As filed with the Securities and Exchange Commission on
January 29, 1999
Registration No. ___________
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form S-6
---------------
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
----------------
AMERITAS VARIABLE LIFE INSURANCE COMPANY
(Depositor)
SEPARATE ACCOUNT V
(EXACT NAME OF REGISTRANT)
----------------
AMERITAS VARIABLE LIFE INSURANCE COMPANY
5900 "O" Street
Lincoln, Nebraska 68510
----------------
NORMAN M. KRIVOSHA
Secretary and General Counsel
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
-----------------
Title of Securities Being Registered: Securities of Unit Investment Trust
-----------------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Flexible Premium Variable Life Insurance Policies - - Registration of an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a) may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2
AND THE PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Ameritas Variable Life Insurance Company; Distribution of
the Policies
5 Ameritas Variable Life Insurance Company Separate Account V
6 Ameritas Variable Life Insurance Company Separate Account V
7 Not Required
8 Not Required
9 Legal Proceedings
10 Summary; Addition, Deletion or Substitution of Investments;
Policy Benefits; Policy Rights; Payment and Allocation of
Premiums; General Provisions; Voting Rights
11 Summary; The Funds
12 Summary; The Funds
13 Summary; The Funds - Charges and Deductions
14 Summary; Payment and Allocation of Premiums
15 Summary; Payment and Allocation of Premiums
16 Summary; Variable Insurance Products Fund, Variable
Insurance Products Fund II, Alger American Fund, MFS
Variable Insurance Trust, Morgan Stanley Universal Funds,
Inc.
17 Summary, Policy Rights
18 Variable Insurance Products Fund, Variable Insurance
Products Fund II, Alger American Fund, MFS Variable
Insurance Trust, Morgan Stanley Universal Funds, Inc.
19 General Provisions; Voting Rights
20 Not Applicable
21 Summary; Policy Rights; General Provisions
22 Not Applicable
23 Safekeeping of the Separate Account's Assets
24 General Provisions
25 Ameritas Variable Life Insurance Company
26 Not Applicable
27 Ameritas Variable Life Insurance Company
28 Executive Officers and Directors of AVLIC; Ameritas
Variable Life Insurance Company
29 Ameritas Variable Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Applicable
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of the Policies
42 Not Applicable
43 Not Applicable
44 Accumulation Value, Payment and Allocation of Premium
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
45 Not Applicable
46 The Funds; Accumulation Value
47 The Funds
48 State Regulation
49 Not Applicable
50 Ameritas Variable Life Insurance Company Separate Account V
51 Cover Page; Summary; Policy Benefits; Charges and Deductions
52 Addition, Deletion or Substitution of Investments
53 Summary; Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Required
57 Not Required
58 Not Required
59 Financial Statements
<PAGE>
PROSPECTUS Ameritas Variable Life Insurance
Company Logo
BRAVO! -- A Survivorship Flexible 5900 "O" Street
Premium Variable Universal Life
Insurance Policy issued by Ameritas P.O. Box 82550/Lincoln, NE 68501
Variable Life Insurance Company
- --------------------------------------------------------------------------------
BRAVO! is a survivorship flexible premium variable universal life insurance
Policy ("Policy"), issued by Ameritas Variable Life Insurance Company ("AVLIC"),
that pays a death benefit upon the Second Death. Like traditional life insurance
policies, a BRAVO! Policy provides Death Benefits to Beneficiaries and gives
you, the Policyowner, the opportunity to increase the Policy's cash value.
Unlike traditional policies, BRAVO! lets you vary the frequency and amount of
premium payments, rather than follow a fixed premium payment schedule. It also
lets you change the level of Death Benefits as often as once each year.
A BRAVO! Policy is different from traditional life insurance policies in another
important way: you select how Policy premiums will be invested. Although each
Policyowner is guaranteed a minimum Death Benefit, the cash value of the Policy,
as well as the actual Death Benefit, will vary with the performance of
investments you select.
