As filed with the Securities and Exchange Commission on November 1, 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. 7 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 19 [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:
Lynn Stone
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
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It is proposed that this filing become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485;
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on pursuant to paragraph (b) of Rule 485;
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60 days after filing pursuant to paragraph (a)(1) of Rule 485;
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X on January 1, 2001 pursuant to paragraph (a)(1) of Rule 485;
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75 days after filing pursuant to paragraph (a)(2) of Rule 485; or
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on pursuant to paragraph (a)(2) of Rule 485.
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Title of Securities: Interests in a separate account under flexible payment
deferred combination fixed and variable annuity contracts.
PROFILE DATED _____________,
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE SAGE VARIABLE ANNUITY ACCOUNT A AND
<PAGE>
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 the 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 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.
<PAGE>
The Contract also provides you with other important features, including
a death benefit, access to your money, and income plan options.
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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 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.
OPTIONAL RIDERS. Subject to state availability and for an additional
charge, you may purchase either or both optional riders offering a guaranteed
minimum income benefit and an enhanced death benefit. These riders can provide
additional benefits that we discuss under "What Are My Income Payment Options"
and "Does the Contract Have A Death Benefit."
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.
<PAGE>
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.
[ ] 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.
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[ ] 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.
OPTIONAL GUARANTEED MINIMUM INCOME BENEFIT. Subject to availability in
your state, at issue, if you are 80 or younger, you may ensure that guaranteed
minimum lifetime income payments are available on your Income Date by electing
the Guaranteed Minimum Income Benefit. You must satisfy the conditions set forth
in the rider to receive the benefit, and there are charges associated with the
benefit. Once you purchase the Guaranteed Minimum Income Benefit, you cannot
cancel it.
3. HOW DO I PURCHASE A CONTRACT?
<PAGE>
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.
4. WHAT ARE MY INVESTMENT OPTIONS?
There are over 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 Funds:
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- AIM VARIABLE INSURANCE FUNDS
- 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
<PAGE>
- THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
- The Global Equity Portfolio
- The Mid Cap Value Portfolio
- The Value Portfolio
- OPPENHEIMER VARIABLE ACCOUNT FUNDS
- Oppenheimer Bond Fund/VA
- Oppenheimer Capital Appreciation Fund/VA
- Oppenheimer Small Cap Growth Fund/VA
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<PAGE> 5
- SAGE LIFE INVESTMENT TRUST
- EAFE(R) Equity Index Fund
- S&P 500 Equity Index Fund
- Money Market Fund
- Nasdaq-100 Index(R) Fund
- All-Cap Growth 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 day, 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 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.
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OPTIONAL BENEFIT CHARGES -- If you choose to purchase one or both of
the optional benefit riders we offer, we will deduct a separate charge on the
Contract Date and monthly thereafter. We deduct the rider charges
proportionately from the Variable and Fixed Sub-Accounts in which you are
invested. On an annual basis, the charge for the Guaranteed Minimum Income
Benefit is 0.20% of Account Value. On an annual basis, the charge for the
Enhanced Death Benefit is 0.20% of Account Value.
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 .55% to 1.34%, 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. The charges include the charges for the optional riders. If we did not
include these charges your expenses would be lower.
<TABLE>
<CAPTION>
Examples of
Total Total Examples of Total
Annual Annual Total Total Expenses Expenses as
Insurance Fund Annual Paid at the End Paid at the End
Fund Charges Charges Charges of 1 Year of 10 Years
---- ------- ------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Government Securities Fund 1.93% 0.90% 2.83% $99 $351
AIM V.I. Growth and Income Fund 1.93 0.77 2.70 98 334
AIM V.I. International Equity Fund 1.93 0.97 2.90 100 360
AIM V.I. Value Fund 1.93 0.76 2.69 98 333
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio 1.93 0.85 2.78 98 344
Alger American Income and Growth Portfolio 1.93 0.70 2.63 97 325
Alger American Small Capitalization Portfolio 1.93 0.90 2.83 99 351
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series 1.93 0.80 2.73 98 338
Colonial Small Cap Value Fund, Variable Series 1.93 1.00 2.93 100 363
Colonial Strategic Income Fund, Variable Series 1.93 0.75 2.68 97 331
Colonial U.S. Growth and Income Fund, Variable Series 1.93 0.88 2.81 99 348
Liberty All-Star Equity Fund, Variable Series 1.93 0.95 2.88 100 357
Newport Tiger Fund, Variable Series 1.93 1.21 3.14 102 391
Stein Roe Global Utilities Fund, Variable Series 1.93 0.77 2.70 98 334
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series 1.93 0.67 2.60 97 321
Stein Roe Balanced Fund, Variable Series 1.93 0.62 2.55 96 314
MFS(R) VARIABLE INSURANCE TRUST(SM):
MFS Growth With Income Series 1.93 0.88 2.81 99 348
MFS High Income Series 1.93 0.91 2.84 99 352
MFS Research Series 1.93 0.86 2.79 99 345
MFS Total Return Series 1.93 0.90 2.83 99 351
MFS Capital Opportunities Series 1.93 0.91 2.44 99 352
</TABLE>
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<TABLE>
<CAPTION>
Examples of
Total Total Examples of Total
Annual Annual Total Total Expenses Expenses as
Insurance Fund Annual Paid at the End Paid at the End
Fund Charges Charges Charges of 1 Year of 10 Years
---- ------- ------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio 1.93% 1.15% 3.08% $102 $383
The Mid Cap Value Portfolio 1.93 1.05 2.98 101 370
The Value Portfolio 1.93 0.85 2.78 98 344
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA 1.93 0.73 2.66 97 329
Oppenheimer Capital Appreciation Fund/VA 1.93 0.70 2.63 97 325
Oppenheimer Small Cap Growth Fund/VA 1.93 1.34 3.27 104 407
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund 1.93 0.90 2.83 99 378
S&P 500 Equity Index Fund 1.93 0.55 2.48 95 332
Money Market Fund 1.93 0.65 2.58 96 345
Nasdaq-100 Index(R) Fund 1.93 0.85 2.78 98 371
All-Cap Growth Fund 1.93 1.10 3.03 101 403
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio 1.93 0.85 2.78 98 344
T. Rowe Price Mid-Cap Growth Portfolio 1.93 0.85 2.78 98 344
T. Rowe Price Personal Strategy Balanced Portfolio 1.93 0.90 2.83 99 351
</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 and Colonial Small Cap Value
Fund, Variable Series.
- MFS(R) Variable Insurance Trust(SM): MFS Capital Opportunity
Series and MFS High Income Series
- The Universal Institutional Funds, Inc.: The Global Equity
Portfolio; The Mid Cap Value Portfolio; and The Value
Portfolio.
- Sage Life Investment Trust: EAFE(R) Equity Index Fund; S&P 500
Equity Index Fund; Money Market Fund; Nasdaq-100 Index(R)
Fund; and All-Cap Growth Fund.
The charges for Sage Life Investment Trust's Nasdaq-100 Index(R) Fund
and All-Cap Growth Fund are based on the estimated expenses that those Funds
expect to incur in their initial fiscal year.
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
examples assume that your Contract earns 5% annually before charges. The
examples assume you make a complete surrender at the end of the period and,
therefore, surrender charges may be assessed.
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.
8. HOW IS CONTRACT PERFORMANCE PRESENTED?
Because as of December 31, 1999 our Variable Sub-Accounts had been in
operation for less than a year, we cannot show you how the Funds performed in
the Variable Account in this Profile. We do, however, include information about
Variable Sub-Account performance in the Prospectus. When the Variable
Sub-Accounts have been in operation for a year or more, we will show you the
Funds' performance in this Profile 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
<PAGE>
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.
OPTIONAL ENHANCED DEATH BENEFIT. Subject to availability in your state,
at the time we issue your Contract, if you are 79 or younger, you may supplement
the basic death benefit by purchasing the Enhanced Death Benefit. You must
satisfy the conditions set forth in the rider to receive the benefit, and there
are charges associated with the benefit. Once you purchase the Enhanced Death
Benefit, you may not cancel it. The Enhanced Death Benefit can only be elected
when you buy the Contract.
10. WHAT OTHER INFORMATION SHOULD I KNOW?
The Contract has several additional features available to you at no
additional charge:
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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 withdrawals
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.
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
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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 SUPPLEMENT
DATED _____________,
SUPPLEMENT TO THE PROSPECTUS
DATED ____________, FOR
FLEXIBLE PAYMENT DEFERRED COMBINATION FIXED AND
VARIABLE ANNUITY CONTRACTS
ISSUED BY
THE SAGE VARIABLE ANNUITY ACCOUNT A AND
SAGE LIFE ASSURANCE OF AMERICA, INC.
- ------------------------------------------------------------------------------
YOU SHOULD KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS.
The purpose of this supplement is to add, for a limited time, an
investment credit feature to your Contract. This feature applies both to new and
existing Contracts.
For Contracts issued on and after September 15, 2000, we will add 2%
of your initial purchase payment that you allocate to the Variable Account to
your Variable Account Value on the later of 1) the first Business Day after the
end of the Free Look Period ("Ten Day Right to Cancel" period in Minnesota)
according to the cover page of your Contract (for purposes of this Prospectus
Supplement, we assume you receive your Contract on the Contract Date), or 2)
October 16, 2000. For all Contracts, we will add 2% of any additional purchase
payment you allocate to the Variable Account, if we receive the payment on or
before April 30, 2001. However, transfers to the Variable Account from the Fixed
Account are not eligible to receive the investment credit.
We will allocate the investment credits on a pro-rata basis to the
Variable Sub-Accounts you select in the same ratio as the applicable purchase
payment. We fund the investment credits through anticipated profits that are at
least in part funded by the fees and charges you pay under the Contracts.
