Supplement to Prospectus
By Supplement to Prospectus ("sticker") dated March 13, 1996, Ameritas Variable
Life Insurance Company discloses the following:
On February 27, 1996, AVLIC determined to postpone the merger with Ameritas Life
Insurance Corp. ("Ameritas Life") indefinitely.
On March 11, 1996, Ameritas Life and American Mutual Life Insurance Company
("American Mutual"), an Iowa mutual life insurance company, announced an
Agreement of Joint Venture ("Agreement").
The terms of the Agreement, which has a closing date of March 29, 1996, require
a holding company (AMAL Corporation) to be formed. Also pursuant to the terms of
the Agreement, the stock of AVLIC and Ameritas Investment Corp. will be
transferred to AMAL Corporation on the closing date. AMAL Corporation will then
issue a controlling ownership of the stock to Ameritas Life and a minority
ownership of the stock to American Mutual.
As of May 1, 1996, The Dreyfus Stock Index Fund is no longer an investment
option under the contract. Funds allocated to the Dreyfus Stock Index Fund as of
April 30, 1996 may remain invested in that portfolio. If transferred out of the
Dreyfus Stock Index portfolio, however, reinvestment into that portfolio will
not be an option. AVLIC eventually intends to file an application with the
Securities and Exchange Commission to substitute the shares of another portfolio
for shares of the Dreyfus Stock Index Fund.
By Supplement to Prospectus ("Sticker") dated March 13,1996, Ameritas Variable
Life Insurance Company discloses the following corrections to its prospectus
dated September 1, 1995:
The annual premium for the Extended Guaranteed Death Benefit Rider will equal
the Guaranteed Death Benefit premium for nonsmokers taking Death Benefit Option
A under the Policy. A higher premium will be required for smokers and/or persons
taking Policy Option B. If the required premium exceeds the IRS guideline level
premium, the rider cannot be issued. The required annual premium will be
adjusted by changes in the Specified Amount, changes in death benefit options or
changes in riders.
Disability Benefit Payment Rider. Provides for the payment of a disability
benefit in the form of premiums by AVLIC while the Insured is disabled. The
premium payments provided will equal the policy's initial Guaranteed Death
Benefit premium. In addition, while the Insured is totally disabled, the cost of
insurance for the rider will not be deducted from the Policy's accumulation
value.
Payor Disability Rider. Provides for the payment of a disability benefit in the
form of premiums by AVLIC while the Covered Person specified in the rider is
totally disabled, as defined in the rider. The premium payments provided will
equal the policy's initial Guaranteed Death Benefit premium. In addition, while
the Covered Person is totally disabled, the cost of insurance for the rider will
not be deducted from the Policy's accumulation value.
The information on Page 30 of the prospectus is corrected by this Supplement.
PROSPECTUS COMPANY LOGO
AMERITAS VARIABLE LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM One Ameritas Way/5900 "O" Street
VARIABLE UNIVERSAL LIFE P.O. Box 81889/Lincoln, NE 68501
- --------------------------------------------------------------------------------
This Prospectus describes a flexible premium variable universal life insurance
policy ("Policy") offered by Ameritas Variable Life Insurance Company ("AVLIC"),
a stock life insurance company wholly-owned by Ameritas Life Insurance Corp.
("Ameritas Life"). The Policy is designed to provide insurance protection until
the Policy Anniversary nearest the Insured's 95th birthday and at the same time
provide flexibility to vary the frequency and amount of premium payments and to
increase or decrease the level of death benefits payable under the Policy. This
flexibility allows a Policyowner to provide for changing insurance needs under a
single insurance policy.
The Policy guarantees the Death Benefit as long as the Policy remains in force.
The Policyowner may choose death benefit Option A (generally, a level benefit
that equals the Specified Amount of the Policy) or Option B (a variable benefit
that generally equals the Specified Amount plus the Policy's accumulation
value). The specified amount for a policy is generally $100,000, lower specified
amounts may be requested. The Policy provides for a surrender value that can be
obtained through partial withdrawals, surrender of the Policy, or through policy
loans. There is no minimum guaranteed accumulation value. AVLIC agrees to keep
the Policy in force during the first three years and provide a Guaranteed Death
Benefit during that time, so long as the cumulative pro rata monthly minimum
Guaranteed Death Benefit Premium is paid even though, in certain instances, the
minimum payments allowed by the contract will not generate positive surrender
values, after payment of insurance and other charges, during the first several
policy months. AVLIC also offers an Extended Guaranteed Death Benefit Rider
which extends this benefit for 10 years and up to 30 years, depending on the age
of the Insured.
The Policyowner has the right to examine the Policy and return it for a refund
for a limited time (see page 22). The initial premium payment will be allocated
to the Money Market portfolio of the Variable Insurance Products Fund, as of the
issue date, for 13 days. After the 13-day period (see page 23), the accumulation
value will be allocated to the Subaccounts of AVLIC Separate Account V
("Account") or the Fixed Account as selected by the Policyowner. The
accumulation value, the duration of the death benefit and, if Option B is
selected, the amount of the death benefit above the Specified Amount, will vary
with the investment experience of the selected Subaccounts or the Fixed Account.
The accumulation value will also be adjusted for other factors, including the
amount of charges imposed and the premium payments made. The Policy will
continue in force so long as the surrender value is sufficient to pay certain
monthly charges imposed in connection with the Policy. This Policy may also be
acquired in exchange for another policy (Form #4002) previously offered by AVLIC
(See Exchange Offer, page 31).
The assets of each Subaccount are invested in shares of a corresponding
portfolio of the Variable Insurance Products Fund, the Variable Insurance
Products Fund II, the Alger American Fund, the MFS Variable Insurance Trust,
and/or the Dreyfus Stock Index Fund, (collectively the "Funds"). The Variable
Insurance Products Fund is a mutual fund with five portfolios: Money Market,
High Income, Equity-Income, Growth and Overseas Portfolios. The Variable
Insurance Products Fund II is a mutual fund with five portfolios: the Asset
Manager, Investment Grade Bond, Index 500*, Contrafund*, and Asset Manager:
Growth* Portfolios. The Alger American Fund is a mutual fund with six
portfolios,: Alger American Income and Growth, Alger American MidCap Growth,
Alger American Small Capitalization, Alger American Balanced, Alger American
Leveraged AllCap*, and Alger American Growth Portfolios. MFS Variable Insurance
Trust is a Massachusetts business trust. The Trust has twelve separate
portfolios or series, of which, MFS Emerging Growth Series*, MFS Utilities
Series*, and MFS World Governments Series* are offered. The Dreyfus Stock Index
Fund has one portfolio. The accompanying prospectuses for the various funds
describe the investment objectives and policies and the risks of each of the
portfolios of the Funds. The investment gains or losses of the monies placed in
the various portfolio Subaccounts will be experienced by the policyowner.
* New funds are only available under newly issued policies. Availability is
expected by May 1, 1996, for all policyholders.
Replacing existing insurance with a Policy or purchasing a Policy as a means to
obtain additional insurance protection if the purchaser already owns another
flexible premium variable life insurance policy may not be advantageous.
This Prospectus Must Be Accompanied or Preceded By Current Prospectuses For
Variable Insurance Products Fund, Variable Insurance Products Fund II, Alger
American Fund, MFS Variable Insurance Trust, and Dreyfus Stock Index Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR BY ANY STATE SECURITIES REGULATORY AUTHORITY, NOR HAS
THE COMMISSION, OR ANY STATE SECURITIES REGULATORY AUTHORITY, PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Please Read This Prospectus Carefully And Retain It For Future Reference.
The Date of This Prospectus is September 1, 1995.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Definitions............................................................... 3
Summary................................................................... 5
Ameritas Variable Life Insurance Company and the Account ................. 9
Ameritas Variable Life Insurance Company............................ 9
Ameritas Variable Life Insurance Company Separate Account V......... 9
The Funds........................................................... 10
Investment Objectives and Policies Of The Funds' Portfolios......... 10
Fund Management Fees ............................................... 13
Addition, Deletion or Substitution of Investments................... 15
Fixed Account....................................................... 15
Policy Benefits........................................................... 16
Purposes of the Policy.............................................. 16
Death Benefit Proceeds.............................................. 16
Death Benefit Options............................................... 16
Methods of Affecting Insurance Protection........................... 18
Duration of Policy.................................................. 18
Accumulation Value.................................................. 19
Benefits at Maturity................................................ 19
Payment of Policy Benefits.......................................... 20
Policy Rights............................................................. 20
Loan Benefits....................................................... 20
Surrenders.......................................................... 21
Partial Withdrawals................................................. 21
Transfers........................................................... 22
Refund Privilege.................................................... 22
Exchange Privilege.................................................. 22
Payment and Allocation of Premiums........................................ 23
Issuance of a Policy................................................ 23
Premiums............................................................ 23
Allocation of Premiums and Accumulation Value....................... 24
Policy Lapse and Reinstatement...................................... 25
Charges and Deductions.................................................... 25
Deductions From Premium Payment..................................... 25
Charges from Accumulation Value..................................... 26
Surrender Charge.................................................... 27
Daily Charges Against the Account................................... 28
General Provisions........................................................ 28
Exchange Offer............................................................ 31
Distribution of the Policies.............................................. 32
Federal Tax Matters....................................................... 32
Safekeeping of the Account's Assets....................................... 34
Voting Rights............................................................. 34
State Regulation of AVLIC................................................. 34
Executive Officers and Directors of AVLIC................................. 35
Legal Matters............................................................. 36
Legal Proceedings......................................................... 36
Experts................................................................... 36
Additional Information.................................................... 36
Financial Statements...................................................... 36
Ameritas Variable Life Insurance Company Separate Account V............... 37
Ameritas Variable Life Insurance Company.................................. 48
Appendices................................................................ 65
The Policy, certain funds, and/or certain riders are not available in all
States.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
</TABLE>
<PAGE>
DEFINITIONS
ACCOUNT - Ameritas Variable Life Insurance Company Separate Account V, a
separate investment account established by AVLIC to receive and invest the net
premiums paid under the Policy and allocated by the Policyowner to the Account.
ACCRUED EXPENSE CHARGES - Any monthly deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that a Policy provides for investment at
any time. It is equal to the total of the accumulation value held in the
Account, the Fixed Account, and any accumulation value held in the general
account which secures policy loans.
ATTAINED AGE - The Issue Age of the Insured plus the number of complete Policy
Years that the policy has been in force.
AVLIC - Ameritas Variable Life Insurance Company, a wholly-owned subsidiary of
Ameritas Life.
BENEFICIARY - The person or persons designated in the application, unless later
changed, to receive the Death Benefit (see page 28) for "Beneficiary" and
"Change of Beneficiary").
DECLARED RATES - The interest rate declared by AVLIC to be earned on amounts in
the Fixed Account, which AVLIC guarantees to be no less than 4.5%.
DEATH BENEFITS - The amount of insurance coverage provided under the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the beneficiary upon receipt by
AVLIC of the proof of the death of the Insured while the Policy is in force. It
is equal to: (l) the Death Benefit; (2) plus additional life insurance proceeds
provided by any riders; (3) minus any outstanding policy debt; (4) minus any
unpaid monthly deduction due, including the deduction for the month of death.
EXTENDED GUARANTEED DEATH BENEFIT PREMIUMS - A specified premium which, when
paid, will extend the Guaranteed Death Benefit beyond the first three policy
years to a period of 10 to 30 policy years, depending on the age of the Insured
on the Issue Date (See Additional Insurance Benefits, page 29). This benefit is
provided without an additional policy charge.
FIXED ACCOUNT - An account that is a part of AVLIC's General Account to which
all or a portion of net premiums and transfers may be allocated for accumulation
at fixed rates of interest.
GENERAL ACCOUNT - The General Account of AVLIC includes all of AVLIC's assets
except those assets segregated into separate accounts.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium for the first three years
which, if paid in advance on a monthly or yearly prorated basis, will keep the
Policy in force during the first three policy years so long as other policy
provisions are met, even if the surrender value is zero or less. This benefit is
provided without an additional policy charge.
INSURED - The person whose life is insured under the Policy.
ISSUE AGE - The age of the Insured at the Insured's birthday nearest the policy
date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MATURITY DATE - The date AVLIC pays any surrender value, if the Insured is still
living.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the policy
date except should such monthly activity date fall on a date other than a
valuation date, the monthly activity date will be the next valuation date.
NET PREMIUM - Premium paid less the sales load charge and premium tax charge
(See page 23).
OUTSTANDING POLICY DEBT - The sum of all unpaid policy loans and accrued
interest on policy loans.
PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at
fixed intervals. The Policyowner is not required to follow this schedule, nor
does following this schedule ensure that the Policy will remain in force unless
the payments meet the requirements of the Guaranteed Death Benefit Premium or
the Extended Guaranteed Death Benefit Premium.
POLICY - The Flexible Premium Variable Universal Life Insurance Policy offered
by AVLIC and described in this Prospectus.
<PAGE>
POLICYOWNER - The owner of the Policy, as designated in the application or as
subsequently changed. If a Policy has been absolutely assigned, the assignee is
the Policyowner. A collateral assignee is not the Policyowner.
POLICY ANNIVERSARY DATE - The same day as the policy date for each year the
Policy remains in force.
POLICY DATE - As set forth in the Policy, the effective date for all coverage
provided in the application. The policy date is used to determine policy
anniversary dates, policy years and monthly activity dates. Policy anniversaries
are measured from the policy date. The policy date and the issue date will be
the same unless: 1) an earlier policy date is specifically requested, or 2) when
additional premiums or application amendments are required at time of delivery.
(See Issuance of a Policy, page 23).
POLICY YEAR - The period from one policy anniversary date until the next policy
anniversary date.
REDUCED LOAN RATE - After reaching the later of age 55 or the tenth policy
anniversary (the reduced loan rate start date), the Policyowner may borrow each
year approximately 10% of the accumulation value at the reduced loan rate (See
page 20 for "Loan Benefits").
SATISFACTORY PROOF OF DEATH - Means all of the following must be submitted: (1)
A certified copy of the death certificate; (2) A Claimant Statement; (3) The
Policy; and (4) Any other information that AVLIC may reasonably require to
establish the validity of the claim.
SPECIFIED AMOUNT - The minimum death benefit under the Policy, as selected by
the Policyowner, which generally must be $100,000 or more at issue date.
SUBACCOUNT - A subdivision of the Account. Each Subaccount invests exclusively
in the shares of a specified portfolio of the Funds.
SURRENDER VALUE - The policy accumulation value on the date of surrender, less
any outstanding policy debt, any surrender charge, and any accrued expense
charges.
VALUATION DATE - Any day on which the New York Stock Exchange is open for
trading.
VALUATION PERIOD - The period between two successive valuation dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one valuation date and
ending at the close of the NYSE on the next succeeding valuation date.
<PAGE>
SUMMARY
The following summary of Prospectus information and diagram of the Policy should
be read in conjunction with the detailed information appearing elsewhere in this
Prospectus. Unless otherwise indicated, the description of the Policy contained
in this Prospectus assumes that the Policy is in force and that there is no
outstanding indebtedness.
DIAGRAM OF POLICY
PREMIUM PAYMENTS
You can vary amount and frequency.
DEDUCTIONS FROM PREMIUMS
Sales load and distribution expense - 5%.
Premium Tax - 2.5%
NET PREMIUM
You direct the net premium to be invested in the Fixed Account or to the
separate account which offers twenty different subaccounts. The twenty
subaccounts invest in the corresponding portfolios (Funds) of the Fidelity
Variable Insurance Product Funds, the Fidelity Variable Insurance Products
Fund II, the Alger American Fund, the MFS Variable Insurance Trust, or the
Dreyfus Stock Index Fund.
DEDUCTIONS FROM ASSETS
Monthly charge for cost of insurance and cost of any riders.
Monthly charge for administrative expenses $9.00 per month the first year,
$4.50 per month thereafter.
Daily charge, at an annual rate of 0.90% for Policy Years 1-20, and 0.65%
thereafter, from the subaccounts for mortality and expense risks. This charge
is not deducted from Fixed Account assets.
LIVING BENEFITS RETIREMENT BENEFITS DEATH BENEFITS
Partial withdrawals can Loans may be taken at a net Income tax free to
be made after the first zero interest rate after beneficiary.
policy year (subject to ten years or when the
certain restrictions). policyholder reaches 55 Available as lump
The death benefit will (whichever occurs later.) sum or under the
be reduced by the amount five payment meth-
of the partial withdrawal. Should the policy lapse ods available as
while loans are outstanding retirement benefits.
Up to fifteen free trans- the portion of the loan
fers can be made each attributable to earnings
year between the invest- will become taxable dist-
ment portfolio. ributions. (See page 21 and
Appendix B).
Accelerated payment of up
to 50% of the lowest Payments can be taken under
scheduled death benefit one or more of five dif-
is available under cer- ferent payment options.
tain conditions to insur-
eds suffering from termi-
nal illness.
The policy may be sur-
rendered at any time for
its surrender value.
Because the company
incurs expenses imme-
diately upon the issuance
of the policy that are
recovered over a period
of years, a policy sur-
render prior to the fif-
teenth anniversary date
will be assessed a sur-
render charge consisting
of the contingent defer-
red sales charge and the
contingent deferred ad-
ministrative charge.
After the fifth policy
year the charge decreases
each year until no sur-
render charge is applied
after the fifteenth
policy year.(See pages 21
and 27).
<PAGE>
THE ISSUER
The Policy is issued by Ameritas Variable Life Insurance Company ("AVLIC"), a
Nebraska stock life insurance company. A separate account of AVLIC, Separate
Account V ("Account"), has been established to hold the assets supporting the
Policy. The Account has twenty Subaccounts which correspond to, and are invested
in, the portfolios of the Funds discussed at page 9 herein. (See Ameritas
Variable Life Insurance Company and the Account, page 9, and The Funds, page 9).
The financial statements for AVLIC and the Account can be found beginning on
page 37.
THE POLICY
This flexible premium variable universal life insurance policy ("Policy") allows
the Policyowner, within limitations, to choose: (a) the amount and frequency of
premium payments; (b) the manner in which the Policyowners accumulation values
are invested; and (c) a choice of two death benefit options unless the Extended
Maturity Rider is in effect.
As long as the Policy remains in force, it will provide for: (1) life insurance
coverage on the Insured up to age 95; (2) an accumulation value; (3) surrender
rights (including partial withdrawals and total surrenders); (4) policy loan
privileges; and (5) a variety of optional benefits and riders that may be added
to the Policy for an additional charge or without charge if certain minimum
premiums are paid.
PREMIUMS
This Policy differs in two important respects from a conventional life insurance
policy. First, the failure to pay a planned periodic premium will not in itself
cause the Policy to lapse.
Second, a Policy can lapse even if planned periodic premiums have been paid
unless the Guaranteed Death Benefit and/or the Extended Guaranteed Death Benefit
Premium requirements have been met. (See Payment and Allocation of Premiums,
page 23).
AMOUNTS. An initial premium of at least 1/12 of the first year Guaranteed Death
Benefit Premium, charges for riders and any substandard risk adjustment times
the number of months between the policy date and issue date, plus one, must be
paid in order to put the Policy in force. After the initial premium is paid,
unscheduled premiums may be paid in any amount and at any frequency, subject
only to the maximum and minimum limitations set by AVLIC and the maximum
limitations set by Federal Income Tax Law. A Policyowner may also choose a
planned periodic premium which may include the minimum cumulative premiums
necessary to keep in force the Guaranteed Death Benefit provision and the
Extended Guaranteed Death Benefit Rider.
A Policy will lapse when the surrender value is insufficient to pay the monthly
deduction unless the Guaranteed or Extended Guaranteed Death Benefit Riders are
in effect. A period of 61 days from the date written notice of lapse is mailed
to the Policyowner's last known address will be allowed for the Policyowner to
make sufficient payment to keep the Policy in force for the Policyowner (grace
period).
ALLOCATION OF NET PREMIUMS.
The Policyowner may select the manner in which the new premiums are allocated
between the Fixed Account (See Fixed Account, page 15) and to one or more of the
Subaccounts.
Net premiums, which equal the premiums paid less the premium charges, are first
allocated for 13 days, as of the issue date, to the Subaccount for the Money
Market Portfolio of the Variable Insurance Products Fund. After the expiration
of the refund period, the accumulation value will be allocated as selected by
the Policyowner. The Policyowner may change the allocation instructions for
premiums and may also make a special designation for unscheduled premiums.
Subject to certain charges and restrictions, a Policyowner may also transfer
amounts among the Subaccounts and the Fixed Account. (See Allocation of Premiums
and Accumulation Value, page 24).
The various subaccounts available invest in a corresponding portfolio of the
Funds. Variable Insurance Products Fund ("Fidelity Fund") has: the Money Market,
High Income, Equity-Income, Growth, and the Overseas Portfolios. Variable
Insurance Products Fund II ("Fidelity Fund II") has five portfolios: the Asset
Manager, Investment Grade Bond, Index 500, Contrafund and Asset Manager: Growth
Portfolios. (Fidelity Fund and Fidelity Fund II may be collectively referred to
as the "Fidelity Funds"). The Alger American Fund ("Alger American Fund") has
six portfolios: Alger American Income and Growth ("Income and Growth"), Alger
American Small Capitalization ("Small-Cap"), Alger American MidCap Growth
("MidCap"), Alger American Growth ("Alger American Growth"), Alger American
<PAGE>
Leveraged AllCap ("Leveraged AllCap") and Alger American Balanced ("Balanced")
portfolios. MFS Variable Insurance Trust ("MFS Fund" or "MFS") has twelve
separate portfolios or series, of which, MFS Emerging Growth Series, MFS
Utiltities Series, and MFS World Governments Series are offered. The Dreyfus
Stock Index Fund ("Dreyfus Index Fund" or "Dreyfus Index") has one portfolio. A
summary of the investment objectives for these portfolios is set forth at page
10 of this Prospectus, and detailed objectives of these portfolios are described
in the accompanying prospectuses for the Funds. There is no assurance that these
objectives will be met. The Policyowner bears the entire investment risk for
amounts allocated to the Subaccounts.
POLICY BENEFITS
DEATH BENEFIT PROCEEDS AND DEATH BENEFIT OPTIONS. While the Policy remains in
force, AVLIC will pay the Death Benefit to the Beneficiary upon receipt of Proof
of Death of the Insured. These proceeds may be paid in a lump sum or in
accordance with an optional payment plan.
The Policy provides for two death benefit options unless the Extended Maturity
Rider is in effect. Under either option, so long as the Policy remains in force,
the death benefit will not be less than the current Specified Amount of the
Policy adjusted for any policy indebtedness. The death benefit may, however,
exceed the Specified Amount, depending upon the investment experience of the
Policy. Death Benefit Option A provides for a level benefit equal to the current
Specified Amount of the Policy, unless the accumulation value of the Policy on
the date of the Insured's death multiplied by the applicable percentage set
forth in the Policy is greater, in which case the death benefit is equal to that
larger amount. Death Benefit Option B provides for a variable benefit equal to
the current Specified Amount of the Policy plus the Policy's accumulation value
on the date of the Insured's death, or if greater, the accumulation value of the
Policy on the date of the Insured's death multiplied by the applicable
percentage set forth in the Policy. (See Death Benefit Options, page 16)
If the Extended Maturity Rider is in effect, the Death Benefit will be the
Accumulation Value.
Optional insurance benefits offered under the Policy include: Guaranteed Death
Benefit provision; Extended Guaranteed Death Benefit rider; Accelerated Living
Benefits Rider for Terminal Illness; Accidental Death Benefit rider; Covered
Insured rider; Disability Benefit rider; Guaranteed Insurability rider; Payor
Disability rider; and Children's Protection rider. (See Additional Insurance
Benefits, page 29). These riders are not all available in every state. The cost,
if any, of these additional insurance benefits will be deducted from the
Policy's accumulation value as a part of the monthly deduction. The Guaranteed
Death Benefit and Extended Guaranteed Death Benefit provisions are provided
without cost but require the described premium payments.
BENEFITS AT MATURITY.
On the maturity date of the Policy, if the Insured is still living, the
Policyowner will be paid the accumulation value of the Policy less any
outstanding policy debt and accrued interest charges.
ACCUMULATION VALUE BENEFITS
The Policy's accumulation value in the Account will reflect the amount and
frequency of premium payments, the investment experience of the chosen
Subaccounts and the Fixed Account, policy loans, any partial withdrawals, and
any charges imposed in connection with the Policy. The entire investment risk of
the Account is borne by the Policyowner. AVLIC does not guarantee a minimum
accumulation value in the Account. (See Accumulation Value, page 19). It does
guarantee the Fixed Account.
The Policyowner may surrender the Policy at any time and receive its surrender
value. Subject to certain limitations, the Policyowner may also make a partial
withdrawal from the Policy and obtain a portion of the surrender value at any
time after the first policy year and prior to the maturity date. Partial
withdrawals will reduce both the accumulation value and the death benefit
payable under the Policy. (See Partial Withdrawals, page 21). A charge will be
deducted from the amount paid upon partial withdrawal. (See Partial Withdrawal
Charge, page 28).
POLICY LOANS. Policy loans, secured by the accumulation value of the Policy, are
available. After the first policy anniversary, the Policyowner may obtain a loan
at "regular" loan interest rates, which shall not exceed 8% annually.
After the later of age 55 or the tenth policy anniversary, the Policyowner can
borrow against a limited amount of the accumulation value of the Policy at a
"reduced" interest rate, which reduced rate is currently 4.5% and shall not
exceed 5% annually ("reduced rate loan"). While the loan is outstanding, the
Policyowner earns 4.5% interest on the accumulation values securing the loans.
(For details concerning policy loan provisions, see page 20).
Policy loans may have tax consequences and will affect earnings and policy
accumulation values. Should the policy lapse while loans are outstanding the
portion of the loans attributable to earnings will become taxable distributions.
Should the Policy become a modified endowment contract, loans (including loans
to pay loan interest) will be taxable to the extent of any gain under the
Policy. Further, a 10% penalty tax also applies to the taxable portion of any
distribution prior to the Insured's age 59 1/2. (See Federal Tax Matters, page
32).
<PAGE>
CHARGES
SALES AND PREMIUM TAX CHARGES Generally, a sales charge of 5% of each premium
will be deducted to compensate AVLIC for its expenses associated with
distributing the Policy and a premium tax charge of 2.5% of each premium will be
deducted from each premium before placing any amount in a Subaccount or the
Fixed Account. (See Deductions From Premium Payments, page 25).
MONTHLY CHARGES AGAINST THE ACCUMULATION VALUE.
a) A monthly maintenance charge of up to $9.00 [currently AVLIC is charging
$9.00 per month ($108.00 per year) during the first policy year and $4.50 per
month ($54.00 per year) thereafter], to compensate AVLIC for the continuing
administrative costs of the Policy, plus
b) A monthly charge for the cost of insurance including the cost for any riders.
(See Charges from Accumulation Value, page 26).
SURRENDER CHARGE. If a Policy is surrendered prior to the 15th anniversary date,
AVLIC will assess a surrender charge consisting of the Contingent Deferred Sales
Charge ("DSC") and the Contingent Deferred Administrative Charge ("DAC"). After
the fifth Policy Year, the surrender charge decreases each year until no
surrender charge is applied after the fifteenth Policy Year. (See Surrender
Charge, page 27).
The DSC is equal to 25% of the premiums received in the first two Policy Years
up to the Guaranteed Death Benefit Premium plus 5% of the premiums received in
those years in excess of the Guaranteed Death Benefit Premium. In no event shall
the surrender charge exceed $12.00 for every $1000.00 of insurance obtained
under the Policy.
The DAC is an amount per $1,000 of insurance that varies by issue age and sex.
(See Contingent Deferred Administrative Charges, page 27).
TRANSFER CHARGE. Fifteen transfers of accumulation value per policy year will be
permitted free of charge. A $10 administrative charge may be assessed for each
additional transfer. The transfer charge will be deducted from the amount
transferred. (See Transfer Charge, page 27).
PARTIAL WITHDRAWAL CHARGE. A maximum charge, not to exceed the lesser of $50 or
2% of the amount withdrawn may be deducted for each partial withdrawal.
(Currently, the charge is the lesser of $25 or 2%). The charge will be deducted
from the amount paid as a result of the withdrawal and will compensate AVLIC for
the administrative costs of partial withdrawals. No surrender charge is assessed
on a partial withdrawal and a partial withdrawal charge is not assessed when a
Policy is surrendered. (See Partial Withdrawal Charge, page 28).
DAILY CHARGES AGAINST THE ACCOUNT. A daily charge at an annual rate not to
exceed .90% (currently .90% for policy years 1-20 and .65% thereafter) of the
average daily net assets of each Subaccount, but not the Fixed Account. (See
Daily Charges Against the Account, page 28).
No charges are currently made against the Account for federal, state or local
taxes (which are charged in addition to state premium taxes). If there is a
material change from the expected treatment of AVLIC under federal, state or
local tax laws, AVLIC may determine to make deductions from the Account to pay
those taxes. (See Taxes, page 28).
In addition, because the Account purchases shares of the Funds, the value of the
units in each Subaccount will reflect the net asset value of shares of the
various Funds held therein, and therefore, the investment advisory fee and other
expenses incurred by the Funds. (See The Funds, page 10).
TAX TREATMENT OF THE POLICY
Like death benefits payable under conventional life insurance policies, life
insurance proceeds payable under the Policy are excludable from the taxable
income of the Beneficiary. Should the Policy be deemed a modified endowment
contract (see Federal Tax Matters-Tax Status of the Policy, page 32), partial or
full surrenders, assignments, policy pledges, and loans under the Policy will be
taxable to the Policyowner to the extent of any gain under the Policy.
Generally, a 10% penalty tax also applies to the taxable portion of any
distribution prior to the Insured reaching age 59 1/2. (For further detail
regarding taxation, see Federal Tax Matters, page 32).