The Investment Options available through BRAVO! include investment portfolios
managed by Fidelity Management, Fred Alger Management, Massachusetts Financial
Services and Morgan Stanley Asset Management. Each of these portfolios has its
own investment objective and policies. These are described in the prospectuses
for each investment portfolio which must accompany this BRAVO! prospectus. You
may also choose to allocate premium payments to the Fixed Account managed by
AVLIC.
A BRAVO! Policy will be issued after AVLIC accepts a prospective Policyowner's
application. Generally, an application must specify a Death Benefit no less than
$100,000. BRAVO! Policies are available to cover individuals between the ages of
20 and 90 at the time of purchase, although at least one of the individuals must
be no older than 85. A BRAVO! Policy, once purchased, may generally be canceled
within 10 days after you receive it.
This BRAVO! prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of a BRAVO! Policy.
Prospective Policyowners are urged to read the prospectus carefully and retain
it for future reference.
This prospectus includes a summary of the most important features of the BRAVO!
Policy, information about AVLIC, a list of the investment portfolios to which
you may allocate premium payments, and a detailed description of the BRAVO!
Policy. The appendix to the prospectus includes tables designed to illustrate
how cash values and Death Benefits may change with the investment experience of
the Investment Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through BRAVO!
Although the BRAVO! Policy is designed to provide life insurance, a BRAVO!
Policy is considered to be a security. It is not a deposit with, an obligation
of, or guaranteed or endorsed by any banking institution through which it may be
purchased, nor is it insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other agency. The purchase of a BRAVO! Policy
involves investment risk, including the possible loss of principal. For this
reason, BRAVO! may not be suitable for all individuals. It may not be
advantageous to purchase a BRAVO! Policy as a replacement for another type of
life insurance or as a way to obtain additional insurance protection if the
purchaser already owns another survivorship flexible premium variable universal
life insurance policy.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains other information regarding registrants that file electronically
with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_________, 1999
BRAVO!
1
<PAGE>
TABLE OF CONTENTS PAGE
DEFINITIONS....................................................................3
SUMMARY........................................................................6
YEAR 2000......................................................................9
AMERITAS VARIABLE LIFE INSURANCE COMPANY AND THE SEPARATE ACCOUNT ............10
AMERITAS VARIABLE LIFE INSURANCE COMPANY.............................10
AMERITAS VARIABLE LIFE INSURANCE COMPANY SEPARATE ACCOUNT V..........10
PERFORMANCE INFORMATION..............................................11
THE FUNDS............................................................11
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS..........13
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS....................16
FIXED ACCOUNT........................................................17
POLICY BENEFITS...............................................................17
PURPOSES OF THE POLICY...............................................17
DEATH BENEFIT PROCEEDS...............................................18
DEATH BENEFIT OPTIONS................................................18
METHODS OF AFFECTING INSURANCE PROTECTION............................20
DURATION OF POLICY...................................................20
ACCUMULATION VALUE...................................................20
PAYMENT OF POLICY BENEFITS...........................................21
POLICY RIGHTS.................................................................21
LOAN BENEFITS........................................................21
SURRENDERS...........................................................22
PARTIAL WITHDRAWALS..................................................23
TRANSFERS............................................................23
SYSTEMATIC PROGRAMS..................................................23
FREE LOOK PRIVILEGE..................................................24
PAYMENT AND ALLOCATION OF PREMIUMS............................................24
ISSUANCE OF A POLICY.................................................24
PREMIUMS.............................................................25
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE........................26
POLICY LAPSE AND REINSTATEMENT.......................................26
CHARGES AND DEDUCTIONS........................................................27
DEDUCTIONS FROM PREMIUM PAYMENTS.....................................27
CHARGES FROM ACCUMULATION VALUE......................................27
SURRENDER CHARGE.....................................................28
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT...........................29
FUND EXPENSE SUMMARY.................................................29
GENERAL PROVISIONS............................................................31
DISTRIBUTION OF THE POLICIES..................................................33
FEDERAL TAX MATTERS...........................................................33
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS..................................36
THIRD PARTY SERVICES..........................................................36
VOTING RIGHTS.................................................................36
STATE REGULATION OF AVLIC.....................................................36
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC.....................................37
LEGAL MATTERS.................................................................38
LEGAL PROCEEDINGS.............................................................38
EXPERTS.......................................................................39
ADDITIONAL INFORMATION........................................................39
FINANCIAL STATEMENTS..........................................................39
AMERITAS VARIABLE LIFE INSURANCE COMPANY SEPARATE ACCOUNT V...................