The investment credit is yours to keep, and we will not recapture the
investment credit. We will not count the investment credit as a purchase
payment, and therefore, will not assess surrender charges on the investment
credit. We reserve the right to cancel the investment credit feature at any time
and for any reason.
<PAGE> 13
PROSPECTUS DATED ___________,
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 over 30 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
- The Alger American Fund
- Liberty Variable Investment Trust
- SteinRoe Variable Investment Trust
- MFS(R)Variable Insurance Trust(SM)
- The Universal Institutional 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 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> 15
<TABLE>
<CAPTION>
=======================================================================================
TABLE OF CONTENTS
=======================================================================================
<S> <C>
INDEX OF TERMS........................................................................
FEE TABLE.............................................................................
1. WHAT ARE THE CONTRACTS?........................................................
Your Options...................................................................
Transfers.....................................................................
2. WHAT ARE MY INCOME PAYMENT OPTIONS?...........................................
Your Choices..................................................................
Income Payment Amounts........................................................
3. HOW DO I PURCHASE A CONTRACT?.................................................
Initial Purchase Payment......................................................
Issuance of a Contract........................................................
Free Look Right to Cancel Your Contract.......................................
Making Additional Purchase Payments...........................................
When We May Cancel Your Contract..............................................
4. WHAT ARE MY INVESTMENT OPTIONS?...............................................
Purchase Payment Allocations..................................................
Variable Sub-Account Investment Options.......................................
Fixed Account Investment Options..............................................
Transfers.....................................................................
Transfer Programs.............................................................
Values Under Your Contract....................................................
5. WHAT ARE THE EXPENSES UNDER A CONTRACT?.......................................
Surrender Charge..............................................................
Annual Administration Charge..................................................
Transfer Charge...............................................................
Asset-Based Charges...........................................................
Purchase Payment Tax Charge...................................................
Optional Benefit Charges......................................................
Fund Annual Expenses..........................................................
Additional Information........................................................
6. HOW WILL MY CONTRACT BE TAXED?................................................
Introduction..................................................................
Taxation of Non-Qualified Contracts...........................................
Taxation of a Qualified Contract..............................................
Transfers, Assignments, or Exchanges of a Contract............................
Possible Tax Law Changes......................................................
7. HOW DO I ACCESS MY MONEY?.....................................................
Withdrawals...................................................................
Requesting Payments...........................................................
8. HOW IS CONTRACT PERFORMANCE PRESENTED?........................................
Yield.........................................................................
Total Return..................................................................
Performance/Comparisons.......................................................
9. DOES THE CONTRACT HAVE A DEATH BENEFIT?.......................................
Basic Death Benefit...........................................................
Owner's Death Before the Income Date..........................................
Owner's or Annuitant's Death After the Income Date............................
Accidental Death Benefit......................................................
Optional Enhanced Death Benefit Rider.........................................
Proof of Death................................................................
10. WHAT OTHER INFORMATION SHOULD I KNOW?.........................................
Separate Accounts.............................................................
Modification..................................................................
Distribution of the Contracts.................................................
Experts.......................................................................
Legal Proceedings.............................................................
Reports to Contract Owners....................................................
Authority to Make Agreements..................................................
Financial Statements..........................................................
11. HOW CAN I MAKE INQUIRIES......................................................
12. ADDITIONAL INFORMATION ABOUT SAGE LIFE ASSURANCE OF AMERICA, INC..............
CONDENSED FINANCIAL INFORMATION......................................................
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.........................
APPENDIX A - MARKET VALUE ADJUSTMENT................................................A-1
APPENDIX B - DOLLAR-COST AVERAGING PROGRAM..........................................B-1
APPENDIX C - CONTRACTS ISSUED BEFORE JANUARY 1, 2001................................C-1
APPENDIX D - GUARANTEED MINIMUM INCOME BENEFIT......................................D-1
APPENDIX E - ENHANCED DEATH BENEFIT.................................................E-1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
ii
<PAGE> 17
===============================================================================
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 daily against
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
<PAGE>
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.
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.
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.
===============================================================================
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)
APPLICABLE APPLICABLE SURRENDER
CONTRACT YEAR CHARGE PERCENTAGE
------------- -----------------
1 7%
2 7%
3 6%
4 5%
5 4%
6 3%
7 1%
8 and thereafter 0%
Maximum Transfer Charge(2)
First 12 transfers in a Contract Year..................................$ 0
After 12th transfer in a Contract Year.................................$25
Annual Administration Charge
Contract Years 1-7(3)..................................................$40
After Contract Year 7..................................................$ 0
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 daily as percentage of the assets
of the Variable Account)
CONTRACT YEARS
--------------
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%
OPTIONAL BENEFIT ANNUAL EXPENSES(deducted monthly as percentage of your variable
and Fixed Account Values)
Guaranteed Minimum Income Benefit Charge..........................0.20%
Enhanced Death Benefit Charge.....................................0.20%
Total Optional Benefit Annual Charges.............................0.40%
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>
TOTAL EXPENSES
(BEFORE FEE
WAIVERS AND
REIMBURSEMENTS,
MANAGEMENT TOTAL EXPENSES AS APPLICABLE,
FEES OTHER EXPENSES (AFTER FEE AND INCLUDING
(AFTER FEE (AFTER WAIVERS AND MAXIMUM 12b-1 FEES
WAIVER, REIMBURSEMENT, REIMBURSEMENTS, [NOT CURRENTLY
FUND AS APPLICABLE) AS APPLICABLE) AS APPLICABLE) CHARGED])
---- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Government Securities Fund................. 0.50% 0.40% 0.90% N/A
AIM V.I. Growth and Income Fund..................... 0.61 0.16 0.77 N/A
AIM V.I. International Equity Fund.................. 0.75 0.22 0.97 N/A
AIM V.I. Value Fund................................. 0.61 0.15 0.76 N/A
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio.............. 0.80 0.05 0.85 N/A
Alger American Income and Growth Portfolio.......... 0.625 0.075 0.70 N/A
Alger American Small Capitalization Portfolio....... 0.85 0.05 0.90 N/A
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable
Series.......................................... 0.60(5) 0.20(5) 0.80(5) 1.88%
Colonial Small Cap Value Fund, Variable Series...... 0.80(5) 0.20(5) 1.00(5) 4.46
Colonial Strategic Income Fund, Variable Series..... 0.65 0.10 0.75 N/A
Colonial U.S. Growth and Income Fund, Variable
Series.......................................... 0.80 0.08 0.88 N/A
Liberty All-Star Equity Fund, Variable Series....... 0.80 0.15 0.95 N/A
Newport Tiger Fund, Variable Series................. 0.90 0.31 1.21 N/A
Stein Roe Global Utilities Fund, Variable Series.... 0.65 0.12 0.77 N/A
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series........ 0.50 0.17 0.67 N/A
Stein Roe Balanced Fund, Variable Series............ 0.45 0.17 0.62 N/A
MFS(R) VARIABLE INSURANCE TRUST(SM):
MFS Growth with Income Series....................... 0.75 0.13(6) 0.88(6) N/A
MFS High Income Series.............................. 0.75(6) 0.16(6) 0.91(6) 0.97
MFS Research Series................................. 0.75 0.11(6) 0.86(6) N/A
MFS Total Return Series............................. 0.75 0.15(6) 0.90(6) N/A
MFS Capital Opportunities Series.................... 0.75(6) 0.16(6) 0.91(6) 1.02
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio......................... 0.47(7) 0.68(7) 1.15(7) 1.48
The Mid Cap Value Portfolio......................... 0.43(7) 0.62(7) 1.05(7) 1.37
The Value Portfolio................................. 0.18(7) 0.67(7) 0.85(7) 1.22
OPPENHEIMER VARIABLE FUNDS:
Oppenheimer Bond Fund/VA............................ 0.72 0.01 0.73 N/A
Oppenheimer Capital Appreciation Fund/VA............ 0.68 0.02 0.70 N/A
Oppenheimer Small Cap Growth Fund/VA................ 0.75 0.59 1.34 N/A
</TABLE>
<TABLE>
<CAPTION>
TOTAL EXPENSES
(BEFORE FEE
WAIVERS AND
REIMBURSEMENTS,
MANAGEMENT TOTAL EXPENSES AS APPLICABLE),
FEES OTHER EXPENSES (AFTER FEE AND INCLUDING
(AFTER FEE (AFTER WAIVERS AND MAXIMUM 12b-1 FEES
WAIVER, REIMBURSEMENT, REIMBURSEMENTS, [NOT CURRENTLY
FUND AS APPLICABLE) AS APPLICABLE) AS APPLICABLE) CHARGED]
---- -------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C>
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund*.......................... 0.73(8) 0.17(8) 0.90(8) 1.32
S&P 500 Equity Index Fund**......................... 0.38(8) 0.17(8) 0.55(8) 0.97
Money Market Fund................................... 0.48(8) 0.17(8) 0.65(8) 1.07
Nasdaq-100 Index(R) Fund***......................... 0.80(9) 0.05(9) 0.85(9) 1.15
All-Cap Growth Fund................................. 0.99(9) 0.11(9) 1.10(9) 1.46
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio............... 0.85(10) 0.00 0.85(10) N/A
T. Rowe Price Mid-Cap Growth Portfolio.............. 0.85(10) 0.00 0.85(10) N/A
T. Rowe Price Personal Strategy Balanced Portfolio.. 0.90(10) 0.00 0.90(10) N/A
</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.
(3) In some states the charge is $30. We waive the Annual Administration
Charge if the Account Value is at least $50,000 on the date of
deduction.
(4) If you bought your Contract before January 1, 2001, we deduct the
Asset-Based Charges on a monthly basis during the Accumulation Phase
(see Appendix C). See "What Are The Expenses Under A Contract?"
