions may apply during the
Free Look Period. To make a transfer, you must give us Satisfactory Notice.
Transfers generally take effect when we receive the notice. The number of free
transfers that we allow each Certificate Year is shown in the Charges section of
the Schedule. Restrictions for transfers are shown in the Schedule. A transfer
from a Fixed Sub-Account may be subject to a Market Value Adjustment. In
addition to the restrictions on transfers shown in the Schedule, we also may
restrict transfers:
. If any of the Sub-Accounts that would be affected by the transfer is
unable to purchase or redeem shares of the Fund in which the Sub-
Account invests; or
. If the transfer results in more than one trade involving the same Sub-
Account within a 30-day period; or
. If the transfer would adversely affect Accumulation Unit values (which
may occur if the transfer would affect one percent or more of the
relevant Fund's total assets).
Where permitted by law, we may accept your authorization of third party
transfers on your behalf. We may restrict the Sub-Accounts that will be
available to you for transfers of purchase payments during any period in which
you authorize such third party to act on your behalf. We will give you prior
notice of any such restrictions. However, we will not enforce such restrictions
if you provide us with satisfactory evidence that (i) such third party has been
appointed by a court of competent jurisdiction to act on your behalf, or (ii)
such third party has been appointed by you to act on your behalf for all your
financial affairs.
SURRENDERING, OR WITHDRAWING PART OF THE ACCOUNT VALUE
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Prior to the Income Date and while the Annuitant is living, the Owner may
withdraw all or part of the Owner's Account Value by giving us Satisfactory
Notice. The minimum withdrawal is shown in the Schedule.
If the Owner requests a surrender, we will terminate the Certificate and pay the
Owner the Surrender Value. This amount may also be applied to the income plans
subject to any restrictions described in a Certificate. Unless specified
otherwise, we will make partial withdrawals as described in the Schedule.
Surrender and withdrawals generally take effect on the date we receive
Satisfactory Notice.
If the Owner makes a withdrawal from a Certificate in excess of the Free
Withdrawal Amount described in the Schedule, a surrender charge may be assessed.
Surrender charges are described in the Schedule. A withdrawal from the Fixed
Account may also be subject to a Market Value Adjustment.
EXCESS WITHDRAWALS - If a partial withdrawal is made for an amount greater than
the Free Withdrawal Amount, a surrender charge may be applicable. For purposes
of calculating the surrender charge only, purchase payments will be liquidated
in whole or in part on a "first-in-first-out-basis." This means we liquidate
purchase payments in the order they were made: the oldest unliquidated purchase
payment first, the next oldest unliquidated purchase payment second, etc., until
all purchase payments have been liquidated.
The surrender charge as to any liquidated purchase payment is determined by
multiplying the amount of
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the purchase payment being liquidated by the applicable percentage shown in the
Schedule. The total surrender charge will be the sum of the surrender charges
for each purchase payment being liquidated.
In a partial withdrawal, the surrender charge is deducted from the Account Value
remaining after the Owner is paid the amount requested. The amount requested
from a Sub-Account may not exceed the value of that Sub-Account less any
applicable surrender charge. In a complete withdrawal (or surrender of a
Certificate), it is deducted from the amount otherwise payable.
CHARGES
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The types and amounts of charges and when and how they are deducted are
described in the Schedule. Charges under this Group Contract and the
Certificates may be reduced or eliminated when certain sales or administration
of the Group Contract result in savings or reduction of expenses and or risks.
OWNER, ANNUITANT AND BENEFICIARY
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THE OWNER - The Owner has the rights and options described in this Group
Contract, including but not limited to the right to receive income payments
beginning on the Income Date. One or more people may own a Certificate.
THE ANNUITANT - Unless another Annuitant is shown in the Schedule, the Owner is
also the Annuitant. The Owner may name a Contingent Annuitant. The Owner will
be the Contingent Annuitant unless the Owner names someone else. If there are
joint Owners, we will treat the youngest Owner as the Contingent Annuitant,
unless the Owner elects otherwise.
If the Owner is not the Annuitant and the Annuitant dies before the Income Date,
the Contingent Annuitant becomes the Annuitant. If the Annuitant dies and no
Contingent Annuitant has been named, we will allow the Owner sixty days to
designate someone other than himself or herself as Annuitant.
THE BENEFICIARY - We pay the death benefit to the primary Beneficiary (unless
there are joint Owners in which case proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death benefit is
paid to the Contingent Beneficiary, if any. If there is no surviving
Beneficiary, we pay the death benefit to the Owner's estate.
One or more persons may be named as primary Beneficiary or Contingent
Beneficiary. We will assume any death benefit is to be paid in equal shares to
the multiple surviving Beneficiaries unless the Owner specifies otherwise.
The Owner has the right to change Beneficiaries. However, if the Owner
designates the primary Beneficiary as irrevocable, the Owner may need the
consent of that irrevocable Beneficiary to exercise the rights and options under
a Certificate.
CHANGE OF OWNER, BENEFICIARY OR ANNUITANT - During the Owner's lifetime and
while a Certificate is in force the Owner can transfer ownership of a
Certificate or change the Beneficiary, or change the Annuitant. (However, the
Annuitant cannot be changed after the Income Date.) To make any of these
changes, the Owner must send us Satisfactory Notice. If accepted, any change in
Owner, Beneficiary or Annuitant will take effect on the date the Owner signed
the notice. Any of these changes will not affect any payment made or action
taken by us before our acceptance. A CHANGE OF OWNER MAY BE A TAXABLE EVENT and
may also affect the amount of death benefit payable under a Certificate.
DEATH BENEFITS
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DEATH BENEFIT BEFORE THE INCOME DATE - If any Owner dies before the Income Date,
we will pay the
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Beneficiary the greatest of the following:
(a) the Account Value determined as of the day we receive proof of death;
or
(b) 100% of the sum of all purchase payments made to a Certificate,
reduced proportionately by any prior withdrawals (including any
associated surrender charge and Market Value Adjustment incurred); or
(c) the Highest Anniversary Value.
In addition, we will pay the Beneficiary any rider benefits that become due upon
the death of the Owner (or Annuitant, if no natural Owner). For the purposes of
the provisions entitled "Required Distributions of Proceeds on the Death of the
Owner" and "Proof of Death," any rider benefits payable will be considered part
of the "Death Benefit."
HIGHEST ANNIVERSARY VALUE - The Highest Anniversary Value is equal to the
greatest anniversary value attained from the following:
Upon our receipt of proof of death, we will calculate an anniversary value
for each Certificate Anniversary before the Owner's death excluding,
however, Certificate Anniversaries that come after the Owner attains age
80. An anniversary value is equal to the Account Value on a Certificate
Anniversary, increased by the dollar amount of any purchase payments made
since that Certificate Anniversary and reduced for any withdrawals
(including any associated surrender charge and Market Value Adjustment
incurred) taken since that anniversary. This reduction will be made in
proportion to the reduction in the Account Value that results from a
withdrawal.
MULTIPLE OWNERS - If there are multiple Owners, the age of the oldest Owner will
be used to determine the death benefit.
DEATH BENEFIT WHEN NO NATURAL OWNERS - If there is no Owner who is a natural
person, we will treat the Annuitant as Owner for the purpose of paying the death
benefit and any rider benefits, and the Annuitant's age will determine the death
benefit payable to the Beneficiary.
REQUIRED DISTRIBUTION OF PROCEEDS ON THE DEATH OF THE OWNER - The three sub-
subsections indicated below are required to qualify a Certificate as an annuity
contract under Section 72(s) of the Internal Revenue Code of 1986, as amended.
Where the terms of these three sub-sections are in conflict with any other
sections or sub-sections of a Certificate, these three sub-sections will
control. We reserve the right to amend or administer the Group Contract and any
Certificate as necessary to comply with the applicable tax requirements. These
three sub-sections and each Certificate should be construed so that they comply
with the applicable tax requirements.
DEATH BENEFIT OPTIONS BEFORE INCOME DATE - In the event any Owner dies
before the Income Date, the death benefit may be taken in one sum, in which
case that Certificate will terminate. Such sum shall be paid within five
years of the Owner's death unless one of the options for continuation of
the Certificate below is elected by the person entitled to make that
election.
CERTIFICATE CONTINUATION OPTION - If the death benefit is not taken in one
sum immediately, the Certificate will continue subject to the following
provisions:
1. If there are joint Owners, the surviving Owner becomes the new Owner.
Otherwise, the Beneficiary becomes the new Owner.
2. Unless specified otherwise, any excess of the death benefit over the
Account Value will be allocated to and among the Variable and Fixed
Accounts in proportion to their values as of the date on which the
death benefit is determined. We will establish a new Fixed Sub-Account
for any allocation to the Fixed Account based on the Guarantee Period
the Owner then elects.
3. If the new Owner is not the deceased Owner's spouse, no additional
purchase payments may be applied to this Certificate after the death
of the deceased Owner and the entire
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interest in this Certificate must be distributed under one of the
following options:
a. The entire interest in this Certificate must be distributed
over the life of the new Owner, or over a period not
extending beyond the life expectancy of the new Owner, with
distributions beginning within one year of the Owner's
death; or
b. The entire interest in this Certificate must be distributed
within 5 years of the Owner's death.
4. If the new Owner is the deceased Owner's spouse, this Certificate
will continue according to its terms and conditions with the
surviving spouse as the new Owner. The death benefit that would
otherwise be paid in a lump sum will become the Account Value as
of the Business Day we receive proof of death. The surviving
spouse may make additional purchase payments. The surviving
spouse may also name a new Beneficiary and choose a new Income
Date. If no Beneficiary is so named, the surviving spouse's
estate will be the Beneficiary. Upon the death of the surviving
spouse before the Income Date, the death benefit will be
determined as provided in the provision entitled, "Death Benefit
Before the Income Date." For this purpose only, item (b) is
initially set equal to the Account Value as of the Business Day
we receive proof of death. The entire interest in this
Certificate must be distributed to the new Beneficiary in
accordance with the provisions of 3.a. or 3.b. above.
5. If the new Owner is the deceased Owner's spouse, a Certificate
will continue with the surviving spouse as the new Owner. The
surviving spouse may name a new Beneficiary. If no Beneficiary is
so named, the surviving spouse's estate will be the Beneficiary.