AMERITAS VARIABLE LIFE INSURANCE COMPANY......................................
APPENDICES....................................................................40
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, SALESPERSON, 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.
BRAVO!
2
<PAGE>
DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that the Policy provides for investment at
any time. It is equal to the total of the Accumulation Value held in the
Separate Account, the Fixed Account, and any Accumulation Value held in the
General Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge to cover the cost of administering the
Policy. It is part of the Monthly Deduction.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of the Separate Account to provide for expenses of ongoing
administrative services to the Policyowners as a group.
ATTAINED AGE - The Issue Age of the younger Insured plus the number of complete
Policy Years that the Policy has been in force.
AVLIC - Ameritas Variable Life Insurance Company, a Nebraska stock company.
AVLIC's Home Office is located at 5900 "O" Street, P.O. Box 82550, Lincoln, NE
68501.
BENEFICIARY - The person or persons to whom the Death Benefit Proceeds are
payable upon the Second Death. (See the sections on Beneficiary and Change of
Beneficiary.)
COST OF INSURANCE - A charge deducted monthly from the Accumulation Value to
provide the life insurance protection; this charge may also include one or more
Flat Extra Rating Charges. The Cost of Insurance is calculated with reference to
an annual "Cost of Insurance Rate." This rate is based on the Issue Age, sex,
and risk class of each Insured and the Policy duration. The Cost of Insurance is
part of the Monthly Deduction.
DECLARED RATE - The interest rate declared by AVLIC to be earned on amounts in
the Fixed Account, which AVLIC guarantees to be no less than an annual rate of
3.5%.
DEATH BENEFIT - The amount of insurance coverage provided under the selected
Death Benefit option of the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
AVLIC of Satisfactory Proof of Death of both Insureds 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 Accrued Expense Charges, including the Monthly Deduction for the month
of the Second Death.
FLAT EXTRA RATING CHARGE - A charge that will be applicable if an Insured is
placed into a class that involves a higher mortality risk. One-half the amount
of any applicable Flat Extra Rating Charge will be added to the Cost of
Insurance Rate and, thus, will be deducted as part of the Monthly Deduction on
each Monthly Activity Date.
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 such as the Separate
Account.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policyowner's last known address. If the Policyowner makes the payment
specified in the notification of lapse, the Policy will not lapse.
GUARANTEED DEATH BENEFIT (IN MARYLAND, "GUARANTEED DEATH BENEFIT TO PREVENT
LAPSE") PERIOD - The number of years the "Guaranteed Death Benefit" provision
will apply. The period extends to Attained Age 85 but in no event is less than
10 years, and may be restricted as a result of state law. Not available in
Massachusetts. This benefit is provided without an additional Policy charge.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium which, if paid in advance
on a monthly prorated basis, will keep the Policy in force during the Guaranteed
Death Benefit Period so long as other Policy provisions are met, even if the Net
Cash Surrender Value is zero or less.
INSUREDS - The two persons whose lives are insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
BRAVO!
3
<PAGE>
ISSUE AGE - The actual age of each Insured on the Policy Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MINIMUM PREMIUM - A specified premium which, if paid in advance on a monthly
prorated basis, will keep the Policy in force during the first sixty Policy
months ("Minimum Benefit" Period) so long as other Policy provisions are met,
even if the Net Cash Surrender Value is zero or less.
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.
MONTHLY DEDUCTION - The deductions taken from the Accumulation Value on the
Monthly Activity Date. These deductions are equal to: (1) the current Cost of
Insurance; (2) the Administrative Expense Charge; and (3) rider charges, if any.
MORTALITY AND EXPENSE RISK CHARGE - A daily charge that is deducted from the
overall assets of the Separate Account to provide for the risk that mortality
and expense costs may be greater than expected.
NET AMOUNT AT RISK - The amount by which the Death Benefit as calculated on a
Monthly Activity Date exceeds the Accumulation Value on that date.