(5) Without fee waivers and expense reimbursements, the management fees,
the other expenses, and total expenses for each of the following
Liberty Variable Investment Trust Funds during 1999 would have been:
Colonial High Yield Securities Fund, Variable Series 0.60%, 1.28%,
1.88%; and Colonial Small Cap Value Fund, Variable Series 0.80%, 3.66%
and 4.46%.
(6) Without fee waivers and expense reimbursements, the management fees,
the other expenses, and total expenses for each of the following MFS
Variable Insurance Trust Funds during 1999 would have been: MFS Capital
Opportunity Series 0.75%, 0.27% and 1.02%; and MFS High Income Series
0.75%, 0.22%, and 0.97%. In addition, each Fund has an expense offset
arrangement which reduces the Fund's custodian fee based upon the
amount of cash maintained by the Fund with its custodian and dividend
disbursing agent. Each Fund may enter into such arrangements and
directed brokerage arrangements, which would also have the effect of
reducing Fund expenses. "Other Expenses" do not take into account these
expense reductions, and are therefore higher than the actual expenses
of the Fund. Had these fee reductions been taken into account, "Total
Expenses (after fee waivers and reimbursements, as applicable)" would
be lower and would equal: MFS Growth with Income Series -- 0.87%; MFS
High Income Series -- 0.90%; MFS Research Series -- 0.85%; MFS Total
Return Series -- 0.89%; and MFS Capital Opportunities Series -- 0.90%.
(7) Without fee waivers and expense reimbursements, the management fees,
the other expenses, and total expenses for each of the following The
Universal Institutional Funds, Inc. Funds during 1999 would have been:
Global Equity Portfolio 0.80%, 0.68%, and 1.48%; Mid Cap Value
Portfolio 0.75%, 0.62%, and 1.37%; and Value Portfolio 0.55%, 0.67%,
and 1.22%.
(8) Without fee waivers and expense reimbursements, total expenses for each
of the Sage Life Investment Trust funds during 1999 would have been:
EAFE(R) Equity Index Fund 1.07%; S&P 500 Equity Index Fund 0.72%; and
Money Market Fund 0.82%. In addition, a Rule 12b-1 Plan (the "Plan")
has been adopted by each Fund, pursuant to which up to 0.25% may be
deducted from Fund assets. No Plan payments were made during 1999, and
no payments will be made under the plan prior to May 1, 2001.
(9) The expenses of Sage Life Investment Trust's Nasdaq-100 Index(R) Fund
and All-Cap Growth Fund are based on the estimated expenses that those
Funds expect to incur in their initial fiscal year. Without fee waivers
and expense reimbursements, total expenses for the Nasdaq-100 Index(R)
Fund during 2000 would be estimated to be 0.90% and total expenses for
the All-Cap Growth Fund during 2000 would be estimated to be 1.21%. In
addition, a Rule 12b-1 Plan has been adopted by each Fund, pursuant to
which up to 0.25% may be deducted from Fund assets. No payments will be
made under the Plan prior to May 1, 2001.
(10) For each of the portfolios in the T. Rowe Price Equity Series,
management fees include operating expenses.
* 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.
*** The Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) are trade or
service marks of The Nasdaq Stock Market, Inc. (which with its
affiliates are the "Corporations"), and are licensed for use by Sage
Advisors, Inc. The product has not been passed on by the Corporations
as to its legality or suitability. The product is not issued, endorsed,
sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO
WARRANTIES AND BEAR NO LIABILITIES WITH RESPECT TO THE PRODUCT.
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, and we
assume that the fee waivers and reimbursements shown above will continue. 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, however, we
currently do not assess the Transfer Charge. 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.
The first series of examples do not reflect the charges for the
optional Guaranteed Minimum Income Benefit ("GMIB") and the optional Enhanced
Death Benefit ("EDB"). If these charges were reflected, your expenses would be
higher. The second series of examples reflect the GMIB and EDB charges.
<TABLE>
<CAPTION>
WITHOUT GMIB AND EDB CHARGES
1. IF YOU SURRENDER YOUR CONTRACT 2. IF YOU DO NOT SURRENDER YOUR
OR YOU ANNUITIZE AT THE END CONTRACT AT THE END
FUND OF EACH TIME PERIOD OF 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:
AIM V.I. Government Securities Fund .................... $95 $138 $177 $299 $25 $78 $137 $299
AIM V.I. Growth and Income Fund ........................ 94 134 170 282 24 74 130 282
AIM V.I. International Equity Fund ..................... 96 141 181 308 26 81 141 308
AIM V.I. Value Fund .................................... 93 134 169 281 23 74 129 281
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio ................. 94 137 174 293 24 77 134 293
Alger American Income and Growth Portfolio ............. 93 132 166 273 23 72 126 273
Alger American Small Capitalization Portfolio .......... 95 138 177 299 25 78 137 299
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series ... 94 135 171 286 24 75 131 286
Colonial Small Cap Value Fund, Variable Series ......... 96 142 183 312 26 82 143 312
Colonial Strategic Income Fund, Variable Series ........ 93 133 168 280 23 73 128 280
Colonial U.S. Growth and Income Fund, Variable Series .. 95 138 176 296 25 78 136 296
Liberty All-Star Equity Fund, Variable Series .......... 95 140 180 305 25 80 140 305
Newport Tiger Fund, Variable Series .................... 98 148 194 339 28 88 154 339
Stein Roe Global Utilities Fund, Variable Series ....... 94 134 170 282 24 74 130 282
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series ........... 93 131 164 269 23 71 124 269
Stein Roe Balanced Fund, Variable Series ............... 92 129 161 263 22 69 121 263
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Growth With Income Series .......................... 95 138 176 296 25 78 136 296
MFS High Income Series ................................. 95 139 177 300 25 79 137 300
MFS Research Series .................................... 94 137 175 294 24 77 135 294
MFS Total Return Series ................................ 95 138 177 299 25 78 137 299
MFS Capital Opportunities Series ....................... 95 139 177 300 25 79 137 300
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio ............................ 97 146 191 331 27 86 151 331
The Mid Cap Value Portfolio ............................ 96 143 185 318 26 83 145 318
The Value Portfolio .................................... 94 137 174 293 24 77 134 293
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA ............................... 93 133 167 277 23 73 127 277
Oppenheimer Capital Appreciation Fund/VA ............... 93 132 166 273 23 72 126 273
Oppenheimer Small Cap Growth Fund/VA ................... 99 153 202 356 29 93 162 356
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund .............................. $95 $114 $186 $326 $25 $81 $146 $326
S&P 500 Equity Index Fund .............................. 91 130 166 281 21 70 126 281
Money Market Fund ...................................... 92 140 172 294 22 73 132 294
Nasdaq-100 Index(R) Fund ............................... 94 140 183 320 24 80 143 320
All-Cap Growth Fund .................................... 97 148 197 352 27 88 157 352
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio .................. 94 137 174 303 24 77 134 293
T. Rowe Price Mid-Cap Growth Portfolio ................. 94 137 174 303 24 77 134 293
T. Rowe Price Personal Strategy Balanced Portfolio ..... 95 138 177 310 25 78 137 259
</TABLE>
<TABLE>
<CAPTION>
WITH GMIB AND EDB CHARGES
1. IF YOU SURRENDER YOUR CONTRACT 2. IF YOU DO NOT SURRENDER YOUR
OR YOU ANNUITIZE AT THE END CONTRACT AT THE END
FUND OF EACH TIME PERIOD OF 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:
AIM V.I. Government Securities Fund .................... $99 $151 $200 $351 $29 $91 $160 $351
AIM V.I. Growth and Income Fund ........................ 98 147 192 334 28 87 152 334
AIM V.I. International Equity Fund ..................... 100 154 204 360 30 94 164 360
AIM V.I. Value Fund .................................... 98 147 192 333 28 87 152 333
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio ................. 98 150 197 344 28 90 157 344
Alger American Income and Growth Portfolio ............. 97 145 188 325 27 85 148 325
Alger American Small Capitalization Portfolio .......... 99 151 200 351 29 91 160 351
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series ... 98 148 194 338 28 88 154 338
Colonial Small Cap Value Fund, Variable Series ......... 100 154 205 363 30 94 165 363
Colonial Strategic Income Fund, Variable Series ........ 97 146 191 331 27 86 151 331
Colonial U.S. Growth and Income Fund, Variable 99 151 198 348 29 91 158 348
Series.......................................................