Upon the death of the surviving spouse, the death benefit will
equal the Account Value as of the date we receive proof of the
spouse's death, and the entire interest in a Certificate must be
distributed to the new Beneficiary in accordance with the
provisions of 4 (a) or 4 (b) above.
If there is more than one Beneficiary, the foregoing provisions will
independently apply to each Beneficiary.
DEATH BENEFIT ON OR AFTER THE INCOME DATE - If any Owner dies on or after
the Income Date but before the time the entire interest in a Certificate
has been distributed, the remaining portion will be distributed at least as
rapidly as under the method of distribution being used as of the date of
the Owner's death.
If income payments have been selected based on an income plan providing for
payments for a guaranteed period, and the Annuitant dies on or after the
Income Date, we will make the remaining guaranteed payments to the
Beneficiary. Any remaining payments will be made as rapidly as under the
method of distribution being used as of the date of the Annuitant's death.
If no Beneficiary is living, we will commute any unpaid guaranteed payments
to a single sum (on the basis of the interest rate used in determining the
payments) and pay that single sum to the estate of the last to die of the
Annuitant or the Beneficiary.
PROOF OF DEATH - Proof of death must be received at our Customer Service Center
before we will pay any death benefit. We will accept one of the following
items:
1. An original certified copy of an official death certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
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GENERAL PROVISIONS
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ENTIRE CONTRACT - This Group Contract including any attached riders,
endorsements, amendments, and the application of the Contractholder constitutes
the entire contract between the Contractholder and us. All statements made by
the Contractholder, or any Owner will be deemed representations and not
warranties.
ASSIGNMENT - The Owner may assign a Certificate at any time prior to the Income
Date. No assignment will be binding on us unless we receive Satisfactory Notice.
We will not be liable for any payments made or actions we take before the
assignment is accepted by us. An absolute assignment will revoke the interest of
any revocable Beneficiary. We will not be responsible for the validity of any
assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
CLAIMS OF CREDITORS - To the extent permitted by law, no benefits payable under
a Certificate will be subject to the claims of the Owner's, the Beneficiary's,
or the Annuitant's creditors.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL - We may require proof of age,
sex or survival of any person upon whose age, sex or survival any payments
depend. If the age or sex of the Annuitant has been misstated, or if the age of
the Owner has been misstated, the benefits will be those that the Account Value
applied would have provided for the correct age and sex. If we have made
incorrect income payments, the amount of any underpayment will be paid
immediately. The amount of any overpayment will be deducted from future income
payments.
NO DIVIDENDS PAYABLE - A Certificate is non-participating and does not share in
any distribution of our surplus. We will not pay any dividends.
INCONTESTABILITY - This Group Contract is incontestable from its Effective Date.
A Certificate is incontestable from its Certificate Date.
REQUIRED REPORTS - We will furnish a report to the Owner as often as required by
law, but at least once each Certificate Year before the Income Date. The report
will show the number of Accumulation Units credited to each Variable Sub-Account
in which the Owner is invested and the corresponding Accumulation Unit value as
of the date of the report. It will also show the Owner's Fixed Account Value.
MORTALITY AND EXPENSES - Our actual mortality and expense experience will not
affect the amount of any income payments or any other values under a
Certificate.
TAXES BASED UPON PURCHASE PAYMENT OR VALUE - If there is a law or change in law
assessing taxes against us based upon purchase payments or value of a
Certificate, we reserve the right to charge the Owner and all similarly situated
Owners proportionately for that tax. This would include a tax based upon our
realized net capital gains in the Variable Sub-Accounts and on earnings in the
Fixed Account, on which we are not currently taxed.
PAYMENTS WE MAY DEFER - We may not be able to determine the value of the assets
of the Variable Sub-Accounts because:
1. The New York Stock Exchange is closed for trading;
2. The SEC determines that a state of emergency exists;
3. An order or pronouncement of the SEC permits a delay for the
protection of Owners; or
4. The check used to pay the purchase payment has not cleared through the
banking system. This may take up to 15 days.
If this happens, we may delay:
1. Determination and payment of the Surrender Value or any withdrawal;
2. Determination and payment of any death benefit if death occurs before
the Income Date;
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3. Transfers of the Account Value; or
4. Application of the Account Value under an income plan.
We reserve the right to delay payment of amounts from the Fixed Account for up
to six months. If deferred 30 days or more, the amount deferred will earn
interest at a rate not less than the Minimum Deferral Interest Rate shown in the
Fixed Account section of the Schedule.
AUTHORITY TO MAKE AGREEMENTS - All agreements made by us must be signed by one
of our officers. No other person, including an insurance agent or broker, can
change the terms of this Group Certificate or a Certificate or make any
agreement binding on us. However, we can, with the agreement of the Group
Contractholder, make changes to the Group Contract and a Certificate without an
Owner's consent.
REQUIRED NOTE ON OUR COMPUTATIONS - We have filed a detailed statement of our
computations with the insurance supervisory officials in the appropriate
jurisdictions. The values are not less than those required by the laws of those
states or jurisdictions. Any benefit provided by an attached rider will not
increase these values unless otherwise stated in that rider.
CERTIFICATES - We will furnish Certificates to the Owners. Each Certificate
will summarize provisions of this Group Contract affecting an individual Owner.
FACTS RELATING TO COVERAGE - At any reasonable time we will have the right to
inspect any records of the Contractholder and plan sponsor which relate to this
Group Contract.
DISCONTINUANCE OF GROUP CONTRACT - This Group Contract may be discontinued by us
or the Contractholder. The party who initiates the discontinuance will send a
notice to each Owner of record, at his or her last known address, at least 15
days prior to the date of discontinuance. No new Owners will be accepted and no
additional purchase payments will be accepted on or after the date notice of the
discontinuance is received or sent by us, whichever is applicable.
ANNUITY INCOME BENEFITS
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CHOOSING AN INCOME DATE AND INCOME PLAN - On the Income Date, if the Annuitant
is alive and a Certificate is in force, income payments will begin under the
income plan the Owner has chosen. If the Owner has not chosen an income plan,
the option shown in the Schedule will automatically apply. If the Owner has not
selected an Income Date, the Maximum Income Date shown in the Schedule will
automatically apply.
The Owner may choose or change an income plan or the Income Date by giving us
Satisfactory Notice at least 30 days before the Income Date. However, any Income
Date must meet the restrictions described in the Schedule.
Once income payments have begun, we reserve the right to disallow further
changes without our prior approval.
MINIMUM AMOUNTS - If the amount available to apply under any variable or fixed
option is less than the minimum amount shown in the Schedule, we reserve the
right to pay such amount in a lump sum in lieu of the payment otherwise provided
for.
Income payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by giving us Satisfactory Notice at least 30 days before the
Income Date. However, if at any time the payment becomes less than the minimum
income payment shown in the Schedule, we reserve the right to reduce the
frequency of payment to an interval that results in each payment being at least
equal to the minimum income payment. In no event will the interval be less
frequent than annual.
ALLOCATION OF ANNUITY - At the time the Owner elects the income plan, the Owner
may also elect to have
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the Account Value applied to provide a Variable Income Annuity, a Fixed Income
Annuity, or a combination of both. Unless the Owner specifies otherwise, we will
provide either variable or fixed, or a combination of variable and fixed income
payments in proportion to the Sub-Accounts in which the Owner is invested as of
a date not more than [5] Valuation Days before the due date of the first income
payment. If any applicable purchase payment taxes are then due us, we will also
deduct them proportionately.
VARIABLE INCOME ANNUITY
AMOUNT OF FIRST VARIABLE PAYMENT - The Income Tables shown in the Schedule are
used to determine the first monthly variable income payment for an assumed
investment rate of 3%. The Income Tables show the dollar amount of the first
monthly variable income payment that can be purchased with each $1,000 applied.
The assumed investment rates we currently allow are shown on the Schedule.
VALUE OF INCOME UNITS - The Income Unit value for any Valuation Period is
determined by multiplying (a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate for the number
of days in the Valuation Period.
The value of an Income Unit may increase, decrease or remain the same from one
Valuation Period to the next.
NUMBER OF INCOME UNITS - We determine the number of Income Units in each
Variable Sub-Account by dividing the first monthly variable income payment
attributable to that Sub-Account by its Income Unit value as of a date not more
than [5] Valuation Days before the due date of the first variable income
payment.
AMOUNT OF SECOND AND SUBSEQUENT VARIABLE PAYMENTS - The dollar amount of the
second and subsequent variable income payments may change with the investment
performance of the Variable Sub-Accounts. The total amount of each variable
income payment will be equal to the sum of the variable income payments in each
Variable Sub-Account. The dollar amount of each payment for a Variable Sub-
Account is determined by multiplying the number of Income Units by the Income
Unit value for the Variable Sub-Account for the Valuation Period which ends on a
consistently applied date not more than [5] Valuation Days before the payment is
due.
We guarantee that the dollar amount of each payment after the first will not be
affected by variations in our expenses or mortality experience.
EXCHANGE OF INCOME UNITS - After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of income
payment made on the date of exchange would be unaffected by the exchange.
FIXED INCOME ANNUITY
A Fixed Income Annuity is an annuity with income payments that remain fixed as
to dollar amount throughout the payment period. The Income Tables shown in the
Schedule are used to determine the monthly fixed income payment. The Income
Tables show the dollar amount of the monthly fixed income payment that can be
purchased with each $1,000 applied.
INCOME PLANS
The following is a list of income plans we guarantee to make available.
DVA(MGC)-9712
Page 19
<PAGE>
INCOME PLAN 1. LIFE ANNUITY - An annuity payable during the lifetime of the
Annuitant and terminating with the last payment preceding the death of the
Annuitant.
INCOME PLAN 2. LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN - An annuity payable
during the lifetime of the Annuitant with the provision that payments will be
made for a minimum of 10 or 20 years, as elected.
INCOME PLAN 3. JOINT AND LAST SURVIVOR ANNUITY - An annuity payable during the
joint lifetime of the Annuitant and a designated second person, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
prior to the death of the survivor.
INCOME PLAN 4. PAYMENTS FOR A SPECIFIED PERIOD CERTAIN - An amount payable for
the number of years selected which may be from 5 to 30 years.