REFUND PRIVILEGE
The Policyowner is granted a period of time (a "free look period") to examine a
Policy and return it for a refund. The Policyowner may cancel the Policy within
45 days after Part I of the application is signed, within 10 days after the
Policyowner receives the Policy, or 10 days after AVLIC delivers a notice
concerning cancellation, whichever is later. The amount of the refund is the
greater of the premiums paid or the premium paid adjusted by investment gains
and losses. (See Refund Privilege, page 22).
<PAGE>
EXCHANGE PRIVILEGE
During the first 24 months after the policy date of the Policy, subject to
certain restrictions, the Policyowner may exchange the Policy for a flexible
premium adjustable life insurance policy issued and made available for exchange
by AVLIC or Ameritas Life. The policy provisions and applicable charges for the
new Policy will be based on the same policy date and issue age as under the
Policy. (See Exchange Privilege, page 22).
EXCHANGE OFFER
On June 13, 1990, the Securities and Exchange Commission approved a request from
AVLIC and the Account that they be permitted to offer to exchange the Policy for
a life insurance policy previously issued by AVLIC. That exchange offer
continues as of the date of this Prospectus. (For additional details concerning
the exchange offer, see Exchange Offer, page 31).
AVLIC AND THE ACCOUNT
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Ameritas Variable Life Insurance Company ("AVLIC") is a stock life insurance
company organized in the State of Nebraska. AVLIC was incorporated on June 22,
1983 and commenced business December 29, 1983. AVLIC is currently licensed to
sell life insurance in 46 states, and the District of Columbia. AVLIC's
financial statements may be found at page 48.
AVLIC is a wholly-owned subsidiary of Ameritas Life. Ameritas Life is a mutual
life insurance company domiciled in Nebraska since 1887. The Home Offices of
both AVLIC and Ameritas Life are at One Ameritas Way, 5900 "0" Street, Lincoln,
Nebraska 68501. Ameritas Life and subsidiaries had total assets at December 31,
1994 of over $2.0 billion. AVLIC, as a wholly-owned subsidiary of Ameritas Life,
has a rating of A+ (Superior) from A.M. Best Company, a firm that analyzes
insurance carriers. Ameritas Life enjoys a long standing A+ (Superior) rating
from A.M. Best. Ameritas Life also has been rated A ("Excellent") by Weiss
Research, Inc., and has an AA ("Excellent") rating from Standard & Poor's for
claims paying ability. Ameritas Life guarantees the obligations of AVLIC. This
guarantee will continue until AVLIC is recognized by a National Rating Agency as
having a financial rating equal to or greater than Ameritas Life, or until AVLIC
is acquired by another insurance company who has a financial rating by a
National Rating Agency equal to or greater than Ameritas Life and who agrees to
assume the guarantee.
AVLIC voted to approve a Merger Agreement with Ameritas Life ("Agreement") at
its December 5, 1994, board meeting. The merger was scheduled to occur on May 1,
1995, or such later date as the required regulatory approvals could be obtained.
On March 31, 1995, the company determined to postpone the merger to evaluate its
options in light of the present regulatory climate. The effective date of the
merger is currently postponed until May 1, 1996.
Ameritas Investment Corp., the principal underwriter of the policies may publish
in advertisements and reports to Policyowners, the ratings and other information
assigned to Ameritas Life and AVLIC by one or more independent rating services
and charts and other information concerning dollar cost averaging, tax-deference
and other investment methods. The purpose of the ratings are to reflect the
financial strength and/or claims-paying ability of AVLIC. The ratings do not
relate to the performance of the separate account.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
Ameritas Variable Life Insurance Company Separate Account V ("the Account") was
established under Nebraska law on August 28, 1985. The assets of the Account are
held by AVLIC segregated from all of AVLIC's other assets, are not chargeable
with liabilities arising out of any other business which AVLIC may conduct, and
income, gains, or losses of AVLIC. Although the assets maintained in the Account
will not be charged with any liabilities arising out of AVLIC's other business,
all obligations arising under the Policies are liabilities of AVLIC who will
maintain assets in the Account of a total market value at least equal to the
reserve and other contract liabilities of the Account. The Account will at all
times contain assets equal to or greater than account values invested in the
separate account. Nevertheless, to the extent assets in the Account exceed
AVLIC's liabilities in the Account, the assets are available to cover the
liabilities of AVLIC's General Account. AVLIC may, from time to time, withdraw
assets available to cover the General Account obligations.
The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any SEC
supervision of the management or investment policies or practices of the
Account. For state law purposes, the Account is treated as a Division of AVLIC.
<PAGE>
THE FUNDS
There are currently twenty Subaccounts within the Account available to
Policyowners for new allocations. Each Subaccount of the Account will invest
only in the shares of a corresponding portfolio of the Fidelity Fund, the
Fidelity Fund II, the Alger American Fund, the MFS Fund or the Dreyfus Index
Fund (collectively the "Funds"). Each fund is registered with the SEC under the
1940 Act as an open-end diversified management investment company.
The assets of each portfolio of the Funds are held separate from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this Prospectus. One or
more of the Portfolios may employ investment techniques that involve certain
risks, including investing in non-investment grade, high risk debt securities,
entering into repurchase agreements and reverse repurchase agreements, lending
portfolio securities, engaging in "short sales against the box," investing in
instruments issued by foreign banks, entering into firm commitment agreements
and investing in warrants and restricted securities. The Alger American
Leveraged AllCap Portfolio may employ "leverage" by borrowing money to increase
its portfolio of securities, and may purchase or sell options and enter into
futures contracts on securities indexes to increase gain or to hedge the value
of the Portfolio. The High Income, Equity-Income, Asset Manager, and Asset
Manager: Growth Portfolios may invest in non-investment grade, high risk debt
securities. These Prospectuses should be read carefully together with this
Prospectus and retained.
Each Policyowner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Funds' various portfolios.The High Income,
Equity-Income and Asset Manager Portfolios of the Fidelity Funds may invest in
non-investment grade, high risk debt securities. These Prospectuses should be
read carefully together with this Prospectus and retained.
Each Policyowner should periodically consider the allocation among the
Subaccounts in light of current market conditions and the investment risks
attendant to investing in the Funds' various portfolios.
The Account will purchase and redeem shares from the Funds at net asset value.
Shares will be redeemed to the extent necessary for AVLIC to collect charges,
pay the surrender values, partial withdrawals, and make policy loans or to
transfer assets from one Subaccount to another, or to the Fixed Account, as
requested by Policyowners. Any dividend or capital gain distribution received
from a portfolio of the Funds will be reinvested immediately at net asset value
in shares of that portfolio and retained as assets of the corresponding
Subaccount.
Since the Fidelity Fund, The Fidelity Fund II, the Alger American Fund, the MFS
Fund and the Dreyfus Index Fund are each designed to provide investment vehicles
for variable annuity and variable life insurance contracts of various insurance
companies and will be sold to separate accounts of other insurance companies as
investment vehicles for various types of variable life insurance policies and
variable annuity contracts, there is a possibility that a material conflict may
arise between the interests of the Account and one or more of the separate
accounts of another participating insurance company. In the event of a material
conflict, the affected insurance companies agree to take any necessary steps,
including removing its separate accounts from the Funds, to resolve the matter.
The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
FIDELITY FUNDS
- --------------
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ --------------------------- -------------------------
Money Market1 High-quality U.S. dollar Seeks to obtain as high
denominated money market a level of current income
instruments of domestic and as is consistent with
foreign Issuers.(Commercial preserving capital and
Paper, Certificate of providing liquidity.
Deposit).
High Income1 At least 65% in income Seeks to obtain a high
producing debt securities level of current income
and preferred stocks, up to by investing in high
20% in common stocks and income producing lower-
other equity securities, rated debt securities
and up to 15% in securities (sometimes called "junk
subject to restriction on bonds"), preferred stocks
resale. including convertible
securities and restricted
securities.
Equity-Income1 At least 65% in income Seeks reasonable income
producing common or prefer- by investing primarily in
red stock. The remainder income producing equity
will normally be invested securities. The goal is
in convertible and non- to achieve a yield in
convertible debt obligations. excess of the composite
yield of the Standard &
Poor's 500 Composite
Stock Price Index.
<PAGE>
Growth1 Portfolio purchases normally Seeks to achieve capital
will be common stocks of appreciation.
both well-known established
companies and smaller, less-
known companies, although
the investments are not
restricted to any one type
of security. Dividend
income will only be consid-
ered if it might have an
effect on stock values.
Overseas1 At least 65% invested in Seeks long-term growth
securities of issuers of capital primarily
outside of North America. through investments in
Most issuers will be foreign securities.
located in developed coun-
tries in the Americas, the
Far East and Pacific Basin,
Scandinavia and Western
Europe. While the primary
purchases will be common
stocks, all types of
securities may be purchased.
Asset Manager2 Equities (Growth, High Div- Seeks to obtain high
idends, Utility), bonds total return with
(Government, Agency, Mort- reduced risk over the
gage backed, Convertible long term by allocating
and Zero Coupon) and money its assets among domes-
market instruments. tic and foreign stocks,
bonds, and short-term
fixed-income securities.
Investment A portfolio of investment Seeks as high a level of
Grade Bond2 grade fixed-income secu- current income as is con-
rities with an average mat- sistent with the preser-
urity of ten years or less. vation of capital.
Index 500 2 At least 80% (65% if fund Seeks investment results
assets are below $20 that correspond to the
million) in equity secu- total return of common
rities of companies that stocks publicly traded in
compose the Standard & the United States, as
Poor's 500. Also purchases respresented by the
short-term debt securities Standard & Poor's 500.
for cash management pur-
poses and uses various in-
vestment techniques, such
as futures contracts, to
adjust its exposure to the
Standard & Poor's 500.
Contrafund2 Portfolio purchases will Seeks long-term capital
normally be common stock or appreciation.
securities convertible into
common stock of companies
believed to be undervalued
due to an overly pessimis-
tic appraisal by the public.
Asset Manager: Focuses on stocks for high Seeks to maximize total
Growth2 potential returns but also return by allocating its
purchases bonds and short- assets among stocks,
term instruments. bonds, short-term instru-
ments and other invest-
ments.
ALGER AMERICAN
- --------------
FUNDS
- -----
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ --------------------------- -------------------------
Income and The Portfolio attempts to Seeks to provide a high
Growth invest 100% of its assets, level of dividend income
except during temporary to the extent consistent
defensive periods, and it with prudent investment
is a fundamental policy of management. Capital ap-
the Portfolio to invest at preciation is a secondary
least 65% of its total objective of the Port-
assets in dividend paying folio.
equity securities that are
listed on a national ex-
change or in securities
convertible into dividend
paying equity securities.
<PAGE>
Balanced The Portfolio will invest Seeks current income and
its assets in common stocks long-term capital apprec-
and investment grade pre- iation by investing in
ferred stock and debt sec- common stocks and fixed
urities as well as sec- income securities, with
urities convertible into emphasis on income pro-
common stocks. Except dur- ducing securities which
ing defensive periods, it appear to have some
is anticipated that 25% of potential for capital
the portfolio assets will appreciation.
be invested in fixed income
senior securities.
Small-Cap The Portfolio will invest Seeks long-term capital
its assets in equity appreciation.
securities of companies
whose securities are traded
on domestic stock exchanges
or in the over-the-counter
market. These companies may
still be in the develop-
mental stage. The Portfolio
will invest at least 65% of
its total assets in the
securities of companies who
have total market capital-
ization of less than $1
billion. The Portfolio may
also purchase restricted
securities, lend its sec-
urities or sell securities
short. Investing in small,
newer issues generally
involves greater risk than
investing in larger, more
established issues. Accord-
ingly, an investment in the
Portfolio may not be appro-
priate for all investors.
MidCap The Portfolio will invest Seeks long-term capital
Growth its assets in equity sec- appreciation.
urities of companies whose
securities are traded on
domestic exchanges or in
the over-the-counter market.
These companies may still
be in the developmental
stage, they may also be
older companies that appear
to be entering a new stage
of growth. The Portfolio
will invest at least 85% of
its net assets in equity
securities and at least 65%
of its total assets in
securities of companies who
have total market capital-
ization of between $750
million and $3.5 billion.
Growth The Portfolio will invest Seeks long-term capital
its assets in companies appreciation.
whose securities are traded
on domestic stock exchange
or in the over-the-counter
market. The Portfolio will
invest at least 85% of its
net assets in equity sec-
urities and at least 65%
of its total assets in the
securities of companies
that have a total market
capitalization of $1
billion or greater.
Leveraged Invests at least 85% of net Seeks long-term capital
All Cap assets in equity securities appreciation.
of companies of any size,
except during defensive
periods. May purchase put
and call options and sell
covered options to increase
gain and hedge. May enter
into futures contracts on
securities indexes and pur-
chase and sell options on
these futures contracts.
May also borrow money
for purchase of additional
securities.
.
MFS FUNDS
- ---------
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ ---------------------------- -------------------------
Emerging Growth At least 80% normally will Seeks to provide long-
Series be invested in common term capital growth. Div-
stocks of small and medium idend and interest income
sized emerging growth com- is incidental.
panies. From 10% to 25% may
be invested in foreign
securities not including
ADR's.
<PAGE>
Utilities Series At least 65%, but up to Seeks capital growth and
100%, normally will be in- current income (above
vested in equity and debt that available from a
securities of both domestic portfolio invested en-
and foreign companies in tirely in equity secur-
the utilities industry. ities).
Normally, not more than 35%
will be invested in equity
and debt securities of
issuers in other industries,
including foreign securi-
ties, emerging market sec-
urities and non-dollar den-
ominated securities.
World Governments At least 80% normally will Seeks capital preser-
Series be invested in debt secur- vation and growth with
ities. May invest up to moderate current income.
100% of assets in foreign
securities, including
emerging markets secur-
ities.
DREYFUS FUND
- ------------
PORTFOLIO INVESTMENT POLICY OBJECTIVES
- ------------------ ---------------------------- -------------------------
Dreyfus The Fund attempts to dupli- Seeks to provide invest-
Index Fund cate the investment results ment results that cor-
of the Standard & Poor's 500 respond to the price and
Composite Stock Price Index yield performance of
(the "Index"). The Fund publicly traded common
attempts to be fully invest- stocks in the aggregate,
ed at all times and, in any as represented by the
event, at least 80% of the Standard & Poor's 500
Fund's net assets will be Composite Stock Index.
invested, in stocks that
comprise the Index.
1 Variable Insurance Products Fund Portfolio.
2 Variable Insurance Products Fund II Portfolio.
FUND MANAGEMENT FEES
FIDELITY FUND EXPENSES
FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR) is the Manager for the Fidelity
Funds. Each portfolio pays FMR a monthly fee for managing its investment and
business affairs. FMR has voluntarily agreed to temporarily limit the total
expenses (excluding interest, taxes, brokerage commissions and extraordinary
expenses) to an annual rate as follows: the Equity-Income, Growth and Overseas
Portfolios, 1.50%, respectively; the Asset Manager Portfolio, 1.25%; the High
Income, Contrafund and Asset Manager: Growth Portfolios, 1.00%, respectively;
and the Investment Grade Bond Portfolio, .80%; of the portfolio's average net
assets. FMR has voluntarily agreed to temporarily limit Index 500 Portfolio's
total operating expenses to 0.28%. If a portfolio's expenses exceed that amount,
FMR will waive all or a portion of its fees and reimburse the portfolio for its
other expenses to the extent necessary to reduce expenses to the applicable
limit. As long as this expense limitation continues for a portfolio, if a
reimbursement occurs, it has the effect of lowering the portfolio's expense
ratio and increasing its total return.
THE MONEY MARKET PORTFOLIO'S fee is calculated as follows: (a) the sum of a
group fee rate and an individual fund fee rate of .03%, and (b) the addition of
an income component of 6% of the Portfolio's gross income in excess of 5% annual
yield. The result is multiplied by the Portfolio's average net assets. The group
fee rate, which is based on the average net assets of all of the mutual funds
advised by FMR, cannot rise above .37%, and it drops as total assets under
management increase. The income component cannot rise above .24%.
THE HIGH INCOME AND INVESTMENT GRADE BOND PORTFOLIOS' FEES HAVE TWO
COMPONENTS:
1. A group fee rate based on the monthly average net assets of all the mutual
funds advised by FMR. On an annual basis this rate cannot rise above .37%,
and it drops as the group assets rise.
2. An individual portfolio fee rate of their average net assets of .45% for the
High Income Portfolio, and .30% for the Investment Grade Bond Portfolio.
<PAGE>
THE EQUITY-INCOME, GROWTH, OVERSEAS, ASSET MANAGER, CONTRAFUND AND ASSET
MANAGER: GROWTH PORTFOLIOS' FEES HAVE TWO COMPONENTS:
1. The group fee rate is based on the monthly average net assets of all the
mutual funds advised by FMR. On an annual basis, this rate cannot rise above
.52%, and drops as the group assets rise.
2. An individual portfolio fee rate of their average net assets of .20% for the
Equity-Income Portfolio, .30% for the Growth Portfolio, .45% for the
Overseas Portfolio, .40% for the Asset Manager Portfolio, .30% for the
Contrafund Portfolio; and .40% for the Asset Manager: Growth Portfolio.
One-twelfth of each portfolio's annual management fee rate is applied to net
assets averaged over the most recent month, resulting in a dollar amount which
is the management fee for the portfolio for that month.
Each portfolio's total operating expenses will include fees for management, and
other expenses, such as custodial, legal, and other miscellaneous fees. The
total expenses for the period ending December 31, 1994 of each fund including
management fees and after any applicable expense limitations were: Money Market
.27%; High Income, .71%; Equity-Income, .58%*; Growth, .69%*; Overseas, .92%;
Investment Grade Bond, .67%; and Asset Manager, .80%*, Index 500, .28%**.
* A portion of the brokerage commissions the fund paid was used to reduce its
expenses. Without this reduction total operating expenses would have been for
Equity-Income - .60%; Growth - .70% and for Asset Manager - .81%.
** Prior to applying expense reimbursements by FMR, total expenses for the year
ending December 31, 1994 were .81%.
Asset Manager: Growth and Contrafund Portfolios did not commence operations
until January 3, 1995. Estimated expenses for the year ending December 31, 1995
for Asset Manager: Growth and Contrafund Portfolios are .93% and .89%,
respectively.
ALGER AMERICAN FUNDS EXPENSES
Fred Alger Management Inc. ("Alger Management") serves as the Alger American
Fund investment manager. Alger Management stresses proprietary research by its
large research team that follows approximately 1400 companies. Each portfolio
pays Alger Management a separate fee computed daily and paid monthly at annual
rates based upon a percentage of the value of the relevant portfolio's daily net
assets, as follows: Alger American Income and Growth, .625%; Alger American
Small-Cap, .85%; Alger American Growth, .75%; Alger American Balanced, .75%; and
Alger American MidCap, .80%.
Each portfolio will bear its own expenses. Alger Management has agreed to
reimburse the portfolios to the extent that the annual operating expenses
(excluding interest, taxes, fees for brokerage services and extraordinary
expenses) exceed respectively; Alger American Income and Growth, and Alger
American Balanced, 1.25%; Alger American Small-Cap, Alger American MidCap, Alger
American Leveraged All Cap, and the Alger American Growth, 1.50%. As long as the
expense limitations continue for a portfolio, if a reimbursement occurs, it has
the effect of lowering the portfolio's expense ratio and increasing its total
return.
The total expenses for the period ended December 31, 1994 of each fund,
including management fees were: Alger American Income-Growth, .75%; Alger
American Balanced, 1.08%; Alger American Small-Cap, .96%; Alger American Growth,
.86%; and Alger American MidCap, .97%.
Alger American Leverged AllCap's inception date was January 25, 1995. Estimated
expenses for this portfolio for the year ending December 31, 1995, are 1.79%.
MFS FUND EXPENSES
Massachusetts Financial Services Company ("MFS Co."), a Delaware Corporation, is
the investment adviser to each series of the MFS Variable Insurance Trust.
EXPENSE SUMMARY
Annual Operating Expenses of each Series (as percentage of average net assets):
Management Fee . . . . . . . . . . . . . . . . . . . . . . . . .75%
Other Expenses (after fee reduction)* . . . . . . . . . . . . . .25%
Total Operating Expenses (after fee reduction)*. . . . . . . . 1.00%
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS):
MFS Co. has agreed to bear, subject to reimbursement, expenses for each of the
Emerging Growth Series and the Utilities Series such that each Series' aggregate
operating expenses shall not exceed, on an annualized basis, 1.00% of the
average daily net assets of the Series from November 2, 1994 through December
31, 1996, provided however, that this obligation may be terminated or revised at
any time. Absent this expense arrangement, "Other Expenses" and "Total Operating
Expenses" would be 1.00% and 1.75%, respectively, for the Emerging Growth Series
and 0.93% and 1.68%, respectively, for the Utilities Series, based upon
estimated expenses for the series' current fiscal year.
MFS Co. has agreed to bear, subject to reimbursement, expenses of the World
Governments Series such that the Series' aggregate operating expenses do not
exceed 1.00%, on an annualized basis, of its average daily net assets. Absent
this expense arrangement, "Other Expenses" and "Total Operating Expenses" for
the World Governments Series would be 0.63% and 1.38%, respectively.
WELLS FARGO NIKKO INVESTMENT ADVISORS (WFNIA) serves as the Dreyfus Index Fund
Manager. The Dreyfus Index fund has agreed to pay the manager a monthly fee at
an annual rate of .30% of the value of the Fund's average daily net assets. The
total expenses were reduced pursuant to an undertaking by WFNIA and Dreyfus
Corporation that they would reimburse the fund for those total expenses
exceeding .40%. Without reimbursement the total expenses for the period ending
December 31, 1994, were .56%.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, and, if necessary, after
notice to and prior approval from the SEC and/or state insurance authorities to
make additions to, deletions from, or substitutions for the shares that are held
in the Account or that the Account may purchase. The Account may, to the extent
permitted by law, purchase other securities for other contracts or permit a
conversion between contracts upon request by the Policyowners.
AVLIC may, in its sole discretion, also establish additional Subaccounts of the
Account, each of which would invest in shares corresponding to a new portfolio
of the Funds or in shares of another investment company having a specified
investment objective. AVLIC may, in its sole discretion, establish new
Subaccounts or eliminate one or more Subaccounts if marketing needs, tax
considerations or investment conditions warrant. Any new Subaccounts may be made
available to existing Policyowners on a basis to be determined by AVLIC.
If any of these substitutions or changes are made, AVLIC may by appropriate
endorsement change the Policy to reflect the substitution or change. If AVLIC
deems it to be in the best interest of Policyowners, and subject to any
approvals that may be required under applicable law, the Account may be operated
as a management company under the 1940 Act, it may be deregistered under that
Act if registration is no longer required, or it may be combined with other
AVLIC separate accounts. To the extent permitted by applicable law, AVLIC may
also transfer the assets of the Account associated with the Policies to another
separate account. In addition, AVLIC may, when permitted by law, restrict or
eliminate any voting rights of Policyowners or other persons who have voting
rights as to the Account.
The Policyowner will be notified of any material change in the investment policy
of any portfolio in which the Policyowner has an interest.
FIXED ACCOUNT
Policyowners may elect to allocate all or a portion of their premium payments to
the Fixed Account, and they may also transfer monies between the Account and the
Fixed Account. (See Transfers, page 22).
Payments allocated to the Fixed Account and transferred from the Account to the
Fixed Account are placed in the General Account of AVLIC, which supports
insurance and annuity obligations. The General Account includes all of AVLIC's
assets, except those assets segregated in the separate accounts. AVLIC has the
sole discretion to invest the assets of the General Account, subject to
applicable law. AVLIC bears an investment risk for all amounts allocated or
transferred to the Fixed Account and interest credited thereto, less any
deduction for charges and expenses, whereas the Policyowner bears the investment
risk that the declared rate described below, will fall to a lower rate after the
expiration of a declared rate period. Because of exemptive and exclusionary
provisions, interests in the General Account have not been registered under the
Securities Act of 1933 (the "1933 Act") nor is the General Account registered as
an investment company under "the
<PAGE>
Investment Company Act of 1940". Accordingly, neither the General Account nor
any interest therein is generally subject to the provisions of the 1933 or 1940
Act. We understand that the staff of the SEC has not reviewed the disclosures in
this Prospectus relating to the Fixed Account portion of the Policy; however,
disclosures regarding the Fixed Account portion of the Policy may be subject to
generally applicable provisions of the Federal Securities Laws regarding the
accuracy and completeness of statements made in prospectuses.
AVLIC guarantees that it will credit interest at an effective annual rate of at
least 4.5%. AVLIC may, at its discretion, declare higher interest rate(s) for
amounts allocated or transferred to the General Account ("Declared Rate(s)").
Each month AVLIC will establish the declared rate from the monies transferred or
allocated to the Fixed Account that month. The Policyowner will earn interest on
the amount transferred or allocated at the rate declared for a 12-month period
effective the month of transfer or allocation. After the end of the 12-month
period, the monies will earn interest at the rate established by AVLIC for each
month.
POLICY BENEFITS
PURPOSES OF THE POLICY
The Policy is designed to provide the Policyowner with both lifetime insurance
protection to the policy anniversary nearest the Insured's 95th birthday and
flexibility in connection with the amount and frequency of premium payments and
with the level of life insurance proceeds payable under the Policy.
The Policyowner is not required to pay scheduled premiums to keep a Policy in
force, but may, subject to certain limitations, vary the frequency and amount of
premium payments. Moreover, the Policy allows a Policyowner to adjust the level
of death benefits payable under the Policy without having to purchase a new
Policy by increasing (with evidence of insurability) or decreasing the Specified
Amount. An increase in the Specified Amount will increase the Guaranteed Death
Benefit and the Extended Guaranteed Death Benefit premium required. Thus, as
insurance needs or financial conditions change, the Policyowner has the
flexibility to adjust life insurance benefits and vary premium payments.
The death benefit may, and the accumulation value will, vary with the investment
experience of the chosen Subaccounts of the Account. Thus the Policyowner
benefits from any appreciation in value of the underlying assets, but bears the
investment risk of any depreciation in value. As a result, whether or not a
Policy continues in force may depend in part upon the investment experience of
the chosen Subaccounts. The failure to pay a planned periodic premium will not
necessarily cause the Policy to lapse, but the Policy could lapse even if
planned periodic premiums have been paid, depending upon the investment
experience of the Account. AVLIC agrees to keep the Policy in force during the
first three years and provide a Guaranteed Death Benefit during that period so
long as the cumulative pro rata monthly minimum Guaranteed Death Benefit premium
is paid even though, in certain instances, the minimum payment allowed by
contract will not, after the payment of monthly insurance and administrative
charges, generate positive surrender values during the first several policy
months. AVLIC also offers an Extended Guaranteed Death Benefit rider which
extends this benefit to between 10 and 30 years depending upon the age of the
insured at the date of issue.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, AVLIC will, upon satisfactory proof of
the Insured's death, pay the death benefit proceeds of a Policy in accordance
with the death benefit option in effect at the time of the Insured's death. The
amount of the death benefits payable will be determined at the end of the
valuation period during which the Insured's death occurred. The death benefit
proceeds may be paid in a lump sum or under one or more of the payment options
set forth in the Policy. (See Payment Options, page 20).
Death benefit proceeds will be paid to the surviving beneficiary or
beneficiaries specified in the application or as subsequently changed. If no
beneficiary is chosen, the proceeds will be paid to the Policyowners estate.
DEATH BENEFIT OPTIONS
The Policy provides two death benefit options, unless the Extended Maturity
Rider is in effect, and the Policyowner selects one of the options in the
application. The death benefit under either option will never be less than the
current Specified Amount of the Policy as long as the Policy remains in force
(see Policy Lapse and Reinstatement, page 25).
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The minimum initial Specified Amount is currently $50,000. Defined differences,
assisted by graphic illustrations are as follows:
OPTION A.
Omitted graph illustrates payout under Death Benefit Option A, specifically by
showing the relationships over time, between the Specified Amount and the
Accumulation Value.
Death Benefit Option A. Pays a Face Amount of death benefit equal to the
Specified Amount or the accumulation value multiplied by the Death Benefit Ratio
(as illustrated at Point A) whichever is greater.
Under Option A, the death benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of accumulation value on the date of
death. The applicable percentage is 250% for Insureds with an attained age 40 or
younger on the policy anniversary prior to the date of death. For Insureds with
an attained age over 40 on that policy anniversary, the percentage declines. For
example, the percentage at age 40 is 250%, at age 50 is 185%, at age 60 is 130%,
at age 70 is 115%, at age 80 is 105%, and at age 90 is 100%. Accordingly, under
Option A the death benefit will remain level at the Specified Amount unless the
applicable percentage of accumulation value exceeds the current Specified
Amount, in which case the amount of the death benefit will vary as the
accumulation value varies. Policyowners who prefer to have favorable investment
performance, if any, reflected in higher accumulation value, rather than
increased insurance coverage, generally should select Option A.
OPTION B.
Omitted graph illustrates payout under Death Benefit Option B, specifically by
showing the relationships over time, between the Specified Amount and the
Accumulation Value.
Death Benefit Option B. Pays a Face Amount of death benefit equal to the
Specified Amount plus the Policy's accumulation value or the accumulation value
multiplied by the Death Benefit Ratio, whichever is greater.
Under Option B, the death benefit is equal to the current Specified Amount plus
the accumulation value of the Policy or, if greater, the applicable percentage
of the accumulation value on the date of death. The applicable percentage is the
same as under Option A: 250% for Insureds with an attained age 40 or younger on
the policy anniversary prior to the date of death, and for Insureds with an
attained age over 40 on that policy anniversary the percentage declines.