Liberty All-Star Equity Fund, Variable Series .......... 100 153 202 357 30 93 162 357
Newport Tiger Fund, Variable Series .................... 102 161 217 391 32 101 177 391
Stein Roe Global Utilities Fund, Variable Series ....... 98 147 192 334 28 87 152 334
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series ........... 97 144 187 321 27 84 147 321
Stein Roe Balanced Fund, Variable Series ............... 96 142 184 314 26 82 144 314
MFS(R) VARIABLE INSURANCE TRUST(SM)
MFS Growth With Income Series .......................... 99 151 198 348 29 91 158 348
MFS High Income Series ................................. 99 152 200 352 29 92 160 352
MFS Research Series .................................... 99 150 197 345 29 90 157 345
MFS Total Return Series ................................ 99 151 200 351 29 91 160 351
MFS Capital Opportunities Series ....................... 99 152 200 352 29 92 160 352
</TABLE>
<TABLE>
<CAPTION>
WITH GMIB AND EDB CHARGES
1. IF YOU SURRENDER YOUR CONTRACT 2. IF YOU DO NOT SURRENDER YOUR
OR YOU ANNUITIZE AT THE END CONTRACT AT THE END
FUND OF EACH TIME PERIOD OF 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>
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio ............................ 102 159 214 383 32 99 174 383
The Mid Cap Value Portfolio ............................ 101 156 208 370 31 96 168 370
The Value Portfolio .................................... 98 150 197 344 28 90 157 344
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA ............................... 97 146 190 329 27 86 150 329
Oppenheimer Capital Appreciation Fund/VA ............... 97 145 188 325 27 85 148 325
Oppenheimer Small Cap Growth Fund/VA ................... 104 165 224 407 34 105 184 407
SAGE LIFE INVESTMENT TRUST:
EAFE(R) Equity Index Fund .............................. 99 154 208 378 29 94 168 378
S&P 500 Equity Index Fund .............................. 95 143 189 332 25 83 149 332
Money Market Fund ...................................... 96 146 194 345 26 86 154 345
Nasdaq-100 Index(R) Fund ............................... 98 152 206 371 28 92 166 371
All-Cap Growth Fund .................................... 101 161 220 403 31 101 180 403
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio .................. 98 150 197 344 28 90 157 344
T. Rowe Price Mid-Cap Growth Portfolio ................. 98 150 197 344 28 90 157 344
T. Rowe Price Personal Strategy Balanced Portfolio ..... 99 151 200 351 29 91 160 351
</TABLE>
More information about Accumulation Unit Values may be found in the
Condensed Financial Information section at the end of this Prospectus.
===============================================================================
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. However, if you would like to purchase a Contract
in connection with a tax-qualified retirement plan, please carefully consider
the costs and benefits of the Contract (including income payments) before your
purchase since the tax-qualified retirement plan itself provides for
tax-sheltered growth. 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 January 1, 2001, please see
Appendix C for certain provisions applicable to your Contract. Generally
Contracts purchased after January 1, 2001 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 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."
We also offer you two optional benefits for an additional charge -- the
GMIB and EDB. These riders can provide additional benefits that we discuss in
"What Are My Income Payment Options" and "Does the Contract Have A Death
Benefit."
TRANSFERS
Subject to certain conditions, you can transfer Account Value three
ways:
- From one Variable Sub-Account to another;
- 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.
10
<PAGE> 27
- 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.
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
<PAGE>
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.
OPTIONAL GUARANTEED MINIMUM INCOME BENEFIT RIDER - The GMIB is an
optional rider that ensures, if you satisfy the rider's conditions, the
availability of guaranteed minimum lifetime income payments on the Income Date.
Regardless of investment experience, this rider guarantees that you will never
receive income payments that are less than the GMIB. For a particular Income
Plan and frequency of payment, we determine the GMIB by multiplying (a) by (b)
where:
11
<PAGE> 28
a) is the Highest Anniversary Value determined on the Income
Date; and
b) is the applicable Monthly Income Payment rate per $1,000 shown
in the Income Tables in your Contract Schedule.
We then compare the GMIB to what we would pay you if you had not
elected the GMIB rider. We determine this amount by applying your current
Account Value to our then current monthly income rate per $1,000 (the current
monthly income rates may be more favorable than the guaranteed rates shown in
the Contract to calculate the GMIB). We will pay you the amount that results in
higher income payments.
The Highest Anniversary Value is the greatest anniversary value
attained in the following manner. We will calculate an anniversary value for
each Contract Anniversary before your Income Date, excluding, however, Contract
Anniversaries that come after you attain age 80 or before the effective date of
the GMIB rider. An anniversary value for a Contract Anniversary equals:
- the Account Value on that Contract Anniversary;
- increased by the dollar amount of any purchase payments made
since that Contract Anniversary; and
- reduced by the proportion that any withdrawal taken since that
anniversary (including applicable surrender charges and Market
Value Adjustments) reduced Account Value.
We show an example of how the GMIB works in Appendix D.
CONTRACT CONTINUATION OPTION. An Owner's surviving spouse who is
eligible to continue the Contract under the Contract Continuation Option, may
also be eligible to continue this rider. To do so, the surviving spouse must
give our Customer Service Center notice within 30 days of the Business Day we
receive proof of the Owner's death. If the spouse is eligible under our then
existing rules, we will continue the rider and assess charges based on the
spouse's attained age and our then current charges. The rider's effective date
for purposes of reviewing Contract Anniversaries to determine the Highest
Anniversary Value will be the Business Day the new Owner elects to continue the
rider. All of the other terms and conditions of the rider will continue as
before.
WHEN MAY YOU ELECT THE GMIB? You may take income payments using the
GMIB on any Contract Anniversary, or the thirty-day period that follows, after
(a) the Contract has been in effect for seven years, and (b) the Annuitant has
attained age 60.
INCOME PLANS AVAILABLE WITH THE GMIB. You may elect to use the GMIB
with the following Income Plans in your Contract:
- Income Plan 1. Fixed Life Annuity;
- Income Plan 2. Fixed Life Annuity with 10 or 20 Years Certain;
and
- Income Plan 3. Fixed Joint and Last Survivor Annuity.
You may also elect any other Income Plan we offer on the Income Date
for which you and the Annuitant are then eligible and we then make available for
use with the GMIB.
12
<PAGE> 29
OTHER GMIB TERMS AND CONDITIONS
- The GMIB must be purchased at time of application;
- The Annuitant must be age 80 or younger at the time your
Contract is issued;
- The purchase of the GMIB as an optional benefit is irrevocable
and charges for the GMIB will remain in force for as long as
your Contract remains in force, or until your Income Date if
sooner.
IMPORTANT CONSIDERATIONS REGARDING THE GMIB. While a GMIB does provide
a guaranteed income, a GMIB MAY NOT BE APPROPRIATE FOR ALL INVESTORS. You should
understand the GMIB completely and analyze it thoroughly before you purchase the
GMIB.
- A GMIB does not in any way guarantee the performance of any
Fund, or any other investment option under your Contract.
- Once purchased, the GMIB is irrevocable. This means that
before the Income Date if current monthly income payment rates
per $1,000 and the investment performance of the Funds are
such as would result in higher income payments than would be
the case under the GMIB using guaranteed monthly income
payment rates, the GMIB charges will still be assessed.
- The GMIB in no way restricts or limits your rights to take
income payments at other times permitted under your Contract
-- therefore, you should consider the GMIB as an income
payment "floor."
- Please take advantage of the guidance of a qualified financial
adviser in evaluating the GMIB options, as well as all other
aspects of your Contract.
- The GMIB may not be approved in all states.
===============================================================================
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, 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 which
Contract you attain age 85 or the year in which the Annuitant
attains age 85.
-------------------------- ---------------------------------------------------------------------
Qualified Accepted until the year in which you attain 70 1/2,
Contract 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.
==============================================================================
4. WHAT ARE MY INVESTMENT OPTIONS?
==============================================================================
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-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 over 30 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
AIM V.I. GOVERNMENT SECURITIES FUND. This Fund seeks to achieve a high
level of 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.
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.
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
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 and income by investing primarily in large capitalization
equity securities. Up to 10% of its assets may be invested in debt 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, The People's Republic of China and the Philippines).
STEIN ROE GLOBAL UTILITIES FUND, VARIABLE SERIES. This Fund seeks
current income and long-term growth of capital by investing primarily in U.S.
and foreign securities of utility companies.
Liberty Advisory Services Corp. provides investment management and
advisory services to the Liberty Variable Investment Trust. Colonial Management
Associates, Inc. sub-advises 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 sub-advises the Global Utility Fund. Newport Fund
Management, Inc. sub-advises the Tiger Fund. Liberty Asset Management Company
sub-advises the All-Star Fund.
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 long-term growth of
capital and income. The Fund invests, under normal market conditions, at least
65% of its total assets in common stock and related securities, such as
preferred stocks, convertible securities and depositary receipts for those
securities. These securities may be listed on a securities exchange or traded in
the over-the-counter markets. While the Fund may invest in companies of any
size, the Fund generally focuses on companies with larger market capitalizations
that the Fund's adviser believes have sustainable growth prospects and
attractive valuations based on current and expected earnings or cash flow.
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. The Fund invests,
under normal market conditions, at least 80% of its total assets in high yield
fixed income securities. Fixed income securities offering the high current
income sought by the series generally are lower rated bonds (junk bonds).
MFS RESEARCH SERIES. This Fund seeks to provide long-term growth of
capital and future income. The Fund invests, under normal market conditions, at
least 80% of its total assets in common stocks and related securities, such as
preferred stocks, convertible securities and depositary receipts. The Fund
focuses on companies that the Fund's adviser believes have favorable prospects
for long-term growth, attractive valuations based on current and expected
earnings or cash flow, dominant or growing market share and superior management.
MFS TOTAL RETURN SERIES. This Fund primarily seeks to obtain
above-average income (compared to a portfolio entirely invested in equity
securities) consistent with prudent employment of capital; its secondary
objective is to take advantage of opportunities for growth of capital and income
since many securities offering a better than average yield may also possess
growth potential. The Fund is a "balanced fund," and invests in a combination of
equity and fixed income securities. Under normal market conditions, the Fund
invests (i) at least 40%, but not more than 75%, of its net assets in common
stocks and related securities (referred to as equity securities), such as
preferred stocks, bonds, warrants or rights convertible into stock, and
depositary receipts for those securities; and (ii) at least 25% of its net
assets in non-convertible fixed income securities.
MFS CAPITAL OPPORTUNITIES SERIES. This Fund seeks capital appreciation.
The Fund invests, under normal market conditions, at least 65% of its total
assets in common stocks and related securities, such as preferred stocks,
convertible securities and depositary receipts for those securities. The Fund
focuses on companies which the Fund's adviser believes have favorable growth
prospects and attractive valuations based on current and expected earnings or
cash flow.
MFS Investment Management(R) advises the MFS(R) Variable Insurance
Trust.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
THE 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.