INCOME PLAN 5. ANNUITY PLAN - An amount can be used to purchase any single
premium annuity we offer on the Income Date for which the Owner and the
Annuitant are eligible.
DVA(MGC)-9712
Page 20
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
DVA(MGC)-9712
<PAGE>
[LOGO OF SAGE APPEARS HERE]
A Stock Company
GROUP FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACT
Surrender Values while the Owner is living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
DVA(MGC)-9712
<PAGE>
Exhibit 4(a)(iv)(c)
[LOGO OF SAGE APPEARS HERE]
A Stock Company
Home Office Customer Service Center
300 Atlantic Street 1290 Silas Deane Highway
Stamford, CT 06901 Wethersfield, CT 06109
1-877-TEL-SAGE
Sage Life Assurance of America, Inc. has issued this Certificate to you. We
certify that you and the Annuitant named in the Schedule are covered under the
Group Contract described in the Schedule. This Certificate becomes effective on
the Certificate Date shown in the Schedule.
This Certificate describes your benefits and rights under the provisions of the
Group Contract. The Group Contract is the agreement under which benefits are
paid and you may obtain a copy by sending us a written request.
RIGHT TO EXAMINE THIS CERTIFICATE:
IF FOR ANY REASON YOU ARE NOT SATISFIED WITH THIS CERTIFICATE, YOU MAY RETURN IT
TO US OR THE AGENT WHO SOLD IT TO YOU WITHIN 10 DAYS AFTER YOU RECEIVE IT (THE
FREE LOOK PERIOD). WHEN WE RECEIVE IT, WE WILL PROMPTLY REFUND YOU THE ACCOUNT
VALUE PLUS ANY CHARGES SHOWN IN THE SCHEDULE THAT WE HAVE DEDUCTED FROM THE
ACCOUNT VALUE ON OR BEFORE THE DATE THE RETURNED CERTIFICATE WAS RECEIVED BY US,
OR IF REQUIRED BY THE LAW OF YOUR STATE, THE INITIAL PURCHASE PAYMENT (MINUS ANY
WITHDRAWALS).
All payments and values, when based on the investment experience of the Variable
Account, may increase or decrease, depending on this Certificate's investment
results and are not guaranteed as to dollar amount. All payments and values
based on the Fixed Account may be subject to a Market Value Adjustment, the
operation of which may cause such payments and values to increase or decrease.
/s/ Ronald S. Scouby
------------------------
Chairman
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CERTIFICATE
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
DVA-C-9712
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SCHEDULE................................................................. 3
DEFINITIONS.............................................................. 7
MAKING PURCHASE PAYMENTS................................................. 9
VARIABLE ACCOUNT......................................................... 9
FIXED ACCOUNT............................................................ 11
TRANSFERS AMONG ACCOUNTS................................................. 13
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE.................. 13
CHARGES.................................................................. 14
OWNER, ANNUITANT AND BENEFICIARY......................................... 14
DEATH BENEFITS........................................................... 14
GENERAL PROVISIONS....................................................... 16
ANNUITY INCOME BENEFITS.................................................. 18
</TABLE>
DVA-C-9712
Page 2
<PAGE>
SCHEDULE
Group Contract No.: 123456789 Certificate No.: 987654
Owner: JOHN DOE Certificate Date: 1/1/1998
Issue Age/Sex: 35/MALE
Annuitant: JOHN DOE Income Date: 1/1/2038
Issue Age/Sex: 35/MALE
Initial Purchase Automatic [INCOME PLAN 2 WITH
Payment: $ [10,000] Income Plan: 10 YEARS CERTAIN]
This Schedule sets forth additional information that relates to the provisions
in this Certificate with the corresponding headings.
MAKING PURCHASE PAYMENTS
The Designated Sub-Account is the [Money Market Sub-Account].
No purchase payment, whether initial or additional, may be allocated such that
any Sub-Account would have a value less than [$250].
Additional purchase payments are subject to the following limits:
1. [Non-qualified plan: Additional purchase payments may be made until the
earlier of the year in which you attain age [85] or the year in which
the Annuitant attains age [85].]
[Qualified plan: Additional purchase payments may be made until the year
in which you attain age [70 1/2], except rollover contributions may be
made until the year in which you attain age [85].]
2. The minimum additional purchase payment we will accept is [$250;
$1,000(for Certificate without surrender charge)].
3. Our prior approval is required before you make a purchase payment that
causes the Account Value of all annuities that you maintain with us to
exceed [$1,000,000].
VARIABLE ACCOUNT
The Variable Account for this Certificate is [The Sage Variable Annuity Account
A]. [It is a unit investment trust variable account.]
FIXED ACCOUNT
The Fixed Account for this Certificate is [The Sage Fixed Interest Account A.]
The Minimum Guaranteed Interest Rate is [3%].
The Minimum Deferral Interest Rate is [3%].
Index Rate: [The Index Rate is the U.S. Treasury Constant Maturity Series as
reported in Federal Reserve Bulletin Release H.15. We currently base the Index
Rate for a calendar week on the reported rate for the preceding calendar week.
We reserve the right to set it less frequently but in no event less often than
monthly.]
DVA-C-9712
Page 3
<PAGE>
TRANSFERS AMONG ACCOUNTS
The minimum amount that can be transferred is [$250]. However, if less remains
in a Sub-Account, that amount may be transferred. If a transfer request would
reduce the Account Value remaining in a Sub-Account below [$250], we will treat
the transfer request as a request to transfer the entire amount.
Your transfer request must clearly state the Sub-Accounts from which and to
which transfers are to be made.
We reserve the right to limit, upon notice, the maximum number of transfers you
may make to [one] per calendar month or [12] per Certificate Year.
After the Income Date, we reserve the right to:
1. disallow transfers from the Fixed Account to the Variable Account, or
from the Variable Account to the Fixed Account; and
2. limit the maximum number of transfers between Variable Sub-Accounts to
[1] per Certificate Year.
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
The Free Withdrawal Amount is the greater of (a) and (b) where:
[(a) is the excess of 10% of the total purchase payments over 100% of all
prior withdrawals (including any associated surrender charge and
Market Value Adjustment incurred) in that Certificate Year; and
(b) is the excess of the Account Value on the date of withdrawal over the
unliquidated purchase payments.]
The minimum amount that can be withdrawn is [$250]. If a withdrawal request
would reduce the Account Value remaining in a Sub-Account below [$250], we will
treat the withdrawal request as a request to withdraw the entire amount.
If a requested withdrawal would reduce the Account Value below [$2,000], we
reserve the right to treat the request as a withdrawal of only the excess over
[$2,000].
Unless you specify otherwise, we will make withdrawals [proportionately from all
Sub-Accounts in which you are invested.]
CHARGES
SURRENDER CHARGE - A surrender charge may be imposed upon surrender of this
Certificate or when an Excess Withdrawal is made. The surrender charge is
applied to each purchase payment and is a percentage of each purchase payment as
follows:
<TABLE>
<CAPTION>
Complete Years Maximum
Elapsed Since Surrender Charge
Payment Accepted Percentage
---------------- ----------
<S> <C>
[0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%]
</TABLE>
OR
DVA-C-9712
Page 4
<PAGE>
<TABLE>
<CAPTION>
Maximum
Certificate Surrender Charge
Year Percentage
---- ----------
<S> <C>
[1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8+ 0%]
</TABLE>
OR
[The maximum surrender charge percentage is 0% for all Certificate Years.]
TRANSFER CHARGE - We reserve the right to charge a maximum of [$25] for each
transfer after the [12th] in a Certificate Year. Each request is considered to
be one transfer regardless of the number of Sub-Accounts affected by the
transfer. The transfer charge will be deducted proportionately from all Sub-
Accounts from which the transfer is made.
ADMINISTRATION CHARGE - [$40] a year. This charge is incurred at the beginning
of each Certificate Year and deducted on each Certificate Anniversary or upon
surrender. The charge will be waived:
1. if the Account Value is at least [$50,000] at the time of deduction; or
2. beginning on and after the [8th] Certificate Anniversary.
PURCHASE PAYMENT TAX CHARGE - The amount of any state and local taxes levied by
any governmental entity on purchase payments may be deducted from the Account
Value when such taxes are incurred. We reserve the right to defer the
collection of this charge and deduct it against your Account Value on the
surrender of this Certificate, or Excess Withdrawal, or application of the
Account Value to provide income payments.
ASSET-BASED CHARGES - We deduct asset-based charges to compensate us for
assuming mortality and expense risks, and certain administrative expenses.
[Prior to the Income Date] asset-based charges are calculated as a percentage of
the Variable Account Value on the date of deduction. On the Certificate Date,
and monthly thereafter, the asset-based charges are deducted in proportion to
the Variable Sub-Accounts in which you are invested. The maximum charges are:
Asset-Based Charges Annual Charge Monthly Charge
------------------- -------------- ---------------
Certificate Years 1-7 [1.40% .116667%
Certificate Years 8+ 1.25% .104167%]
We also reserve the right to deduct asset-based charges on the effective date of
any transfer from the Fixed Account, or allocation of purchase payment to the
Variable Account, based on the amount transferred or allocated, and based on the
number of days remaining until the next date of deduction.
VARIABLE SUB-ACCOUNT CHARGES - [On and after the Income Date] we deduct the
asset-based charges above from the assets in each Variable Sub-Account on a
daily basis. The maximum charges are:
Variable Sub-Account Charges Annual Charge Daily Charge
---------------------------- -------------- -------------
Certificate Years 1-7 [1.40% .0038626%
Certificate Years 8+ 1.25% .0034462%]
DVA-C-9712
Page 5
<PAGE>
CHARGE DEDUCTION RULES - Unless otherwise specified above, charges are deducted
from the Account Value [proportionately from all Sub-Accounts in which you are
invested.]
ANNUITY INCOME BENEFITS
If you have not chosen an income plan, [Life Annuity with 10 Years Certain] will
automatically apply.
The Maximum Income Date is the first day of the first calendar month following
the Annuitant's [95/th/] birthday.
We reserve the right to require that the Income Date be at least [2 years] after
the Certificate Date.
The minimum amount that can be applied under any Variable or Fixed Income
Annuity is [$5,000].
The minimum income payment is [$100].