Accordingly, under Option B the amount of the death benefit will always vary as
the accumulation value varies (but will never be less than the Specified
Amount). Policyowners who prefer to have favorable investment performance, if
any, reflected in increased insurance coverage, rather than higher accumulation
values, generally should select Option B.
Extended Maturity
If the Extended Maturity Rider is in effect, the Death Benefit will be the
Accumulation Value.
<PAGE>
CHANGE IN DEATH BENEFIT OPTION. The death benefit option may be changed once per
year after the first policy year by sending AVLIC a written request. The
effective date of such a change will be the monthly activity date on or
following the date the change is approved by AVLIC. A change may have Federal
Tax consequences.
If the death benefit option is changed from Option A to Option B, the death
benefit after the change will equal the Specified Amount before the change plus
the accumulation value on the effective date of the change and will require
evidence of insurability before the change is made. If the death benefit option
is changed from Option B to Option A, the Specified Amount under Option A after
the change will equal the death benefit under Option B on the effective date of
change.
No charges will be imposed upon a change in death benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's accumulation value. However, a change in the death benefit option may
affect the monthly cost of insurance charge since this charge varies with the
net amount at risk, which is the amount by which the death benefit that would be
payable on a monthly activity date exceeds the accumulation value on that date.
Changing from Option B to Option A will generally decrease in the future the net
amount at risk, and therefore the cost of insurance charges. Changing from
Option A to Option B generally will not change a net amount at risk. Such a
change, however, will result in an increase in the cost of insurance charges
over time, since the cost of insurance rates increase with the Insured's age.
If, however, the change was from Option A to Option B, the cost of insurance
rate may be different for the increased death benefit. (See Charges and
Deductions, page 25 and Federal Tax Matters, page 32).
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
policy year, a Policyowner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount may affect the cost of insurance rate and
the net amount at risk, both of which may affect a Policyowner's cost of
insurance charge and have Federal Tax consequences. (See Charges and Deductions,
page 25 and Federal Tax Matters, page 32).
Any increase or decrease in the Specified Amount will become effective on the
monthly activity date on or following the date a written request is approved by
AVLIC. The Specified Amount of a Policy may be changed only once per year and
AVLIC may limit the size of a change in a policy year. The Specified Amount
remaining in force after any requested decrease may not be less than $35,000. In
addition, if following the decrease in Specified Amount, the Policy would not
comply with the maximum premium limitations required by Federal Tax Law (See
Premiums, page 23), the decrease may be limited or accumulation value may be
returned to the Policyowner at the Policyowner's election, to the extent
necessary to meet these requirements.
Increases in the Specified Amount will be allowed after the first policy year.
For an increase in the Specified Amount, a written supplemental application must
be submitted. AVLIC may also require additional evidence of insurability.
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to effect the
requested increase.
(See Premiums upon Increases in Specified Amount, page 24). The minimum amount
of any increase is $25,000, and an increase cannot be made if the Insured's
attained age is over 75. An increase in the Specified Amount will result in
certain increased charges, which will be deducted from the accumulation value of
the Policy on each monthly activity date. An increase in the Specified Amount
may also increase surrender charges. An increase in the Specified Amount during
the time the Guaranteed and Extended Guaranteed Death Benefit provision or rider
are in effect will increase the respective premium requirements. (See Charges
and Deductions, page 25).
METHODS OF AFFECTING INSURANCE PROTECTION
A Policyowner may increase or decrease the pure insurance protection provided by
a Policy - the difference between the death benefit and the accumulation value -
in several ways as insurance needs change. These ways include increasing or
decreasing the Specified Amount of insurance, changing the level of premium
payments, and making a partial withdrawal of the Policy's accumulation value.
Certain of these changes may have Federal Tax consequences. The consequences of
each of these methods will depend upon the individual circumstances.
DURATION OF THE POLICY
The duration of the Policy generally depends upon the accumulation value. The
Policy will remain in force so long as the surrender value is sufficient to pay
the monthly deduction. (See Charges from Accumulation
<PAGE>
Value, page 26). Where, however, the surrender value is insufficient to pay the
monthly deduction and the grace period expires without an adequate payment by
the policyowner, the Policy will lapse and terminate without value. (See Policy
Lapse and Reinstatement, page 25). AVLIC agrees to keep the policy in force
during the first three years and provide a Guaranteed Death Benefit so long as
the cumulative pro rata monthly minimum Guaranteed Death Benefit premium is
paid. AVLIC also offers an Extended Guaranteed Death Benefit rider which extends
this benefit up to 30 years. (See Additional Insurance Benefits, page 29)
ACCUMULATION VALUE
The Policy's accumulation value in the Account or the Fixed Account will reflect
the investment performance of the chosen Subaccounts of the Account or the Fixed
Account, the net premiums paid, any partial withdrawals, and the charges
assessed in connection with the Policy. A Policyowner may at any time surrender
the Policy and receive the Policy's surrender value. (See Surrenders, page 21).
There is no guaranteed minimum accumulation value.
DETERMINATION OF ACCUMULATION VALUE. Accumulation value is determined on each
valuation date. On the policy issue date, the accumulation value in a Subaccount
will equal the portion of any net premium allocated to the Subaccount, reduced
by the portion of the first monthly deductions allocated to that Subaccount.
(See Allocation of Premiums and Accumulation Value, page 24). Thereafter, on
each valuation date, the accumulation value of a Policy will equal:
(a) The aggregate of the values attributable to the Policy in each of the
Subaccounts on the valuation date, determined for each Subaccount by
multiplying the Subaccount's unit value by the number of Subaccount units
allocated to the Policy; plus
(b) The value of the Fixed Account; plus
(c) Any accumulation value impaired by policy debt held in the general account;
plus
(d) Any net premiums received on that valuation date; less
(e) Any partial withdrawal, and its charge, made on that valuation date; less
(f) Any monthly deduction to be made on that valuation date; less
(g) Any federal or state income taxes charged against the accumulation value.
In computing the Policy's accumulation value, the number of Subaccount units
allocated to the Policy is determined after any transfers among Subaccounts, or
the Fixed Account, (and deduction of transfer charges) but before any other
Policy transactions, such as receipt of net premiums and partial withdrawals, on
the valuation date. Because the accumulation value is dependent upon a number of
variables, a Policy's accumulation value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount shall be
calculated by (i) multiplying the per share net asset value of the corresponding
Fund portfolio on the valuation date times the number of shares held by the
Subaccount, before the purchase or redemption of any shares on that date; minus
(ii) a charge not exceeding an annual rate of .90% for mortality and expense
risk; and (iii) dividing the result by the total number of units held in the
Subaccount on the valuation date, before the purchase or redemption of any units
on that date. (See Daily Charges Against the Account, page 28).
VALUATION DATE AND VALUATION PERIOD. A valuation date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. A valuation period is the
period between two successive valuation dates, commencing at the close of the
NYSE on each valuation date and ending at the close of the NYSE on the next
succeeding valuation date.
BENEFITS AT MATURITY
If the Insured is living, AVLIC will pay the accumulation value of the Policy,
less outstanding policy debt, on the maturity date to the Policyowner. The
Policy will mature on the policy anniversary nearest the Insured's 95th
birthday, if living, unless the maturity has been extended by election of the
Extended Maturity Rider.
<PAGE>
PAYMENT OF POLICY BENEFITS
Death benefit proceeds under the Policy will usually be paid within seven days
after AVLIC receives Satisfactory Proof of Death. Accumulation value benefits
will ordinarily be paid within seven days of receipt of a written request.
Payments may be postponed in certain circumstances. (See Postponement of
Payments, page 29). The Policyowner may decide the form in which the benefits
will be paid. During the Insured's lifetime, the Policyowner may arrange for the
death benefit proceeds to be paid in a lump sum or under one or more of the
optional methods of payment described below. Changes must be in writing and will
revoke all prior elections. These choices are also available if the Policy is
surrendered or matures. If no election is made, AVLIC will pay the benefits in a
lump sum. When death benefits are payable in a lump sum and no election for an
optional method of payment is in force at the death of the Insured, the
beneficiary may select one or more of the optional methods of payment. Further,
if the Policy is assigned, any amounts due to the assignee will first be paid in
one sum. The balance, if any, may be applied under any payment option. Once
payments have begun, the payment option may not be changed.
PAYMENT OPTIONS. The minimum amount of each payment is $25. If a payment would
be less than $25, AVLIC has the right to make payments less often so that the
amount of each payment is at least $25. Once a payment option is in effect, the
proceeds will be transferred to AVLIC's general account. AVLIC may make other
payment options available in the future. For additional information concerning
these options, see the Policy itself. The following payment options are
currently available:
OPTION AI--INTEREST PAYMENT OPTION. AVLIC will hold any amount applied under
this option. Interest on the unpaid balance will be paid or credited each month
at a rate determined by AVLIC.
OPTION AII--FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed
fixed amount. Payments continue until the amount AVLIC holds runs out.
OPTION B--FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any
period selected up to 20 years.
OPTION C--LIFETIME PAYMENT OPTION. Equal monthly payments are based on the life
of a named person. Payments will continue for the lifetime of that person.
Variations provide for guaranteed payments for a period of time.
OPTION D--JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based on the
lives of two named persons. While both are living, one payment will be made each
month. When one dies, the same payment will continue for the lifetime of the
other.
As an alternative to the above payment options, the proceeds may be paid in any
other manner approved by AVLIC. Further, one of AVLIC's affiliates may make
payments under the above payment options. If an affiliate makes the payment, it
will do so according to the request of the Policyowner using the rules set out
above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. After the first policy anniversary, the Policyowner may borrow
up to 90% of the accumulation value less any surrender charges and any accrued
expenses as of the date of the policy loan at regular and, as described below,
reduced loan interest rates. Loans usually are funded within seven days after
receipt of a written request. The loan may be repaid at any time while the
Insured is living, prior to the maturity date. Policyowners in certain states
may borrow 100% of the surrender value after deducting interest and policy
charges for the remainder of the policy year. Loans may have a tax consequence.
(See Federal Tax Matters, page 32).
INTEREST. AVLIC charges interest to Policyowners at regular and reduced rates.
After the later of age 65 or the tenth policy anniversary, the Policyowner may
borrow each year a limited amount of the accumulation value of the Policy at a
reduced interest rate. Interest will accrue on a daily basis at a rate of up to
5% per year. AVLIC is currently charging 4.5% interest on reduced rate loans.
The amount available at the reduced rate is 10% of the accumulation value as of
the later of age 55 or the 10th policy anniversary (the start date) times the
number of years since the start date, increased by the accrued interest charges
on the reduced loan amount. Regular loans will accrue interest on a daily basis
at a rate of up to 8% per year. AVLIC is currently charging 6.5% on regular
loans. If unpaid when due, interest will be added to the amount of the
<PAGE>
loan and bear interest at the same rate. The Policyowner earns 4.5% interest on
the accumulation values securing the loans.
EFFECT OF POLICY LOANS. When a loan is made, accumulation value equal to the
amount of the loan will be transferred from the Account and/or the Fixed Account
to the General Account of AVLIC as security for the indebtedness. The
accumulation value transferred out of the Account will be allocated among the
Subaccounts or the Fixed Account in accordance with the instructions given when
the loan is requested. The minimum amount which can remain in a Subaccount or
the Fixed Account as a result of a loan is $100. If no instructions are given
the amounts will be withdrawn in proportion to the various accumulation values
in the Subaccounts or the Fixed Account. If loan interest is not paid when due
in any policy year, on the policy anniversary thereafter, AVLIC will loan the
interest and allocate the amount transferred to secure the excess indebtedness
among the Subaccounts and the Fixed Account as set out just above. No charge
will be imposed for these transfers. A policy loan will permanently affect the
accumulation value of a Policy, and may permanently affect the amount of the
Death Benefits, even if the loan is repaid.
Interest earned on amounts held in the general account will be allocated to the
Subaccounts and the Fixed Account on each policy anniversary in the same
proportion that net premiums are being allocated to those Subaccounts and the
Fixed Account at the time. Upon repayment of indebtedness, the portion of the
repayment allocated in accordance with the repayment of indebtedness provision
(see below) will be transferred to increase the accumulation value in that
Subaccount or the Fixed Account.
OUTSTANDING POLICY DEBT. The outstanding policy debt equals the total of all
policy loans and accrued interest on policy loans. If the policy debt exceeds
the accumulation value less any surrender charge and any accrued expenses, the
Policyowner must pay the excess. AVLIC will send a notice of the amount which
must be paid. If the Policyowner does not make the required payment within the
61 days after AVLIC sends the notice, the Policy will terminate without value.
Should the policy lapse while policy loans are outstanding the portion of the
loans attributable to earnings will become taxable. A policyowner may lower the
risk of a policy lapsing while loans are outstanding as a result of a reduction
in the market value of investments in the various subaccounts by investing in a
diversified group of lower risk investment portfolios and/or transferring the
funds to the fixed account and receiving a guaranteed rate of return. Should a
substantial reduction be experienced, the policyowner may need to lower
anticipated withdrawals and loans, repay loans, make additional premium
payments, or take other action to avoid policy lapse (See Appendix B). A lapsed
Policy may later be reinstated. (See Policy Lapse and Reinstatement, page 25).
REPAYMENT OF INDEBTEDNESS. Unscheduled premiums paid while a policy loan is
outstanding are treated as repayment of indebtedness only if the Policyowner so
requests. As indebtedness is repaid, the accumulation value in the general
account securing the indebtedness repaid will be allocated among the Subaccounts
and the Fixed Account in the same proportion that net premiums are being
allocated at the time of repayment.
SURRENDERS
At any time during the lifetime of the Insured and prior to the maturity date,
the Policyowner may partially withdraw or totally surrender the Policy by
sending a written request to AVLIC. The amount available for surrender is the
surrender value at the end of the valuation period during which the surrender
request is received at AVLIC's Home Office. Surrenders will generally be paid
within seven days of receipt of the written request. (See Postponement of
Payments, page 29). Surrenders may have tax consequences. (See Tax Treatment of
Policy Proceeds, page 33).
TOTAL SURRENDERS. If the Policy is being totally surrendered, the Policy itself
must be returned to AVLIC along with the request. AVLIC will pay the surrender
value. Coverage under the Policy will terminate as of the date of a total
surrender. A Policyowner may elect to have the amount paid in a lump sum or
under a payment option. (See Payment Options, page 20).
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. One partial withdrawal may be made each
year after the first policy year. During policy years 2-5 a partial withdrawal
may be obtained if the accumulation value is at least three times the annual
Guaranteed Death Benefit premiums. The amount of a partial withdrawal may not
exceed the surrender value on the date the request is received and may not be
less than $500. The surrender value after a partial withdrawal must be at least
$1,000 and further during policy years 2-5 the accumulation value after
surrender must equal two times the annual Guaranteed Death Benefit Premium.
<PAGE>
The amount paid will be deducted from the Subaccounts or the Fixed Account
according to the instructions of the Policyowner when the withdrawal is
requested, provided that the minimum amount remaining in a Subaccount as a
result of the allocation is $100. If no instructions are given, the amounts will
be withdrawn in proportion to the various accumulation values in the Subaccounts
and/or Fixed Account.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way in which the cost of insurance charge is calculated and the
amount of pure insurance protection under the Policy. (See Monthly Deduction -
Cost of Insurance, page 26; Death Benefit Options--Methods of Affecting
Insurance Protection, page 18). If Option B is in effect, the Specified Amount
will not change, but the accumulation value will be reduced.
The Specified Amount remaining in force after a partial withdrawal may not be
less than $35,000. Any request for a partial withdrawal that would reduce the
Specified Amount below this amount will not be implemented. A fee not to exceed
the lesser of $50.00 or 2% of the amount withdrawn is deducted from each partial
withdrawal amount paid. Currently, the charge is the lesser of $25 or 2% of the
amount withdrawn. (See Partial Withdrawal Charge, page 28).
TRANSFERS
Accumulation value may be transferred among the Subaccounts of the Account and
to the Fixed Account as often as desired. The transfers may be ordered in
person, by mail or by telephone. The total amount transferred each time must be
at least $250, or the balance of the Subaccount, if less. The minimum amount
that may remain in a Subaccount or the Fixed Account after a transfer is $100.
One hundred percent of the amount deposited plus interest thereon may be
transferred out of the Fixed Account during the 30-day period following the
yearly policy anniversary date.
The first fifteen transfers per policy year will be permitted free of charge.
Thereafter, a transfer charge of $10 may be imposed each additional time amounts
are transferred and will be deducted from the amount transferred. (See Transfer
Charge, page 27). Transfers resulting from policy loans or exercise of the
exchange privilege will not be subject to a transfer charge. AVLIC may at any
time revoke or modify the transfer privilege, including the minimum amount
transferable.
The privilege to initiate transactions by telephone will be made available to
Policyowners automatically. AVLIC will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, and if it does not,
AVLIC may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures AVLIC follows for transactions initiated by
telephone include, but are not limited to, requiring the Policyowner to provide
the policy number at the time of giving transfer instructions; AVLIC's tape
recording of all telephone transfer instructions; and the provision, by AVLIC,
of written confirmation of telephone transactions.
Transfers may be subject to additional restrictions at the fund level.
REFUND PRIVILEGE
The Policyowner may cancel the Policy within 10 days after the Policyowner
receives it, within 10 days after AVLIC delivers a notice of the Policyowners
right of cancellation, or within 45 days of completing Part I of the
application, whichever is later. If a Policy is cancelled within this time
period the refund will be the greater of the premium paid or the premium paid
adjusted by investment gains or losses.
To cancel the Policy, the Policyowner should mail or deliver it to AVLIC at the
Home Office. A refund of premiums paid by check may be delayed until the check
has cleared the Policyowner's bank. (See Postponement of Payments, page 29).
EXCHANGE PRIVILEGE
During the first 24 policy months after the policy date of the Policy, the
Policyowner may exchange the Policy for a flexible premium adjustable life
insurance policy approved for exchange and issued by AVLIC or Ameritas Life
Insurance Corp. No new evidence of insurability will be required.
<PAGE>
The policy date, issue age and risk classification for the Insured will be the
same under the new Policy as under the old. In addition, the policy provisions
and applicable charges for the new Policy and its riders will be based on the
same policy date and issue age as under the Policy. Accumulation values for the
exchange and payments will be established after making adjustments for
investment gains or losses and after recognizing variance, if any, between
payment or charges, dividends or accumulation values under the flexible contract
and under the new Policy. The Policyowner may elect either the same Specified
Amount or the same net amount at risk for the new Policy as under the old.
To make the change, the Policy, a completed application for exchange and any
required payment must be received by AVLIC. The exchange will be effective on
the valuation date when all financial and contractual arrangements for the new
Policy have been completed.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office (One Ameritas Way, 5900 "O" Street, P.O. Box 81889,
Lincoln, Nebraska 68501). A Policy will generally be issued only to individuals
80 years of age or less on their nearest birthday who supply satisfactory
evidence of insurability to AVLIC. AVLIC may, at its sole discretion, issue a
Policy to an individual above the age of 80. Acceptance is subject to AVLIC's
underwriting rules, and AVLIC reserves the right to reject an application for
any reason.
The policy date is the effective date of coverage for all coverage applied for
in the original application. The policy date is used to determine policy
anniversary dates, policy years and policy months. The policy date and the issue
date will be the same unless: 1) an earlier policy date is specifically
requested, or 2) when additional premiums or application amendments are needed.
When there are additional requirements before issue (see below) the policy date
will be when it is sent for delivery and the issue date will be the date the
requirements are met.
The issue date is the date that all financial, contractual and administrative
requirements have been met and processed for the Policy. When all required
premiums and application amendments have been received by AVLIC in its Home
Office, the issue date will be the date the Policy is mailed to the Policyowner
or sent to the agent for delivery to the Policyowner. When application
amendments or additional premiums need to be obtained upon delivery of the
Policy, the issue date will be when the policy receipt and Federal Funds are
received; and the application amendments are received and reviewed in AVLIC's
Home Office. The initial premium payment will be allocated to the Money Market
Portfolio of the Variable Products Insurance Fund, as of the issue date, for 13
days. After the expiration of the refund period, the accumulation value will be
allocated to the Subaccounts or the Fixed Account as selected by the
Policyowner.
Interim conditional insurance coverage may be issued prior to the policy date,
provided that certain conditions are met, upon the completion of an application
and the payment of a specified amount at the time of the application. The amount
of the interim coverage is limited to the smaller of; (a) the amount of
insurance applied for, (b) $100,000, or (c) $25,000 if the proposed Insured is
under age 10 or over age 60 at his nearest birthday.
PREMIUMS
No insurance will take effect before the initial premium is received by AVLIC in
Federal Funds. The initial premium must be at least 1/12 of the first year
Guaranteed Death Benefit Premium, including any riders and any substandard risk
adjustment, times the number of months between the policy date and the issue
date, plus one. Subsequent premiums are payable at AVLIC's Home Office. The
Directors and employees of AVLIC and its affiliates may purchase this Policy in
transactions that involve lower sales costs to AVLIC. In those instances the
initial sales load, the contingent deferred sales load, and/or initial premium
may be lowered. In no event will this be permitted where it will be unfairly
discriminatory to any person. Subject to certain limitations, a Policyowner has
flexibility in determining the frequency and amount of premiums. However, unless
the Policyowner has paid sufficient premiums to pay the cost of insurance, the
monthly maintenance and mortality and expense risk charges, the Policy may have
a zero surrender value and lapse. AVLIC agrees to keep the Policy in force
during the first three years and provide a Guaranteed Death Benefit so long as
the cumulative prorated monthly minimum Guaranteed Death Benefit Premium is paid
even though, in certain instances, these minimum premiums will not, after the
payment of monthly insurance and administrative charges, generate positive
surrender values during the first several policy months. AVLIC also offers an
Extended Guaranteed Death Benefit rider which extends this benefit up to 30
years. (See Additional Insurance Benefits (Riders), page 29).
<PAGE>
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued each Policyowner may
determine a planned periodic premium schedule that provides for the payment of
level premiums at selected intervals. The planned periodic premium schedule may
include the Guaranteed Death Benefit Premium and/or the Extended Guaranteed
Death Benefit Premium. The Policyowner is not required to pay premiums in
accordance with this schedule. The Policyowner has considerable flexibility to
alter the amount and frequency of premiums paid. AVLIC does reserve the right to
limit the number and amount of additional or unscheduled premium payments.
Policyowners can also change the frequency and amount of planned periodic
premiums by sending a written request to the Home Office, although AVLIC
reserves the right to limit any increase. Premium payment notices will be sent
annually, semi-annually or quarterly, depending upon the frequency of the
planned periodic premiums. Payment of the planned periodic premiums does not
guarantee that the Policy remains in force unless the Guaranteed Death Benefit
provision and/or the Extended Guaranteed Death Benefit Rider is in effect.
Instead, the duration of the Policy depends upon the Policy's surrender value.
(See Duration of the Policy, page 18). Unless the Guaranteed Death Benefit or
Extended Guaranteed Death Benefit provisions are in effect, even if planned
periodic premiums are paid by the Policyowner, the Policy will lapse any time
surrender value is insufficient to pay certain monthly charges, and a grace
period expires without a sufficient payment. (See Policy Lapse and
Reinstatement, page 25).
PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both
planned and unscheduled, exceed the current maximum premium limitations
established by federal tax laws.
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limitation, AVLIC will only accept that portion of
the premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limitations prescribed by law. AVLIC may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
net amount at risk on the date the premium is received.
PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the accumulation
value of the Policy at the time of an increase in the Specified Amount of the
Policy and the amount of the increase requested by the Policyowner, an
additional premium payment may be required. AVLIC will notify the Policyowner of
any premium required to fund the increase, this required premium must be made as
a single payment. The accumulation value of the Policy will be immediately
increased by the amount of the payment, less the applicable premium charge.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policyowner
allocates net premiums to one or more Subaccounts of the Account or to the Fixed
Account. The minimum percentage that may be allocated to any one Subaccount or
to the Fixed Account is 10% of the net premium, and fractional percentages may
not be used. The allocations must total 100%. The allocation for future net
premiums may be changed without charge by providing proper notification to the
Home Office. If there is any outstanding policy debt at the time of a payment,
AVLIC will treat the payment as a premium payment unless otherwise instructed in
proper written notice.
The initial premium payment will be allocated to the Money Market portfolio of
the Variable Insurance Products Fund, as of the issue date, for 13 days.
Thereafter, the accumulation value will be allocated to the Subaccounts or the
Fixed Account as selected by the Policyowner. Premium payments received by AVLIC
prior to the issue date are held in the general account until the issue date and
are credited with interest at a rate determined by AVLIC for the period from the
date the payment has been converted into Federal Funds (monies of member banks
within the Federal Reserve System which are held on deposit at a Federal Reserve
Bank) that are available to AVLIC. In no event will interest be credited prior
to the policy date.
ACCUMULATION VALUE. The value of the Subaccounts of the Separate Account will
vary with the investment performance of these Subaccounts and the Policyowner
bears the entire investment risk. This will affect the Policy's accumulation
value, and may affect the death benefit as well. Policyowners should
periodically review their allocations of premiums and values in light of market
conditions and overall financial planning requirements.
<PAGE>
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
planned periodic premium payment will not itself cause the Policy to lapse.
Lapse will occur when the surrender value (the accumulation value less debt,
deferred sales and administrative charges, and accrued expense charges) is
insufficient to cover the monthly deduction and a grace period expires without a
sufficient payment unless the Guaranteed Death Benefit provision or Extended
Death Benefit rider are in effect. The grace period is 61 days from the date
AVLIC mails a notice that the grace period has begun. AVLIC will notify the
Policyowner at the beginning of the grace period by mail addressed to the last
known address on file with AVLIC. The notice will specify the premium required
to keep the Policy in force. Failure to pay the required amount within the grace
period will result in lapse of the Policy. If the Insured dies during the grace
period, any overdue monthly deductions and outstanding policy debt will be
deducted from the proceeds.
If the surrender value is insufficient to cover the monthly deduction, the
policyowner must pay a premium during the grace period sufficient to cover the
monthly deductions and premium charges for the three policy months after
commencement of the grace period to avoid lapse. (See Charges and Deductions,
page 25).
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the end of the grace period, but before the
maturity date. Reinstatement will be effected based on the Insured's
underwriting classification at the time of the reinstatement.
Reinstatement is subject to the following:
a. Evidence of insurability of the Insured satisfactory to AVLIC (including
evidence of insurability of any person covered by a rider to reinstate the
rider);
b. Any policy debt will be reinstated with interest due and accrued;
c. The Policy cannot be reinstated if it has been surrendered for its full
surrender value;
d. If the reinstatement occurs during the first three years, the minimum premium
required is the amount necessary to meet the pro rata monthly requirement of
the Guaranteed Death Benefit premium as of the date of statement as if the
Policy had not lapsed;
e. If the reinstatement occurs after the first three years, the minimum premium
required is the greater of:
(1) the amount necessary to raise the surrender value as of the date of
reinstatement to equal to or greater than zero; or
(2) the amount necessary to pay sales load and premium tax on the premium
paid and monthly policy deductions for the next three policy months.
The amount of accumulation value on the date of reinstatement will be equal to
the amount of the surrender value on the date of lapse, increased by the premium
paid at reinstatement, less the premium charges and the amounts stated above,
plus that part of the deferred sales load (i.e., surrender charge) which would
apply if the Policy were surrendered on the date of reinstatement. The last
addition to the accumulation value is designed to avoid duplicate surrender
charges. The original policy date, and the dates of increases in the Specified
Amount (if applicable), will be used for purposes of calculating the surrender
charge. If any policy debt was reinstated, that debt will be held in AVLIC's
General Account. Accumulation value calculations will then proceed as described
under "Accumulation Value" on page 19.
The effective date of reinstatement will be the first monthly activity date on
or next following the date of approval by AVLIC of the application for
reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate AVLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy; (3) assuming
certain risks in connection with the Policy; and (4) incurring expenses in
distributing the Policy. The nature and amount of these charges are described
more fully below.
DEDUCTIONS FROM PREMIUM PAYMENT
SALES CHARGE. AVLIC deducts a sales charge, generally called the "sales load,"
of 5% from each payment to reimburse AVLIC for the cost of selling the Policy.
This cost includes agents' commissions, the printing of Prospectuses and sales
literature, and advertising.
<PAGE>
There are two types of sales loads under the Policy. The first, just described,
is the front-end sales load, which will be deducted from each premium payment
upon receipt prior to allocation of net premium to the Account or the Fixed
Account. The second, a contingent deferred sales load which is part of the
surrender charge, will reduce the assets in the Account and the Fixed Account
attributable to the Policy in the event of surrender if surrendered before the
15th policy year.
The sales charges in any Policy year are not necessarily related to actual
distribution expenses incurred in that year. Instead, AVLIC expects to incur the
majority of distribution expenses in the early Policy years and to recover
amounts to pay such expenses over the life of the Policy. To the extent that
sales and distribution expenses exceed sales loads (both front-end and deferred)
in any year, AVLIC will pay them from its other assets or surplus in its General
Account, which include amounts derived from mortality and expense risk charges,
and other charges made under the Policy. AVLIC believes that this distribution
financing arrangement will benefit the Account and the Policyowners.
PREMIUM TAXES. A deduction of 2.5% of the premium will be made from each premium
payment to pay state premium taxes. The deduction represents an amount AVLIC
considers necessary to pay all premium taxes imposed by the states and their
subdivisions. AVLIC does not expect to derive a profit from the premium tax
charge.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTION. Charges will be deducted as of the policy date and on each
monthly activity date thereafter from the accumulation value of the Policy to
compensate AVLIC for administrative expenses and insurance provided. These
charges will be allocated among the Subaccounts, and the Fixed Account on a pro
rata basis. Each of these charges is described in more detail below.