THE MID CAP VALUE PORTFOLIO. This Fund seeks above-average total return
over a market cycle of three to five years by investing primarily in common
stocks of companies with equity capitalizations in the range of companies
included in the S&P MidCap 400 Index (currently $500 million to $6 billion).
THE VALUE PORTFOLIO. This Fund seeks above-average return over a market
cycle of three to five years by investing primarily in a portfolio of common
stocks and other equity securities of companies with equity capitalization
greater than $2.5 billion 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.
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.
<PAGE>
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.
NASDAQ - 100 INDEX(R) FUND. This Fund seeks to provide investment
returns that correspond to the performance of the Nasdaq-100 Index(R) before the
deduction of Fund expenses. The Nasdaq-100 Index(R) is a modified
capitalization-weighted index composed of 100 of the largest non-financial
domestic and international companies listed on the National Market tier of the
Nasdaq Stock Market.
ALL-CAP GROWTH FUND. This Fund seeks long-term capital appreciation by
investing primarily in a diversified portfolio of common stocks.
Sage Advisors, Inc. is the investment manager to the Sage Life
Investment Trust. State Street Global Advisors subadvises the EAFE(R) Equity
Index Fund, S&P 500 Equity Index Fund, and Nasdaq-100 Index(R) Fund. Conning
Asset Management Company subadvises the Money Market Fund. Eagle Asset
Management, Inc. subadvises the All-Cap Growth 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.
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 up to .25% 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-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.
- 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
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.
N/365
[(1+I)/(1+J+.0025)] - 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
<PAGE>
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.
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<PAGE> 39
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 $100, 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 $100, we will treat your transfer request as a
request to transfer the entire amount.
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.
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<PAGE> 40
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.
INTERNET TRANSACTIONS. In addition to telephone transactions, we permit
transfers via the Internet. We will send Owners information about our website
and transactions that may be made through it. We will use reasonable procedures
to confirm that instructions communicated by the Internet are genuine. We may
only be liable for any losses due to unauthorized or fraudulent instructions
where we fail to follow our procedures. These procedures include: (a) asking for
your social security number and personal identification number (generally
provided at Contract delivery) when you access our website to make a
transaction; (b) sending you a confirmation statement (by U.S. Mail or internet,
according to instructions you provided to us) after all such transactions; and
(c) posting a Contract transaction history on our website which you may access
at any time.
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
<PAGE>
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.
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, and we reserve the right to restrict
dollar-cost averaging into the Money Market Sub-Account. Dollar-cost averaging
is not available while you are participating in the systematic partial
withdrawal program.
We may also permit you to periodically transfer earnings (sweep) from
the Fixed Sub-Accounts to the Variable Sub-Accounts.
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, and you may discontinue your
participation in this program by contacting our Customer Service Center. We
reserve the right to cancel the asset allocation 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.
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
<PAGE>
- 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.
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<PAGE> 43
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)and subtracting
(c) where:
(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.
(c) is the daily Asset-Based Charges.
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.
27
<PAGE> 44
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;
- the available investment options, including dollar-cost
averaging, asset allocation, automatic portfolio rebalancing,
IRA partial withdrawal programs, 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.
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.
29
<PAGE> 46
We define "Qualifying Terminal Illness" and "Qualifying Hospital or Nursing Care
Facility" in your Contract.
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 Sub-Accounts. We may,
from time to time, eliminate this charge for the first Contract Year.
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 deduct Asset-Based
Charges on a daily basis and calculate the charges as a percentage of the assets
of the Variable Account on the date of deduction. We deduct the Asset- Based
Charges from the Variable Sub-Accounts in which you are invested. If you bought
your Contract prior to January 1, 2001, see Appendix C for information related
to Asset-Based Charges. The maximum charges are:
<TABLE>
<CAPTION>
COMBINED
ASSET-BASED CHARGES
-------------------
ANNUAL DAILY
CHARGE CHARGE
------ ------
<S> <C> <C>
Contract Years 1-7 1.40% .0038626%
Contract Years 8+ 1.25% .0034462%
</TABLE>
These charges do not apply to any Fixed Account Value.
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.
OPTIONAL BENEFIT CHARGES.
Guaranteed Minimum Income Benefit. If you purchase the optional
Guaranteed Minimum Income Benefit, we will deduct an additional charge equal on
an annual basis to 0.20% of your Account Value on the date of deduction during
the Accumulation Phase. We calculate this charge as a percentage of your Account
Value on the date of deduction, and deduct it proportionately from the Fixed and
Variable Sub-Accounts in which you are invested. Charges are deducted on your
Contract Date and monthly thereafter. These charges will continue while your
Contract is in force unless (a) you apply all of your Account Value to an Income
Plan or income payments cease for any reason, (b) the death benefit is paid or
has begun to be paid, or (c) the Covered Person dies and an eligible surviving
spouse chooses not to continue this rider even though he or she continues the
Contract.
Enhanced Death Benefit. If you purchase the optional Enhanced Death
Benefit, we will deduct an additional charge equal on an annual basis to .20% of
your Account Value on the date of deduction during the Accumulation Phase. We
deduct it proportionately from the Fixed and Variable Sub-Accounts in which you
are invested. Charges are deducted on your Contract Date and monthly thereafter.
These charges will continue while your Contract is in force unless (a) you apply
the Account Value to an Income Plan, (b) the death benefit is paid or has begun
to be paid, or (c) the Covered Person dies and an eligible surviving spouse
chooses not to continue this rider even though he or she continues the Contract.
FUND ANNUAL EXPENSES
Because the Variable Account purchases shares of the various Funds you
<PAGE>
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.
31
<PAGE> 48
==============================================================================
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.
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
<PAGE>
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 59 1/2;
- made on or after the death of an Owner;
- attributable to the taxpayer's becoming disabled; or
- 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."
33
<PAGE> 50
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.
- 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.
34
<PAGE> 51
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.
==============================================================================
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.
- 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.
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. We show
standard performance that reflects no charges for the optional benefits.
"Non-Standard" average annual total return information may be presented,
computed on the same basis as described above, except that deductions will not
include any Contract charges. 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.
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.
<PAGE>
==============================================================================
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
(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.
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 OR ANNUITANT'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.
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.
OPTIONAL ENHANCED DEATH BENEFIT RIDER
You may enhance the Contract's basic death benefit by purchasing the
optional Enhanced Death Benefit rider. The Enhanced Death Benefit rider may
provide an additional death benefit if the Owner dies before the Income Date (or
the Annuitant, if the Owner is not a natural person). We determine the Enhanced
Death Benefit on the Business Day we receive proof of death by subtracting (b)
from (a), and then multiplying by (c), where:
a) is your Account Value on the date of calculation;
b) is the Net Purchase Amount; and
c) is the Benefit Rate.
The Enhanced Death Benefit will not exceed the Maximum Benefit Amount as shown
in your Contract Schedule. The Maximum Benefit Amount is guaranteed not to be
less than 100% of your Net Purchase Amount times the benefit rate.
On the Contract Date, the Net Purchase Amount is equal to your Initial
Purchase Payment. Thereafter, the Net Purchase Amount is increased by any
additional purchase payments you make; and is reduced in proportion to the
reduction in Account Value that results from withdrawals you make.
The Benefit Rate is 0.40% for issue ages 69 and under, and 25.0% for
issue ages 70 through 79.
We will pay the Enhanced Death Benefit to your Beneficiary or surviving
joint Owner upon receipt of written proof of death. PLEASE NOTE THAT IF YOUR
ACCOUNT VALUE HAS DECLINED SUCH THAT IT IS LESS THAN THE NET PURCHASE AMOUNT, NO
ENHANCED DEATH BENEFIT WILL BE PAYABLE.
We show examples of the Enhanced Death Benefit in Appendix E.
CONTRACT CONTINUATION OPTION. An Owner's surviving spouse who is eligible
to continue the Contract under the Contract Continuation Option, may also be
eligible to continue this rider. To do so, the surviving spouse must give our
Customer Service Center notice within 30 days of the Business Day we receive
proof of the Owner's death. If the spouse is eligible under our then existing
rules, we will continue the rider based on our then current charges for the new
Owner's attained age. The rider's effective date for purposes of calculating the
Net Purchase Amount will be the Business Day the new Owner elects to continue
the rider. On this date the Net Purchase Amount will be equal to the Account
Value. After that, the Net Purchase Amount will be increased by any additional
purchase payments the new Owner makes, and will be reduced in proportion to the
reduction in Account Value that results from withdrawals the new Owner makes.
All of the other terms and conditions of the rider will continue as before.
OTHER ENHANCED DEATH BENEFIT TERMS AND CONDITIONS.
- You can only purchase the Enhanced Death Benefit at time of
application;
- You must be age 79 or younger at the time the Contract is
issued;
- If you purchase the Enhanced Death Benefit as an optional
benefit it is irrevocable and charges for it will remain in
force during the Accumulation Phase (unless not renewed by a
surviving spouse who continues the Contract under the Contract
Continuation Option).
IMPORTANT CONSIDERATIONS REGARDING THE ENHANCED DEATH BENEFIT OPTION.
- The Enhanced Death Benefit rider does not guarantee that any
amounts under the rider will become payable upon death. Market
declines resulting in your Account Value at death being less
than the Net Purchase Amount will result in no Enhanced Death
Benefit being payable.
- Once purchased, the Enhanced Death Benefit is irrevocable.
This means that even if the investment performance of the
Funds are such as would result in a basic death benefit that
is sufficient for your needs, the Enhanced Death Benefit
charges will still be assessed.
- Please take advantage of the guidance of a qualified financial
adviser in evaluating the Enhanced Death Benefit option, as
well as all other aspects of the Contract.