We currently allow assumed investment rates of [2.5%] and [6%]. If you do not
specify one of these rates when you choose an income plan, the assumed
investment rate will be [2.5%].
Values for other ages, and for other payment periods, joint life combinations,
or assumed investment rates that we offer (Tables below show the minimum income
values and are based on 2.5% interest and the Annuity 2000 Mortality Tables) are
available on request. Monthly income payments are shown for each $1,000
applied.
INCOME TABLE FOR A FIXED PERIOD
<TABLE>
<CAPTION>
Fixed Period Monthly Income Fixed Period Monthly Income Fixed Period Monthly Income
of Years Payment of Years Payment of Years Payment
-------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
11 $8.66 21 $5.09
12 8.03 22 4.91
13 7.50 23 4.75
14 7.05 24 4.61
5 17.73 15 6.65 25 4.47
6 14.96 16 6.31 26 4.35
7 12.98 17 6.01 27 4.23
8 11.49 18 5.74 28 4.13
9 10.34 19 5.50 29 4.03
10 9.41 20 5.29 30 3.94
</TABLE>
INCOME TABLE FOR LIFE
<TABLE>
<CAPTION>
Male/Female Male/Female Male/Female
Age Life Only 10 Years Certain 20 Years Certain
--- --------- ---------------- ----------------
<S> <C> <C> <C>
50 3.81 / 3.55 $3.78 / 3.54 $3.68 / 3.49
55 4.20 / 3.89 4.15 / 3.86 3.98 / 3.77
60 4.72 / 4.33 4.62 / 4.28 4.31 / 4.10
65 5.43 / 4.93 5.24 / 4.83 4.64 / 4.47
70 6.42 / 5.76 5.99 / 5.54 4.93 / 4.82
75 7.79 / 6.99 6.86 / 6.44 5.13 / 5.08
80 9.70 / 8.80 7.74 / 7.45 5.24 / 5.22
85 12.38 / 11.52 8.49 / 8.35 5.28 / 5.27
</TABLE>
RIDERS
Accidental Death Benefit Rider
The Maximum Accidental Death Benefit is [$250,000].
DVA-C-9712
Page 6
<PAGE>
DEFINITIONS
- --------------------------------------------------------------------------------
"ACCOUNT VALUE" is the entire amount we hold under this Certificate for you
before the Income Date. It is equal to the sum of the Variable Account Value
and the Fixed Account Value.
"ACCUMULATION UNIT" is the unit of measure we use before the Income Date to keep
track of the value of each Variable Sub-Account.
"ANNUITANT" is the natural person whose age determines the Maximum Income Date
and the amount and duration of income payments involving life contingencies.
The Annuitant may also be the person to whom any payment will be made starting
on the Income Date. The Annuitant's name appears in the Schedule.
"BENEFICIARY" is the person or persons to whom we pay a death benefit if any
Owner dies prior to the Income Date.
"CERTIFICATE DATE" is the date this Certificate is issued at our Customer
Service Center. The Certificate Date is shown in the Schedule. While this
Certificate is in force, every anniversary of the Certificate Date is a
CERTIFICATE ANNIVERSARY, and each and every consecutive twelve-month period
beginning on the Certificate Date and each Certificate Anniversary is a
CERTIFICATE YEAR.
"CONTINGENT ANNUITANT" is the natural person who becomes the Annuitant if the
Annuitant dies prior to the Income Date.
"CONTINGENT BENEFICIARY" is the person that becomes the Beneficiary if the named
Beneficiary dies prior to the Income Date.
"CUSTOMER SERVICE CENTER" is where we provide service to you. The mailing
address and telephone number of the Customer Service Center are shown on the
first page of this Certificate.
"EXCESS WITHDRAWAL" is a withdrawal of Account Value that exceeds the Free
Withdrawal Amount.
"EXPIRY DATE" is the last day in a Guarantee Period.
"FIXED ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred.
"FIXED ACCOUNT VALUE" is the sum of the value of each Fixed Sub-Account on any
particular day.
A "FIXED SUB-ACCOUNT" is established when purchase payments are invested or
amounts are transferred to the Fixed Account. The value of each Fixed Sub-
Account is equal to the amount invested, increased by interest and reduced by
any withdrawals or transfers from, or charges assessed against the Fixed Sub-
Account.
"FREE WITHDRAWAL AMOUNT" is the maximum amount that can be withdrawn in a
Certificate Year without being subject to a surrender charge. This amount is
described in the Schedule.
"GENERAL ACCOUNT" consists of all our assets other than those held in any
separate investment accounts.
"GUARANTEED INTEREST RATE" is the effective annual interest rate we will credit
for a specified Guarantee Period. The Guaranteed Interest Rate will never be
less than the minimum shown in the Schedule.
"GUARANTEE PERIOD" is a period of years for which a specified effective annual
interest rate is guaranteed by us. Interest is credited daily at a rate to
yield the declared annual Guaranteed Interest Rate.
DVA-C-9712
Page 7
<PAGE>
"HOME OFFICE" is our main office. The mailing address is shown on the first
page of this Certificate.
"INCOME DATE" is the date when income payments under this Certificate commence.
This date is shown in the Schedule.
"INCOME UNIT" is the unit of measure we use to calculate the amount of income
payments under the Variable Income Annuity.
"MARKET VALUE ADJUSTMENT" is a positive or negative adjustment that may apply to
surrender, withdrawals, transfers and amounts applied to an income plan, from a
Fixed Sub-Account before the end of a Guarantee Period.
"NET ASSET VALUE" is the price of one share of an investment portfolio.
"SATISFACTORY NOTICE" is a notice or request authorized by you, in a form
satisfactory to us, received at our Customer Service Center.
"SUB-ACCOUNT" includes both Variable Sub-Accounts and Fixed Sub-Accounts, unless
the context indicates otherwise.
"SURRENDER VALUE" is the amount you receive upon surrender of this Certificate
before the Income Date. It is your Account Value, plus or minus any applicable
Market Value Adjustment, and less any applicable surrender charges or other
charges shown in the Schedule.
"VALUATION DATE" is the date at the end of a Valuation Period when each Variable
Sub-Account is valued.
"VALUATION PERIOD" is the period between one calculation of an Accumulation Unit
value and the next calculation. Normally, we calculate Accumulation Units daily
when the New York Stock Exchange is open for trading and we are open for
business. We can delay this calculation if an emergency exists, making disposal
or fair valuation of assets in the Variable Account not reasonably practicable,
or the Securities and Exchange Commission (SEC) permits the delay. We may
change when we calculate the Accumulation Unit value by giving you 30 days
notice, or such notice as may be required by law.
"VARIABLE ACCOUNT" is a separate investment account of ours into which purchase
payments may be invested or Account Value may be transferred. The Variable
Account is shown in the Schedule.
"VARIABLE ACCOUNT VALUE" is the sum of the value of each Variable Sub-Account on
a Valuation Date.
"VARIABLE SUB-ACCOUNT" is a division of the Variable Account that invests in
shares of a particular investment portfolio. The value of a Variable Sub-
Account is determined by multiplying (a) times (b) where:
(a) equals the number of Accumulation Units held in the Variable Sub-
Account; and
(b) equals the value of the Accumulation Unit for the Variable Sub-
Account.
"WE", "US" OR "OUR" is Sage Life Assurance of America, Inc.
"YOU" OR "YOUR" is the Owner of this Certificate. Your name appears in the
Schedule. You are entitled to exercise all rights under this Certificate.
However, if you designate an irrevocable beneficiary, you may need that
beneficiary's consent before you exercise your rights under this Certificate.
The death of any Owner before the Income Date initiates payment of the death
benefit.
DVA-C-9712
Page 8
<PAGE>
MAKING PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT - You must make the initial purchase payment in order
to put this Certificate in force. The amount of your initial purchase payment
is shown in the Schedule.
ADDITIONAL PURCHASE PAYMENTS - After the initial purchase payment, additional
purchase payments may be made at any time while this Certificate is in force and
before the Income Date. The amount of any additional purchase payments may vary
but are subject to limits described in the Schedule.
ALLOCATION OF PURCHASE PAYMENTS AMONG THE VARIABLE AND FIXED ACCOUNTS - Subject
to limits described in the Schedule, you tell us how to allocate your purchase
payment, less any applicable taxes, by notifying us of your choices. You
specified how to allocate your initial purchase payment in your application for
this Certificate. Initial purchase payments allocated to the Fixed Account will
be invested in Fixed Sub-Accounts with the Guarantee Periods that you specified
in your application. We may, however, require that an initial purchase payment
allocated to a Variable Sub-Account be invested in the Designated Sub-Account
shown in the Schedule during the Free Look Period. At the end of the Free Look
Period, if your initial purchase payment was allocated to the Designated Sub-
Account by us, we will transfer the value of the Designated Sub-Account to the
Sub-Account(s) you specified in your application. For the purpose of processing
transfers from the Designated Sub-Account, the Free Look Period will end 15 days
after the Certificate Date.
Subject to our rules, you may tell us how to allocate any additional purchase
payments. If you do not tell us, they will be allocated in the same manner as
your most recent purchase payment.
CANCELLATION OF CERTIFICATE - If you have not made a purchase payment for more
than [2] years and your Account Value is less than [$2,000] on a Certificate
Anniversary, we may cancel this Certificate and pay you the Surrender Value as
though you had made a full withdrawal. We will send you written notice at your
address of record. You will be allowed 61 days from the date we mail you the
notice to submit an additional purchase payment to us in an amount not less than
the difference between [$2,000] and the Account Value on the last Certificate
Anniversary. The additional purchase payment is subject to the limits and
minimums shown in the Schedule.
VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
VARIABLE ACCOUNT - A variable account is an investment account we maintain
separate from our General Account and any other separate investment accounts we
may have. We own the assets in a variable account. A variable account will not
be charged with liabilities that arise from any other business that we conduct.
We may transfer to our General Account assets that exceed the reserves and other
liabilities of a variable account.
A variable account may invest in mutual funds, unit investment trusts and other
investment portfolios. Such a variable account is treated as a unit investment
trust under Federal securities laws and is registered with the SEC under the
Investment Company Act of 1940.
We may offer certain series or variable accounts that may not be registered with
the SEC under the Securities Act of 1933. Any such series or variable account,
if offered, will be described in the applicable offering document.