MAINTENANCE CHARGE. To compensate AVLIC for the ordinary administrative expenses
expected to be incurred in connection with a Policy, the monthly deduction
includes a $9.00 per policy charge (currently $9.00 the first year and $4.50
during each year thereafter). This maintenance charge is levied throughout the
life of the Policy and is guaranteed not to increase above $9.00 per month.
AVLIC does not expect to make any profit from the monthly maintenance charge.
COST OF INSURANCE. Because the cost of insurance depends upon several variables,
the cost for each policy month can vary from month to month. AVLIC will
determine the monthly cost of insurance charges by multiplying the applicable
cost of insurance rate by the net amount at risk for each policy month. The net
amount at risk on any monthly activity date is the amount by which the death
benefit which would have been payable on that monthly activity date exceeds the
accumulation value on that date.
COST OF INSURANCE RATE. The annual cost of insurance rate is based on the
Insured's sex, attained age, policy duration, specified amount, and risk class.
The rate will vary if the Insured is a smoker, non-smoker, a preferred
non-smoker or is considered a substandard risk and rated with a tabular extra
rating. For the initial Specified Amount, the cost of insurance rate will not
exceed those shown in the Schedule of Guaranteed Annual Cost of Insurance Rates
shown in the schedule pages of the Policy. These guaranteed rates are based on
the Insured's age nearest birthday and are equal to the 1980 Insurance
Commissioners Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality
Tables. The current rates range between 40% and 100% of the rates based on the
1980 Commissioners Standard Ordinary Tables, based on AVLIC's own mortality
experience. Policies issued on a unisex basis are based upon the 1980 Insurance
Commissioners Standard Ordinary Table B assuming 80% male and 20% female lines.
The cost of insurance rates, surrender charges, and payment options for policies
issued in Massachusetts, Montana and certain other states are on a sex-neutral
(unisex) basis. Any change in the cost of insurance rates will apply to all
persons of the same age, sex, Specified Amount and risk class and whose policies
have been in effect for the same length of time.
If the underwriting class for any increase in the Specified Amount or for any
increase in death benefit resulting from a change in death benefit option from A
to B is not the same as the underwriting class at issue, the cost of insurance
rate used after such increase will be a composite rate based upon a weighted
average of the rates of the different underwriting classes. Decreases will also
be reflected in the cost of insurance rate as discussed earlier.
The actual charges made during the policy year will be shown in the annual
report delivered to Policyowners.
<PAGE>
RATE CLASS. The rate class of an Insured may affect the cost of insurance rate.
AVLIC currently places Insureds into both standard rate classes and substandard
classes that involve a higher mortality risk. In an otherwise identical policy,
an Insured in the standard rate class will have a lower cost of insurance than
an Insured in a rate class with higher mortality risks. If a Policy is rated at
issue with a tabular extra rating, the guaranteed rate is a multiple of the
guaranteed rate for a standard issue. This multiple factor is shown in the
Schedule of Benefits in the Policy, and may be from 1.5 to 5 times the
guaranteed rate for a standard issue.
Insureds may also be assigned a flat extra rating to reflect certain additional
risks. The flat extra rating will not impact the cost of insurance rate but 1/12
of any flat extra cost will be deducted as part of the monthly deduction on each
monthly activity date.
SURRENDER CHARGE
If a policy is surrendered prior to the 15th anniversary, AVLIC will assess a
surrender charge based upon percentages of the premiums actually paid in policy
years 1 and 2 and a charge per $1,000 of insurance issued based upon sex, age,
and smoking habits.
The total surrender charge is made up of two parts, the Contingent Deferred
Administrative Charge and Contingent Deferred Sales Charge. AVLIC will assess
surrender charges on increases in Specified Amount based on Contingent Deferred
Administrative Charges.
The Contingent Deferred Sales Charge will be based upon the actual premiums
received the first two policy years up to a maximum of $12 per $1,000 of
insurance. It will be calculated as 25% of the premiums received up to the
Guaranteed Death Benefit Premium plus 5% of the premiums received in excess of
the Guaranteed Death Benefit Premium.
The Contingent Deferred Administrative Charge is an amount per $1,000 of
insurance that varies by issue age and sex. It is 70% of the Guaranteed Death
Benefit Premium not to exceed $28 per $1,000 of insurance.
The surrender charge remains level in policy years three through five and will
equal the surrender charge at the end of year 2 and then grades to 0% in year
fifteen based upon the following schedule.
<TABLE>
<CAPTION>
Percent of Surrender Charge
maximum that will apply
Policy Year during policy year
- --------------- -------------------------------
<S> <C>
1 thru 5 100%
6 90%
7 80%
8 70%
9 60%
10 50%
11 40%
12 30%
13 20%
14 10%
15 0%
</TABLE>
No surrender charge will be assessed upon decreases in the Specified Amount of
the Policy or partial withdrawals of accumulation value.
Because the surrender charge may be significant upon early surrender,
prospective Policyowners should purchase a Policy only if they do not intend to
surrender the Policy for a substantial period.
TRANSFER CHARGE. A transfer charge of $10.00 (guaranteed not to increase) may be
imposed for each additional transfer among the Subaccounts after fifteen per
policy year to compensate AVLIC for the costs of
<PAGE>
effecting the transfer. Since the charge reimburses AVLIC for the cost of
effecting the transfer only, AVLIC does not expect to make any profit from the
transfer charge. This charge will be deducted from the amount transferred. The
transfer charge will not be imposed on transfers that occur as a result of
policy loans or the exercise of exchange rights.
PARTIAL WITHDRAWAL CHARGE. A charge currently not greater than the lesser of $25
or 2% of the amount withdrawn (guaranteed not to be greater than the lesser of
$50 or 2% of the amount withdrawn) will be imposed for each partial withdrawal
to compensate AVLIC for the administrative costs in effecting the requested
payment and in making necessary calculations for any reductions in Specified
Amount which may be required by reason of the partial withdrawal. No Surrender
Charge is assessed on a partial withdrawal and a partial withdrawal charge is
not assessed when a Policy is surrendered.
DAILY CHARGES AGAINST THE ACCOUNT
A daily charge will be deducted from the value of the net assets of the Account
to compensate AVLIC for mortality and expense risks assumed in connection with
the Policy. This daily charge from the Account is currently at the rate of
0.002466% (equivalent to an annual rate of 0.90%) for policy years 1-20 and at
the rate of 0.001781% (equivalent to an annual rate of 0.65%) for the years
thereafter, and will not exceed .90% of the average daily net assets of the
Account. The daily charge will be deducted from the net asset value of the
Account, and therefore the Subaccounts, on each valuation date. Where the
previous day or days was not a valuation date, the deduction on the valuation
date will be 0.002466% (or 0.001781%, if applicable) multiplied by the number of
days since the last valuation date. No mortality and expense charges will be
deducted from the amounts in the Fixed Account.
AVLIC believes that this level of charge is within the range of industry
practice for comparable flexible premium variable universal life policies.
The mortality risk assumed by AVLIC is that Insureds may live for a shorter time
than assumed, and that an aggregate amount of death benefits greater than that
assumed accordingly will be paid. The expense risk assumed is that expenses
incurred in issuing and administering the policies will exceed the
administrative charges provided in the policies.
In addition to the charges against the account described just above, management
fees and expenses will be assessed by FMR, Alger, MFS and the Dreyfus Index Fund
against the amounts invested in the various portfolios. No portfolio fees will
be assessed against amounts placed in the Fixed Account.
AVLIC may receive administrative fees from the investment advisers of certain
funds.
TAXES. Currently, no charge is made against the Account for federal, state or
local income taxes. AVLIC may, however, make such a charge in the future if
income or gains within the Account will incur any federal, or any significant
state or local income tax liability, or if the federal, state or local tax
treatment of AVLIC changes. Charges for such taxes, if any, would be deducted
from the Account and/or the Fixed Account. (See Federal Tax Matters, page 32).
GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any riders, amendments or endorsements make up the entire contract. Only the
President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by AVLIC. No agent has
the authority to alter or modify any of the terms, conditions or agreements of
the Policy or to waive any of its provisions.
CONTROL OF POLICY. The Policyowner is as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable beneficiary and
any assignee of record, all rights, options, and privileges belong to the
Policyowner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last owner to die.
BENEFICIARY. Policyowner may name both primary and contingent beneficiaries in
the application. Payments will be shared equally among beneficiaries of the same
class unless otherwise stated. If a beneficiary dies before the Insured,
payments will be made to any surviving beneficiaries of the same class;
otherwise to any beneficiary(ies) of the next class; otherwise to the owner;
otherwise to the estate of the owner.
CHANGE OF BENEFICIARY The Policyowner may change the beneficiary by written
request at any time during the Insured's lifetime unless otherwise provided in
the previous designation of beneficiary. The change will take effect as of the
date the change is recorded at the Home Office. AVLIC will not be liable for any
payment made or action taken before the change is recorded.
<PAGE>
CHANGE OF OWNER OR ASSIGNMENT. In order to change the owner of the Policy or
assign Policy rights, an assignment of the Policy must be made in writing and
filed with AVLIC at its Home Office. The change will take effect as of the date
the change is recorded at the Home Office, and AVLIC will not be liable for any
payment made or action taken before the change is recorded. Payment of proceeds
is subject to the rights of any assignee of record. A collateral assignment is
not a change of ownership.
PAYMENT OF PROCEEDS. The proceeds are subject first to any indebtedness to AVLIC
and then to the interest of any assignee of record. The balance of any death
benefit proceeds shall be paid in one sum to the designated beneficiary unless
an Optional Method of Payment is selected. If no beneficiary survives the
Insured, the proceeds shall be paid in one sum to the Policyowner, if living;
otherwise to any successor-owner, if living; otherwise to the Policyowner's
estate. Any proceeds payable on the Maturity Date or upon full surrender shall
be paid in one sum unless an Optional Method of Payment is elected.
INCONTESTABILITY. The Policy or reinstated Policy is incontestable after it has
been in force for two years from the policy date (or reinstatement effective
date) during the lifetime of the Insured. An increase in the Specified Amount or
addition of a rider after the policy date shall be incontestable after such
increase or addition has been in force for two years from its effective date
during the lifetime of the Insured. However, this two year provision shall not
apply to riders that provide disability or accidental death benefits.
MISSTATEMENT OF AGE OR SEX. If the age or sex of the Insured or any person
insured by rider has been misstated, the amount of the death benefit will be
adjusted. The death benefit will be adjusted in proportion to the correct and
incorrect cost of insurance rates.
SUICIDE. Suicide within two years of the policy date is not covered by the
Policy unless otherwise provided by a state's Insurance law. If the Insured,
while sane or insane, commits suicide within two years after the policy date,
AVLIC will pay only the premiums received less any partial withdrawals, the cost
for riders and any outstanding policy debt. If the Insured, while sane or
insane, commits suicide within two years after the effective date of any
increase in the Specified Amount, AVLIC's liability with respect to such
increase will only be its total cost of insurance applied to the increase. The
laws of Missouri provide that death by suicide at any time is covered by the
Policy, and further that suicide by an insane person may be considered an
accidental death.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon complete surrender, partial
withdrawal, policy loans, benefits payable at death or maturity, and transfers
may be postponed whenever: (i) the New York Stock Exchange is closed other than
customary weekend and holiday closings, or trading on the New York Stock
Exchange is restricted as determined by the Securities and Exchange Commission;
(ii) the Commission by order permits postponement for the protection of
Policyowners; (iii) an emergency exists, as determined by the Commission, as a
result of which disposal of securities is not reasonably practicable or it is
not reasonably practicable to determine the value of the Account's net assets;
or (iv) surrenders, loans or partial withdrawals from the Fixed Account may be
deferred for up to 6 months from the date of written request. Payments under the
Policy of any amounts derived from premiums paid by check may be delayed until
such time as the check has cleared the Policyowner's bank.
ADDITIONAL INSURANCE BENEFITS (RIDERS). Subject to certain requirements, one or
more of the following additional insurance benefits may be added to a Policy by
rider. All riders are not available in all states. The cost, if any, of
additional insurance benefits will be deducted as part of the monthly deduction.
(See Charges From Accumulation Value - Monthly Deduction, page 26).
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER). Upon
satisfactory proof of terminal illness after the two-year contestable period,
(no waiting period in certain states) AVLIC will accelerate the payment of up to
50% of the lowest scheduled death benefit as provided by eligible coverages,
less an amount up to two guideline level premiums.
Future premium allocations after the payment of the benefit must be allocated to
the Fixed Account. Payment will not be made for amounts less than $4,000 or more
than $250,000 on all policies issued by AVLIC or its affiliates. AVLIC may
charge the lesser of 2% of the benefit or $50 as a withdrawal charge to cover
the costs of administration.
Satisfactory proof of terminal illness must include a written statement from a
licensed physician who is not related to the Insured or the Policyowner stating
that the Insured has a non-correctable medical condition that, with a reasonable
degree of medical certainty, will result in the death of the Insured in less
than 12 months (6 months in certain states) from the physician's statement.
Further, the condition must first be diagnosed while the Policy was in force.
The accelerated benefit first will be used to repay any outstanding policy loans
and unpaid loan interest, and will also affect future loans, partial
withdrawals, and surrenders. The accelerated benefit will be treated as a lien
against the policy death benefit and will thus reduce the proceeds payable on
the death of the Insured. There is no extra premium for this rider.
<PAGE>
ACCIDENTAL DEATH BENEFIT RIDER. Provides additional insurance if the Insured's
death results from accidental death, as defined in the rider. Under the terms of
the rider, the additional benefits provided in the Policy will be paid upon
receipt of proof by AVLIC that death resulted directly and independently of all
other causes from accidental bodily injuries incurred before the rider
terminates and within 91 days after such injuries were incurred.
TERM RIDER FOR COVERED INSURED. Provides the Specified Amount of insurance to
the beneficiary upon receipt of satisfactory proof of death of any Covered
Insured, as defined in the rider. This rider is not available if the Extended
Guaranteed Death Benefit rider is chosen.
CHILDREN'S PROTECTION RIDER. Provides for term insurance on the Insured's
children, as defined in the rider. Under the terms of the rider, the death
benefit will be payable to the named beneficiary upon the death of any insured
child. Upon receipt of proof of the Insured's death before the rider terminates,
the rider will be considered paid up for the term of the rider.
EXTENDED GUARANTEED DEATH BENEFIT RIDER. Provides that, as long as the
cumulative Extended Guaranteed Death Benefit premiums are paid during the
guarantee period, the Policy will stay in force and the Specified Amount of the
Policy will be paid upon death even though the surrender value of the Policy is
zero or less.
The length of the guarantee period for various issue ages is as follows: issue
ages 0-35 - 30 years; issue ages 36-55 to age 65; and issue ages 56-65 - 10
years. The rider will not be issued on policies for persons over 65 or rated as
a substandard risk.
The annual premium for the Extended Guaranteed Death Benefit Rider will equal
the Guaranteed Death Benefit premium for nonsmokers taking Death Benefit Option
A under the Policy. The premium for smokers and/or persons selecting Policy
Option B will be the initial guideline level premium of person of their rating
class. If the required premium exceeds the IRS guideline level premium, the
rider cannot be issued. The required annual premium will be adjusted by changes
in the Specified Amount, changes in death benefit options or changes in riders.
Partial withdrawals and any outstanding policy debt are subtracted from premiums
paid in determining if cumulative monthly pro rata extended Guaranteed Death
Benefit premiums have been paid. Further, the Policy will terminate if the
policy loan exceeds the surrender value even if the cumulative premiums have
been paid.
GUARANTEED INSURABILITY RIDER. Provides that the Policyowner can purchase
additional insurance for the Insured by increasing the Specified Amount of the
Policy at certain future dates without evidence of insurability.
DISABILITY BENEFIT PAYMENT RIDER. Provides for the payment of a disability
benefit in the form of premiums by AVLIC while the Insured is disabled. The
premium payments provided will equal the policies initial guideline level
premium unless the face amount of the policy has been lowered. In that instance
the guideline level premium for that insurance benefit will apply. In addition,
while the Insured is totally disabled, the cost of insurance for the rider will
not be deducted from the Policy's accumulation value.
PAYOR DISABILITY RIDER. Provides for the payment of a disability benefit in the
form of premiums by AVLIC while the Covered Person specified in the rider is
totally disabled, as defined in the rider. The premium payments provided will
equal the policies initial guideline level premium unless the face amount of the
policy has been lowered. In that instance the guideline level premium for that
insurance benefit will apply. In addition, while the Covered Person is totally
disabled, the cost of insurance for the rider will not be deducted from the
Policy's accumulation value.
EXTENDED MATURITY RIDER. This rider may be elected by submitting a written
request to AVLIC during the 90 days prior to Maturity Date. If elected, as long
as the Surrender Value is greater than zero, the policy will remain in force for
purposes of providing a benefit at the time of the Insured's death. Once this
rider becomes effective, no further premium payments will be accepted, and no
monthly charges will be made for cost of insurance, riders or flat extra rating.
All other policy provisions not specifically noted herein will remain in effect
while the policy continues in force. Interest on policy loans will continue to
accrue and become part of the policy debt. This rider does not extend the
Maturity Date for purposes of determining benefits under any other riders. Death
Benefit Proceeds are payable to the beneficiary.
There is no extra premium for this rider. This rider is not available in all
states.
The Internal Revenue Service has not issued a ruling regarding the tax
consequences of this rider. There may be tax consequences to the election of
this rider.
REPORTS AND RECORDS. AVLIC will maintain all records relating to the Account and
will mail to the Policyowner, at the last known address of record, within 30
days after each policy anniversary, an annual report which shows the current
accumulation value, surrender value, death benefit, premiums paid, outstanding
policy debt and other information. The Policyowner will also be sent a periodic
report for the Funds and a list of the portfolio securities held in each
portfolio of the Funds.
<PAGE>
EXCHANGE OFFER
On June 13, 1990, the Securities and Exchange Commission, after application by
Ameritas Variable Life Insurance Company (AVLIC), AVLIC's Separate Account V and
Ameritas Investment Corp., and public notice in the Federal Register, granted
their request that they be allowed to offer to exchange certain previously
issued Variable Universal Life Insurance policies for the policies offered by
this Prospectus.
1. This insurance Policy will be issued as of the original date of issue of the
exchanged UniVar Life Policy;
2. This Policy will be issued to UniVar Policyowners without additional evidence
of insurability of the insured for the same amount of insurance.
3. The UniVar Life Policyowner will be refunded all of the sales and acquisition
charges deducted from his/her premium payment, except premium taxes, plus 12%
interest thereon, which amount will be added to the UniVar Policy's
accumulation value.
4. After the additions to the accumulation value, AVLIC will then exchange the
UniVar Life Policy for and issue the Policy offered by this Prospectus on a
relative net asset basis without deducting surrender charges on the UniVar
Life Policy's surrender or sales or acquisition charges on this Policy's
acquisition. AVLIC expects to recover certain of the refunded sales and
acquisition charges through surrender charges on this Policy if surrendered
before the 15th policy year dating from the original UniVar issue date. AVLIC
does not expect to recover the remainder of the refunded charge.
5. The Policyowner will then enjoy the benefits and be subject to the charges
and contract provisions as set out in this Prospectus. A table summarizing
the charges under the respective policies follows:
OLD POLICY NEW POLICY
----------------------------- -------------------------
PREMIUM TAX 2.5% 2.5% (not charges on
accumulation value from
old Policy.
SALES CHARGES 7.5% of all premiums (8.5% of 5% (not charges on acc-
minimum first year premiums) umulation values from old
(refunded plus 12% interest Policy.
in the exchange)
ADMINISTRATIVE Charges deducted from first No deductions are made
CHARGES year premiums based upon table from premiums for the
FOR ISSUE in the UniVar Prospectus Administrative costs of
issue. Charges for De-
ferred Administrative
costs will be assesed if
the Policy is surrendered
before policy year 15.
MORTALITY AND Daily deductions at an annual Daily deductions current-
EXPENSE CHARGES rate of .70% ly charged at an annual
rate of .90% for the
first 20 policy years and
.65% therafter (guaran-
teed .90%).
SURRENDER CHARGES A contingent deferred sales A contingent deferred
load based upon amounts paid sales load of 25% of
in the first two policy years premiums actually paid in
(up to 21.5% of the minimum the first two years up to
first year premium to 2.5% of the Guaranteed Death
additional amounts paid during Benefit premium and 5% of
the first two years, up to a the premiums paid in
second minimum first year excess of that amount.
premium) is deducted upon sur- This is subject to a
renders prior to the sixteenth limit of $12 per $1000 of
policy anniversary. 100% of insurance. And a
the surrender charge is contingent deferred
deducted in policy years 1 administrative charge
through 11 and then grades to based upon an amount per
0 in the 16th policy year. $1000 of face amount of
insurance. This amount
varies by age at date of
issue as described in the
table on page 27 herein.
100% of the surrender
charges are deducted in
policy years 1 through
5 and then grades to 0 in
the 15th policy year.
<PAGE>
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("Investment Corp."), a wholly-owned subsidiary of
Ameritas Life and an affiliated company of AVLIC, will act as the principal
underwriter of the Policies, pursuant to an Underwriting Agreement between
itself and AVLIC. Investment Corp. was organized under the laws of the State of
Nebraska on December 29, 1983 and is a registered broker/dealer pursuant to the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers.
Registered Representatives of Investment Corp. who sell the Policy will receive
commissions based upon a commission schedule. After issuance of the Policy,
commissions to the Registered Representatives will equal, at most, 50% of the
commissionable first year premium paid plus the first year cost of any riders.
In years thereafter, Registered Representatives will receive a maximum
commission of 4% per policy year on any premiums paid. Upon any subsequent
increase in Specified Amount or any subsequent increase in riders, commissions
will also be paid based on the amount of the increase in Specified Amount or
increase in rider. Further, Registered Representatives who meet certain
production standards may receive additional compensation, and managers receive
override commissions and bonuses with respect to the Policies. Investment Corp.
and AVLIC may authorize other registered broker/dealers and its Registered
Representatives to sell the Policies subject to applicable law.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy. This discussion is not intended
as tax advice. No attempt has been made to consider in detail any applicable
state or other tax (except premium taxes, see discussion "Premium Taxes," page
26 ) laws. Counsel and other competent advisors should be consulted for more
complete information before a Policy is purchased.
(a) TAXATION OF AVLIC. After AVLIC issues the Policies, AVLIC believes it will
be taxed as a life insurance company under Part I of Subchapter L of the
Internal Revenue Code of 1986, (the "Code"). At that time, since the Account
is not an entity separate from AVLIC, and its operations form a part of
AVLIC, it will not be taxed separately as a "regulated investment company"
under Subchapter M of the Code. Net investment income and realized net
capital gains on the assets of the Account are reinvested and automatically
retained as a part of the reserves of the Policy and are taken into account
in determining the death benefit and accumulation value of the Policy. AVLIC
believes that Account net investment income and realized net capital gains
will not be taxable to the extent that such income and gains are retained as
reserves under Policy.
AVLIC does not currently expect to incur any federal income tax liability
attributable to the Account with respect to the sale of the Policies.
Accordingly, no charge is being made currently to the Account for federal
income taxes. If, however, AVLIC determines that it may incur such taxes
attributable to the Account, it may assess a charge for such taxes against
the Account.
AVLIC may also incur state and local taxes (in addition to premium taxes for
which a deduction from premiums is currently made). At present, they are not
charges against the Account. If there is a material change in state or local
tax laws, charges for such taxes attributable to the Account, if any, may be
assessed against the Account.
(b) TAX STATUS OF THE POLICY. The Code (section 7702) includes a definition of a
life insurance contract for federal tax purposes, which places limitations
on the amount of premiums that may be paid for the Policy and the
relationship of the accumulation value to the death benefit. AVLIC believes
that the Policy meets the statutory definition of a life insurance contract.
If the death benefit of a Policy is increased or decreased, the applicable
definitional limitations may change. In the case of a decrease in the death
benefit, a partial surrender, a change from Option B to Option A, or any
other such change that reduces future benefits under the Policy during the
first 15 years after a Policy is issued and that results in a cash
distribution to the Policyowners in order for the Policy to continue
complying with the section 7702 definitional limitations on premiums and
accumulation values, such distributions will be taxable as ordinary income
to the Policyowner (to the extent of any gain in the Policy) as prescribed
in Section 7702.
The Code (section 7702A) also defines a "modified endowment contract" for
federal tax purposes which causes distributions to be taxed as ordinary
income to the extent of any gain. This Policy will become a "modified
endowment contract" if the premiums paid into the Policy fail to meet a
7-pay premium test as outlined in Section 7702A of the Code.
<PAGE>
Certain benefits the Insured may elect under this Policy may be material
changes affecting the 7-pay premium test. These include changes in death
benefits and changes in the policy amount. Should the Policy become a
"modified endowment contract" partial or full surrenders, assignments,
pledges, and loans (including loans to pay loan interest) under the Policy
will be taxable to the extent of any gain under the Policy. A 10% penalty
tax also applies to the taxable portion of any distribution prior to the
Insured's age 59 1/2. The 10% penalty tax does not apply if the Insured is
disabled as defined under the Code or if the distribution is paid out in the
form of a life annuity on the life of the Insured or the joint lives of the
Insured and beneficiary. One may avoid a Policy becoming a modified
endowment contract by, among other things, not making excessive payments or
reducing benefits. Should one deposit excessive premiums during a policy
year, that portion that is returned by the insurance company within 60 days
after the policy anniversary will reduce the premiums paid to avoid the
Policy becoming a modified endowment contract.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury (the
"Treasury") to set standards by regulation or otherwise for the investments
of the Account to be "adequately diversified" in order for the Policy to be
treated as a life insurance contract for federal tax purposes. The Account,
through the Funds, intends to comply with the diversification requirements
prescribed by the Treasury in regulations published in the Federal Register
on March 2, 1989, which affect how the Fund's assets may be invested.
However, AVLIC believes that the Funds will meet the diversification
requirements and AVLIC will monitor compliance with this requirement. Thus,
AVLIC believes that the Policy will be treated as a life insurance contract
for federal tax purposes.
In connection with the issuance of regulations relating to the
diversification requirements, the Treasury announced that such regulations
do not provide guidance concerning the extent to which owners may direct
their investments to particular divisions of a separate account. Regulations
in this regard are expected in the near future. It is not clear what these
regulations will provide nor whether they will be prospective only. It is
possible that when regulations are issued, the Policy may need to be
modified to comply with such regulations. For these reasons, the Company
reserves the right to modify the Policy as necessary to prevent the
Policyowner from being considered the owner of the assets of the Separate
Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal tax purposes.
(c) TAX TREATMENT OF POLICY PROCEEDS. AVLIC believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy
for federal income tax purposes. Thus, AVLIC believes that the death benefit
payable will be excludable from the gross income of the beneficiary under
Section 101(a)(1) of the Code and the Policyowner will not be deemed to be
in constructive receipt of the accumulation value under the Policy until its
actual surrender. However, in the event of certain cash distributions under
the Policy resulting from any change which reduces future benefits under the
Policy, the distribution will be taxed in whole or in part as ordinary
income (to the extent of gain in the Policy). See discussion above, "Tax
Status of the Policy."
AVLIC also believes that loans received under a Policy will be treated as
indebtedness of the Policyowner and that no part of any loan under a Policy
will constitute income to the Policyowner so long as the Policy remains in
force, unless the Policy becomes a Modified Endowment Contract. Should the
policy lapse while policy loans are outstanding the portion of the loans
attributable to earnings will become taxable. Generally, interest paid on
any loan under a Policy owned by an individual will not be tax-deductible.
In addition, interest on any loan under a Policy owned by a taxpayer and
covering the life of any individual who is an officer or is financially
interested in the business carried on by that taxpayer will not be tax
deductible to the extent the aggregate amount of such loans with respect to
Policies covering such individual exceeds $50,000. Further, even as to
interest on loans up to $50,000 per such individual, such interest would not
be deductible if the Policy were deemed for federal tax purposes to be a
single premium life insurance contract. Policyowners should consult a
competent tax advisor as to whether the Policy would be so deemed.
The right to exchange the Policy for a flexible premium adjustable life
insurance policy (See Exchange Privilege, page 22), the right to change
owners (See General Provisions, page 28), and the provision for partial
withdrawals (See Surrenders, page 21) may have tax consequences depending on
the circumstances of such exchange, change, or withdrawal. Upon complete
surrender or when maturity benefits are paid, if the amount received plus
any outstanding policy debt exceeds the total premiums paid, (the "basis"),
that are not treated as previously withdrawn by the Policyowner, the excess
generally will be taxed as ordinary income.
<PAGE>
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend on applicable
law and the circumstances of each Policyowner or beneficiary. In addition,
if the Policy is used in connection with tax-qualified retirement plans,
certain limitations prescribed by the Service on, and rules with respect to
the taxation of, life insurance protection provided through such plans may
apply.
SAFEKEEPING OF THE ACCOUNT'S ASSETS
AVLIC holds the assets of the Account. The assets are kept physically segregated
and held separate and apart from the General Account assets, except for the
Fixed Account. AVLIC maintains records of all purchases and redemptions of Funds
shares by each of the Subaccounts.
VOTING RIGHTS
AVLIC is the legal holder of the shares held in the Subaccounts of the Account
and as such has the right to vote the shares; to elect Directors of the Funds,
to vote on matters that are required by the 1940 Act and upon any other matter
that may be voted upon at a shareholders's meeting. To the extent required by
law, AVLIC will vote all shares of the Funds held in the Account at regular and
special shareholder meetings of the Funds in accordance with instructions
received from Policyowners based on the number of shares held as of the record
date declared by the Fund's Board of Directors.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policyowner is determined by dividing the Policy's accumulation value held in
that Subaccount by the net asset value of one share in the corresponding
portfolio of the Fund. Fractional shares will be counted. Fund shares held in
each Subaccount for which no timely instructions from Policyowners are received
and Fund shares held in each Subaccount which do not support Policyowner
interests will be voted by AVLIC in the same proportion as those shares in that
Subaccount for which timely instructions are received. Voting instructions to
abstain on any item to be voted will be applied on a pro rata basis to reduce
the votes eligible to be cast. Should applicable federal securities laws or
regulations permit, AVLIC may elect to vote shares of the Fund in its own right.