- The Enhanced Death Benefit may not be available in all states.
<PAGE>
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, The Alger American Fund, Liberty Variable Investment Trust, SteinRoe
Variable Investment Trust, MFS(R) Variable Investment Trust(SM), The Universal
Institutional Funds, Inc., Oppenheimer Variable Account Funds, Sage Life
Investment 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;
- operate the Variable Account as a unit investment trust under
the 1940 Act if it is operating as a managed separate account;
<PAGE>
- 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 (the shares of the new Fund may have higher fees and charges
than the Fund it replaced, and 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., 300 Atlantic Street, Stamford, CT 06901 ("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
The financial statements of Sage Life Assurance of America, Inc. at
December 31, 1999 and 1998, and for each of the three years in the period ended
December 31, 1999, and the financial statements of The Sage Variable Annuity
Account A at December 31, 1999 and for the period from February 19, 1999
(commencement of operations) through December 31, 1999, appearing in this
Prospectus and Registration Statement have been audited by ___________________,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein, and are included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing. The financial statements of
Sage Life Assurance of America, Inc. for the nine months ended September 30,
2000 and 1999 have not been audited.
<PAGE>
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 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 as of December 31, 1999 from its
commencement of operations on February 19, 1999 to December 31, 1999.
We included the audited financial statements for Sage Life as of
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999 and unaudited financial information as of September 30, 2000
and for the nine month periods ended September 30, 2000 and 1999 in this
Prospectus. 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.
================================================================================
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 five states.
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
("Sage Group"), a corporation quoted on the Johannesburg Stock Exchange. 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.
On December 1, 1998, Sage Group entered into a letter of intent with Swiss
Re Life & Health America Inc. ("Swiss Re"). Swiss Re is an indirect subsidiary
of Swiss Reinsurance Company, Switzerland, one of the world's largest
reinsurance groups. This agreement encompassed two transactions: (1) that Sage
Life would enter into a reinsurance agreement with Swiss Re or its affiliate,
Life Reassurance Corporation of America ("LRCA"); and (2) that Swiss Re or LRCA
would make an investment in Sage Life Holdings, our immediate parent. The
reinsurance agreement with LRCA was entered into on June 8, 2000. As to the
investment in Sage Life Holdings, on December 31, 1998, LRCA did invest $12.5
million in non-voting, non-redeemable, cumulative preferred stock of Sage Life
Holdings, which at that point became our immediate parent and a wholly-owned
subsidiary of Sage Insurance Group. We anticipate that, during the third quarter
of 2000, LRCA will exchange part of its preferred stock for a voting interest of
not more that 9.9% in Sage Life Holdings with a retroactive effective date of
April 1999. The arrangements contemplated by the agreement may be subject to
regulatory approval.
The Company is licensed to write business in all states, except New York.
However, the Company has formed a subsidiary company, Sage Life Assurance
Company of New York ("Sage Life New York"), that will be licensed to write
business in New York. It is anticipated that Sage Life New York will begin
operations at the beginning of 2001.
SELECTED FINANCIAL DATA. (To be filed by Amendment)
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.
(To be filed by Amendment)
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, President and Chief Executive Officer, 1/2000
Age 61 Chairman, 2/98 to present to present, Sheldon Scowby Associates, Inc.; Chairman
and Trustee, Sage Life 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 12/99; President, Chief Executive
Officer, Sage Life Assurance of America Inc.,
1/97-2/98; Director, Sage Distributors, Inc., 1/98 to
12/99; Director, President, Chief Executive Officer,
Sage Management Services (USA), Inc., 6/96 to 12/99;
Owner, Sheldon Scowby Resources 7/95-6/96.
Robin I. Marsden(2) Director, 1/97 to present; President President and Chief Executive Officer, Sage Life
Age 34 and Chief Executive Officer, 2/98 Assurance Company of New York, 4/2000 to present;
to present Director and President, Sage Life (Bermuda) Ltd.,
1/2000 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(3) Director, 1/97 to Director, Sage Life Assurance Company of New York, 5/98
Age 70 present 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(4) Director, 1/97 to Director, Sage Life Assurance Company of New York, 5/98
Age 47 present to present; Partner, Clifford, Chance, Rogers & Wells
LLP, 1986 to present.
Richard D. Starr(5) Director, 1/97 to Chairman and Director, ABN Amro Financial
Age 56 present Services, Inc., 7/00 to present; Director,
Sage Life Assurance Company 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.
Mitchell R. Katcher(2) Director, 12/97 to present; Senior Senior Executive Vice President and
Age 47 Executive Vice President, Chief Actuary, Sage Life Assurance
Chief Actuary 5/97 to present Company of New York, 4/2000 to
present; Also, Chief Financial
Officer of Sage Life 5/97 to __/00;
Director, Chief Financial Officer
and Chief Actuary, Sage Life (Bermuda), Ltd.,
1/2000 to present; Vice 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(6) Director, 1/2000 to present Dean/Professor, Columbia University Graduate School of
Age 58 Business, 7/89 to present; Director, 1/2000 to present,
Sage Life Assurance Company of New York and Sage
Insurance Group, Inc.
John A. Benning(7) Director, 4/2000 to present Director, 4/2000 to present, Sage Life
Age 66 Assurance Company of New York; Treasurer and
General Counsel, Liberty Hospitality Company,
1/2000 to present; Senior Vice President and
General Counsel, Liberty Financial Companies,
1986 to 1999.
</TABLE>
- ----------------
(1) Mr. Scowby's principal business address is 200 Broad Street, Suite 2337,
Stamford, CT 06901
(2) The principal business address of these persons is 300 Atlantic Street,
Stamford, CT 06901.
(3) Mr. Shill's principal business address is Sage Centre, 10 Fraser Street,
Johannesburg, South Africa 2000.
(4) Mr. Meyer's principal business address is 200 Park Avenue, New York, NY
10166.
(5) Mr. Starr's principal business address is 22507 SE 47th Place, Issaquah,
WA 98029.
(6) Dr. Feldberg's principal business address is Columbia University Graduate
School of Business, Uris Hall, Room 101, 3022 Broadway, New York, NY
10027.
(7) Mr. Benning's principal business address is 23rd Floor, 600 Atlantic
Street, Boston, MA 02210
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
1999 $350,000 $100,000 $100,000
Robin I. Marsden ............................... 1998 $275,000 $100,000 $ 20,956
President and Chief Executive Officer(1) 1999 $322,500 $150,000
Mitchell R. Katcher ............................ 1997 $114,583 $265,000
Senior Executive Vice President, 1998 $250,000 $125,000 $ 19,037
Chief Financial Officer 1999 $268,750 $150,000
and Chief Actuary(1)
</TABLE>
- ----------------
(1) All salaries and bonuses are paid by Sage Insurance Group.
We pay outside directors $12,000 and $2,000 per meeting attended. Dr. Feldberg
is paid $30,000 and $8,000 per meeting attended. For meetings attended in the
year ended December 31, 1999, we paid each outside director $20,000. Dr.
Feldberg attended no meetings in 1999; we paid his 2000 retainer in 1999. All
directors' compensation includes compensation for services on any board of
directors for any company affiliated with the Company. 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.
Sage Life Assurance of America, Inc.
Financial Statements
(To be filed by Amendment)
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
Exchange of Income Units
Safekeeping of Account Assets
Legal Matters
Other Information
Financial Statements
================================================================================
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:
<PAGE>
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> 91
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 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> 93
================================================================================
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>
<CAPTION>
(1) (2) (3) (4) (5)
Beginning Beginning of Month Dollar Cost Averaging Amount Dollar Interest Credited End of Month
of Month Account 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 16,175 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> 94
================================================================================
APPENDIX C
================================================================================
CONTRACTS ISSUED BEFORE JANUARY 1, 2001
The purpose of this Appendix is to show certain benefits for Contracts
issued before certain dates. Generally, Contracts purchased after January 1,
2001, 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.
CONTRACTS ISSUED BEFORE JANUARY 1, 2001
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 your 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:
COMBINED
ASSET-BASED CHARGES
-------------------------------------------------
ANNUAL MONTHLY DAILY
CHARGE CHARGE CHARGE
------ ------- ------
Contract Years 1-7 1.40% .116667% .0038626%
Contract Years 8+ 1.25% .104167% .0034462%
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.
ACCUMULATION UNIT VALUE - NET INVESTMENT FACTOR
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:
(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.
CONDENSED FINANCIAL INFORMATION
We began operations in February, 1999. For Contracts purchased before January 1,
2001, 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 Accumulation
Unit Values Unit Values
Fund as of 9/30/00 as of 12/31/99
---- -------------- --------------
<S> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Government Securities Fund............................. 9.939464
AIM V.I. Growth and Income Fund................................. 11.206934
AIM V.I. International Equity Fund.............................. 16.010519
AIM V.I. Value Fund............................................. 12.265469
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio.......................... 12.646000
Alger American Income and Growth Portfolio...................... 13.895548
Alger American Small Capitalization Portfolio................... 11.860213
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series............ 10.132350
Colonial Small Cap Value Fund, Variable Series.................. 12.344051
Colonial Strategic Income Fund, Variable Series................. 10.087292
Colonial U.S. Growth and Income Fund, Variable Series........... 10.892669
Liberty All-Star Equity Fund, Variable Series..................... 10.855902
Newport Tiger Fund, Variable Series............................... 12.310435
Stein Roe Global Utilities Fund, Variable Series.................. 11.302434
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series...................... 11.198531
Stein Roe Balanced Fund, Variable Series.......................... 10.439622
MFS(R) VARIABLE INSURANCE TRUSTS:
MFS Growth With Income Series..................................... 10.481767
MFS High Income Series............................................ 10.151440
MFS Research Series............................................... 10.932084
MFS Total Return Series........................................... 9.839246
MFS Capital Opportunities......................................... 11.300049
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio....................................... 10.855955
The Mid Cap Value Portfolio....................................... 12.575303
The Value Portfolio............................................... 9.861418
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA.......................................... 9.863016
Oppenheimer Capital Appreciation Fund/VA.......................... 13.794624
Oppenheimer Small Cap Growth Fund/VA.............................. 15.934311
SAGE LIFE INVESTMENT TRUST:
EAFE(R)Equity Index Fund.......................................... 12.658833
S&P 500 Equity Index Fund......................................... 11.777777
Money Market Fund................................................. 10.396108
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio............................. 10.362079
T. Rowe Price Mid-Cap Growth Portfolio............................ 12.593555
T. Rowe Price Personal Strategy Balanced Portfolio................ 10.245335
If you bought your Contract on or after January 1, 2001, we will provide you
Accumulation Unit Values in our next prospectus update.