The Variable Account for this Certificate is shown in the Schedule. The laws of
our state of domicile govern this Variable Account.
DVA-C-9712
Page 9
<PAGE>
VARIABLE SUB-ACCOUNTS - A unit investment trust variable account includes
variable sub-accounts, each investing in a designated investment portfolio. The
sub-accounts and the investment portfolios in which they invest are specified in
the prospectus or offering document. Income, gains or losses, realized and
unrealized from assets in each variable sub-account are credited to or charged
against that variable sub-account without regard to other income, gains or
losses in the other sub-accounts or our other income, gains or losses.
CHANGES WITHIN THE VARIABLE ACCOUNT - We may, from time to time, make additional
Variable Sub-Accounts available to you. These Sub-Accounts will invest in
investment portfolios we find suitable for the Group Contract. We also have the
right to eliminate Sub-Accounts, to combine two or more Sub-Accounts or to
substitute a new investment portfolio for the portfolio in which a Sub-Account
invests. Such an action may become necessary if, in our judgment, a portfolio or
Sub-Account no longer suits the purposes of the Group Contract. This may happen
due to a change in laws or regulations, or a change in a portfolio's or Sub-
Account's investment objectives or restrictions, or because the portfolio or
Sub-Account is no longer available for investment, or for some other reason. We
will get prior approval from the insurance department of our state of domicile
before taking such action. If required, this approval process will be on file
with the insurance department of the jurisdiction in which the Group Contract is
delivered. We will also get any required approval from the SEC and any other
required approvals before taking such an action.
Subject to any required regulatory approvals, we reserve the right to transfer
assets of the Variable Sub-Accounts that we determine to be associated with the
class of Group Contracts to which the Group Contract belongs, to another
variable account or variable sub-account.
When permitted by law, we reserve the right to:
1. Deregister the Variable Account under the Investment Company Act of
1940;
2. Operate the Variable Account as a management company under the
Investment Company Act of 1940, if it is operating as a unit investment
trust;
3. Operate the Variable Account as a unit investment trust under the
Investment Company Act of 1940, if it is operating as a Managed
Separate Account;
4. Restrict or eliminate any voting rights of Owners, or other persons who
have voting rights as to the Variable Account;
5. Combine the Variable Account with other separate investment accounts;
and
6. Combine a Variable Sub-Account with another Variable Sub-Account.
If any actions we take result in a material change in the underlying investments
of a Variable Sub-Account in which you are invested, we will notify you of the
change. You may then choose a new Sub-Account.
ACCUMULATION UNITS - We keep track of the value of each of your Variable Sub-
Accounts by crediting you with Accumulation Units for each Sub-Account. The
number of Accumulation Units credited to you for each Sub-Account is determined
by dividing (a) by (b) where:
(a) is the dollar amount allocated to that Sub-Account; and
(b) is the value of the Accumulation Unit for that Sub-Account for the
Valuation Date on which the purchase payment or transferred amount is
invested in that Sub-Account.
Accumulation Units will be adjusted for any transfers and will be canceled on
payment of a death benefit, a withdrawal, a surrender, the application of
Account Value to an income plan on the Income Date, or assessment of charges
shown in the Schedule (other than the variable sub-account charges) based on
their value for the Valuation Period in which the transaction occurs.
DVA-C-9712
Page 10
<PAGE>
VALUE OF ACCUMULATION UNITS - The Accumulation Unit value for any Valuation
Period is determined by multiplying (a) by (b) where:
(a) is the Accumulation Unit value for the immediately preceding Valuation
Period; and
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined.
The value of an Accumulation Unit may increase, decrease or remain the same from
one Valuation Period to the next.
NET INVESTMENT FACTOR - The net investment factor for a Variable Sub-Account is
an index that measures the investment performance of that Sub-Account from one
Valuation Period to the next. The net investment factor for any Valuation
Period is determined by dividing (a) by (b), and then subtracting (c) where:
(a) is the net result of:
(i) the Net Asset Value per share of the investment portfolio share
in which the Sub-Account invests determined at the end of the
current Valuation Period; plus
(ii) the per share amount of any dividend or capital gains
distribution made by that investment portfolio on shares held
in the Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period; and plus or minus
(iii) a per share charge or credit for any taxes reserved for, which
is determined by us to have resulted from the operations of
that Sub-Account;
(b) is the Net Asset Value per share of the investment portfolio share in
which the Sub-Account invests determined at the end of the immediately
preceding Valuation Period; and
(c) is the daily variable sub-account charges shown in the Schedule
(adjusted for the number of days in the Valuation Period).
The net investment factor may be more or less than, or equal to, one.
FIXED ACCOUNT
- --------------------------------------------------------------------------------
FIXED ACCOUNT - The Fixed Account is a separate investment account under state
insurance law. It is maintained separate from our General Account and separate
from any other separate investment account that we may have. We own the assets
in the Fixed Account. Notwithstanding the foregoing, our obligations under (and
the values and benefits under) the Fixed Account option of this Certificate do
not vary as a function of the investment performance of the Fixed Account.
Owners and Beneficiaries with rights under this Certificate do not participate
in the investment gains or losses of the assets of the Fixed Account. Such
gains or losses accrue solely to us. We retain the risk that the value of the
assets in the Fixed Account may fall below the reserves and other liabilities
that we must maintain in connection with our obligations under the Fixed Account
option of this Certificate. In such event, we will transfer assets from our
General Account to the Fixed Account to make up the difference. The Fixed
Account will not be charged with liabilities that arise from any other business
that we conduct. We may transfer to our General Account assets that exceed the
reserves and other liabilities of the Fixed Account. The Fixed Account is not
required to be registered with the SEC as an investment company under the
Investment Company Act of 1940.
FIXED SUB-ACCOUNT - We will establish a separate Fixed Sub-Account for you each
time you allocate amounts to the Fixed Account. Amounts invested in these Fixed
Sub-Accounts earn interest at the Guaranteed Interest Rate in effect on the date
the amounts are allocated.
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GUARANTEE PERIODS - Each Fixed Sub-Account is guaranteed an interest rate for a
period we refer to as a Guarantee Period. The Guaranteed Interest Rate for a
Fixed Sub-Account is effective for the entire Guarantee Period. The length of a
Guarantee Period is measured from the end of the calendar month in which the
amount is allocated to the Fixed Sub-Account. The last day of the Guarantee
Period is its Expiry Date. Surrender, or withdrawals or transfers from all or
part of a Fixed Sub-Account, and amounts applied to an income plan, made prior
to the Expiry Date of a Guarantee Period may be subject to a Market Value
Adjustment.
We will notify you at least thirty days prior to an Expiry Date of your options
for renewal, which include:
1. electing a new Guarantee Period from among those then offered by us,
but excluding any that extend beyond your Income Date; or
2. transferring the value of the Fixed Sub-Account to one or more Variable
Sub-Accounts.
If we do not receive Satisfactory Notice prior to the Expiry Date, we will
transfer the value of the expiring Fixed Sub-Account to a Fixed Sub-Account with
the same Guarantee Period, but not longer than 5 years, nor extending beyond
your Income Date. The transfer will be effective as of the Expiry Date of the
previous Guarantee Period.
GUARANTEED INTEREST RATES - Periodically, we will declare Guaranteed Interest
Rates for then available Guarantee Periods. These rates will be guaranteed for
the duration of the respective Guarantee Periods. Guaranteed Interest Rates
will never be less than the Minimum Guaranteed Interest Rate shown in the
Schedule.
MARKET VALUE ADJUSTMENT - A Market Value Adjustment may be applied to surrender,
withdrawals, transfers or amounts applied to an income plan when taken from a
Fixed Sub-Account other than during the thirty-day period prior to its Expiry
Date. A Market Value Adjustment is applied separately to each Fixed Sub-
Account.
A Market Value Adjustment is determined by multiplying the amount surrendered,
withdrawn, transferred or applied to an income plan by the following factor:
[(1+I)/(1+J+.0025)]/N/365/--1
Where:
. I is the Index Rate for a maturity equal to the Fixed Sub-Account's
Guarantee Period;
. J is the Index Rate for a maturity equal to the time remaining (rounded
up to the next full year) in the Fixed Sub-Account's Guarantee Period;
and
. N is the remaining number of days in the Guarantee Period at the time
of calculation.
If there is no Index Rate for the maturity needed to calculate I or J, straight
line interpolation between the Index Rate of the next highest and next lowest
maturities will be used to determine that Index Rate. If the maturity is one
year or less, we will use the Index Rate for a one-year maturity.
Market Value Adjustments will be applied as follows:
1. For a surrender, withdrawal, transfer or amount applied to an income
plan, the Market Value Adjustment will be calculated on the total
amount that must be surrendered, withdrawn, transferred or applied to
an income plan in order to provide the amount requested.
2. If the Market Value Adjustment is negative, it is deducted from any
remaining value in the Fixed Sub-Account or amount surrendered. Any
remaining Market Value Adjustment is
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deducted from the amount withdrawn, transferred or applied to an income
plan.
3. If the Market Value Adjustment is positive, it is added to any
remaining value in the Fixed Sub-Account or amount surrendered. If the
full amount of the Fixed Sub-Account is withdrawn, transferred or
applied to an income plan, the Market Value Adjustment is added to the
amount withdrawn, transferred or applied to an income plan.
TRANSFERS AMONG ACCOUNTS
Prior to the Income Date and while the Annuitant is living, you may transfer
Account Value among Sub-Accounts. Certain restrictions may apply during the Free
Look Period. To make a transfer, you must give us Satisfactory Notice. Transfers
generally take effect when we receive the notice. The number of free transfers
that we allow each Certificate Year is shown in the Charges section of the
Schedule. Restrictions for transfers are shown in the Schedule. A transfer from
a Fixed Sub-Account may be subject to a Market Value Adjustment. In addition to
the restrictions on transfers shown in the Schedule, we also may restrict
transfers:
. If any of the Sub-Accounts that would be affected by the transfer is unable
to purchase or redeem shares of the Fund in which the Sub-Account invests;
or
. If the transfer results in more than one trade involving the same Sub-
Account within a 30-day period; or
. If the transfer would adversely affect Accumulation Unit values (which may
occur if the transfer would affect one percent or more of the relevant
Fund's total assets).