DISREGARD OF VOTING INSTRUCTION. AVLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' Portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, AVLIC itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for the Funds, if AVLIC reasonably
disapproves those changes in accordance with applicable federal regulations. If
AVLIC does disregard voting instructions, it will advise Policyowners of that
action and its reasons for the action in the next annual report or proxy
statement to Policyowners.
STATE REGULATION OF AVLIC
AVLIC, a stock life insurance company organized under the laws of Nebraska, is
subject to regulation by the Nebraska Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of AVLIC and the Account as of December 31
of the preceding year must be filed with the Nebraska Department of Insurance.
Periodically, the Nebraska Department of Insurance examines the liabilities and
reserves of AVLIC and the Account and certifies their adequacy.
In addition, AVLIC is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
policies offered by the Prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC
Shows name and position(s) with AVLIC* followed by the principal occupations for
the last five years.***
LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER
Director, Chairman of the Board, and Chief Executive Officer: ALIC**, First
Ameritas Life Insurance Corp. of New York.; Director, Chairman of the Board,
President, and Chief Executive Officer: Pathmark Assurance Company, Bankers Life
Nebraska Company, BLN Financial Services, Inc.; Director and Chairman of the
Board: Veritas Corp., Ameritas Investment Corp., Ameritas Investment Advisors,
Inc., FMA Realty Inc.; Director, Chairman, President, Chief Executive Officer:
Lincoln Gateway Shopping Center, Inc.; Director: Ameritas Bankers Assurance
Company, Ameritas Managed Dental Plan, Inc.
KENNETH C. LOUIS, DIRECTOR, PRESIDENT & CHIEF OPERATING OFFICER
President and Chief Operating Officer: ALIC; Director: First Ameritas Life
Insurance Corp. of New York, Ameritas Investment Advisors, Inc., Ameritas
Investment Corp., Veritas Corp., Ameritas Bankers Assurance Company, Bankers
Life Nebraska Company, BLN Financial Services, Inc., FMA Realty, Inc., Lincoln
Gateway Shopping Center, Inc., Pathmark Assurance Company, Ameritas Managed
Dental Plan, Inc.
NORMAN M. KRIVOSHA, DIRECTOR, SECRETARY
Executive Vice President, Secretary & Corporate General Counsel: ALIC; Director,
Secretary: Ameritas Investment Advisors Inc., Ameritas Investment Corp., BLN
Financial Services, Inc., Ameritas Bankers Assurance Company, Veritas Corp.,
Pathmark Assurance Company, Bankers Life Nebraska Company; Armenta Corp., FMA
Realty, Inc.; Ameritas Managed Dental Plan, Inc.; Vice President, Secretary &
General Counsel: First Ameritas Life Insurance Corp. of New York; Secretary:
Lincoln Gateway Shopping Center, Inc.
JON C. HEADRICK, TREASURER
Executive Vice President-Investments and Treasurer:ALIC; Treasurer to: Veritas
Corp., Ameritas Bankers Assurance Company, Bankers Life Nebraska Company,
Pathmark Assurance Company, First Ameritas Life Insurance Corp. of New York,
Ameritas Managed Dental Plan, Inc.; Director, Vice President and Treasurer to:
BLN Financial Services Inc.; Director, President and Treasurer: FMA Realty Inc.,
Armenta Corp.; Director, President, Chief Executive Officer, and Treasurer:
Ameritas Investment Corp.; Director, President and Chief Executive Officer:
Ameritas Investment Advisors Inc.
JAMES R. HAIRE, DIRECTOR, VICE PRESIDENT
Senior Vice President-Corporate Actuary and Strategic Development: ALIC;
Director: Pathmark Assurance Co.; Director and Vice President: First Ameritas
Life Insurance Corp. of New York.
JOANN MARTIN, DIRECTOR, COMPTROLLER
Senior Vice President-Controller and Chief Financial Officer: ALIC; Director,
Ameritas Managed Dental Plan, Inc., Ameritas Investment Advisors, Inc., Ameritas
Investment Corp., BLN Financial Services, Inc., FMA Realty, Inc.; Comptroller
to: Veritas Corp., Bankers Life Nebraska Company, Pathmark Assurance Company;
Director, Treasurer: Lincoln Gateway Shopping Center Inc.; Director,
Comptroller, Assistant Secretary: Ameritas Bankers Assurance Company; Vice
President, Comptroller: First Ameritas Life Insurance Corp. of New York.
THOMAS D. HIGLEY, VICE PRESIDENT AND ACTUARY
Vice President - Individual Financial Operations and Actuarial, ALIC; Vice
President and Actuary: First Ameritas Life Insurance Corp. of New York;
Director, Vice President and Actuary, Ameritas Bankers Assurance Company.
WAYNE E. BREWSTER, VICE PRESIDENT-VARIABLE SALES
Vice President-Variable Sales: ALIC.
KENNETH R. JONES, VICE PRESIDENT-CORPORATE COMPLIANCE AND ASSISTANT SECRETARY
Vice President, Corporate Compliance & Assistant Secretary: ALIC; Ameritas
Investment Advisors, Inc., Ameritas Investment Corp., First Ameritas Life
Insurance Corp. of New York; Assistant Vice President & Assistant Secretary:
Bankers Life Nebraska Company, Pathmark Assurance Company.
* The principal business address of each person listed is Ameritas Variable
Life Insurance Company, One Ameritas Way, 5900 "O" Street, P.O. Box
81889, Lincoln, Nebraska 68501.
** Ameritas Life Insurance Corp.
*** Where an individual has held more than one position with an organization
during the last 5-year period, the last position held has been given.
<PAGE>
LEGAL MATTERS
All matters of Nebraska law pertaining to the Policy, including the validity of
the Policy and AVLIC's right to issue the Policy under Nebraska Insurance Law,
have been passed upon by Norman M. Krivosha, Director and Secretary of AVLIC.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Account is a party or to which the
assets of the Account are subject. AVLIC is not involved in any litigation that
is of material importance in relation to its total assets or that relates to its
total assets or that related to the Account.
EXPERTS
The financial statements of AVLIC as of December 31, 1994, and 1993, and for
each of the three years in the period ended December 31, 1994 and the financial
statements of the Account as of December 31, 1994 and for each of the three
years in the period then ended, included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
Actuarial matters included in this Prospectus have been examined by Thomas P.
McArdle, Assistant Vice President and Associate Actuary of Ameritas Life
Insurance Corp., as stated in the opinion filed as an exhibit to the
registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Account, AVLIC and the Policy offered hereby.
Statements contained in this Prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of AVLIC which are included in this Prospectus should
be considered only as bearing on the ability of AVLIC to meet its obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in the Account.
<PAGE>
Independent Auditors' Report
Board of Directors
Ameritas Variable Life
Insurance Company
Lincoln, Nebraska
We have audited the accompanying statment of net assets of Ameritas Variable
Life Insurance Company Separate Account V as of December 31, 1994, and the
related statements of operations and changes in net assets for each of the three
years in the period then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1994. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company
Separate Account V as of December 31, 1994, and the results of its operations
and changes in its net assets for each of the three years in the period then
ended, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 1, 1995
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1994
ASSETS
<S> <C>
INVESTMENTS AT NET ASSET VALUE:
Variable Insurance Products Fund:
---------------------------------
Money Market Portfolio - 6,247,661.970 shares at
$1.00 per share (cost $6,247,662) $ 6,247,662
Equity Income Portfolio - 410,159.302 shares at
$15.35 per share (cost $5,539,697) 6,295,945
Growth Portfolio - 569,981.087 shares at
$21.69 per share (cost $10,666,166) 12,362,890
High Income Portfolio - 276,041.963 at
$10.76 per share (cost $2,889,687) 2,970,211
Overseas Portfolio - 316,186.952 shares at
$15.67 per share (cost $4,703,647) 4,954,650
Variable Insurance Products Fund II:
------------------------------------
Asset Manager Portfolio - 1,171,722.945 shares at
$13.79 per share (cost $15,864,705) 16,158,059
Investment Grade Bond Portfolio - 82,319.293 shares at
$11.02 per share (cost $967,658) 907,159
Alger American Fund:
--------------------
Small Capitalization Portfolio - 156,146.723 shares at
$27.31 per share (cost $4,083,316) 4,264,367
Growth Portfolio - 87,011.270 shares at
$23.13 per share (cost $1,930,745) 2,012,571
Income and Growth Portfolio - 23,109.060 shares at
$13.30 per share (cost $326,379) 307,350
Midcap Growth Portfolio - 40,556.228 shares at
$13.46 per share (cost $522,284) 545,887
Balanced Portfolio - 11,683.157 shares at
$10.80 per share (cost $126,560) 126,178
Dreyfus Stock Index Fund:
-------------------------
Stock Index Fund Portfolio - 74,453.907 shares at
$12.94 per share (cost $1,052,851) 963,434
-------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $ 58,116,363
=============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
1994 1993 1992
-------------- ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividend Distributions received $ 799,210 $ 499,740 $ 270,834
EXPENSE
Charges to policyowners for assuming
mortality and expense risk (Note B) 465,706 260,944 121,652
-------------- ------------- -------------
INVESTMENT INCOME - NET 333,504 238,796 149,182
-------------- ------------- -------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS - NET
Capital Gain Distributions received 1,403,280 292,625 121,808
Unrealized increase/(decrease) (2,469,056) 3,683,814 983,400
-------------- ------------- -------------
NET GAIN/(LOSS) ON INVESTMENTS (1,065,776) 3,976,439 1,105,208
-------------- ------------- -------------
NET (DECREASE)/INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS (732,272) 4,215,235 1,254,390
NET INCREASE IN NET ASSETS RESULTING
FROM PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS (NOTE B) 21,904,104 14,840,992 8,433,982
-------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS 21,171,832 19,056,227 9,688,372
NET ASSETS
Beginning of period 36,944,531 17,888,304 8,199,932
-------------- ------------- -------------
End of period $ 58,116,363 $ 36,944,531 $ 17,888,304
============== ============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
A. ORGANIZATION AND ACCOUNTING POLICIES:
-------------------------------------
Ameritas Variable Life Insurance Company Separate Account V (the Account)
was established on August 28, 1985, under Nebraska law by Ameritas Variable
Life Insurance Company (AVLIC), a wholly-owned subsidiary of Ameritas Life
Insurance Corp. (ALIC). The assets of the account are segregated from
AVLIC's other assets and are used only to support variable life products
issued by AVLIC.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. At December 31, 1994, there are
thirteen subaccounts within the Account. Five of the subaccounts invest
only in a corresponding Portfolio of Variable Insurance Products Fund and
two invest only in a corresponding Portfolio of Variable Insurance Products
Fund II. Both funds are diversified open-end management investment
companies and are managed by Fidelity Management and Research Company.
Five of the subaccounts invest only in a corresponding Portfolio of Alger
American Fund which is a diversified open-end management investment
company managed by Fred Alger Management, Inc. One subaccount invests only
in a corresponding Portfolio of Dreyfus Stock Index Fund which is a non-
diversified open-end management investment company managed by Wells Fargo
Nikko Investment Advisors. All four funds are registered under the
Investment Company Act of 1940, as amended. Each portfolio pays the
manager a monthly fee for managing its investments and business affairs.
The assets of the account are carried at the net asset value of the
underlying Portfolios of the Funds. The value of the policyowners'
units corresponds to the Account's investment in the underlying
subaccounts. The availability of investment portfolio and subaccount
options may vary between products.
AVLIC currently does not expect to incur any federal income tax liability
attributable to the Account with respect to the sale of the variable life
insurance policies. If, however, AVLIC determines that it may incur such
taxes attributable to the Account, it may assess a charge for such taxes
against the Account.
B. POLICYHOLDER CHARGES:
---------------------
AVLIC charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing
equity of policyowners held in each subaccount per each product's current
policy provisions. Additional charges are made at intervals and in amounts
per each product's current policy provisions. These charges are prorated
against the balance in each investment option of the policyholder,
including the Fixed Account option which is not reflected in this
separate account. The withdrawal of these charges are included as other
operating transfers.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
C. DISSOLUTION OF ZERO COUPON BOND PORTFOLIO:
------------------------------------------
The Zero Coupon Bond Portfolio managed by Fidelity Management and Research
Company was closed by the fund manager effective December 30, 1992. These
funds had been unavailable to new policyowners or for transfers since
May 1, 1991. A substitution order from the Securities and Exchange
Commission allowed the transfer of accumulated values invested in the 1993
Zero Coupon Bond subaccount to the Money Market subaccount of the Variable
Insurance Products Fund and the transfer of accumulated values in the 1998
and 2003 Zero Coupon Bond subaccounts to the Investment Grade Bond
subaccount of the Variable Insurance Products Fund II on December 30, 1992.
D. PLAN FOR MERGER:
----------------
In December 1994 the Board of Directors for AVLIC and ALIC approved a plan
of statutory merger of the companies. The merger, which will combine
the assets and liabilities of the companies, has an effective date of
May 1, 1995, or at such later date as all required regulatory approvals
can be obtained. The plan of merger has been approved by the Insurance
Department of the State of Nebraska.
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
E. INFORMATION BY FUND:
--------------------
Alger American Fund
-----------------------------------------------------------------------------------------
Income and Midcap
Small Cap Growth Growth Growth Balanced
---------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance 12-31-93 $ 2,431,108 $ 513,578 $ 155,544 $ 91,469 $ 12,416
Distributed Earnings 197,447 56,309 12,250 805 1,173
Mortality Risk Charge (28,810) (10,955) (2,338) (2,777) (667)
Unrealized increase/(decrease) (212,648) 11,388 (27,043) 15,802 (793)
Net premium transferred 1,877,270 1,442,251 168,937 440,588 114,049
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-94 $ 4,264,367 $ 2,012,571 $ 307,350 $ 545,887 $ 126,178
================ ================= ================= =============== ===============
Variable Insurance Products Fund
-----------------------------------------------------------------------------------------
Money Equity High
Market Income Growth Income Overseas
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-93 $ 3,302,391 $ 4,081,214 $ 8,666,232 $ 2,112,409 $ 2,627,460
Distributed Earnings 227,947 343,291 540,322 192,676 16,253
Mortality Risk Charge (53,086) (50,692) (97,597) (24,422) (41,486)
Unrealized increase/(decrease) --- (10,817) (430,322) (216,500) (57,561)
Net premium transferred 2,770,410 1,932,949 3,684,255 906,048 2,409,984
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-94 $ 6,247,662 $ 6,295,945 $ 12,362,890 $ 2,970,211 $ 4,954,650
================ ================= ================= =============== ===============
Variable Insurance
Products Fund II Dreyfus
----------------------------------- -----------------
Asset Investment Stock
Manager Grade Bond Index Fund TOTAL
---------------- ----------------- ----------------- ---------------
Balance 12-31-93 $ 11,412,386 $ 1,069,216 $ 469,108 $ 36,944,531
Distributed Earnings 589,342 2,944 21,731 2,202,490
Mortality Risk Charge (133,984) (12,468) (6,424) (465,706)
Unrealized increase/(decrease) (1,465,271) (53,875) (21,416) (2,469,056)
Net premium transferred 5,755,586 (98,658) 500,435 21,904,104
---------------- ----------------- ----------------- --------------
Balance 12-31-94 $ 16,158,059 $ 907,159 $ 963,434 $ 58,116,363
================ ================= ================= ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
E. INFORMATION BY FUND:
--------------------
Alger American Fund
-----------------------------------------------------------------------------------------
Income and Midcap
Small Cap Growth Growth Growth(1) Balanced(2)
---------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance 12-31-92 $ 596,677 $ 56,046 $ 37,708 $ --- $ ---
Distributed earnings --- 189 218 922 ---
Mortality risk charge (12,717) (2,485) (775) (191) (42)
Unrealized increase/(decrease) 298,611 64,901 6,462 7,801 411
Net premium transferred 1,548,537 394,927 111,931 82,937 12,047
---------------- ----------------- ----------------- --------------- --------------
Balance 12-31-93 $ 2,431,108 $ 513,578 $ 155,544 $ 91,469 $ 12,416
================ ================= ================= =============== ==============
Variable Insurance Products Fund
-----------------------------------------------------------------------------------------
Money Equity High
Market Income Growth Income Overseas
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-92 $ 2,600,260 $ 2,476,762 $ 5,152,469 $ 857,133 $ 586,673
Distributed earnings 84,138 89,586 125,620 82,061 15,219
Mortality risk charge (26,767) (33,306) (67,253) (17,034) (13,317)
Unrealized increase/(decrease) --- 430,027 1,063,056 215,584 333,367
Net premium transferred 644,760 1,118,145 2,392.340 974,665 1,705,518
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-93 $ 3,302,391 $ 4,081,214 $ 8,666,232 $ 2,112,409 $ 2,627,460
================ ================= ================= =============== ===============
Variable Insurance
Products Fund II Dreyfus
----------------------------------- -----------------
Asset Investment Stock
Manager Grade Bond Index Fund TOTAL
---------------- ----------------- ----------------- ----------------
Balance 12-31-92 $ 4,852,263 $ 510,803 $ 161,510 $ 17,888,304
Distributed earnings 237,544 60,677 96,191 792,365
Mortality risk charge (74,672) (9,236) (3,149) (260,944)
Unrealized increase/(decrease) 1,317,267 15,527 (69,200) 3,683,814
Net premium transferred 5,079,984 491,445 283,756 14,840,992
---------------- ----------------- ----------------- ---------------
Balance 12-31-93 $ 11,412,386 $ 1,069,216 $ 469,108 $ 36,944,531
================ ================= ================= ===============
(1) Commenced business 06/17/93.
(2) Commenced business 06/28/93.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
E. INFORMATION BY FUND:
--------------------
Variable Insurance Products Fund
-----------------------------------------------------------------------------------------
Money Equity High
Market Income Growth Income Overseas
---------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance 12-31-91 $ 1,221,511 $ 1,553,786 $ 2,947,040 $ 290,693 $ 250,623
Distributed earnings 84,230 63,812 72,609 29,542 3,800
Mortality risk charge (24,206) (18,988) (36,300) (5,602) (3,749)
Realized gain/(loss)
on distribution --- --- --- --- ---
Unrealized increase/(decrease --- 243,041 394,360 65,738 (48,827)
Net premium transferred 1,318,725 635,111 1,774,760 476,762 384,826
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-92 $ 2,600,260 $ 2,476,762 $ 5,152,469 $ 857,133 $ 586,673
================ ================= ================= =============== ===============
Variable Insurance
Products Fund II Zero Coupon Bond Fund (5)
---------------------------------- ----------------------------------------------------
Asset Investment
Manager Grade Bond 1993 1998 2003
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-91 $ 1,679,178 $ 40,920 $ 44,420 $ 85,185 $ 86,576
Distributee earnings 97,937 31,832 2,437 1,254 1,306
Mortality risk charge (27,359) (1,848) (347) (550) (691)
Realized gain/(loss)
on distribution --- --- (724) 10,008 12,062
Unrealized increase/(decrease) 246,506 (22,909) (152) (8,710) (10,369)
Net premium transferred 2,856,001 462,808 (45,634) (87,187) (88,884)
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-92 $ 4,852,263 $ 510,803 $ --- $ --- $ ---
================ ================= ================= =============== ===============
Alger American Fund Dreyfus
----------------------------------------------------- ---------------------------------
Income and Stock
Small Cap(1) Growth(2) Growth (3) Index Fund(4) TOTAL
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-91 $ --- $ --- $ --- $ --- $ 8,199,932
Distributed earnings --- --- --- 3,883 392,642
Mortality risk charge (1,586) (114) (45) (267) (121,652)
Realized gain/(loss)
on distribution --- --- --- --- 21,346
Unrealized increase/(Decrease) 95,088 5,537 1,552 1,199 962,054
Net premium transferred 503,175 50,623 36,201 156,695 8,433,982
---------------- ----------------- ----------------- --------------- ---------------
Balance 12-31-92 $ 596,677 $ 56,046 $ 37,708 $ 161,510 $ 17,888,304
================ ================= ================= =============== ===============
(1) Commenced business 06/05/92. (4) Commenced business 05/19/92.
(2) Commenced business 05/29/92. (5) Zero Coupon Bond funds closed by fund
(3) Commenced busniess 05/20/92. manager effective 12/30/92.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
ASSETS
<S> <C>
INVESTMENTS AT NET ASSET VALUE:
Variable Insurance Products Fund:
---------------------------------
Money Market Portfolio - 6,551,977.180 shares at
$1.00 per share (cost $6,551,977) $ 6,551,977
Equity Income Portfolio - 535,943.192 shares at
$16.89 per share (cost $7,538,628) 9,052,081
Growth Portfolio - 630,456.322 shares at
$26.70 per share (cost $12,061,809) 16,833,184
High Income Portfolio - 398,014.509 at
$11.19 per share (cost $4,157,689) 4,453,782
Overseas Portfolio - 367,670.267 shares at
$16.19 per share (cost $5,440,713) 5,952,582
Variable Insurance Products Fund II:
------------------------------------
Asset Manager Portfolio - 1,237,166.357 shares at
$14.33 per share (cost $16,751,909) 17,728,594
Investment Grade Bond Portfolio - 102,502.882 shares at
$11.76 per share (cost $1,192,088) 1,205,434
Alger American Fund:
--------------------
Small Capitalization Portfolio - 194,281.254 shares at
$36.02 per share (cost $5,252,336) 6,998,011
Growth Portfolio - 126,367.792 shares at
$28.60 per share (cost $2,923,647) 3,614,119
Income and Growth Portfolio - 36,704.822 shares at
$16.84 per share (cost $521,606) 618,109
Midcap Growth Portfolio - 82,090.271 shares at
$17.12 per share (cost $1,133,877) 1,405,385
Balanced Portfolio - 16,746.949 shares at
$12.59 per share (cost $185,566) 210,844
Dreyfus Stock Index Fund:
-------------------------
Stock Index Fund Portfolio - 94,791.022 shares at
$15.34 per share (cost $1,346,721) 1,454,094
-----------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $ 76,078,196
===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
1995 1994
--------------- --------------
<S> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 984,106 $ 566,381
EXPENSE
Charges to policyowners for assuming
mortality and expense risk 313,108 206,755
--------------- --------------
INVESTMENT INCOME - NET 670,998 359,626
--------------- --------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS - NET
Capital gain distributions received 382,049 1,398,987
Unrealized increase/(decrease) 7,824,624 (4,231,961)
--------------- --------------
NET GAIN/(LOSS) ON INVESTMENTS 8,206,673 (2,832,974)
--------------- --------------
NET (DECREASE)/INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS 8,877,671 (2,473,348)
NET INCREASE IN NET ASSETS RESULTING
FROM PREMIUM PAYMENTS AND OTHER
OPERATING TRANSFERS 9,084,162 13,033,162
--------------- --------------
TOTAL INCREASE IN NET ASSETS 17,961,833 10,559,814
NET ASSETS
Beginning of period 58,116,363 36,944,530
--------------- --------------
End of period $ 76,078,196 $ 47,504,344
=============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
A. ORGANIZATION AND ACCOUNTING POLICIES:
-------------------------------------
Ameritas Variable Life Insurance Company Separate Account V (the Account)
was established on August 28, 1985, under Nebraska law by Ameritas Variable
Life Insurance Company (AVLIC), a wholly-owned subsidiary of Ameritas Life
Insurance Corp. (ALIC). The assets of the Account are segregated from
AVLIC's other assets and are used only to support variable products issued
by AVLIC.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. At June 30, 1995, there are thirteen
subaccounts within the Account. Five of the subaccounts invest only in a
corresponding Portfolio of Variable Insurance Products Fund and two invest
only in a corresponding Portfolio of Variable Insurance Products Fund II.
Both funds are diversified open-end management investment companies and are
managed by Fidelity Management and Research Company. Five of the
subaccounts invest only in a corresponding Portfolio of Alger American Fund
which is a diversified open-end management investment company managed by
Fred Alger Management, Inc. One subaccount invests only in a corresponding
Portfolio of Dreyfus Stock Index Fund which is a non-diversified open-end
management investment company managed by Wells Fargo Nikko Investment
Advisors. All four funds are registered under the Investment Company Act of
l940, as amended. Each Portfolio pays the manager a monthly fee for
managing its investments and business affairs. The assets of the Account
are carried at the net asset value of the underlying Portfolios of the
Funds. The value of the policyowners' units corresponds to the Account's
investment in the underlying subaccounts. The availability of investment
portfolio and subaccount options may vary between products.
AVLIC currently does not expect to incur any federal income tax liability
attributable to the Account with respect to the sale of the variable life
insurance policies. If, however, AVLIC determines that it may incur such
taxes attributable to the Account, it may assess a charge for such taxes
against the Account.
B. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS:
----------------------------------------------------------------
Management believes that all adjustments, consisting of only normal
recurring accruals, considered necessary for a fair presentation of the
unaudited interim financial statements have been included. The results of
operations for any interim peirod are not necessarily indicative of results
for the full year. The unaudited interim financial statements should be
read in conjunction with the audited financial statements and notes thereto
for the years ended December 31, 1994 and 1993.
C. PLAN FOR MERGER:
----------------
In December 1994 the Board of Directors for AVLIC and ALIC approved a plan
of statutory merger of the companies. The merger, which will combine the
assets and liabilities of the companies, has an effective date of May 1,
1995, or at such later date as all required regulatory approvals can be
obtained. The plan of merger has been approved by the Insurance Department
of the State of Nebraska. The merger was subsequently postponed until
May 1, 1996.
<PAGE>
Independent Auditors' Report
Board of Directors
Ameritas Variable Life
Insurance Company
Lincoln, Nebraska
We have audited the accompanying balance sheets of Ameritas Variable Life
Insurance Company as of December 31, 1994 and 1993, and the related statements
of operations, changes in stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company as
of December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with statutory accounting principles which are considered generally
accepted accounting principles for mutual life insurance companies and their
insurance subsidiaries.
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 1, 1995
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEET
(Columnar amounts in thousands)
December 31,
--------------------------
1994 1993
ASSETS ----------- ----------
------
<S> <C> <C>
Investments:
Bonds (Note C) $ 34,607 $ 23,974
Short-term investments 7,714 19,273
Loans on life insurance policies 1,597 1,021
--------- ---------
Total investments 43,918 44,268
Cash 431 1,161
Accrued investment income 774 676
Reinsurance Recoverable - affiliates (Note E) 467 -
Other assets 129 97
Separate Accounts (Note F) 462,886 325,088
--------- ---------
$ 508,605 $ 371,290
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
LIABILITIES:
Life and annuity reserves $ 30,578 $ 31,261
Funds left on deposit with the company 142 97
Interest maintenance reserve 36 31
Accounts payables - affiliates (Note E) 884 1,570
Income tax payable-affiliates 36 109
Accrued professional fees 11 40
Sundry current liabilities -
Cash with applications 562 1,995
Other 692 394
Valuation Reserve 163 100
Separate Accounts (Note F) 462,886 325,088
--------- ---------
495,990 360,685
--------- ---------
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share; 4,000 4,000
authorized 50,000 shares, issued and
outstanding 40,000 shares
Additional paid-in capital 29,700 23,700
Deficit (21,085) (17,095)
---------- ----------
12,615 10,605
---------- ----------
$ 508,605 $ 371,290
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(in thousands)
Year Ended December 31,
--------------------------------------
1994 1993 1992
------------ ----------- ----------
<S> <C> <C> <C>
INCOME:
Premium income $ 174,085 $ 155,166 $ 84,181
Less reinsurance: (Note E)
Yearly renewable term (1,333) (843) (293)
Fixed account - - (3,840)
------------ ----------- ---------
Net premium income 172,752 154,323 80,048
Net investment income (Note D) 3,050 2,897 1,732
Miscellaneous insurance income 1,398 459 596
------------ ----------- ---------
177,200 157,679 82,376
------------ ----------- ---------
EXPENSES:
Increase (Decrease) in reserves (637) 1,717 28,671
Benefits to policyowners 19,012 8,128 3,902
Redemptions from fixed account - - (25,831)
Commissions 15,799 13,080 7,733
General insurance expenses (Note E) 6,403 4,216 3,583
Taxes, licenses and fees 1,183 829 447
Net premium transferred to
Separate Accounts (Note F) 139,974 136,451 71,043
------------ ----------- ----------
181,734 164,421 89,548
(Loss) before income taxes ------------ ----------- ----------
and realized capital gains (4,535) (6,742) (7,172)
Income Taxes (benefit)-current (611) (1,501) (1,844)
------------ ----------- ---------
(Loss) before realized capital gains (3,923) (5,241) (5,328)
Realized capital gains (net of tax of $11, $19 and $0
and $12, $32 and $0 transfers to interest maintenance
reserve for 1994, 1993 and 1992 , respectively) (2) 1 -
------------ ---------- --------
Net (loss) $ (3,925) $ (5,240) $ (5,328)
============ ========== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands, except shares)
Additional
Common Stock Paid in
Shares Amount Capital Deficit Total
------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1992 40,000 $ 4,000 $ 13,200 $ (6,492) $ 10,708
Decrease in non-admitted assets - - - 65 65
Transfer to Valuation Reserve - - - (38) (38)
Capital Contribution from
Ameritas Life Insurance Corp. - - 5,000 - 5,000
Net (loss) - - - (5,328) (5,328)
--------- ----------- ---------- ----------- ----------
BALANCE, December 31, 1992 40,000 $ 4,000 $ 18,200 $ (11,793) $ 10,407
Transfer to Valuation Reserve - - - (62) (62)
Capital Contribution from
Ameritas Life Insurance Corp. - - 5,500 - 5,500
Net (loss) - - - (5,240) (5,240)
--------- ------------ ---------- ---------- ---------
BALANCE, December 31, 1993 40,000 4,000 23,700 (17,095) 10,605
Increase in non-admitted assets - - - (2) (2)
Transfer to Valuation Reserve - - - (63) (63)
Capital Contribution from
Ameritas Life Insurance Corp. - - 6,000 - 6,000
Net (loss) - - - (3,925) (3,925)
---------- ------------ ---------- ---------- ----------
BALANCE, December 31, 1994 40,000 $ 4,000 $ 29,700 $ (21,085) $ 12,615
========== ============ ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
-----------------------
1994 1993 1992
---------------- ---------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net premium income received $ 172,701 $ 154,408 $ 80,037
Miscellaneous insurance income 1,398 459 596
Net investment income received 2,899 2,848 1,714
Net premium transferred to Separate Accounts (140,161) (136,451) (71,043)
Benefits paid to policyowners (18,944) (8,207) (3,823)
Redemptions from fixed account - - 1,931
Commissions (15,799) (13,080) (7,659)
Expenses and taxes (7,547) (4,939) (3,950)
Net increase in policy loans (576) (592) (99)
Income taxes 527 1,630 1,805
Other operating income and disbursements (2,222) 270 2,496
--------------- --------------- -------------
Net cash (used in) provided by operating activities (7,724) (3,654) 2,005
--------------- --------------- -------------
INVESTING ACTIVITIES:
Maturity of bonds 5,108 8,266 3,069
Purchase of Investments (15,673) (1,460) (448)
--------------- --------------- -------------
Net cash (used in) provided by investing activities (10,565) 6,806 2,621
--------------- --------------- -------------
FINANCING ACTIVITIES:
Capital Contribution 6,000 5,500 5,000
--------------- --------------- -------------
NET INCREASE (DECREASE) IN CASH AND
SHORT TERM INVESTMENTS (12,289) 8,652 9,626
CASH AND SHORT TERM INVESTMENTS -
BEGINNING OF YEAR 20,434 11,782 2,156
--------------- --------------- -------------
CASH AND SHORT TERM INVESTMENTS -
END OF YEAR $ 8,145 $ 20,434 $ 11,782
=============== =============== =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------------
Ameritas Variable Life Insurance Company (the Company), a stock life insurance
company domiciled in the State of Nebraska, is a wholly-owned subsidiary of
Ameritas Life Insurance Corp.(ALIC), a mutual life insurance company. The
Company began issuing variable life insurance and variable annuity policies in
1987. The variable life and variable annuity policies are not participating with
respect to dividends.