</TABLE>
CONTRACTS ISSUED BEFORE MAY 1, 2000
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.
TRANSFER 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
transfers 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> 95
(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> 96
================================================================================
APPENDIX D
================================================================================
GUARANTEED MINIMUM INCOME BENEFIT
Below is an example of how the GMIB will work. The example assumes the
following:
- you are a male whose age last birthday is 55;
- you purchase a Contract with the GMIB rider;
- you do not make any additional purchase payments nor any
withdrawals;
<PAGE>
- you elect to receive income from the Contract 10 years later, at
attained age 65; and
- you elect a Life Annuity with 10 Year Certain, which is an
eligible Income Plan under the GMIB rider.
Assume your Account Value is $200,000 and that your Highest Anniversary
Value ("HAV") is $250,000.
Calculate the GMIB:
1. Your guaranteed Monthly Income Payment rate per $1,000 (as shown in
your Contract Schedule) is $5.42.
2. Your HAV is $250,000.
3. The GMIB = $1,355 [$5.42 x $250,000 / $1,000].
Therefore, under this Income Plan, we guarantee that your monthly income
payment will not be less than $1,355.00.
Different guaranteed minimum Monthly Income Payment rates per $1,000 will
apply for females, for males who begin income payments at ages other than the
age shown above, or for income payments under different Income Plans. In these
cases, the GMIB will be different.
D-1
<PAGE> 97
================================================================================
APPENDIX E
================================================================================
ENHANCED DEATH BENEFIT
Below are examples of how the Enhanced Death Benefit will work. All
examples assume the following:
- The Owner is a male whose age last birthday is 55;
- The Owner purchases a Contract with the Enhanced Death Benefit
rider;
- The Owner makes an initial purchase payment of $150,000; and
- The Owner does not make any additional purchase payments nor any
withdrawals.
Example 1.
Assume the Account Value is $200,000, the Highest Anniversary Value
("HAV") is $175,000 and the Owner dies of natural causes.
Calculate the basic Death Benefit:
1. The Account Value determined as of the Business Day we receive
proof of the Owner's death is $200,000.
2. The sum of all purchase payments made is $150,000.
3. The HAV is $175,000.
4. The basic Death Benefit is $200,000 [the greatest of (1), (2) and
(3)].
Calculate the Enhanced Death Benefit:
5. The Benefit Rate for an issue age of 55 is 40.0%.
6. The Net Purchase Amount is $150,000.
7. The Maximum Benefit Amount is $60,000 ($150,000 x .40).
8. The Enhanced Death Benefit is $20,000 ([.40 x [$200,000 -
$150,000] = $20,000, but not in excess of $60,000).
We will pay the Owner's Beneficiary the basic Death Benefit of $200,000
and the Enhanced Death Benefit of $20,000, for a total payment of $220,000.
E-1
<PAGE> 98
Example 2.
Assume the Account Value is $500,000, the HAV is $300,000 and the Owner
dies of natural causes.
Calculate the basic Death Benefit:
1. The Account Value determined as of the Business Day we receive
proof of the Owner's death is $500,000.
2. The sum of all purchase payments made is $150,000.
3. The HAV is $300,000.
4. The basic Death Benefit is $500,000 [the greatest of (1), (2) and
(3)].
Calculate the Enhanced Death Benefit:
<PAGE>
5. The Benefit Rate for an issue age of 55 is 40.0%.
6. The Net Purchase Amount is $150,000.
7. The Maximum Benefit Amount is $60,000 ($150,000 x .40).
8. The Enhanced Death Benefit is $60,000 ([.40 x [$500,000 -
$150,000] = $140,000, but not in excess of $60,000).
We will pay the Owner's Beneficiary the basic Death Benefit of $500,000
and the Enhanced Death Benefit of $60,000, for a total payment of $560,000.
Example 3.
Assume the Account Value is $100,000, the HAV is $175,000 and the Owner
dies of natural causes.
Calculate the basic Death Benefit:
1. The Account Value determined as of the Business Day we receive
proof of the Owner's death is $100,000.
2. The sum of all purchase payments made is $150,000.
3. The HAV is $175,000.
4. The basic Death Benefit is $175,000 [the greatest of (1), (2) and
(3)].
E-2
<PAGE> 99
Calculate the Enhanced Death Benefit:
5. The Benefit Rate for an issue age of 55 is 40.0%.
6. The Net Purchase Amount is $150,000.
7. The Maximum Benefit Amount is $60,000 ($150,000 x .40).
8. The Enhanced Death Benefit is $0 ([.40 x [$100,000 - $150,000] =
$0, but not in excess of $60,000).
We will pay the Owner's Beneficiary the basic Death Benefit of $175,000
and the Enhanced Death Benefit of $0, for a total payment of $175,000.
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
PART B
STATEMENT OF ADDITIONAL INFORMATION
DATED _______________, 2001
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)
<PAGE>
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 _______________, 2001 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.
Statement of Additional Information
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
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.................................................................................................
<PAGE>
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................................................................................................
Exchange of Income Units.........................................................................................
Safekeeping of Account Assets.......................................................................................
Legal Matters.......................................................................................................
Other Information...................................................................................................
Financial Statements................................................................................................
</TABLE>
<PAGE> 105
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.
SAI-1
<PAGE>
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.
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.
SAI-2
<PAGE> 107
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.
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", 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" 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" (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.
SAI-3
<PAGE>
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 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.
As of September 30, 2000, the current yield for the Money Market
Sub-Account was ____% and the effective yield for the Money Market Sub-Account
was ____%.
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,
<PAGE>
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:
<TABLE>
<S> <C>
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.
</TABLE>
SAI-5
<PAGE> 110
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.
<PAGE>
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.
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. The calculation also assumes surrender of
Account Value at the end of the period for the return quotation. We may also
include standard average annual total return without the optional benefit
charges when we show standard average annual total return with the optional
benefit charges. 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.
SAI-6
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
<PAGE>
We show standard average annual total return for the period from
Sub-Account inception through September 30, 2000 in the chart below. The total
return figures reflect the deduction of all the charges discussed above, and
reflects surrender charges because we assume that you make a complete surrender
at the end of the time period. We do not reflect the deduction of any charges
for the optional benefit riders in the chart below. If we were to deduct the
charges for these riders, the performance shown in the chart would be reduced.
<TABLE>
<CAPTION>
FOR THE FROM SUB-ACCOUNT
SUB-ACCOUNT PERIOD ENDED INCEPTION THROUGH
FUND INCEPTION DATE SEPTEMBER 30, 2000 DECEMBER 31, 1999
---- ------------- ----------------- -----------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
AIM V.I. Government Securities Fund 3/30/99 -8.89%
AIM V.I. Growth and Income Fund 11/12/99 N/A
AIM V.I. International Equity Fund 3/24/99 51.11
AIM V.I. Value Fund 3/24/99 14.10
THE ALGER AMERICAN FUND:
Alger American MidCap Growth Portfolio 3/30/99 17.86
Alger American Income and Growth Portfolio 3/24/99 30.21
Alger American Small Capitalization Portfolio 11/12/99 N/A
LIBERTY VARIABLE INVESTMENT TRUST:
Colonial High Yield Securities Fund, Variable Series 11/12/99 N/A
Colonial Small Cap Value Fund, Variable Series 3/30/99 14.87
Colonial Strategic Income Fund, Variable Series 3/30/99 -7.43
Colonial U.S. Growth and Income Fund, Variable Series 3/30/99 0.53
Liberty All-Star Equity Fund, Variable Series 3/30/99 0.17
Newport Tiger Fund, Variable Series 3/30/99 15.68
Stein Roe Global Utilities Fund, Variable Series 11/12/99 N/A
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Growth Stock Fund, Variable Series 11/12/99 N/A
Stein Roe Balanced Fund, Variable Series 11/12/99 N/A
MFS(R) VARIABLE INSURANCE TRUST(SM):
MFS Growth With Income Series 3/30/99 -3.53
MFS High Income Series 3/30/99 -6.80
MFS Research Series 11/12/99 N/A
MFS Total Return Series 11/12/99 N/A
MFS Capital Opportunities Series 11/12/99 N/A
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio 3/24/99 0.17
The Mid Cap Value Portfolio 3/30/99 17.16
The Value Portfolio 11/12/99 N/A
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
Oppenheimer Bond Fund/VA 3/30/99 -9.65
Oppenheimer Capital Appreciation Fund/VA 3/24/99 29.21
Oppenheimer Small Cap Growth Fund/VA 3/30/99 50.36
SAGE LIFE INVESTMENT TRUST:
EAFE(R)Equity Index Fund 3/19/99 17.99
S&P 500 Equity Index Fund 2/18/99 10.80
Money Market Fund* 2/18/99 -4.44
Nasdaq-100 Index(R) Fund N/A N/A
All-Cap Growth Fund N/A N/A
T. ROWE PRICE EQUITY SERIES, INC.:
T. Rowe Price Equity Income Portfolio 3/30/99 -4.72
T. Rowe Price Mid-Cap Growth Portfolio 3/30/99 17.34
T. Rowe Price Personal Strategy Balanced Portfolio 11/12/99 N/A
</TABLE>
* Yield more closely reflects current earnings of the Sage Life
Investment Trust's Money Market Fund than its total return.