Where permitted by law, we may accept your authorization of third party
transfers on your behalf. We may restrict the Sub-Accounts that will be
available to you for transfers of purchase payments during any period in which
you authorize such third party to act on your behalf. We will give you prior
notice of any such restrictions. However, we will not enforce such restrictions
if you provide us with satisfactory evidence that (i) such third party has been
appointed by a court of competent jurisdiction to act on your behalf, or (ii)
such third party has been appointed by you to act on your behalf for all your
financial affairs.
SURRENDERING, OR WITHDRAWING PART OF YOUR ACCOUNT VALUE
Prior to the Income Date and while the Annuitant is living, you may withdraw all
or part of your Account Value by giving us Satisfactory Notice. The minimum
withdrawal is shown in the Schedule.
If you request a surrender, we will terminate this Certificate and pay you the
Surrender Value. This amount may also be applied to the income plans subject to
any restrictions described in this Certificate. Unless specified otherwise, we
will make partial withdrawals as described in the Schedule. Surrender and
withdrawals generally take effect on the date we receive Satisfactory Notice.
If you make a withdrawal from this Certificate in excess of the Free Withdrawal
Amount described in the Schedule, a surrender charge may be assessed. Surrender
charges are described in the Schedule. A withdrawal from the Fixed Account may
also be subject to a Market Value Adjustment.
EXCESS WITHDRAWALS - If a partial withdrawal is made for an amount greater than
the Free Withdrawal Amount, a surrender charge may be applicable. For purposes
of calculating the surrender charge only, purchase payments will be liquidated
in whole or in part on a "first-in-first-out-basis." This means we liquidate
purchase payments in the order they were made: the oldest unliquidated purchase
payment first, the next oldest unliquidated purchase payment second, etc., until
all purchase payments have been liquidated.
The surrender charge as to any liquidated purchase payment is determined by
multiplying the amount of the purchase payment being liquidated by the
applicable percentage shown in the Schedule. The total surrender charge will be
the sum of the surrender charges for each purchase payment being liquidated.
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In a partial withdrawal, the surrender charge is deducted from the Account Value
remaining after you are paid the amount requested. The amount requested from a
Sub-Account may not exceed the value of that Sub-Account less any applicable
surrender charge. In a complete withdrawal (or surrender of this Certificate),
it is deducted from the amount otherwise payable.
CHARGES
- --------------------------------------------------------------------------------
The types and amounts of charges and when and how they are deducted are
described in the Schedule.
OWNER, ANNUITANT AND BENEFICIARY
- --------------------------------------------------------------------------------
THE OWNER - You are the Owner of this Certificate. You have the rights and
options described in this Certificate, including but not limited to the right to
receive the income payments beginning on the Income Date. One or more people may
own this Certificate.
THE ANNUITANT - Unless another Annuitant is shown in the Schedule, you are also
the Annuitant. You may name a Contingent Annuitant. You will be the Contingent
Annuitant unless you name someone else. If there are joint Owners, we will treat
the youngest Owner as the Contingent Annuitant, unless you elect otherwise.
If you are not the Annuitant and the Annuitant dies before the Income Date, the
Contingent Annuitant becomes the Annuitant. If the Annuitant dies and no
Contingent Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as Annuitant.
THE BENEFICIARY - We pay the death benefit to the primary Beneficiary (unless
there are joint Owners in which case proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death benefit is
paid to the Contingent Beneficiary, if any. If there is no surviving
Beneficiary, we pay the death benefit to the Owner's estate.
One or more persons may be named as primary Beneficiary or Contingent
Beneficiary. We will assume any death benefit is to be paid in equal shares to
the multiple surviving Beneficiaries unless you specify otherwise.
You have the right to change Beneficiaries. However, if you designate the
primary Beneficiary as irrevocable, you may need the consent of that irrevocable
Beneficiary to exercise the rights and options under this Certificate.
CHANGE OF OWNER, BENEFICIARY OR ANNUITANT - During your lifetime and while this
Certificate is in force you can transfer ownership of this Certificate or change
the Beneficiary, or change the Annuitant. (However, the Annuitant cannot be
changed after the Income Date.) To make any of these changes, you must send us
Satisfactory Notice. If accepted, any change in Owner, Beneficiary or Annuitant
will take effect on the date you signed the notice. Any of these changes will
not affect any payment made or action taken by us before our acceptance. A
CHANGE OF OWNER MAY BE A TAXABLE EVENT and may also affect the amount of death
benefit payable under this Certificate.
DEATH BENEFITS
- --------------------------------------------------------------------------------
DEATH BENEFIT BEFORE THE INCOME DATE - If any Owner dies before the Income Date,
we will pay the Beneficiary the greatest of the following:
(a) the Account Value determined as of the day we receive proof of death;
or
(b) 100% of the sum of all purchase payments made to this Certificate,
reduced proportionately by any prior withdrawals (including any
associated surrender charge and Market Value
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Adjustment incurred); or
(c) the Highest Anniversary Value.
In addition, we will pay the Beneficiary any rider benefits that become due upon
the death of the Owner (or Annuitant, if no natural Owner). For the purposes of
the provisions entitled "Required Distributions of Proceeds on the Death of the
Owner" and "Proof of Death," any rider benefits payable will be considered part
of the "Death Benefit."
HIGHEST ANNIVERSARY VALUE - The Highest Anniversary Value is equal to the
greatest anniversary value attained from the following:
Upon our receipt of proof of death, we will calculate an anniversary value
for each Certificate Anniversary before the Owner's death excluding,
however, Certificate Anniversaries that come after the Owner attains age
80. An anniversary value is equal to the Account Value on a Certificate
Anniversary, increased by the dollar amount of any purchase payments made
since that Certificate Anniversary and reduced for any withdrawals
(including any associated surrender charge and Market Value Adjustment
incurred) taken since that anniversary. This reduction will be made in
proportion to the reduction in the Account Value that results from a
withdrawal.
MULTIPLE OWNERS - If there are multiple Owners, the age of the oldest Owner will
be used to determine the death benefit.
DEATH BENEFIT WHEN NO NATURAL OWNERS - If there is no Owner who is a natural
person, we will treat the Annuitant as Owner for the purpose of paying the death
benefit and any rider benefits, and the Annuitant's age will determine the death
benefit payable to the Beneficiary.
REQUIRED DISTRIBUTION OF PROCEEDS ON THE DEATH OF THE OWNER - The three sub-
sections indented below are required to qualify this Certificate as an annuity
contract under Section 72(s) of the Internal Revenue Code of 1986, as amended.
Where the terms of these three sub-sections are in conflict with any other
sections or sub-sections of this Certificate, these three sub-sections will
control. We reserve the right to amend or administer this Certificate as
necessary to comply with the applicable tax requirements. These three sub-
sections and this Certificate should be construed so that they comply with the
applicable tax requirements.
DEATH BENEFIT OPTIONS BEFORE INCOME DATE - In the event any Owner dies
before the Income Date, the death benefit may be taken in one sum, in which
case this Certificate will terminate. Such sum shall be paid within five
years of the Owner's death unless one of the options for continuation of
this Certificate below is elected by the person entitled to make that
election.
CERTIFICATE CONTINUATION OPTION - If the death benefit is not taken in one
sum immediately, the Certificate will continue subject to the following
provisions:
1. If there are joint Owners, the surviving Owner becomes the new
Owner. Otherwise, the Beneficiary becomes the new Owner.
2. Unless specified otherwise, any excess of the death benefit over
the Account Value will be allocated to and among the Variable and
Fixed Accounts in proportion to their values as of the date on
which the death benefit is determined. We will establish a new
Fixed Sub-Account for any allocation to the Fixed Account based on
the Guarantee Period you then elect.
3. If the new Owner is not the deceased Owner's spouse, no additional
purchase payments may be applied to this Certificate after the
death of the deceased Owner and the entire interest in this
Certificate must be distributed under one of the following
options:
a. The entire interest in this Certificate must be distributed
over the life of the new Owner, or over a period not extending
beyond the life expectancy of the new Owner, with
distributions beginning within one year of the Owner's death;
or
b. The entire interest in this Certificate must be distributed
within 5 years of the Owner's
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death.
4. If the new Owner is the deceased Owner's spouse, this Certificate
will continue according to its terms and conditions with the
surviving spouse as the new Owner. The death benefit that would
otherwise be paid in a lump sum will become the Account Value as
of the Business Day we receive proof of death. The surviving
spouse may make additional purchase payments. The surviving spouse
may also name a new Beneficiary and choose a new Income Date. If
no Beneficiary is so named, the surviving spouse's estate will be
the Beneficiary. Upon the death of the surviving spouse before the
Income Date, the death benefit will be determined as provided in
the provision entitled, "Death Benefit Before the Income Date."
For this purpose only, item (b) is initially set equal to the
Account Value as of the Business Day we receive proof of death.
The entire interest in this Certificate must be distributed to the
new Beneficiary in accordance with the provisions of 3.a. or 3.b.
above.
If there is more than one Beneficiary, the foregoing provisions will
independently apply to each Beneficiary.
DEATH BENEFIT ON OR AFTER THE INCOME DATE - If any Owner dies on or after
the Income Date but before the time the entire interest in this Certificate
has been distributed, the remaining portion will be distributed at least as
rapidly as under the method of distribution being used as of the date of
the Owner's death.
If income payments have been selected based on an income plan providing for
payments for a guaranteed period, and the Annuitant dies on or after the
Income Date, we will make the remaining guaranteed payments to the
Beneficiary. Any remaining payments will be made as rapidly as under the
method of distribution being used as of the date of the Annuitant's death.
If no Beneficiary is living, we will commute any unpaid guaranteed payments
to a single sum (on the basis of the interest rate used in determining the
payments) and pay that single sum to the estate of the last to die of the
Annuitant or the Beneficiary.
PROOF OF DEATH - Proof of death must be received at our Customer Service Center
before we will pay any death benefit. We will accept one of the following
items:
1. An original certified copy of an official death certificate; or
2. An original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. Any other proof satisfactory to us.
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
ASSIGNMENT - You may assign this Certificate at any time prior to the Income
Date. No assignment will be binding on us unless we receive Satisfactory Notice.