The accompanying financial statements have been prepared in accordance with life
insurance accounting practices prescribed by the Insurance Department of the
State of Nebraska. While appropriate for mutual life insurance companies, such
accounting practices differ in certain respects from generally accepted
accounting principles followed by other business enterprises. The Financial
Accounting Standards Board (FASB) has undertaken consideration of changing those
methods constituting generally accepted accounting principles applicable to
mutual life insurance companies. In accordance with pronouncements issued by the
FASB in 1993 and 1994, financial statements prepared on the basis of statutory
accounting practices will no longer be described as prepared in conformity with
generally accepted accounting principles for fiscal years beginning after
December 15, 1995.
The principal accounting and reporting practices followed are:
INVESTMENTS-Bonds and short-term investments earning interest are carried at
amortized cost which, for short-term investments, approximates market. It is
management's intent to hold fixed maturity securities to maturity; thus,
adjustment to market value is not considered appropriate. Separate account
assets are carried at market. Realized gains and losses are determined on the
basis of specific identification. At December 31, 1994, the Company had
securities with a book value of $3,278 and market value of $3,149 on deposit
with various State Insurance Departments.
ACQUISITION COSTS - Commissions, underwriting and other costs of issuing new
policies as well as maintenance and settlement costs are reported as costs of
insurance operations in the period incurred.
PREMIUMS - Premiums are reported as income when collected over the premium
paying periods of the policies. Premium income consists of:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1994 1993 1992
---------- ----------- -----------
<S> <C> <C> <C>
Life $ 31,980 $ 20,591 $ 11,693
Annuity 142,105 134,575 72,488
---------- ----------- -----------
$ 174,085 $ 155,166 $ 84,181
========== =========== ===========
</TABLE>
POLICY RESERVES - Generally, reserves for variable life and annuity policies are
established and maintained on the basis of each policyholder's interest in the
account values of Separate Accounts V and VA-2. However, reserves established
for certain annuity products are determined on the basis of the Commissioner's
Annuity Reserve Valuation Method (CARVM) reserving method which approximates
surrender values. The account values are net of applicable cost of insurance and
other expense charges. The cost of insurance has been developed by actuarial
methods. The Company uses the mortality rates from the Commissioners 1980
Standard Ordinary Smoker and Non- Smoker, Male and Female Mortality Tables in
computing minimum values and reserves. Policy reserves are also provided for
amounts held in the general accounts consistent with requirements of the
Nebraska Department of Insurance.
INTEREST MAINTENANCE RESERVE - The interest maintenance reserve is calculated
based on the prescribed methods developed by the NAIC. This reserve is used to
accumulate realized gains and losses resulting from interest rate changes on
fixed income investments. These gains and losses are then amortized into
investment income over what would have been the remaining years to maturity of
the underlying investment. Amortization for the years ended December 31, 1994
and 1993 was $5 and $1, respectively. There was no amortization for the year
ended December 31, 1992.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------------
(Continued)
VALUATION RESERVE - Valuation reserves are a required appropriation of
Stockholder's Equity to provide for possible losses that may occur on
certain investments held by the Company. The appropriation (Asset Valuation
Reserve) is based on the holdings of bonds, stocks, mortgages, real estate
and short-term investments. Realized and unrealized gains and losses,
other than those resulting from interest rate changes, are added or
charged to the reserve (subject to certain maximums).
INCOME TAXES - The Company files a consolidated life/non-life tax return with
Ameritas Life Insurance Corp. and its subsidiaries. An agreement among
the members of the consolidated group provides for distribution of con-
solidated tax results as if filed on a separate return basis. The current
income tax expense or benefit (including effects of capital gains and
losses and net operating losses) is apportioned generally on a sub-group
(life/non-life) basis. As a result of deferred acquisition costs, current
tax benefits are less than the statutory corporate rate of 35%.
B. FINANCIAL INSTRUMENTS:
----------------------
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate a value:
Bonds
For publicly traded securities, fair value is determined using an independent
pricing source. For securities without a readily ascertainable fair value,
fair value has been determined using an interest rate spread matrix based
upon quality, weighted average maturity, and Treasury yields.
Short-term Investments
The carrying amount approximates fair value because of the short maturity
of these instruments.
Loans on Life Insurance Policies
Fair values for policy loans are estimated using discounted cash flow
analyses at interest rates currently offered for similar loans. Policy
loans with similar characteristics are aggregated for purposes of the
calculations.
Cash
The carrying amounts reported in the balance sheet equals fair value.
Accrued Investment Income
Fair value on accrued investment income equals book value.
Funds left on Deposit
Funds on deposit which do not have fixed maturities are carried at the amount
payable on demand at the reporting date.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
B. FINANCIAL INSTRUMENTS: (Continued)
The estimated fair values, as of December 31, 1994 and 1993, of the
Company's financial instruments are as follows:
<TABLE>
<CAPTION>
1994 1993
-------------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Financial Assets:
Bonds $ 34,607 $ 34,021 $ 23,974 $ 25,803
Short-term investments 7,714 7,714 19,273 19,273
Cash 431 431 1,161 1,161
Accrued investment income 774 774 676 676
Loans on life insurance 1,597 1,190 1,021 905
policies
Financial Liabilities:
Funds left on deposit 142 142 97 97
These fair values do not necessarily represent the value for which the
financial instrument could be sold.
</TABLE>
C. BONDS:
------
The table below provides additional information relating to bonds held by
the Company as of December 31, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized Fair Unrealized Unrealized Carrying
Cost Value Gains Losses Value
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
LONG TERM BONDS:
Corporate-U.S. $ 19,634 $ 19,396 $ 160 $ 398 $ 19,634
Corporate-Foreign 1,000 1,008 8 - 1,000
Mortgage-Backed 1,149 1,184 35 - 1,149
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 12,824 12,433 47 438 12,824
---------- ----------- ------------ ------------ ------------
$ 34,607 $ 34,021 $ 250 $ 836 $ 34,607
========== =========== ============ ============ ============
The comparative data as of December 31, 1993 is summarized as follows:
Gross Gross
Amortized Fair Unrealized Unrealized Carrying
Cost Value Gains Losses Value
----------- ----------- ------------ ------------ ------------
LONG TERM BONDS:
Corporate-U.S. $ 13,511 $ 14,801 $ 1,290 $ - $ 13,511
Mortgage-Backed 2,486 2,613 127 - 2,486
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 7,977 8,389 427 15 7,977
----------- ------------ ----------- ------------ ------------
$ 23,974 $ 25,803 $ 1,844 $ 15 $ 23,974
=========== ============ =========== ============ ============
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
C. BONDS: (Continued)
------
The carrying value and fair value of bonds at December 31, 1994 by
contractual maturity are shown below:
<TABLE>
<CAPTION>
Fair Carrying
Value Value
----------- -----------
<S> <C> <C>
Due in one year or less $ 1,512 $ 1,501
Due after one year through five years 22,306 22,655
Due after five years through ten years 8,517 8,806
Due after ten years 502 496
Mortgage-Backed Securities 1,184 1,149
---------- -----------
$ 34,021 $ 34,607
========== ===========
</TABLE>
Investments in securities of one issuer other than United States Government
and United States Government Agencies which exceed 10% of total
stockholder's equity as of December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Included in Bonds: Carrying
ISSUER Value
------ ------------
<S> <C>
Legget & Platt Inc Medi um Term Notes $ 1,500
Sears, Roebuck & Co 1,499
Included in Short-Term Investments:
ISSUER
------
GTE Northwest Inc Discount Note $ 1,397
Potomac Electric Power Co Disc Note 1,499
AT&T Corp Disc Note 1,299
Cargill Inc Disc Note 1,496
Investments in securities of one issuer other than United States Government
and United States Government Agencies which exceed 10% of total
stockholder's equity as of December 31, 1993 are as follows:
Included in Bonds: Carrying
ISSUER Value
------ ------------
Carlisle Company $ 1,200
Pep Boys 1,198
Sears, Roebuck & Co. 1,498
Included in Short-Term Investments:
ISSUER
------
American Tel & Tel $ 1,490
Bell South 1,495
Cargill 1,493
Congra 1,394
Cox Enterprises 1,492
Kmart 1,495
Nynex 1,494
Pepsico 1,494
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSUANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
D. INVESTMENT INCOME:
------------------
Net investment income for the years ended December 31, 1994, 1993 and 1992 is
comprised as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1994 1993 1992
---------- ----------- ------------
<S> <C> <C> <C>
Bonds $ 2,410 $ 2,384 $ 1,645
Short-term Investments 609 529 105
IMR Amortization 5 1 -
Loans on Life Insurance Policies 82 39 26
---------- ----------- ------------
Gross Investment Income 3,106 2,953 1,776
Less investment expenses 56 56 44
---------- ----------- ------------
Net Investment Income $ 3,050 $ 2,897 $ 1,732
========== =========== ============
</TABLE>
E. RELATED PARTY TRANSACTIONS:
---------------------------
Ameritas Life Insurance Corp. provides technical, financial and legal support
to the Company under an administrative service agreement. The cost of these
services to the Company for years ended December 31, 1994, 1993 and 1992
was $4,029, $1,915 and $1,285, respectively. The Company also leases office
space and furniture and equipment from Ameritas Life Insurance Corp. The
cost of these leases to the Company for the years ended December 31, 1994,
1993 and 1992 was $40, $54 and $48, respecitively.
Under the terms of an investment advisory agreement, the Company paid $43,
$44 and $32 for the years ended December 31, 1994, 1993 and 1992 to Ameritas
Investment Advisors Inc., an indirect wholly-owned subsidiary of Ameritas
Life Insurance Corp.
The Company entered into a reinsurance agreement (yearly renewable term) with
Ameritas Life Insurance Corp. Under this agreement, Ameritas Life Insurance
Corp. assumes life insurance risk in excess of the Company's $50 retention
limit. The Company paid $1,333, $843 and $293 of reinsurance premiums for
the years ended December 31, 1994, 1993 and 1992, respectively.
The Company ceded premium designated for the Fixed Account of $3,840 for the
year ended December 31, 1992. The reinsurance agreement on thee Fixed
Account between Ameritas Life Insurance Corp. and the Company provided either
party with the option to cancel the agreement when the Fixed Account reached
$20 million. The two parties cancelled the agreement as of July 31, 1992.
Starting July 1, 1992 all Fixed Account Activity is held and invested by the
Company. The value of the Fixed Account at July 31, 1992 ($24,900) was
transferred from ALIC to the Company during August, 1992 via participaiton
certificates.
The Company has entered into a guarantee agreement with Ameritas Life
Insurance Corp., whereby, Ameritas Life Insurance Corp. guarantees absolutely
the full, complete and absolute performance of all duties and obligations of
the Company.
The Company's products are distributed through Ameritas Investment Corp., an
indirect wholly-owned subsidiary of Ameritas Life Insurance Corp. The Company
received $266 and $23 for the years ended December 31, 1994 and 1993,
respectively, from this affiliate to partially defray the costs of materials,
prospectuses, etc.. In 1992 there were no reimbursements from this affiliate
for these purposes. Policies placed by this affiliate generated commission
expense of $15,223, $12,621 and $7,454 for the years ended December 31, 1994,
1993 and 1992, respectively.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
F. SEPARATE ACCOUNTS:
------------------
The Company is currently marketing variable life and variable annuity
products which have separate accounts as an investment option. Separate
Account V (Account V) was formed to receive and invest premium receipts from
variable life insurance policies issued by the Company. Separate Account
VA-2 (Account VA-2) was formed to receive and invest premium receipts from
variable annuity policies issued by the Company. Both Separate Accounts are
registered under the Investment Company Act of 1940, as amended, as unit
investment trusts. Account V and VA-2's assets and liabilities are
segregated from the other assets and liabilities of the Company.
Amounts in the Separate Accounts are:
<TABLE>
<CAPTION>
December 31, 1994
---------------------------
1994 1993
----------- ------------
<S> <C> <C>
Separate Account V $ 58,117 $ 36,945
Separate Account VA-2 404,769 288,143
----------- ------------
$ 462,886 $ 325,088
=========== ============
</TABLE>
The assets of Account V are invested in shares of the Variable Insurance
Products Fund, the Variable Insurance Products Fund II, Alger American Fund
and Dreyfus Stock Index Fund. Each fund is registered with the SEC under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company.
The Variable Insurance Products Fund and the Variable Insurance Products
Fund II are managed by Fidelity Management and Research Company. Variable
Insurance Products Fund has five portfolios: the Money Market Portfolio, the
High Income Portfolio, the Equity Income Portfolio, the Growth Portfolio and
the Overseas Portfolio. The Variable Insurance Fund II has two portfolios:
the Investment Grade Bond Portfolio and the Asset Manager Portfolio. The
Alger American Fund is managed by Fred Alger Management, Inc. and has five
portfolios: Income and Growth Portfolio, Small Capitalization Portfolio,
Growth Portfolio, MidCap Growth Portfolio (effective June 17, 1993) and the
Balanced Portfolio (effective June 28, 1993). The Dreyfus Stock Index Fund
is managed by Wells Fargo Nikko Investment Advisors and has the Stock Index
Fund Portfolio.
Prior to December 30, 1992 the Company offered Fidelity Management and
Research Company's Zero Coupon Bond Fund and its three portfolios, Zero
coupon 1993 Portfolio, Zero Coupon 1998 Portfolio and Zero Coupon 2003
Portfolio, as an investment option in Separate Account V. On December 31,
1992 Fidelity Management and Research Company liquidated and closed the Fund.
All remaining shares were transferred into other portfolios pursuant to a
substitution program approved by the Securities and Exchange Commission as of
the close of business December 30, 1992 Separate Account VA-2 allows
investment in the Variable Insurance Products Fund, Variable Insurance
Products Fund II, Alger American Fund and Dreyfus Stock Index Fund with the
same portfolios as described above.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
G. BENEFIT PLANS:
--------------
The Company is included in the noncontributory defined-benefit pension plan
that covers substantially all full-time employees of Ameritas Life
Insurance Corp. and its subsidiaries. Pension costs include current service
costs, which are accrued and fundedon a current basis, and past service
costs, which are amortized over the average remaining service life of all
employees on the adoption date. The assets of this plan are not segregated.
Total Company contributions for the years ended December 31, 1994, 1993 and
1992 were $47, $51 and $32, respectively.
The Company's employees also participate in a defined contribution thrift
plan that covers substantially all full-time employees of Ameritas Life
Insurance Corp. and its subsidiaries. Company matching contributions under
the plan range from 1% to 3% of the participant's compensation. Total Company
contributions for the years ended December 31, 1994, 1993 and 1992 were $20,
$22 and $21, respectively.
The Company is also included in the postretirement benefit plans provided to
retired employees of Ameritas Life Insurance Corp. and its subsidiaries.
These benefits are a specified percentage of premium until age 65 and a flat
dollar amount thereafter. Employees become eligible for these benefits upon
the attainment of age 55, 15 years of service and participation in the plan
for the immediately preceding 5 years. Benefit costs include the expected
cost of postretirement benefits for newly eligible employees, interest cost,
and gains and losses arising from differences between actuarial assumptions
and actual experience.
The liabilities of this plan are not segregated. Total Company contributions
for the years ended December 31, 1994 and 1993 were $7 and $2, respectively.
In 1992 there was no cost charged for postretirement benefits.
H. PLAN FOR MERGER:
----------------
In December 1994 the Board of Directors for AVLIC and ALIC approved a plan
of statutory merger of the companies. The merger, which will combine the
assets and liabilities of the companies, has an effective date of May 1,
1995, or at such later date as all required regulatory approvals can be
obtained. The plan of merger has been approved by the Insurance Department
of the State of Nebraska.
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEET
(Columnar amounts in thousands)
(Unaudited)
June 30, 1995
---------------
ASSETS
------
<S> <C>
Investments:
Bonds $ 36,163
Short-term investments 12,406
Loans on life insurance policies 2,059
-------------
Total investments 50,628
Cash 774
Accrued investment income 713
Other assets 120
Separate Accounts 561,343
------------
$ 613,578
============
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
LIABILITIES:
Life and annuity reserves $ 33,793
Funds left on deposit with the company 155
Interest maintenance reserve 52
Accounts payables - affiliates 2,273
Income tax payable-affiliates 766
Other liabilities 2,054
Asset valuation reserve 194
Separate Accounts 561,343
-----------
600,630
-----------
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share; 4,000
authorized 50,000 shares, issued and
outstanding 40,000 shares
Additional paid-in capital 29,700
Deficit (20,752)
-----------
12,948
-----------
$ 613,578
===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
Six Months End
----------------------------
1995 1994
------------- ------------
<S> <C> <C>
INCOME: Premium income $ 66,949 $ 113,836
Less reinsurance:
Yearly renewable term (2,607) (547)
------------ -----------
Net premium income 64,342 113,289
Net investment income 1,737 1,444
Miscellaneous insurance income 2,481 580
----------- ----------
68,560 115,313
----------- ----------
EXPENSES:
Increase (Decrease) in reserves 3,215 (844)
Benefits to policyowners 16,747 8,347
Commissions 6,450 9,721
General insurance expenses 3,156 3,080
Taxes, licenses and fees 645 687
Net premium transferred to
Separate Accounts 37,268 98,452
---------- --------
67,481 119,443
Income/(loss) before income taxes ---------- --------
and realized capital gains 1,079 (4,130)
Income Taxes (benefit)-current 720 (845)
---------- ---------
Income/(loss) before realized capital gains 359 (3,285)
Realized capital gains (net of tax of $11, and $11
and $18 and $8 transfers to interest maintenance
reserve for 1995 and 1994 , respectively) - -
---------- --------
Net income/(loss) $ 359 $ (3,285)
========== =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND THE YEAR ENDED DECEMBER 31, 1994
(in thousands, except shares)
(Unaudited)
Additional
Common Stock Paid in
Shares Amount Capital Deficit Total
------------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994 40,000 $ 4,000 $ 23,700 $ (17,095) $ 10,605
Decrease in non-admitted assets - - - (2) (2)
Transfer to asset valuation reserve - - - (63) (63)
Capital contribution from
Ameritas Life Insurance Corp. - - 6,000 - 6,000
Net (loss) - - - (3,925) (3,925)
---------- --------- ----------- --------- ---------
BALANCE, December 31, 1994 40,000 4,000 29,700 (21,085) 12,615
Increase in non-admitted assets - - - 5 5
Transfer to asset valuation reserve - - - (31) (31)
Net income - - - 359 359
----------- ---------- ----------- ---------- --------
BALANCE, June 30, 1995 40,000 $ 4,000 $ 29,700 $ (20,752) $ 12,948
=========== ========== =========== ========== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
Six Months Ended June 30,
---------------------------------
1995 1994
------------- ------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net premium income received $ 64,705 $ 113,254
Miscellaneous insurance income 1,033 37
Net investment income received 1,760 1,465
Net premium transferred to Separate Accounts (36,859) (98,118)
Benefits paid to policyowners (16,802) (8,143)
Commissions (5,230) (9,692)
Expenses and taxes (4,063) (3,782)
Net increase in policy loans (462) (206)
Other operating income and disbursements 2,448 76
------------ ------------
Net cash (used in) provided by operating activities 6,530 (5,109)
------------ ------------
INVESTING ACTIVITIES:
Maturity of bonds 2,501 3,402
Purchase of Investments (3,996) (7,216)
------------ ------------
Net cash (used in) provided by investing activities (1,495) (3,814)
------------ ------------
FINANCING ACTIVITIES:
Capital Contribution - 6,000
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
SHORT TERM INVESTMENTS 5,035 (2,923)
CASH AND SHORT TERM INVESTMENTS -
BEGINNING OF PERIOD 8,145 20,430
------------ ------------
CASH AND SHORT TERM INVESTMENTS -
END OF PERIOD $ 13,180 $ 17,507
============ ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(in thousands)
(Unaudited)
A. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------------
Ameritas Variable Life Insurance Company (the Company), a stock life
insurance company domiciled in the State of Nebraska, is a wholly-
owned subsidiary of Ameritas Life Insurance Corp. (ALIC), a mutual life
insurance company. The Company began issuing variable life insurance
and variable annuity policies in 1987. The variable life and variable
annuity policies are not participating with respect to dividends.
The accompanying financial statements have been prepared in accordance
with life insurance accounting practices prescribed or permitted by the
Insurance Department of the State of Nebraska. While appropriate for
mutual life insurance companies, such accounting practices differ in
certain respects from generally accepted accounting principles followed
by other business enterprises. The Financial Accounting Standards Board
(FASB) has undertaken consideration of changing those methods constituting
generally accepted accounting principles applicable to mutual life
insurance companies. In accordance with pronouncements issued by the FASB
in 1993 and 1994, financial statements prepared on the basis of statutory
accounting practices will no longer be described as prepared in conformity
with generally accepted accounting principles for fiscal years beginning
after December 15, 1995.
B. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS:
----------------------------------------------------------------
Management believes that all adjustments, consisting of only normal
recurring accruals, considered necessary for a fair presentation of the
unaudited interim financial statements have been included. The results
of operations for any interim period are not necessarily indicative of
results for the full year. The unaudited interim financial statements
should be read in conjunction with the audited financial statements and
notes thereto for the years ended December 31, 1994 and 1993.
C. PLAN OF MERGER
--------------
In December, 1994 the Board of Directors for the company and ALIC approved
a plan of statutory merger of the companies. The merger, which will
combine the assets and liabilities fo the companies, had an effective date
of May 1, 1995, or at such later date as all required regulatory approvals
can be obtained. The plan of merger has been approved by the Insurance
Department of the State of Nebraska. The merger was subsequently postponed
until May 1, 1996.
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND CASH VALUES
The following tables illustrate how the cash values and death benefits of a
Policy may change with the investment experience of the Fund. The tables show
how the cash values and death benefits of a Policy issued to an Insured of a
given age and specified underwriting risk classification who pays the given
premium at issue would vary over time if the investment return on the assets
held in each portfolio of the Funds were a uniform, gross, after-tax annual rate
of 0%, 6%, or 12%. The tables on pages 66 through 69 illustrate a Policy issued
to a male, age 35, under a Preferred rate non-smoker underwriting risk
classification. This policy provides for a standard smoker and non-smoker, and
preferred non-smoker classification and different rates for certain specified
amounts. The cash values and death benefits would be different from those shown
if the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above and below those averages for individual
policy years, or if the Insured were assigned to a different underwriting risk
classification.
The second column of the tables shows the accumulated value of the premiums paid
at 5%. The following columns show the death benefits and the cash values for
uniform hypothetical rates of return shown in these tables. The tables on pages
66 and 68 are based on the current cost of insurance rates, current expense
deductions and the guaranteed percent of premium loads. These reflect the basis
on which AVLIC currently sells its Policies. The maximum cost of insurance rates
allowable under the Policy are based upon the 1980 Commissioner's Standard
Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. Since these
are recent tables and are split to reflect smoking habits and sex, the current
cost of insurance rates used by AVLIC are at this time equal to the guaranteed
cost of insurance rates for many ages. AVLIC anticipates reflecting future
improvements in actual mortality experience through adjustments in the current
cost of insurance rates actually applied. AVLIC also anticipates reflecting any
future improvements in expenses incurred by applying lower percent of premiums
of loads and other expense deductions. The death benefits and cash values shown
in the tables on pages 67 and 69 are based on the assumption that the maximum
allowable cost of insurance rates as described above ("guaranteed cost") and
maximum allowable expense deductions are made throughout the life of the Policy.
The amounts shown for the death benefits, surrender values and accumulation
values reflect the fact that the net investment return of the Subaccounts is
lower than the gross, after-tax return of the assets held in the Funds as a
result of expenses paid by the Fund and charges levied against the Subaccounts.
The values shown take into account an average of the daily investment advisory
fee paid by each portfolio available for investment (the equivalent to an annual
rate of .62% of the aggregate average daily net assets of the Fund), the other
expenses incurred by the Fund (.21%), and the daily charge by AVLIC to each
Subaccount for assuming mortality and expense risks (which is equivalent to a
charge at an annual rate of 0.90% for policy years 1-20 and 0.65% thereafter on
pages 66 and 68 and at an annual rate of .90% on page 67 and 69 of the average
net assets of the Subaccounts). The Investment Advisor or other affiliates of
the various funds have agreed to reimburse the portfolios to the extent that the
aggregate operating expenses (certain portfolio's may exclude certain items)
were in excess of an annual rate of 1.00% for the High Income, Contrafund and
Asset Manager: Growth Portfolios, 1.50% for the Equity-Income, Growth and
Overseas Portfolios, .80% for the Investment Grade Bond Portfolio, 1.25% for the
Asset Manager Portfolio, .28% for the Index 500 Portfolio, 1.25% for the Alger
American Income and Growth and Alger American Balanced Portfolio; 1.50% for the
Alger American Small Capitalization, Alger American Mid-Cap Growth, Alger
American Leveraged All Cap, and Alger American Growth Portfolios, 1.00% for the
MFS Emerging Growth, MFS Utilities, and MFS World Governments Portfolios, and
.40% for the Dreyfus Index Fund of daily net assets. These agreements are
expected to continue in future years. As long as the expense limitations
continue for a portfolio, if a reimbursement occurs, it has the effect of
lowering the portfolio's expense ratio and increasing its total return. The
illustrated gross annual investment rates of return of 0%, 6%, and 12% were
computed after deducting fund expenses and correspond to approximate net annual
rates of -1.73%, 4.27% and 10.27% respectively, for years 1-20 and -1.48%,
4.52%, and 10.52% for the years thereafter respectively, on pages 66 and 68 and
- -1.73%, 4.27%, and 10.27% respectively, on pages 67 and 69.
The hypothetical values shown in the tables do not reflect any charges for
Federal Income tax burden attributable to the Account, since AVLIC is not
currently making such charges. However, such charges may be made in the future
and, in that event, the gross annual investment rate of return would have to
exceed 0 percent, 6 percent, or 12 percent by an amount sufficient to cover the
tax charges in order to produce the death benefits and values illustrated. (See
Federal Tax Matters, page 32).
The tables illustrate the policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all net premiums are allocated to the Account, and if no policy loans have been
made. The tables are also based on the assumptions that the policyowner has not
requested an increase or decrease in the initial Specified Amount, that no
partial withdrawals have been made, and that no more than twelve transfers have
been made in any policy year so that no transfer charges have been incurred.
Illustrated values would be different if the proposed Insured were female, a
smoker, in substandard risk classification, or were another age, or if a higher
or lower premium was illustrated.
Upon request, AVLIC will provide comparable illustration based upon the proposed
Insured's age, sex and underwriting classification, the Specified Amount, the
death benefit option, and planned periodic premium schedule requested, and any
available riders requested.