SAI-7
<PAGE> 112
We may also show non-standard average annual total returns. These returns
may be calculated the same way as standard average total returns, except that
the annual administrative charge and the surrender charge is not included in the
calculations, or they may just show underlying fund fees and expenses. The
following chart shows the non-standard average annual compounded total returns
for the underlying Funds for the period ending September 30, 2000. The
performance below reflects hypothetical returns based on the actual performance
of each underlying Fund. The performance assumes the Sage Variable Annuity was
available as of the inception date of the underlying Funds for the period
indicated. The performance assumes the deduction of fund management and
operating expenses, but does not include any contract level expenses (i.e.,
transaction expenses and optional rider charges).
<TABLE>
<CAPTION>
AVERAGE ANNUAL COMPOUNDED TOTAL RETURN
---------------------------------------------------------
FUND ONE YEAR FIVE YEARS TEN YEARS
---- -------------------- ------------------ -----------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS:
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
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.:
The Global Equity Portfolio
The Mid Cap Value Portfolio
The 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>
* The S&P 500 Equity Index Fund and Money Market Fund commenced
operations on February 19, 1999. The EAFE Equity Index Fund commenced operations
on March 2, 1999. Total investment return is calculated assuming an initial
investment made at net asset value at the
SAI-8
beginning of the period, reinvestment of all distributors at net asset value
during the period and redemption on the last day of the period. Total investment
return is not annualized.
** Yield more closely reflects current earnings of the Sage Life
Investment Trust's Money Market Fund than its total return.
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.
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 Income Payment 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
(4) is the Income Unit value for the Variable Sub-Account for the
Valuation Period ending on that date.
SAI-10
<PAGE> 115
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" (as described in the prospectus)
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.
ILLUSTRATION OF CALCULATION OF INCOME UNIT VALUE
<TABLE>
<S> <C>
1. Net Investment Factor ........................................................................................1.00022253
2. Income Unit value for the immediately preceding Valuation
Period.......................................................................................................10.00000000
3. 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
4. Income Unit value for current Valuation Period
[(1) x (2)]/(3)..............................................................................................10.00141533
</TABLE>
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.
SAI-12
<PAGE> 117
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. _______________________________ 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.
FINANCIAL STATEMENTS
The Variable Account began operations on February 19, 1999, and financial
statements for the Variable Account from February 19, 1999 through the period
ended December 31, 1999 are provided. Financial statements of the Company are
presented in the Prospectus.
(To be filed by Amendment)
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. (Financial Statements will be filed by Amendment.)
(b) Exhibits
<TABLE>
<S> <C>
(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. 15/
(ii)(B) Amended Form of Individual Contract with Interest Account.4/
(ii)(C) Second Amended Form of Individual Contract with Interest Account. 15/
(iii)(B) Amended Form of Group Contract.3/
(iii)(C) Second Amended Form of Group Contract. 15/
(iv)(B) Amended Form of Group Certificate.3/
(iv)(C) Second Amended Form of Group Certificate. 15/
(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. 15/
(x)(A) Form of Group Accidental Death Benefit Rider.5/
(x)(B) Amended Form of Group Accidental Death Benefit Rider. 15/
(xi)(A) Form of Individual Enhanced Death Benefit Rider. 17/
(xi)(B) Form of Group Enhanced Benefit Rider. 17/
(xii)(A) Form of Individual Guaranteed Minimum Income Benefit Rider. 17/
(xii)(B) Form of Group Guaranteed Minimum Income Benefit Rider. 17/
(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.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 TrustSM.9/
(v) Form of Participation Agreement with Morgan Stanley The Universal
Institutional 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) Opinion and Consent of James F. Bronsdon. (To be filed by Amendment)
(10) Consent of Ernst & Young LLP. (To be filed by Amendment)
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Power of Attorney for Paul C. Meyer.11/
(14)(b) Power of Attorney for Ronald S. Scowby.12/
(14)(c) Power of Attorney for Richard D. Starr.12/
(14)(d) Power of Attorney for H. Louis Shill.13/
(14)(e) Power of Attorney for Mitchell R. Katcher.13/
(14)(f) Power of Attorney for Robin I. Marsden.14/
(14)(g) Power of Attorney for Paul C. Meyer, Ronald S. Scowby, Richard D. Starr, H.
Louis Shill and Meyer Feldberg.16/
</TABLE>
- -----------------------
(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 Pre-Effective
Amendment No. 1 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.
PC-3
<PAGE> 139
(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. 333-43329) 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. 333-43329) 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.
<PAGE>
(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. 14 to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4 (File No. 333-44751)
dated January 12, 1999, and is incorporated herein by reference.
(12) This exhibit was previously filed in Exhibit No. 14 to Pre-Effective
Amendment No. 2 to the Registration Statement filed on Form N-4 (File No.
333-43329) dated January 28, 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. 333-44751)
dated February 10, 1999, and is incorporated herein by reference.
(14) This exhibit was previously filed in Exhibit No. 14 to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4 (File No. 333-43329)
dated February 26, 1999, and is incorporated herein by reference.
(15) This exhibit was previously filed in Exhibit No. 4 to Post-Effective
Amendment No. 3 to the Registration Statement on Form N-4 (File No. 333-43329)
dated February 29, 2000, and is incorporated herein by reference.
(16) This exhibit was previously filed in Exhibit No. 14 to Post-Effective
Amendment No. 3 to the Registration Statement on Form N-4 (File No. 333-43329)
dated February 29, 1999, and is incorporated herein by reference.
(17) This exhibit was previously filed in Exhibit No. 4 to Post-Effective
Amendment No. 5 to the Registration Statement on Form N-4 (File No. 333-43329)
dated June 27, 2000, and is incorporated herein by reference.
PC-4
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 Re (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.
<TABLE>
<CAPTION>
DIRECT AND INDIRECT SUBSIDIARIES OF SAGE GROUP LIMITED
------------------------------------------------------
COMPANY NAME PRINCIPAL BUSINESS
<S> <C>
Bentley Office Park (Pty) Ltd Property development & investment
Blackreef Properties (Pty) Ltd Property holding
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
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 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% owner) Property development
Kemparkto (Pty) Ltd Property investment & development
Lakeview Management Properties (Pty) Ltd (75% owner) Property management
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
<PAGE>
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 Consulting Services (Pty) Ltd Consulting, financial, administrative,
and management services
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
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 Strategic Services (Pty) Ltd. Consulting, financial, administrative
and management services
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 Jewellery Corporation (Pty) Ltd Manufacture & sale of coins & jewelry
Townhomes (Pty) Ltd Building contractors
Von Brandis Square Development Co. (Pty) Ltd Property development
Witch Construction Company (Pty) Ltd Property investment & development
Witch Construction Company (Transvaal) (Pty) Ltd Property investment & development
Sage International B.V. (Netherlands corporation) Holding
Sage International Assets Ltd (BVI corporation) Holding
Sage Management Services (USA), Inc.
(New York corporation) Management services
</TABLE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of July 31, 2000, 40 Contracts were in force.
ITEM 28. INDEMNIFICATION
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 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.
<TABLE>
<CAPTION>
Name and Principal Business Address Positions and Offices With Sage Distributors
- ----------------------------------- --------------------------------------------
<S> <C>
Robin I. Marsden Director
Mitchell R. Katcher Director
Lincoln B. Yersin President and Chief Executive Officer
James F. Bronsdon Chief Compliance Officer, Chief Legal Officer
James F. Renz Chief Financial Officer, Treasurer, Assistant Secretary
</TABLE>
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.
<PAGE>
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.
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company
Act of 1940, the registrant has caused this Registration Statement to be signed
on its behalf, in the City of Stamford, in the State of Connecticut, on this
30th day of October, 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
- ------------------------------- --------------------
James F. Bronsdon Robin I. Marsden
Assistant Secretary President and Chief Executive
Officer
By: Sage Life Assurance of America, Inc.
(Depositor)
Attest:
/s/ James F. Bronsdon By: /s/ Robin I. Marsden
- ------------------------------- --------------------
James F. Bronsdon Robin I. Marsden
Assistant Secretary President and Chief Executive
Officer
As required by the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement 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 October 30, 2000
----------------------
Ronald S. Scowby
/s/ H. Louis Shill* Director October 30, 2000
-----------------------
H. Louis Shill
/s/ Paul C. Meyer* Director October 30, 2000
----------------------
Paul C. Meyer
/s/ Richard D. Starr* Director October 30, 2000
-----------------------
Richard D. Starr
/s/ Mitchell R. Katcher Director, October 30, 2000
------------------------ Senior Executive Vice
Mitchell R. Katcher President, Chief Actuary
/s/ Meyer Feldberg* Director October 30, 2000
--------------------
Meyer Feldberg
/s/ John A. Benning* Director October 30, 2000
--------------------
John A. Benning
/s/ Robin I. Marsden Director, President and October 30, 2000
--------------------- Chief Executive Officer
Robin I. Marsden
</TABLE>
*By: /s/ Mitchell R. Katcher
------------------------
Mitchell R. Katcher
As Attorney-In-Fact pursuant to a Power of Attorney dated below.
Director Date
- -------- ----
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
John A. Benning July 31, 2000
EXHIBIT INDEX
(Exhibits to be filed by Amendment)