We will not be liable for any payments made or actions we take before the
assignment is accepted by us. An absolute assignment will revoke the interest of
any revocable Beneficiary. We will not be responsible for the validity of any
assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT.
CLAIMS OF CREDITORS - To the extent permitted by law, no benefits payable under
this Certificate will be subject to the claims of your, the Beneficiary's, or
the Annuitant's creditors.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL - We may require proof of age,
sex or survival of any person upon whose age, sex or survival any payments
depend. If the age or sex of the Annuitant has been misstated, or if the age of
the Owner has been misstated, the benefits will be those that the Account Value
applied would have provided for the correct age and sex. If we have made
incorrect income payments, the amount of any underpayment will be paid
immediately. The amount of any overpayment will be deducted from future income
payments.
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NO DIVIDENDS PAYABLE - This Certificate is non-participating and does not share
in any distribution of our surplus. We will not pay any dividends.
INCONTESTABILITY - This Certificate is incontestable from its Certificate Date.
REQUIRED REPORTS - We will furnish a report to you as often as required by law,
but at least once each Certificate Year before the Income Date. The report will
show the number of Accumulation Units credited to each Variable Sub-Account in
which you are invested and the corresponding Accumulation Unit value as of the
date of the report. It will also show your Fixed Account Value.
MORTALITY AND EXPENSES - Our actual mortality and expense experience will not
affect the amount of any income payments or any other values under this
Certificate.
TAXES BASED UPON PURCHASE PAYMENT OR VALUE - If there is a law or change in law
assessing taxes against us based upon purchase payments or value of this
Certificate, we reserve the right to charge you and all similarly situated
Owners proportionately for that tax. This would include a tax based upon our
realized net capital gains in the Variable Sub-Accounts and on earnings in the
Fixed Account, on which we are not currently taxed.
PAYMENTS WE MAY DEFER - We may not be able to determine the value of the assets
of the Variable Sub-Accounts because:
1. The New York Stock Exchange is closed for trading;
2. The SEC determines that a state of emergency exists;
3. An order or pronouncement of the SEC permits a delay for the protection
of Owners; or
4. The check used to pay the purchase payment has not cleared through the
banking system. This may take up to 15 days.
If this happens, we may delay:
1. Determination and payment of the Surrender Value or any withdrawal;
2. Determination and payment of any death benefit if death occurs before
the Income Date;
3. Transfers of the Account Value; or
4. Application of the Account Value under an income plan.
We reserve the right to delay payment of amounts from the Fixed Account for up
to six months. If deferred 30 days or more, the amount deferred will earn
interest at a rate not less than the Minimum Deferral Interest Rate shown in the
Fixed Account section of the Schedule.
AUTHORITY TO MAKE AGREEMENTS - All agreements made by us must be signed by one
of our officers. No other person, including an insurance agent or broker, can
change the terms of this Certificate or make any agreement binding on us.
However, we can, with the agreement of the Group Contractholder, make changes to
the Group Contract and this Certificate without your consent.
REQUIRED NOTE ON OUR COMPUTATIONS - We have filed a detailed statement of our
computations with the insurance supervisory officials in the appropriate
jurisdictions. The values are not less than those required by the laws of those
states or jurisdictions. Any benefit provided by an attached rider will not
increase these values unless otherwise stated in that rider.
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ANNUITY INCOME BENEFITS
- --------------------------------------------------------------------------------
CHOOSING AN INCOME DATE AND INCOME PLAN - On the Income Date, if the Annuitant
is alive and this Certificate is in force, income payments will begin under the
income plan you have chosen. If you have not chosen an income plan, the option
shown in the Schedule will automatically apply. If you have not selected an
Income Date, the Maximum Income Date shown in the Schedule will automatically
apply.
You may choose or change an income plan or the Income Date by giving us
Satisfactory Notice at least 30 days before the Income Date. However, any Income
Date must meet the restrictions described in the Schedule.
Once income payments have begun, we reserve the right to disallow further
changes without our prior approval.
MINIMUM AMOUNTS - If the amount available to apply under any variable or fixed
option is less than the minimum amount shown in the Schedule, we reserve the
right to pay such amount in a lump sum in lieu of the payment otherwise provided
for.
Income payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by giving us Satisfactory Notice at least 30 days before the
Income Date. However, if at any time the payment becomes less than the minimum
income payment shown in the Schedule, we reserve the right to reduce the
frequency of payment to an interval that results in each payment being at least
equal to the minimum income payment. In no event will the interval be less
frequent than annual.
ALLOCATION OF ANNUITY - At the time you elect the income plan, you may also
elect to have the Account Value applied to provide a Variable Income Annuity, a
Fixed Income Annuity, or a combination of both. Unless you specify otherwise, we
will provide either variable or fixed, or a combination of variable and fixed
income payments in proportion to the Sub-Accounts in which you are invested as
of a date not more than [5] Valuation Days before the due date of the first
income payment. If any applicable purchase payment taxes are then due us, we
will also deduct them proportionately.
VARIABLE INCOME ANNUITY
AMOUNT OF FIRST VARIABLE PAYMENT - The Income Tables shown in the Schedule are
used to determine the first monthly variable income payment for an assumed
investment rate of 2.5%. The Income Tables show the dollar amount of the first
---
monthly variable income payment that can be purchased with each $1,000 applied.
The assumed investment rates we currently allow are shown on the Schedule.
VALUE OF INCOME UNITS - The Income Unit value for any Valuation Period is
determined by multiplying (a) by (b), and then dividing by (c) where:
(a) is the Income Unit value for the immediately preceding Valuation
Period;
(b) is the "net investment factor" for the Variable Sub-Account for the
Valuation Period for which the value is being determined; and
(c) is the daily equivalent of the assumed investment rate for the number
of days in the Valuation Period.
The value of an Income Unit may increase, decrease or remain the same from one
Valuation Period to the next.
NUMBER OF INCOME UNITS - We determine the number of Income Units in each
Variable Sub-Account by dividing the first monthly variable income payment
attributable to that Sub-Account by its Income Unit value as of a date not more
than [5] Valuation Days before the due date of the first variable income
payment.
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AMOUNT OF SECOND AND SUBSEQUENT VARIABLE PAYMENTS - The dollar amount of the
second and subsequent variable income payments may change with the investment
performance of the Variable Sub-Accounts. The total amount of each variable
income payment will be equal to the sum of the variable income payments in each
Variable Sub-Account. The dollar amount of each payment for a Variable Sub-
Account is determined by multiplying the number of Income Units by the Income
Unit value for the Variable Sub-Account for the Valuation Period which ends on a
consistently applied date not more than [5] Valuation Days before the payment is
due.
We guarantee that the dollar amount of each payment after the first will not be
affected by variations in our expenses or mortality experience.
EXCHANGE OF INCOME UNITS - After the Income Date, if there is an exchange of
value of a designated number of Income Units of particular Variable Sub-Accounts
into other Income Units, the value will be such that the dollar amount of income
payment made on the date of exchange would be unaffected by the exchange.
FIXED INCOME ANNUITY
A Fixed Income Annuity is an annuity with income payments that remain fixed as
to dollar amount throughout the payment period. The Income Tables shown in the
Schedule are used to determine the monthly fixed income payment. The Income
Tables show the dollar amount of the monthly fixed income payment that can be
purchased with each $1,000 applied.
INCOME PLANS
The following is a list of income plans we guarantee to make available.
INCOME PLAN 1. LIFE ANNUITY - An annuity payable during the lifetime of the
Annuitant and terminating with the last payment preceding the death of the
Annuitant.
INCOME PLAN 2. LIFE ANNUITY WITH 10 OR 20 YEARS CERTAIN - An annuity payable
during the lifetime of the Annuitant with the provision that payments will be
made for a minimum of 10 or 20 years, as elected.
INCOME PLAN 3. JOINT AND LAST SURVIVOR ANNUITY - An annuity payable during the
joint lifetime of the Annuitant and a designated second person, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
prior to the death of the survivor.
INCOME PLAN 4. PAYMENTS FOR A SPECIFIED PERIOD CERTAIN - An amount payable for
the number of years selected which may be from 5 to 30 years.
INCOME PLAN 5. ANNUITY PLAN - An amount can be used to purchase any single
premium annuity we offer on the Income Date for which you and the Annuitant are
eligible.
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[LOGO]
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND VARIABLE ANNUITY CERTIFICATE
Surrender Values while you are living and prior to the Income Date
Income Payments begin on the Income Date
Nonparticipating
DVA-C-9712
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EXHIBIT 4(b)(ix)(B)
[LOGO OF SAGE]
ACCIDENTAL DEATH BENEFIT RIDER
GENERAL
This Rider is made part of the Contract to which it is attached. It provides an
additional benefit, the "Accidental Death Benefit," in the event of the
accidental death of the Covered Person. The Covered Person is the person whose
death causes the death benefit to become payable.
BENEFIT
Subject to the terms and conditions stated below, this Rider provides an
Accidental Death Benefit equal to the purchase payments made minus any
withdrawals (including any associated Market Value Adjustment and surrender
charge incurred) determined as of the date of the Covered Person's death, up to
a maximum amount shown in the Contract Schedule.
CONDITIONS
1. The Covered Person's death must be an accidental death.
2. The accidental death must occur while this Rider is in force and prior
to the first Contract Anniversary after which the Covered Person
attains age 80.
3. The accidental death must occur prior to the Income Date.
4. We must receive satisfactory proof of accidental death.
ACCIDENTAL DEATH DEFINITION
Accidental death means a death resulting from a bodily injury effected solely
through external, violent, and accidental means independently and exclusively of
all other causes, with death occurring within 90 days after such injury.
EXCLUSIONS
This Rider does not provide an additional benefit in the event that death
results from or relates to any of the following:
1. Sickness of mind and/or body, including related medical or surgical
treatment.
2. Overdose due to voluntary ingestion of non-prescribed drugs and/or
alcohol.
3. Suicide, while sane or insane.
4. Air travel, in any type of vehicle, except as a fare paying passenger
traveling on a regularly scheduled airline.
5. War, or any act of war, whether or not the Covered Person is serving
in the military, naval or air forces of any country or international
organization.
6. Voluntarily committing and/or attempting to commit an assault or
felony, including participation in a riot.