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Male Issue Age: 35 Non-Smoker Preferred
Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $1252
INITIAL SPECIFIED AMOUNT: $100,000
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
O% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.73% net) (4.27% net) (10.27% net)
---------------------------------- ---------------------------------- -------------------------------
Accumulated
End Of Premiums At Accumu- Cash Accumu- Cash Accumu- Cash
Policy 5% Interest lation Surrender Death lation Surrender Death lation Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -------- --------------- ---------- ----------- ----------- ---------- ---------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1314 873 89 100000 934 150 100000 995 211 100000
2 2694 1779 977 100000 1957 1156 100000 2143 1342 100000
3 4144 2656 1855 100000 3011 2210 100000 3397 2595 100000
4 5666 3511 2710 100000 4104 3202 100000 4772 3971 100000
5 7263 4341 3540 100000 5233 4431 100000 6279 5478 100000
6 8941 5151 4429 100000 6404 5683 100000 7937 7215 100000
7 10703 5935 5294 100000 7615 6974 100000 9755 9114 100000
8 12553 6696 6135 100000 8869 8308 100000 11752 11191 100000
9 14495 7430 6949 100000 10165 9684 100000 13946 13465 100000
10 16534 8142 7742 100000 11507 11107 100000 16359 15958 100000
15 28367 11261 11261 100000 18895 18895 100000 32536 32536 100000
20 43468 13998 13998 100000 27965 27965 100000 59178 59178 100000
Ages
60 62742 16392 16392 100000 39518 39518 100000 104117 104117 139517
65 87340 17273 17273 100000 53244 53244 100000 177403 177403 216432
70 118735 15684 15684 100000 69793 69793 100000 296357 296357 343774
75 158803 9847 9847 100000 90859 90859 100000 489990 489990 524289
1) Assumes an annual $1252 premium is paid at the beginning of each policy year. Values would be
different if premiums with a different frequency or in different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient
cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Male Issue Age: 35 Non-Smoker Preferred
Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $1252
INITIAL SPECIFIED AMOUNT: $100,000
DEATH BENEFIT OPTION: A
USING GUARANTEED SCHEDULE OF COST OF INSURANCE RATES
O% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.73% net) (4.27% net) (10.27% net)
---------------------------------- ---------------------------------- -------------------------------
Accumulated
End Of Premiums At Accumu- Cash Accumu- Cash Accumu- Cash
Policy 5% Interest lation Surrender Death lation Surrender Death lation Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -------- --------------- ---------- ----------- ----------- ---------- ---------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1314 873 89 100000 934 150 100000 995 211 100000
2 2694 1718 916 100000 1893 1092 100000 2077 1276 100000
3 4144 2538 1737 100000 2885 2084 100000 3264 2462 100000
4 5666 3335 2534 100000 3911 3109 100000 4561 3760 100000
5 7263 4106 3305 100000 4968 4166 100000 5980 5179 100000
6 8941 4853 4131 100000 6057 5336 100000 7536 6814 100000
7 10703 5570 4929 100000 7180 6539 100000 9236 8595 100000
8 12553 6260 5699 100000 8336 7775 100000 11099 10538 100000
9 14495 6921 6440 100000 9526 9045 100000 13140 12659 100000
10 16534 7552 7152 100000 10749 10349 100000 15378 14977 100000
15 28367 10217 10217 100000 17388 17388 100000 30294 30294 100000
20 43468 11845 11845 100000 24855 24855 100000 54346 54346 100000
Ages
60 62742 11839 11839 100000 32904 32904 100000 93701 93701 125559
65 87340 9204 9204 100000 41193 41193 100000 156794 156794 191289
70 118735 1742 1742 100000 49010 49010 100000 256817 256817 297908
75 158803 0 0 0 55246 55246 100000 416299 416299 445440
1) Assumes an annual $1252 premium is paid at the beginning of each policy year. Values would be
different if premiums with a different frequency or in different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient
cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Male Issue Age: 35 Non-Smoker Preferred
Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $2805
INITIAL SPECIFIED AMOUNT: $100,000
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
O% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.73% net) (4.27% net) (10.27% net)
---------------------------------- ---------------------------------- -------------------------------
Accumulated
End Of Premiums At Accumu- Cash Accumu- Cash Accumu- Cash
Policy 5% Interest lation Surrender Death lation Surrender Death lation Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -------- --------------- ---------- ----------- ----------- ---------- ---------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2945 2283 1481 102283 2430 1628 102430 2577 1775 102577
2 6037 4573 3771 104573 5011 4210 105011 5468 4666 105468
3 9284 6808 6007 106808 7688 6886 107688 8640 7839 108640
4 12694 8996 8195 108996 10470 9668 110470 12129 11327 112129
5 16274 11133 10332 111133 13357 12555 113357 15962 15160 115962
6 20033 13226 12504 113226 16359 15638 116359 20181 19459 120181
7 23980 15268 14627 115268 19476 18834 119476 24818 24177 124818
8 28124 17263 16701 117263 22712 22151 122712 29918 29356 129918
9 32476 19207 18726 119207 26070 25589 126070 35524 35043 135524
10 37045 21104 20703 121104 29558 29158 129558 41693 41293 141693
15 63554 29790 29790 129790 49008 49008 149008 83050 83050 183050
20 97387 37558 37558 137558 72744 72744 172744 150188 150188 250188
Ages
60 140568 44774 44774 144774 102711 102711 202711 262048 262048 362048
65 195679 49799 49799 149799 138182 138182 238182 444344 444344 544344
70 266015 51574 51574 151574 179124 179124 279124 740646 740646 859149
75 355785 48470 48470 148470 224766 224766 324766 1222551 1222551 1322551
1) Assumes an annual $2805 premium is paid at the beginning of each policy year. Values would be different if premiums with a
different frequency or in different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient
cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Male Issue Age: 35 Non-Smoker Preferred
Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $2805
INITIAL SPECIFIED AMOUNT: $100,000
DEATH BENEFIT OPTION: B
USING GUARANTEED SCHEDULE OF COST OF INSURANCE RATES
O% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.73% net) (4.27% net) (10.27% net)
---------------------------------- ---------------------------------- -------------------------------
Accumulated
End Of Premiums At Accumu- Cash Accumu- Cash Accumu- Cash
Policy 5% Interest lation Surrender Death lation Surrender Death lation Surrender Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
- -------- --------------- ---------- ----------- ----------- ---------- ---------- --------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2945 2283 1481 102283 2430 1628 102430 2577 1775 102577
2 6037 4215 3710 104511 4947 4146 104948 5403 4601 105403
3 9284 6690 5889 106690 7563 6761 107563 8506 7705 108507
4 12694 8819 8018 108820 10277 9475 110277 11918 11116 111918
5 16274 10898 10097 110899 13093 12291 113092 15664 14862 115664
6 20033 12928 12206 112927 16012 15291 116013 19780 19058 119779
7 23980 14902 14261 114902 19040 18398 119040 24298 23657 124298
8 28124 16827 16265 116826 22178 21617 122178 29263 28701 129262
9 32476 18695 18214 118695 25428 24947 125428 34715 34234 134714
10 37045 20512 20111 120512 28796 28396 128796 40704 40304 140705
15 63554 28731 28731 128731 47473 47473 147473 80750 80750 180750
20 97387 35297 35297 135297 69384 69384 169384 144774 144774 244774
Ages
60 140568 39577 39577 139577 94398 94398 194398 246883 246883 346883
65 195679 40604 40604 140604 121913 121913 221913 409609 409609 509609
70 266015 36565 36565 136565 150123 150123 250123 668332 668332 775266
75 355785 24619 24619 124619 175485 175485 275485 1079412 1079412 1179412
1) Assumes an annual $2805 premium is paid at the beginning of each policy year. Values would be different if premiums with a
different frequency or in different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient
cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
APPENDIX B
ILLUSTRATIONS OF RETIREMENT STRATEGIES
The following tables illustrate how the Policy can be used as a funding vehicle
for (non-qualified) retirement strategies for individuals. Ledger illustrations
are presented that show the effect on Accumulated Value (which is presented net
of Policy loans), Net Cash Surrender Value, and the death benefit (which is
presented net of Policy loans) of a Policy purchased to fund a private
retirement strategy, assuming that the Insured (and Owner) is a male nonsmoker,
Age 35 of the preferred underwriting class at the time of issuance, that the
annual premium of $6,000, that premiums and loan interest are paid when due, and
that death benefit Option B has been initially chosen. Ledger illustrations
portray Policies under the following circumstances:
1 . Current cost of insurance rates and a hypothetical gross rate of return
of 0%;
2. Guaranteed cost of insurance rates and a hypothetical gross rate of
return of 0%;
3. Current cost of insurance rates and a hypothetical gross rate of return
of 6%;
4. Guaranteed cost of insurance rates and a hypothetical gross rate of
return of 6%;
5. Current cost of insurance rates and a hypothetical gross rate of return
of 8%;
6. Guaranteed cost of insurance rates and a hypothetical gross rate of
return of 8%;
7. Current cost of insurance rates and a hypothetical gross rate of return
of 12%; and
8. Guaranteed cost of insurance rates and a hypothetical gross rate of
return of 12%;
The ledger illustrations assume the Owner pays level premiums for 30 Policy
Years, then makes withdrawals until the policy lapses, or the amount withdrawn
equals the amount of premiums that have been paid, and thereafter, if
applicable, takes Policy loans. The amount of the withdrawals and Policy loans
that are taken each Policy Year was determined to provide variously the maximum
retirement income stream, consistent with maintaining Accumulated Value so that
the duration of the Policy would be until its Maturity Date, or until all
premiums paid had been withdrawn. Further, the ledger illustrations reflect the
same assumptions that are reflected in the Policy illustrations described on
pages 66 through 69 with respect to the net investment return of the Variable
Accounts the charges under the Policy, and the expenses of the Fund. The premium
amounts are different and the Death Benefit Options change at Age 65 from Option
B to Option A.
Policy values and benefits shown in the ledger illustrations would be different
if the gross annual investment rates of return were different from the
hypothetical rates portrayed, and if premiums and interest on loans were not
paid when due and if the premium amounts were different. Withdrawals or loans
may have an adverse effect on Policy benefits, and will affect earnings and
policy accumulation values.
Critical to the successful completion of the strategy is that the policy stay in
force and not lapse after loans are taken. Should the policy lapse while loans
are outstanding, the portion of the loans attributable to earnings will become
taxable distributions. The strategy assumes, and the Registrant suggests, that
the policyowner consult with his tax, financial, and other advisors prior to age
65 and at least annually thereafter to evaluate the policy accumulation value
and the policyowners needs and objectives in order to devise and effect a
flexible plan of withdrawals and loans.
The policyowner may before or during the distribution phase of the strategy
lower the risk of the policy lapsing with loans outstanding as a result of
reduction in the market value of investments by investing in a diversified group
of lower risk investment portfolios and/or transferring the funds to the fixed
account and receiving a guaranteed rate of return. Should a reduction in
investment return be experienced, the policyowner may need to lower anticipated
loans, repay loans, make additional premium payment or take other action to
avoid lapse. The policyowner will receive 61 days notice before any lapse would
occur.
Also presented below are charts showing an analysis of retirement strategies.
The charts present values under various retirement strategies including a
taxable investment, a qualified retirement plan, and a private retirement
strategy that is funded with a Policy. Values are shown during an accumulation
phase, under which an individual would invest for retirement, and a distribution
phase, under which an individual would receive retirement income. Values are
presented at hypothetical gross rates of return of 0%, 6%, 8%, and 12%. The
chart assumes a retirement strategy for a male, nonsmoker, preferred
underwriting class, Age 35 at the beginning of the first year in the
accumulation phase, a retirement Age of 65, and an income tax bracket of 31%.
Tax rates may vary for different taxpayers from the 31% used in the charts,
which would result in different values than those shown on the charts. Separate
charts present the private retirement strategy analysis based upon guaranteed
and current cost of insurance rates.
The accumulation phase of the charts presents information on the effect of
taxation on contributions committed to the retirement strategies, by portraying
an amount allocated to retirement that is subject to income tax and the
resulting after-tax contribution. The charts assume that 100% of net
contributions are invested in the various investment strategies. Net rates of
return are portrayed that take into account the effects of taxation in the case
of the taxable investment and the charges under the Policy in the case of the
private retirement strategy. There are no management expenses and other charges
assumed for the taxable investment or the qualified plan. Most plans and
investments will have charges.
The distribution phase of the charts assumes that the after-tax amounts to be
distributed are the same for the taxable investment strategy and qualified plan
as they are for the private retirement strategy. The assumptions for the values
shown for the private retirement strategy are the same as the assumptions
reflected in the ledger illustrations described above.
The tables illustrate the policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all net premiums are allocated to the Account, and if no policy loans or partial
withdrawals have been made until age 65. The tables are also based on the
assumptions that the Policyowner has not requested an increase or decrease in
the initial Specified Amount, and that no more than fifteen transfers have been
made in any policy year so that no transfer charges have been incurred.
Illustrated values would be different if the proposed Insured were female, a
smoker, in substandard risk classification, or were another age, or if a higher
or lower premium was illustrated.
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Male Issue Age: 35 CLASS: Non-Smoker Preferred
Underwriting
PLANNED PERIODIC ANNUAL PREMIUM: $6000
INITIAL SPECIFIED AMOUNT: 220,000
DEATH BENEFIT OPTION: B TO AGE 65
DEATH BENEFIT OPTION: A AFTER AGE 65
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 8% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return Annual Investment Return
(-1.73% net) (4.27% net) (6.27% net) (10.27% net)
-------------------------- -------------------------- -------------------------- -------------------------
End Of Accumulated
Policy Premiums At Accumu- Cash Accumu- Cash Accumu- Cash Accumu- Cash
Year 5% Interest lated Surrender Death lated Surrender Death lated Surrender Death lated Surrender Death
Per Year Value Value Benefit Value Value Benefit Value Value Benefit Value Value Benefit
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 6300 4995 3232 224995 5313 3550 225313 5419 3656 225419 5632 3868 225632
2 12915 9943 8179 229943 10893 9130 230893 11218 9455 231218 11882 10119 231882
3 19860 14772 13008 234772 16677 14914 236677 17347 15584 237347 18740 16977 238740
4 27153 19498 17734 239498 22689 20925 242689 23840 22076 243840 26282 24518 246282
5 34811 24114 22350 244114 28928 27164 248928 30710 28947 250710 34568 32805 254568
6 42852 28633 27045 248633 35415 33828 255415 37994 36406 257994 43687 42100 263687
7 51294 33043 31632 253043 42148 40737 262148 45702 44291 265702 53710 52299 273710
8 60159 37349 36114 257349 49140 47905 269140 53864 52629 273864 64732 63498 284732
9 69467 41545 40487 261545 56394 55336 276394 62502 61444 282502 76850 75792 296850
10 79240 45641 44760 265641 63929 63047 283929 71652 70770 291652 90182 89300 310182
15 135944 64377 64377 284377 105926 105926 325926 125945 125945 345945 179543 179543 399543
20 208315 81124 81124 301124 157169 157169 377169 198976 198976 481976 324600 324600 544600
25 300680 96663 96663 316663 221846 221846 441846 300314 300314 520314 566265 566265 786265
30 418564 107406 107406 327406 298323 298323 518323 434906 434906 654906 960015 960015 1180015
35 534206 84355 84355 327406 357670 357670 518323 584515 584515 678038 1563684 1563684 1813873
40 681797 49217 49217 327406 430136 430136 518323 791587 791587 846998 2546913 2546913 2725197
1) Assumes an annual $6,000 premium is paid at the beginning of each policy year until Age 65 and a change from Death Benefit Option
B to Option A at Age 65. Values would be different if premiums are paid with a different frequency or in different amounts and
different Death Benefit Options were used.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient
cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Male Issue Age: 35 CLASS: Non-Smoker Preferred
Underwriting
PLANNED PERIODIC ANNUAL PREMIUM: $6000
INITIAL SPECIFIED AMOUNT: 220,000
DEATH BENEFIT OPTION: B TO AGE 65
DEATH BENEFIT OPTION: A AFTER AGE 65
USING GUARANTEED SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 8% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return Annual Investment Return
(-1.73% net) (4.27% net) (6.27% net) (10.27% net)
------------------------- --------------------------- ------------------------- ---------------------------
End Of Accumulated
Policy Premiums At Accumu- Cash Accumu- Cash Accumu- Cash Accumu- Cash
Year 5% Interest lated Surrender Death lated Surrender Death lated Surrender Death lated Surrender Death
Per Year Value Value Benefit Value Value Benefit Value Value Benefit Value Value Benefit
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 6300 4995 3232 224995 5313 3550 225313 5419 3656 225419 5632 3868 225632
2 12915 9872 8108 229872 10819 9056 230820 11144 9381 231144 11806 10043 231807
3 19860 14640 12876 234640 16536 14773 236537 17203 15440 237204 18590 16827 238591
4 27153 19300 17536 239299 22472 20708 242471 23616 21852 243616 26044 24280 246044
5 34811 23848 22084 243848 28628 26864 248628 30398 28635 250398 34230 32467 254230
6 42852 28286 26698 248285 35013 33426 255013 37573 35985 257572 43223 41636 263223
7 51294 32607 31196 252607 41632 40221 261631 45155 43744 265155 53097 51686 273097
8 60159 36815 35580 256815 48492 47257 268492 53173 51938 273173 63944 62710 283944
9 69467 40904 39846 260904 55598 54540 275598 61645 60587 281646 75857 74799 295857
10 79240 44877 43996 264878 62961 62079 282961 70603 69721 290602 88945 88063 308945
15 135944 62852 62852 282852 103784 103784 323784 123528 123528 343528 176434 176434 396434
20 208315 77197 77197 297197 151661 151661 371661 192712 192712 412712 316288 316288 536288
25 300680 86521 86521 306521 206286 206286 426286 281894 281894 501894 539301 539301 759301
30 418564 88696 88696 308696 266323 266323 486323 395156 395156 615156 894645 894645 1114645
35 534206 51023 51023 308696 298642 298642 486323 510391 510391 615156 1424267 1424267 1652150
40 681797 0 0 0 326622 326622 486323 674973 674973 722221 2268998 2268998 2427828
1) Assumes an annual $6,000 premium is paid at the beginning of each policy year until Age 65 and a change from Death Benefit Option
B to Option A at Age 65. Values would be different if premiums are paid with a different frequency or in different amounts and
different Death Benefit Options were used.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient
cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and
Loans
Based on Current Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B to Age 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
---------------Projected Values at 0% (-1.73% Net)--------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death
Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 4995 3232 224995
2 37 6000 0 0 9943 8179 229943
3 38 6000 0 0 14772 13008 234772
4 39 6000 0 0 19498 17734 239498
5 40 6000 0 0 24114 22350 244114
6 41 6000 0 0 28633 27045 248633
7 42 6000 0 0 33043 31632 253043
8 43 6000 0 0 37349 36114 257349
9 44 6000 0 0 41545 40487 261545
10 45 6000 0 0 45641 44760 265641
11 46 6000 0 0 49619 48913 269619
12 47 6000 0 0 53484 52955 273484
13 48 6000 0 0 57235 56882 277235
14 49 6000 0 0 60862 60686 280862
15 50 6000 0 0 64377 64377 284377
16 51 6000 0 0 67844 67844 287844
17 52 6000 0 0 71257 71257 291257
18 53 6000 0 0 74612 74612 294612
19 54 6000 0 0 77902 77902 297902
20 55 6000 0 0 81124 81124 301124
21 56 6000 0 0 84487 84487 304487
22 57 6000 0 0 87769 87769 307769
23 58 6000 0 0 90901 90901 310901
24 59 6000 0 0 93871 93871 313871
25 60 6000 0 0 96663 96663 316663
26 61 6000 0 0 99262 99262 319262
27 62 6000 0 0 101651 101651 321651
28 63 6000 0 0 103816 103816 323816
29 64 6000 0 0 105740 105740 325740
30 65 6000 0 0 107406 107406 327406
31 66 0 6000 0 97477 97477 321406
32 67 0 6000 0 87372 87372 315406
33 68 0 6000 0 77052 77052 309406
34 69 0 6000 0 66468 66468 303406
35 70 0 6000 0 55567 55567 297406
36 71 0 6000 0 44287 44287 291406
37 72 0 6000 0 32567 32567 285406
38 73 0 6000 0 20338 20338 279406
39 74 0 6000 0 7512 7512 273406
-------- -------- --------
Total ............ 180000 540000 0
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM DEATH
BENEFIT OPTION B TO OPTION A AT AGE 65 AND WITHDRAWALS EACH YEAR OF $6,000 BEGINNING AT AGE 65. THE POLICY WOULD LAPSE
AT AGE 75 ASSUMING THE WITHDRAWALS DESCRIBED ABOVE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES, AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 0% (-1.73% Net)--------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death
Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 4995 3232 224995
2 37 6000 0 0 9872 8108 229872
3 38 6000 0 0 14640 12876 234640
4 39 6000 0 0 19300 17536 239299
5 40 6000 0 0 23848 22084 243848
6 41 6000 0 0 28286 26698 248285
7 42 6000 0 0 32607 31196 252607
8 43 6000 0 0 36815 35580 256815
9 44 6000 0 0 40904 39846 260904
10 45 6000 0 0 44877 43996 264878
11 46 6000 0 0 48729 48023 268728
12 47 6000 0 0 52453 51924 272453
13 48 6000 0 0 56051 55698 276051
14 49 6000 0 0 59519 59343 279519
15 50 6000 0 0 62852 62852 282852
16 51 6000 0 0 66047 66047 286047
17 52 6000 0 0 69091 69091 289091
18 53 6000 0 0 71972 71972 291972
19 54 6000 0 0 74679 74679 294679
20 55 6000 0 0 77197 77197 297197
21 56 6000 0 0 79513 79513 299513
22 57 6000 0 0 81613 81613 301613
23 58 6000 0 0 83490 83490 303490
24 59 6000 0 0 85134 85134 305134
25 60 6000 0 0 86521 86521 306521
26 61 6000 0 0 87631 87631 307631
27 62 6000 0 0 88439 88439 308439
28 63 6000 0 0 88913 88913 308913
29 64 6000 0 0 89013 89013 309013
30 65 6000 0 0 88696 88696 308696
31 66 0 6000 0 76467 76467 302696
32 67 0 6000 0 63801 63801 296696
33 68 0 6000 0 50621 50621 290696
34 69 0 6000 0 36843 36843 284696
35 70 0 6000 0 22358 22358 278696
36 71 0 6000 0 7011 7011 272696
--------- -------
Total ........ 180000 360000
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM DEATH
BENEFIT OPTION B TO OPTION A AT AGE 65 AND WITHDRAWALS EACH YEAR OF $6,000 BEGINNING AT AGE 65. THE POLICY WOULD
LAPSE AT AGE 72 ASSUMING THE WITHDRAWALS DESCRIBED ABOVE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION
SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Current Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 6% (4.27%Net)-------------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death
Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 5313 3550 225313
2 37 6000 0 0 10893 9130 230893
3 38 6000 0 0 16677 14914 236677
4 39 6000 0 0 22689 20925 242689
5 40 6000 0 0 28928 27164 248928
6 41 6000 0 0 35415 33828 255415
7 42 6000 0 0 42148 40737 262148
8 43 6000 0 0 49140 47905 269140
9 44 6000 0 0 56394 55336 276394
10 45 6000 0 0 63929 63047 283929
11 46 6000 0 0 71736 71031 291736
12 47 6000 0 0 79832 79303 299832
13 48 6000 0 0 88225 87873 308225
14 49 6000 0 0 96916 96740 316916
15 50 6000 0 0 105926 105926 325926
16 51 6000 0 0 115335 115335 335335
17 52 6000 0 0 125153 125153 345153
18 53 6000 0 0 135389 135389 355389
19 54 6000 0 0 146057 146057 366057
20 55 6000 0 0 157169 157169 377169
21 56 6000 0 0 169140 169140 389140
22 57 6000 0 0 181622 181622 401622
23 58 6000 0 0 194563 194563 414563
24 59 6000 0 0 207971 207971 427971
25 60 6000 0 0 221846 221846 441846
26 61 6000 0 0 236192 236192 456192
27 62 6000 0 0 251010 251010 471010
28 63 6000 0 0 266304 266304 486304
29 64 6000 0 0 282075 282075 502075
30 65 6000 0 0 298323 298323 518323
31 66 0 16500 0 292131 292131 501823
32 67 0 16500 0 285509 285509 485323
33 68 0 16500 0 278429 278429 468823
34 69 0 16500 0 270864 270864 452323
35 70 0 16500 0 262780 262780 435823
36 71 0 16500 0 254143 254143 419323
37 72 0 16500 0 244922 244922 402823
38 73 0 16500 0 235082 235082 386323
39 74 0 16500 0 224577 224577 369823
40 75 0 16500 0 213356 213356 353323
41 76 0 15000 1500 202926 201358 336755
42 77 0 0 16500 207429 188548 319442
43 78 0 0 16500 211816 174844 301350
44 79 0 0 16500 216065 160186 282444
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Current Cost of Insurance Charges (Continued)
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 6% (4.27% net)------------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death
Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 80 0 0 16500 220150 144514 262687
46 81 0 0 0 224050 145010 259283
47 82 0 0 0 227626 145030 255726
48 83 0 0 0 230832 144519 252010
49 84 0 0 0 233606 143408 248126
50 85 0 0 0 235847 141591 244067
51 86 0 0 0 237432 138934 239825
52 87 0 0 0 238199 135269 235393
53 88 0 0 0 237943 130381 230761
54 89 0 0 0 236398 123996 225921
55 90 0 0 0 233208 115747 220863
56 91 0 0 0 227891 105145 215577
57 92 0 0 0 220059 91789 210053
58 93 0 0 0 208913 74871 204281
59 94 0 0 0 193357 53283 198249
60 95 0 0 0 171815 25438 191946
------- ------- -------
Total ..... 180000 180000 67500
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF
EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM DEATH BENEFIT OPTION B TO OPTION
A AT AGE 65, AND WITHDRAWALS AND THEN LOANS OF $16,500 EACH YEAR AGES 65 TO 80.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES
OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES
OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 6% (4.27% Net)---------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death
Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 5313 3550 225313
2 37 6000 0 0 10819 9056 230820
3 38 6000 0 0 16536 14773 236537
4 39 6000 0 0 22472 20708 242471
5 40 6000 0 0 28628 26864 248628
6 41 6000 0 0 35013 33426 255013
7 42 6000 0 0 41632 40221 261631
8 43 6000 0 0 48492 47257 268495
9 44 6000 0 0 55598 54540 275598
10 45 6000 0 0 62961 62079 282961
11 46 6000 0 0 70582 69877 290582
12 47 6000 0 0 78469 77940 298469
13 48 6000 0 0 86626 86274 306627
14 49 6000 0 0 95064 94888 315065
15 50 6000 0 0 103784 103784 323784
16 51 6000 0 0 112793 112793 332793
17 52 6000 0 0 122089 122089 342089
18 53 6000 0 0 131667 131667 351667
19 54 6000 0 0 141527 141527 361527
20 55 6000 0 0 151661 151661 371661
21 56 6000 0 0 162065 162065 382065
22 57 6000 0 0 172732 172732 392732
23 58 6000 0 0 183663 183663 403663
24 59 6000 0 0 194853 194853 414853
25 60 6000 0 0 206286 206286 426286
26 61 6000 0 0 217947 217947 437947
27 62 6000 0 0 229816 229816 449816
28 63 6000 0 0 241861 241861 461861
29 64 6000 0 0 254045 254045 474045
30 65 6000 0 0 266323 266323 486323
31 66 0 12000 0 260360 260360 474323
32 67 0 12000 0 253778 253778 462323
33 68 0 12000 0 246522 246522 450323
34 69 0 12000 0 238530 238530 438323
35 70 0 12000 0 229721 229721 426323
36 71 0 12000 0 219979 219979 414323
37 72 0 12000 0 209037 209037 402323
38 73 0 12000 0 196931 196931 390323
39 74 0 12000 0 183310 183310 378323
40 75 0 12000 0 167893 167893 366323
41 76 0 12000 0 150379 150379 354323
42 77 0 12000 0 130396 130396 342323
43 78 0 12000 0 107487 107487 330323
44 79 0 12000 0 81090 81090 318323
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges (Continued)
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 6% (4.27% Net)-----------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 80 0 12000 0 50443 50443 306323
46 81 0 0 0 27081 27081 306323
--------- -------
Total ............ 180000 1800000
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM DEATH
BENEFIT OPTION B TO OPTION A AT AGE 65 AND WITHDRAWALS OF $12,000 EACH YEAR BEGINNING AT AGE 65.
THIS POLICY WILL LAPSE DURING AGE 82 ASSUMING THE WITHDRAWALS DESCRIBED ABOVE. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT
RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION.
THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%,
8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO
REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Current Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 8% (6.27% Net)-----------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 5419 3656 225419
2 37 6000 0 0 11218 9455 231218
3 38 6000 0 0 17347 15584 237347
4 39 6000 0 0 23840 22076 243840
5 40 6000 0 0 30710 28947 250710
6 41 6000 0 0 37994 36406 257994
7 42 6000 0 0 45702 44291 265702
8 43 6000 0 0 53864 52629 273864
9 44 6000 0 0 62502 61444 282502
10 45 6000 0 0 71652 70770 291652
11 46 6000 0 0 81326 80620 301326
12 47 6000 0 0 91561 91032 311561
13 48 6000 0 0 102389 102036 322389
14 49 6000 0 0 113834 113658 333834
15 50 6000 0 0 125945 125945 345945
16 51 6000 0 0 138830 138830 358830
17 52 6000 0 0 152529 152529 372529
18 53 6000 0 0 167088 167088 387088
19 54 6000 0 0 182552 182552 402552
20 55 6000 0 0 198976 198976 418976
21 56 6000 0 0 216919 216919 436919
22 57 6000 0 0 236000 236000 456000
23 58 6000 0 0 256220 256220 476220
24 59 6000 0 0 277639 277639 497639
25 60 6000 0 0 300314 300314 520314
26 61 6000 0 0 324311 324311 544311
27 62 6000 0 0 349695 349695 569695
28 63 6000 0 0 376538 376538 596538
29 64 6000 0 0 404916 404916 624916
30 65 6000 0 0 434906 434906 654906
31 66 0 39000 0 419332 419332 615906
32 67 0 39000 0 402758 402758 576906
33 68 0 39000 0 385141 385141 537906
34 69 0 39000 0 366435 366435 498906
35 70 0 24000 15000 362279 346604 459231
36 71 0 0 39000 382789 325654 417771
37 72 0 0 39000 404027 303565 374444
38 73 0 0 39000 426098 280361 329169
39 74 0 0 39000 449016 255966 296377
40 75 0 0 39000 472622 230130 263213
41 76 0 0 39000 496926 202767 227613
42 77 0 0 39000 521648 173496 199578
43 78 0 0 39000 546748 142174 169511
44 79 0 0 39000 572182 108647 137256
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Current Cost of Insurance Charges (Continued)
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 8% (6.27% Net)-----------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 80 0 0 39000 597898 72749 102644
46 81 0 0 0 624624 75844 107075
47 82 0 0 0 652347 78871 111488
48 83 0 0 0 681070 81788 115842
49 84 0 0 0 710796 84546 120086
50 85 0 0 0 741509 87078 124153
51 86 0 0 0 773187 89307 127966
52 87 0 0 0 805799 91144 131434
53 88 0 0 0 839302 92488 134453
54 89 0 0 0 873651 93230 136913
55 90 0 0 0 908789 93249 138689
56 91 0 0 0 944658 92418 139651
57 92 0 0 0 982831 92241 131554
58 93 0 0 0 1023709 93042 123754
59 94 0 0 0 1067765 95218 116574
60 95 0 0 0 1115546 99235 110390
------- ------- --------
Total ....... 180000 180000 405000
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM
DEATH BENEFIT OPTION B TO OPTION A AT AGE 65, AND WITHDRAWALS AND THEN LOANS OF $39,000 EACH YEAR AGES 65 TO 80.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH
BENEFIT OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS,
BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR
THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 8% (6.27% Net)--------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 5419 3656 225419
2 37 6000 0 0 11144 9381 231144
3 38 6000 0 0 17203 15440 237204
4 39 6000 0 0 23616 21852 243616
5 40 6000 0 0 30398 28635 250398
6 41 6000 0 0 37573 35985 257572
7 42 6000 0 0 45155 43744 265155
8 43 6000 0 0 53173 51938 273173
9 44 6000 0 0 61645 60587 281646
10 45 6000 0 0 70603 69721 290602
11 46 6000 0 0 80065 79359 300064
12 47 6000 0 0 90058 89529 310058
13 48 6000 0 0 100614 100261 320614
14 49 6000 0 0 111761 111585 331761
15 50 6000 0 0 123528 123528 343528
16 51 6000 0 0 135950 135950 355950
17 52 6000 0 0 149051 149051 369051
18 53 6000 0 0 162859 162859 382859
19 54 6000 0 0 177403 177403 397403
20 55 6000 0 0 192712 192712 412712
21 56 6000 0 0 208815 208815 428815
22 57 6000 0 0 225746 225746 445746
23 58 6000 0 0 243545 243545 463545
24 59 6000 0 0 262251 262251 482251
25 60 6000 0 0 281894 281894 501894
26 61 6000 0 0 302505 302505 522505
27 62 6000 0 0 324117 324117 544117
28 63 6000 0 0 346751 346751 566751
29 64 6000 0 0 370425 370425 590425
30 65 6000 0 0 395156 395156 615156
31 66 0 30500 0 382773 382773 584656
32 67 0 30500 0 369547 369547 554156
33 68 0 30500 0 355452 355452 523656
34 69 0 30500 0 340462 340462 493156
35 70 0 30500 0 324544 324544 462656
36 71 0 27500 3000 310782 307632 432006
37 72 0 0 30500 324875 289542 399823
38 73 0 0 30500 339471 270347 366032
39 74 0 0 30500 354596 249991 330550
40 75 0 0 30500 370391 228530 293295
41 76 0 0 30500 387062 206083 254177
42 77 0 0 30500 404880 182827 213103
43 78 0 0 30500 423991 158811 180011
44 79 0 0 30500 443487 133023 155197
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges (Continued)
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 8% (6.27% Net)--------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 80 0 0 30500 463158 105146 128304
46 81 0 0 0 483482 107569 131743
47 82 0 0 0 504443 109734 134956
48 83 0 0 0 526012 111568 137869
49 84 0 0 0 548154 112988 140395
50 85 0 0 0 570828 113903 142444
51 86 0 0 0 593995 114224 143924
52 87 0 0 0 617619 113860 144741
53 88 0 0 0 641661 112714 144797
54 89 0 0 0 666087 110692 143996
55 90 0 0 0 690849 107685 142227
56 91 0 0 0 715893 103570 139365
57 92 0 0 0 742873 99934 129649
58 93 0 0 0 772159 97073 120238
59 94 0 0 0 804196 95356 111440
60 95 0 0 0 839515 95233 103628
------- ------- -------
Total ....... 180000 180000 277500
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM
DEATH BENEFIT OPTION B TO OPTION A AT 65 AND WITHDRAWALS AND THEN LOANS OF $30,500 EACH YEAR AGES 65 TO 80.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT
OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD
BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Current Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 12% (10.27% Net)-------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 5632 3868 225632
2 37 6000 0 0 11882 10119 231882
3 38 6000 0 0 18740 16977 238740
4 39 6000 0 0 26282 24518 246282
5 40 6000 0 0 34568 32805 254568
6 41 6000 0 0 43687 42100 263687
7 42 6000 0 0 53710 52299 273710
8 43 6000 0 0 64732 63498 284732
9 44 6000 0 0 76850 75792 296850
10 45 6000 0 0 90182 89300 310182
11 46 6000 0 0 104833 104127 324833
12 47 6000 0 0 120942 120413 340942
13 48 6000 0 0 138655 138302 358655
14 49 6000 0 0 158126 157949 378126
15 50 6000 0 0 179543 179543 399543
16 51 6000 0 0 203174 203174 423174
17 52 6000 0 0 229239 229239 449239
18 53 6000 0 0 257981 257981 477981
19 54 6000 0 0 289669 289669 509669
20 55 6000 0 0 324600 234600 544600
21 56 6000 0 0 363922 363922 583922
22 57 6000 0 0 407350 407350 627350
23 58 6000 0 0 455239 455239 675239
24 59 6000 0 0 508045 508045 728045
25 60 6000 0 0 566265 566265 786265
26 61 6000 0 0 630451 630451 850451
27 62 6000 0 0 701210 701210 921210
28 63 6000 0 0 779216 779216 999216
29 64 6000 0 0 865211 865211 1085211
30 65 6000 0 0 960015 960015 1180015
31 66 0 107500 0 939950 939950 1127941
32 67 0 72500 35000 954338 917763 1099087
33 68 0 0 107500 1043479 892921 1080747
34 69 0 0 107500 1134762 865091 1058001
35 70 0 0 107500 1228077 833933 1030425
36 71 0 0 107500 1323294 799076 997571
37 72 0 0 107500 1420567 760422 945095
38 73 0 0 107500 1519872 717683 884868
39 74 0 0 107500 1621199 670574 816482
40 75 0 0 107500 1724564 618824 739543
41 76 0 0 107500 1830020 561108 652609
42 77 0 0 107500 1936255 495373 592186
43 78 0 0 107500 2042747 420618 522755
44 79 0 0 107500 2148887 335722 443167
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Current Cost of Insurance Charges (Continued)
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 12% (10.27% Net)-----------
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 80 0 0 107500 2253961 239438 352136
46 81 0 0 0 2363611 251326 369507
47 82 0 0 0 2477845 263753 387645
48 83 0 0 0 2596748 276655 406492
49 84 0 0 0 2720383 289944 425963
50 85 0 0 0 2848758 303473 445911
51 86 0 0 0 2981843 371052 466144
52 87 0 0 0 3119565 330446 486425
53 88 0 0 0 3261807 343373 506463
54 89 0 0 0 3408419 355511 525932
55 90 0 0 0 3559202 366492 544452
56 91 0 0 0 3713933 375914 561611
57 92 0 0 0 3878931 389917 545074
58 93 0 0 0 4056098 410078 531761
59 94 0 0 0 4247722 437632 522587
60 95 0 0 0 4456472 474928 519492
-------- ------- --------
Total ...... 180000 180000 1432500
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM
DEATH BENEFIT OPTION B TO OPTION A AT AGE 65, AND WITHDRAWALS AND THEN LOANS OF $107,500 EACH YEAR AGES 65 TO 80.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT
BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE
SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION
SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE
DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
LUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 12% (10.27% Net)--------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 36 6000 0 0 5632 3868 225632
2 37 6000 0 0 11806 10043 231807
3 38 6000 0 0 18590 16827 238591
4 39 6000 0 0 26044 24280 246044
5 40 6000 0 0 34230 32467 254230
6 41 6000 0 0 43223 41636 263223
7 42 6000 0 0 53097 51686 273097
8 43 6000 0 0 63944 62710 283944
9 44 6000 0 0 75857 74799 295857
10 45 6000 0 0 88945 88063 308945
11 46 6000 0 0 103320 102614 323319
12 47 6000 0 0 119107 118578 339107
13 48 6000 0 0 136451 136098 356451
14 49 6000 0 0 155505 155328 375504
15 50 6000 0 0 176434 176434 396434
16 51 6000 0 0 199428 199428 419428
17 52 6000 0 0 224682 224682 444682
18 53 6000 0 0 252414 252414 472414
19 54 6000 0 0 282863 282863 502863
20 55 6000 0 0 316288 316288 536288
21 56 6000 0 0 352979 352979 572979
22 57 6000 0 0 393253 393253 613253
23 58 6000 0 0 437467 437467 657467
24 59 6000 0 0 486011 486011 706011
25 60 6000 0 0 539301 539301 759301
26 61 6000 0 0 597799 597799 817799
27 62 6000 0 0 662009 662009 882009
28 63 6000 0 0 732480 732480 952480
29 64 6000 0 0 809807 809807 1029807
30 65 6000 0 0 894645 894645 1114645
31 66 0 91500 0 881282 881282 1057538
32 67 0 88500 3000 869989 866839 1032137
33 68 0 0 91500 949330 849947 1020826
34 69 0 0 91500 1030676 830249 1005464
35 70 0 0 91500 1113931 807408 985638
36 71 0 0 91500 1198963 781039 960884
37 72 0 0 91500 1286010 751115 918296
38 73 0 0 91500 1375306 717591 868874
39 74 0 0 91500 1466857 680181 812198
40 75 0 0 91500 1560851 638766 748026
41 76 0 0 91500 1657605 593341 676221
42 77 0 0 91500 1755235 541683 629445
43 78 0 0 91500 1853329 483024 575690
44 79 0 0 91500 1951408 414885 512455
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE
Illustrations of Death Benefits, Accumulated Values, Net Cash Surrender Values, Withdrawals and Loans
Based on Guaranteed Cost of Insurance Charges (Continued)
ISSUE AGE: 35 DEATH BENEFIT OPTION: B TO AGE 65
CLASS: MALE NONSMOKER DEATH BENEFIT OPTION: A AFTER AGE 65
PREFERRED UNDERWRITING CLASS INITIAL SPECIFIED AMOUNT: 220,000
ANNUAL PREMIUM: $6,000
LEDGER ILLUSTRATION
-------------Projected Values at 12% (10.27% Net)--------------
EOY
End of Annual With- Accumulation EOY Net EOY Net
Year Age Premium drawal Net Loan Value Surrender Value Death Benefit
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 80 0 0 91500 2048815 335837 438278
46 81 0 0 0 2150015 348499 456000
47 82 0 0 0 2254988 361224 473974
48 83 0 0 0 2363655 373806 491989
49 84 0 0 0 2475885 385984 509778
50 85 0 0 0 2591527 397131 526707
51 86 0 0 0 2710405 406289 541809
52 87 0 0 0 2832296 412974 554589
53 88 0 0 0 2956947 416659 564507
54 89 0 0 0 3084095 416792 570997
55 90 0 0 0 3213397 412729 573399
56 91 0 0 0 3344422 403721 570942
57 92 0 0 0 3484877 397141 536536
58 93 0 0 0 3636686 394563 503664
59 94 0 0 0 3802206 397977 474022
60 95 0 0 0 3984338 409898 449742
------- ------- -------
Total ......... 180000 180000 1192500
THIS ILLUSTRATION ASSUMES AN ANNUAL $6,000 PREMIUM IS PAID AT THE BEGINNING OF EACH POLICY YEAR UNTIL AGE 65, A CHANGE FROM
DEATH BENEFIT OPTION B TO OPTION A AT AGE 65 AND WITHDRAWALS AND THEN LOANS OF $91,500 EACH YEAR AGES 65 TO 80.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT
OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD
BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS
THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RETIREMENT PLANNING COMPARISONS
CLIENT AGE: 35 CURRENT COST OF INSURANCE CHARGES
RETIREMENT AGE: 65 DEATH BENEFIT OPTION: B TO AGE 65
PERSONAL TAX BRACKET: 31% DEATH BENEFIT OPTION: A AFTER AGE 65
YEARLY NET CONTRIBUTIONS: $6,000
ACCUMULATION PHASE ASSUMPTIONS
Taxable Investment Qualified Plan Private Retirement
Strategy
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Tax Dollars 8,695 8,695 8,695 8,695 6,000 6,000 6,000 6,000 8,695 8,695 8,695 8,695
After-Tax Contributions 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Interest Rate (%) 0.00% 6.00% 8.00% 12.00% 0.00% 6.00% 8.00% 12.00% 0.00% 6.00% 8.00% 12.00%
Net Interest Rate (%) 0.00% 4.14% 5.52% 8.28% 0.00% 6.00% 8.00% 12.00% -1.73% 4.27% 6.27% 10.27%
End of
Policy
Yr. Age
1 36 6,000 6,248 6,331 6,497 6,000 6,360 6,480 6,720 4,995 5,313 5,419 5,632
2 37 12,000 12,755 13,012 13,532 12,000 13,102 13,478 14,246 9,943 10,893 11,218 11,882
3 38 18,000 19,532 20,061 21,149 18,000 20,248 21,037 22,676 14,772 16,677 17,347 18,740
4 39 24,000 26,589 27,500 29,397 24,000 27,823 29,200 32,117 19,498 22,689 23,840 26,282
5 40 30,000 33,938 35,349 38,328 30,000 35,852 38,016 42,691 24,114 28,928 30,710 34,568
6 41 36,000 41,592 43,632 47,998 36,000 44,363 47,537 54,534 28,633 35,415 37,994 43,687
7 42 42,000 49,562 52,371 58,469 42,000 53,385 57,820 67,798 33,043 42,148 45,702 53,710
8 43 48,000 57,862 61,593 69,807 48,000 62,948 68,925 82,654 37,349 49,140 53,864 64,732
9 44 54,000 66,506 71,325 82,084 54,000 73,085 80,919 99,292 41,545 56,394 62,502 76,850
10 45 60,000 75,508 81,593 95,377 60,000 83,830 93,873 117,927 45,641 63,929 71,652 90,182
11 46 66,000 84,882 92,428 109,771 66,000 95,220 107,863 138,799 49,619 71,736 81,326 104,833
12 47 72,000 94,645 103,861 125,357 72,000 107,293 122,972 162,175 53,484 79,832 91,561 120,942
13 48 78,000 104,811 115,925 142,233 78,000 120,090 139,290 188,356 57,235 88,225 102,389 138,655
14 49 84,000 115,399 128,656 160,507 84,000 133,656 156,913 217,678 60,862 96,916 113,834 158,126
15 50 90,000 126,425 142,089 180,294 90,000 148,035 175,946 250,520 64,377 105,926 125,945 179,543
16 51 96,000 137,907 156,263 201,719 96,000 163,277 196,501 287,302 67,844 115,335 138,830 203,174
17 52 102,000 149,865 171,220 224,918 102,000 179,434 218,701 328,498 71,257 125,153 152,529 229,239
18 53 108,000 162,318 187,003 250,038 108,000 196,560 242,678 374,638 74,612 135,389 167,088 257,981
19 54 114,000 175,286 203,657 277,238 114,000 214,714 268,572 426,315 77,902 146,057 182,552 289,669
20 55 120,000 188,792 221,230 306,690 120,000 233,956 296,538 484,192 81,124 157,169 198,976 324,600
30 65 180,000 358,750 460,202 774,865 180,000 502,810 734,075 1,621,756 107,406 298,323 434,906 960,015
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION PHASE ASSUMPTIONS
Taxable Investment Qualified Plan Private Retirement Strategy
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Tax Dollars 6,000 16,500 39,000 107,500 8,695 23,913 56,521 155,797 6,000 16,500 39,000 107,500
After Tax Distribution 6,000 16,500 39,000 107,500 6,000 16,500 39,000 107,500 6,000 16,500 39,000 107,500
REMAINING VALUES END OF YEAR
Yr. Age
1 66 174,000 356,419 444,452 722,623 171,305 507,631 731,759 1,641,874 97,477 292,131 419,332 939,950
2 67 168,000 353,992 427,833 666,055 162,610 512,741 729,257 1,664,406 87,372 285,509 402,758 917,763
3 68 162,000 351,464 410,297 604,804 153,915 518,158 726,554 1,689,642 77,052 278,429 385,141 892,921
4 69 156,000 348,832 391,792 538,481 145,220 523,899 723,636 1,717,906 66,468 270,864 366,435 865,091
5 70 150,000 346,090 372,266 466,666 136,525 529,985 720,484 1,749,562 55,567 262,780 346,604 833,933
6 71 144,000 343,235 351,663 388,905 127,830 536,437 717,080 1,785,017 44,287 254,143 325,654 799,076
7 72 138,000 340,262 329,922 304,705 119,135 543,275 713,404 1,824,727 32,567 244,922 303,565 760,422
8 73 132,000 337,166 306,981 213,534 110,440 550,524 709,434 1,869,201 20,338 235,082 280,361 717,683
9 74 126,000 333,941 282,773 114,813 101,745 558,208 705,146 1,919,013 7,512 224,577 255,966 670,574
10 75 120,000 330,584 257,229 0 93,050 566,352 700,515 1,974,802 0 213,356 230,130 618,824
11 76 114,000 327,087 230,276 84,355 574,986 695,513 2,037,285 201,358 202,767 561,108
12 77 108,000 323,445 201,834 75,660 584,137 690,112 2,107,267 188,548 173,496 495,373
13 78 102,000 319,652 171,823 66,965 593,838 684,278 2,185,646 174,844 142,174 420,618
14 79 96,000 315,703 140,154 58,270 604,120 677,977 2,273,431 160,186 108,647 335,722
15 80 90,000 311,590 106,738 49,575 615,019 671,173 2,371,750 144,514 72,749 239,438
Yrs. To Pay Benefit 15 15 15 10 15 15 15 15 10 15 15 15
THIS IS A LIFE INSURANCE POLICY ILLUSTRATION.
THE ILLUSTRATION ASSUMES DEATH BENEFIT OPTION B UNTIL RETIREMENT AT AGE 65 AND A CHANGE TO DEATH BENEFIT OPTION A DURING THE
DISTRIBUTION STAGE. EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF INSUFFICIENT CASH VALUE. SHOULD THE
POLICY LAPSE WHILE LOANS ARE OUTSTANDING, THE PORTION OF THE LOANS ATTRIBUTABLE TO EARNINGS WILL BECOME TAXABLE DISTRIBUTIONS.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION
SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR
BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL
RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RETIREMENT PLANNING COMPARISONS
CLIENT AGE: 35 CURRENT COST OF INSURANCE CHARGES
RETIREMENT AGE: 65 DEATH BENEFIT OPTION: B TO AGE 65
PERSONAL TAX BRACKET: 31% DEATH BENEFIT OPTION: A AFTER AGE 65
YEARLY NET CONTRIBUTIONS: $6,000
ACCUMULATION PHASE ASSUMPTIONS
Taxable Investment Qualified Plan Private Retirement Strategy
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Tax Dollars 8,695 8,695 8,695 8,695 6,000 6,000 6,000 6,000 8,695 8,695 8,695 8,695
After-Tax Contributions 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
Interest Rate (%) 0.00% 6.00% 8.00% 12.00% 0.00% 6.00% 8.00% 12.00% 0.00% 6.00% 8.00% 12.00%
Net Interest Rate (%) 0.00% 4.14% 5.52% 8.28% 0.00% 6.00% 8.00% 12.00% -1.73% 4.27% 6.27% 10.27%
End of
Policy
Yr. Age
1 36 6,000 6,248 6,331 6,497 6,000 6,360 6,480 6,720 4,995 5,313 5,419 5,632
2 37 12,000 12,755 13,012 13,532 12,000 13,102 13,478 14,246 9,872 10,819 11,144 11,807
3 38 18,000 19,532 20,061 21,149 18,000 20,248 21,037 22,676 14,640 16,536 17,203 18,591
4 39 24,000 26,589 27,500 29,397 24,000 27,823 29,200 32,117 19,300 22,472 23,616 26,044
5 40 30,000 33,938 35,349 38,328 30,000 35,852 38,016 42,691 23,848 28,628 30,398 34,230
6 41 36,000 41,592 43,632 47,998 36,000 44,363 47,537 54,534 28,286 35,013 37,573 43,224
7 42 42,000 49,562 52,371 58,469 42,000 53,385 57,820 67,798 32,607 41,632 45,155 53,097
8 43 48,000 57,862 61,593 69,807 48,000 62,948 68,925 82,654 36,815 48,492 53,173 63,944
9 44 54,000 66,506 71,325 82,084 54,000 73,085 80,919 99,292 40,904 55,598 61,645 75,857
10 45 60,000 75,508 81,593 95,377 60,000 83,830 93,873 117,927 44,877 62,961 70,603 88,944
11 46 66,000 84,882 92,428 109,771 66,000 95,220 107,863 138,799 48,729 70,582 80,065 103,320
12 47 72,000 94,645 103,861 125,357 72,000 107,293 122,972 162,175 52,453 78,469 90,058 119,107
13 48 78,000 104,811 115,925 142,233 78,000 120,090 139,290 188,356 56,051 86,626 100,614 136,451
14 49 84,000 115,399 128,656 160,507 84,000 133,656 156,913 217,678 59,519 95,064 111,761 155,505
15 50 90,000 126,425 142,089 180,294 90,000 148,035 175,946 250,520 62,852 103,784 123,528 176,434
16 51 96,000 137,907 156,263 201,719 96,000 163,277 196,501 287,302 66,047 112,793 135,950 199,428
17 52 102,000 149,865 171,220 224,918 102,000 179,434 218,701 328,498 69,091 122,089 149,051 224,682
18 53 108,000 162,318 187,003 250,038 108,000 196,560 242,678 374,638 71,972 131,667 162,859 252,414
19 54 114,000 175,286 203,657 277,238 114,000 214,714 268,572 426,315 74,679 141,527 177,403 282,863
20 55 120,000 188,792 221,230 306,690 120,000 233,956 296,538 484,192 77,197 151,661 192,712 316,288
30 65 180,000 358,750 460,202 774,865 180,000 502,810 734,075 1,621,756 88,696 266,323 395,156 894,645
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION PHASE ASSUMPTIONS
Taxable Investment Qualified Plan Private Retirement Strategy
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-Tax Dollars 6,000 12,000 30,500 91,500 8,695 17,391 44,202 132,608 6,000 12,000 30,500 91,500
After Tax Distribution 6,000 12,000 30,500 91,500 6,000 12,000 30,500 91,500 6,000 12,000 30,500 91,500
REMAINING VALUES END OF YEAR
Yr. Age
1 66 174,000 361,106 453,421 739,948 171,305 514,544 745,063 1,667,845 76,467 260,360 382,773 881,282
2 67 168,000 363,559 446,267 702,140 162,610 526,982 756,930 1,719,466 63,801 253,778 369,547 866,839
3 68 162,000 366,113 438,717 661,200 153,915 540,167 769,746 1,777,281 50,621 246,522 355,452 849,947
4 69 156,000 368,773 430,751 616,872 145,220 554,142 783,588 1,842,034 36,843 238,530 340,462 830,249
5 70 150,000 371,544 422,344 568,872 136,525 568,957 798,537 1,914,557 22,358 229,721 324,544 807,408
6 71 144,000 374,429 413,474 516,899 127,830 584,659 814,681 1,995,782 7,011 219,979 307,632 781,039
7 72 138,000 377,434 404,114 460,622 119,135 601,305 832,118 2,086,755 0 209,037 289,542 751,115
8 73 132,000 380,563 394,238 399,685 110,440 618,948 850,949 2,188,645 196,931 270,347 717,591
9 74 126,000 383,821 383,816 333,703 101,745 637,651 871,287 2,302,761 183,310 249,991 680,181
10 75 120,000 387,214 372,819 262,257 93,050 657,475 893,251 2,430,572 167,893 228,530 638,766
11 76 114,000 390,748 361,215 0 84,355 678,489 916,973 2,573,720 150,379 206,083 593,341
12 77 108,000 394,428 348,971 75,660 700,764 942,593 2,734,045 130,396 182,827 541,683
13 78 102,000 398,261 336,050 66,965 724,376 970,262 2,913,609 107,487 158,811 483,024
14 79 96,000 402,252 322,417 58,270 749,404 1,000,145 3,114,722 81,090 133,023 414,885
15 80 90,000 406,409 308,031 49,575 775,934 1,032,419 3,339,967 50,443 105,146 335,837
Yrs. To Pay Benefit 15 15 15 11 15 15 15 15 7 15 15 15
THIS IS A LIFE INSURANCE POLICY ILLUSTRATION.
THE ILLUSTRATION ASSUMES DEATH BENEFIT OPTION B UNTIL RETIREMENT AT AGE 65 AND A CHANGE TO DEATH BENEFIT OPTION A DURING THE
DISTRIBUTION STAGE. EXCESSIVE LOANS OR WITHDRAWALS MAY CAUSE THE POLICY TO LAPSE BECAUSE OF INSUFFICIENT CASH VALUE. SHOULD THE
POLICY LAPSE WHILE LOANS ARE OUTSTANDING, THE PORTION OF THE LOANS ATTRIBUTABLE TO EARNINGS WILL BECOME TAXABLE DISTRIBUTIONS.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, 8% AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE
AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE>
APPENDIX C
LONG TERM MARKET TRENDS
The information below covering the period of 1926-1994 is an examination of the
basic relationship between risk and return among the different asset classes,
and between nominal and real (inflation adjusted) returns. The information is
provided because the Policyowners have varied investment portfolios available
which have different investment objectives and policies. The chart generally
demonstrates how different classes of investments have performed during the
period. The study of asset returns provides a period long enough to include most
of the major types of events that investors have experienced in the past and may
experience in the future. This is a historical record and is not intended as a
projection of future performance.
The graph depicts the growth of a dollar invested in common stocks, small
company stocks, long-term government bonds, Treasury bills, and a hypothetical
asset returning the inflation rate over the period from the end of 1925 to the
end of 1994. All results assume reinvestment of dividends on stocks or coupons
on bonds and no taxes. Transaction costs are not included, except in the small
stock index starting in 1982. Charges associated with a variable insurance
policy are not reflected in the chart.
Each of the cumulative index values is initiated at $1.00 at year-end 1925. The
graph illustrates that common stocks and small stocks gained the most over the
entire 69-year period: investments of one dollar would have grown to $810.54
and $2,842.77 respectively, by year-end 1995. This growth, however, was earned
by taking substantial risk. In contrast, long-term government bonds (with an
approximate 20-year maturity), which exposed the holder to less risk, grew to
only $25.86.
The lowest risk strategy over the past 69 years was to buy U.S. Treasury bills.
Since Treasury bills tended to track inflation, the resulting real
(inflation-adjusted) returns were near zero for the entire 1926-1994 period.
(OMITTED GRAPH ILLUSTRATES LONG TERM MARKET TRENDS AS DESCRIBED IN THE NARRATIVE
ABOVE.)
Year End 1925 = $1.00
Source: Stocks, Bonds, Bills, and Inflation 1995 Yearbook
(C)Ibbotson Associates, Chicago. All Rights Reserved.
<PAGE>
APPENDIX D
STANDARD & POOR'S 500
The Standard and Poor's (S & P 500) is a weighted index of 500 widely held
stocks: 400 Industrials, 40 Financial Company Stocks, 40 Public Utilities, and
20 Transportation stocks, most of which are traded on the New York Stock
Exchange. This information is provided because the Policyowners have varied
investment options available. The investment options, except the Fixed Account
and the Money Market Account, involve investments in the stock market. The S & P
500 is generally regarded as an accurate composite of the overall stock market.
<TABLE>
<CAPTION>
PERCENT CHANGE OF
STANDARD & POOR'S 500 INDEX
%
Year Change
- ----------------------------------
<S> <C> <C>
1 1970 3.93
2 1971 14.56 (OMITTED GRAPH DEPICTS THE ACTIVITY
3 1972 18.90 OF THE S&P 500 INDEX FOR THE YEARS
4 1973 -14.77 1970-1994.)
5 1974 -26.39
6 1975 37.16
7 1976 23.57
8 1977 -7.42
9 1978 6.38
10 1979 18.20
11 1980 32.27
12 1981 -5.01
13 1982 21.44
14 1983 22.38
15 1984 6.10
16 1985 31.57
17 1986 18.56
18 1987 5.10
19 1988 16.61
20 1989 31.69
21 1990 -3.14
22 1991 30.45
23 1992 7.61
24 1993 10.08
25 1994 -1.32
</TABLE>
THE CHART ASSUMES THE RETURN EXPERIENCED BY THE STANDARD & POOR'S 500 INDEX
FOR THE LAST 25 YEARS. FUTURE RATES OF RETURN MAY BE MORE OR LESS THAN THOSE
SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATIONS MADE BY AN OWNER. THE INFORMATION IN THE CHART IS NOT NECESSARILY
INDICATIVE OF FUTURE PERFORMANCE.