7. Resisting or fleeing from arrest.
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CONTRACT CONTINUATION OPTION
If the Contract is being continued by the deceased Owner's spouse pursuant to
the Contract Continuation Option, this Rider shall also continue according to
its terms and conditions subject to the following additional conditions:
1. For purposes of the "Benefit" provision above, (a) the initial benefit
upon continuation will be equal to the beginning Account Value as
determined in the Contract, subject to the maximum amount shown in the
Contract Schedule; and (b) thereafter, the benefit will be the initial
benefit plus purchase payments made minus any withdrawals (including
any associated Market Value Adjustment and surrender charge incurred)
subject to the maximum amount shown in the Contract Schedule.
2. If this Rider's benefit has become payable pursuant to the accidental
death of the original Owner, then no further benefit will be payable
pursuant to this Rider for (a) any accidental death occurring within
180 days of the original Owner's accidental death, or (b) any
accidental death arising from the same accident that caused the bodily
injury resulting in the Owner's death.
SATISFACTORY PROOF OF CLAIM
We must receive written proof that the Covered Person died an accidental death
while this Rider is in force.
We will have the right to have the Covered Person's body examined and to request
an autopsy, at our expense, unless law prohibits us from doing so.
NOTICE OF CLAIM
Written notice of claim must be given to us within (30) days after an accidental
death or as soon as reasonably possible. Notice given to us at our Customer
Service Center with information sufficient to identify the Covered Person will
be considered notice to us.
PAYMENT OF CLAIM
The Accidental Death Benefit will be paid to the person or persons entitled to
receive the death benefit according to the Contract upon receipt of the written
proof of accidental death. If we elect to have the Covered Person's body
examined and/or perform an autopsy, payment may be made after satisfactory
conclusion of the examination.
CHARGE FOR THIS RIDER
There is no charge for this Rider.
TERMINATION
This Rider will terminate on the date of the first to occur of the following
events:
1. The Accidental Death Benefit is paid after the death of the surviving
spouse.
2. The Contract is surrendered or the entire Account Value is applied
under an income option.
3. The interest in the Contract is distributed due to the death of the
Covered Person.
4. You request the termination of this Rider.
TERMS
All of the terms used in this Rider have the same meanings as in the Contract
unless otherwise clearly indicated in this Rider.
/s/ Ronald S. Scowby
Chairman
DVA-ADB-9712
<PAGE>
Exhibit 4(b)(x)(B)
[LOGO OF SAGE APPEAR HERE]
ACCIDENTAL DEATH BENEFIT RIDER
GENERAL
This Rider is made part of the Group Contract/Certificate to which it is
attached. It provides an additional benefit, the "Accidental Death Benefit," in
the event of the accidental death of the Covered Person. The Covered Person is
the person insured under the Certificate whose death causes the death benefit to
become payable.
BENEFIT
Subject to the terms and conditions stated below, this Rider provides an
Accidental Death Benefit equal to the purchase payments made minus any
withdrawals (including any associated Market Value Adjustment and surrender
charge incurred) determined as of the date of the Covered Person's death, up to
a maximum amount shown in the Certificate Schedule.
CONDITIONS
1. The Covered Person's death must be an accidental death.
2. The accidental death must occur while this Rider is in force and prior
to the first Certificate Anniversary after which the Covered Person
attains age 80.
3. The accidental death must occur prior to the Income Date.
4. We must receive satisfactory proof of accidental death.
ACCIDENTAL DEATH DEFINITION
Accidental death means a death resulting from a bodily injury effected solely
through external, violent, and accidental means independently and exclusively of
all other causes, with death occurring within 90 days after such injury.
EXCLUSIONS
This Rider does not provide an additional benefit in the event that death
results from or relates to any of the following:
1. Sickness of mind and/or body, including related medical or surgical
treatment.
2. Overdose due to voluntary ingestion of non-prescribed drugs and/or
alcohol.
3. Suicide, while sane or insane.
4. Air travel, in any type of vehicle, except as a fare paying passenger
traveling on a regularly scheduled airline.
5. War, or any act of war, whether or not the Covered Person is serving in
the military, naval or air forces of any country or international
organization.
6. Voluntarily committing and/or attempting to commit an assault or
felony, including participation in a riot.
7. Resisting or fleeing from arrest.
DVA-C-ADB-9712
<PAGE>
CERTIFICATE CONTINUATION OPTION
If the Certificate is being continued by the deceased Owner's spouse pursuant to
the Certificate Continuation Option, this Rider shall also continue according to
its terms and conditions subject to the following additional conditions:
1. For purposes of the "Benefit" provision above, (a) the initial benefit
upon continuation will be equal to the beginning Account Value as
determined in the Certificate, subject to the maximum amount shown in
the Certificate Schedule; and (b) thereafter, the benefit will be the
initial benefit plus purchase payments made minus any withdrawals
(including any associated Market Value Adjustment and surrender charge
incurred) subject to the maximum amount shown in the Certificate
Schedule.
2. If this Rider's benefit has become payable pursuant to the accidental
death of the original Owner, then no further benefit will be payable
pursuant to this Rider for (a) any accidental death occurring within
180 days of the original Owner's accidental death, or (b) any
accidental death arising from the same accident that caused the bodily
injury resulting in the Owner's death.
SATISFACTORY PROOF OF CLAIM
We must receive written proof that the Covered Person died an accidental death
while this Rider is in force.
We will have the right to have the Covered Person's body examined and to request
an autopsy, at our expense, unless law prohibits us from doing so.
NOTICE OF CLAIM
Written notice of claim must be given to us within (30) days after an accidental
death or as soon as reasonably possible. Notice given to us at our Customer
Service Center with information sufficient to identify the Covered Person will
be considered notice to us.
PAYMENT OF CLAIM
The Accidental Death Benefit will be paid to the person or persons entitled to
receive the death benefit according to the Certificate upon receipt of the
written proof of accidental death. If we elect to have the Covered Person's
body examined and/or perform an autopsy, payment may be made after satisfactory
conclusion of the examination.
CHARGE FOR THIS RIDER
There is no charge for this Rider.
TERMINATION
This Rider will terminate on the date of the first to occur of the following
events:
1. The Accidental Death Benefit is paid after the death of a surviving
spouse.
2. The Certificate is surrendered or the entire Account Value is applied
under an income option.
3. The interest in the Certificate is distributed due to the death of the
Covered Person.
4. You request the termination of this Rider.
TERMS
All of the terms used in this Rider have the same meanings as in the Group
Contract and Certificate unless otherwise clearly indicated in this Rider.
/s/ Ronald S. Scowby
Chairman
DVA-C-ADB-9712
<PAGE>
Exhibit 14(G)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that RONALD S. SCOWBY, MEYER FELDBERG, PAUL C.
MEYER, H. LOUIS SHILL, AND RICHARD D. STARR whose signatures appear below,
hereby constitute and appoint ROBIN I. MARSDEN and MITCHELL R. KATCHER, and each
of them, as his attorney-in-fact, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any registration statement and amendments including
post-effective amendments thereto, under the Securities Act of 1933 and the
Investment Company Act of 1940, where applicable, executed on behalf of Sage
Life Assurance of America, Inc. (the "Company") in connection with (a)
combination fixed and variable annuity contracts issued by the Company through
The Sage Variable Annuity Account A, (b) variable annuity contracts issued by
the Company through The Sage Variable Annuity Account A, (c) combination fixed
and variable life insurance contracts issued by the Company through The Sage
Variable Life Account A, and (d) variable life contracts issued by the Company
through The Sage Variable Life Account A, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission. RONALD S. SCOWBY, MEYER FELDBERG, PAUL C. MEYER, H. LOUIS
SHILL, and RICHARD D. STARR hereby ratify and confirm all that said
attorney(s)-in-fact, or their substitution, may do or cause to be done by virtue
thereof.
/s/ Ronald S. Scowby
-------------------------------
Ronald S. Scowby
Director
Sage Life Assurance of America,
Inc.
February 24, 2000
State of Connecticut )
County of Fairfield )
On this 24th day of February, 2000, before me came RONALD S. SCOWBY,
Director of Sage Life Assurance of America, Inc., to me known, and signed the
above Power of Attorney on behalf of Sage Life Assurance of America, Inc.
/s/ Cynthia Wendt [SEAL]
-------------------------
Notary Public
<PAGE>
/s/ Meyer Feldberg
-------------------------------
Meyer Feldberg
Director
Sage Life Assurance of America,
Inc.
February 25, 2000
State of New York )
County of New York
)
On this 28th day of February, 2000, before me came MEYER FELDBERG,
Director of Sage Life Assurance of America, Inc., to me known, and signed the
above Power of Attorney on behalf of Sage Life Assurance of America, Inc.
/s/ Patricia Sachs Catapano [SEAL]
-----------------------------------
Notary Public
/s/ H. Louis Shill
-----------------------------------
H. Louis Shill
Director
Sage Life Assurance of America,
Inc.
February 25, 2000
State of )
----------------
County of
--------------- )
On this 25th day of February, 2000, before me came H. LOUIS SHILL,
Director of Sage Life Assurance of America, Inc., to me known, and signed the
above Power of Attorney on behalf of Sage Life Assurance of America, Inc.
/s/ D.B. Green [SEAL]
-------------------------------
Notary Public
<PAGE>
/s/ Paul C. Meyer
-------------------------------
Paul C. Meyer
Director
Sage Life Assurance of America,
Inc.
February 23, 2000
State of New York )
County of New York
)
On this 23rd day of February, 2000, before me came PAUL C. MEYER,
Director of Sage Life Assurance of America, Inc., to me known, and signed the
above Power of Attorney on behalf of Sage Life Assurance of America, Inc.
/s/ Stephanie White [SEAL]
-------------------------------
Notary Public
/s/ Richard D. Starr
-------------------------------
Richard D. Starr
Director
Sage Life Assurance of America,
Inc.
February 25, 2000
State of Washington )
County of King
)
On this 25th day of February, 2000, before me came RICHARD D. STARR,
Director of Sage Life Assurance of America, Inc., to me known, and signed the
above Power of Attorney on behalf of Sage Life Assurance of America, Inc.
/s/ Timothy W. Williams [SEAL]
-------------------------------
Notary Public