NET CASH SURRENDER VALUE - The Accumulation Value of the Policy on any Valuation
Date (including for this purpose, the date of Surrender), less any Surrender
Charges and any Outstanding Policy Debt.
NET POLICY FUNDING - Net Policy Funding is the sum of all premiums paid, less
any partial withdrawals and less any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the Percent of Premium Charge.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PERCENT OF PREMIUM CHARGE FOR TAXES - The amount deducted from each premium
received to cover certain expenses, expressed as a percentage of the premium.
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 Minimum Benefit or the Guaranteed
Death Benefit.
POLICY - The survivorship flexible premium variable universal life insurance
Policy offered by AVLIC and described in this prospectus.
POLICYOWNER - ("you," "your") 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 - 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) unless there are additional premiums or
application amendments at time of delivery. (See the section on Issuance of a
Policy.)
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date. A "Policy Month" is measured from the same date in each
succeeding month as the Policy Date.
BRAVO!
4
<PAGE>
SATISFACTORY PROOF OF DEATH - Satisfactory Proof of Death must be provided to us
at the time of death of each Insured. Satisfactory Proof of Death means all of
the following must be submitted:
(1) A certified copy of both death certificates;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that AVLIC may reasonably require to
establish the validity of the claim.
SECOND DEATH - The later of the dates of death of the Insureds.
SEPARATE ACCOUNT - This term refers to 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 Separate Account. The
Separate Account is segregated from the General Account and all other assets of
AVLIC.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy, as selected by
the Policyowner.
SUBACCOUNT - A subdivision of the Separate Account. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy for the Net Cash Surrender Value while
at least one Insured is alive.
SURRENDER CHARGE - This charge is assessed against the Accumulation Value of the
Policy if the Policy is Surrendered on or before the 14th Policy Anniversary
Date or, in the case of an increase in the Specified Amount, on or before the
14th anniversary of the increase.
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.
BRAVO!
5
<PAGE>
SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read along with the detailed information found elsewhere in this prospectus.
Unless stated otherwise, this prospectus assumes that the Policy is in force and
that there is no Outstanding Policy Debt.
DIAGRAM OF POLICY
PREMIUM PAYMENTS
You can vary amount and frequency.
DEDUCTIONS FROM PREMIUMS
Percent of Premium Charge for Taxes - currently 2.25% (maximum 3.0%)
NET PREMIUM
The net premium may be invested in the Fixed Account or in the Separate Account
which offers twenty six different Subaccounts. The twenty six Subaccounts invest
in the corresponding portfolios ("Funds") of Variable Insurance Products Fund,
Variable Insurance Products Fund II,The Alger American Fund, MFS Variable
Insurance Trust, or Morgan Stanley Universal Funds, Inc.
DEDUCTIONS FROM ASSETS
Monthly charge for cost of insurance and cost of any riders.
Monthly charge for administrative expenses (maximum charge $16.00/month plus
$.05 per month per $1000 of specified amount).
<TABLE>
<CAPTION>
<S> <C> <C>
Specified Amount Policy Year Policy Years 6+
---------------- ----------- ---------------
100,000 - 999,999 $16/mo + $.05/1000/mo $8/mo
1,000,000 - 4,999,999 $ 8/mo + $.05/1000/mo $4/mo
5,000,000 + $ 0/mo + $.05/1000/mo $0/mo
Daily charge from the Subaccounts for mortality and expense risks and
administrative expenses, at an annual rate of 0.90% for Policy Years 1-15, and
0.45% thereafter. This charge is not deducted from Fixed Account assets.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIVING BENEFITS RETIREMENT BENEFITS DEATH BENEFITS
You may make partial withdrawals, subject to Loans may be available on a Generally, death benefit
certain restrictions. The Death Benefit will be more favorable interest rate income is tax free to the
reduced by the amount of the partial withdrawal. basis after the tenth Policy Year Beneficiary.
AVLIC guarantees up to 15 free transfers Should the Policy lapse while The Beneficiary may be
between the Investment Options each Policy Year. loans are outstanding, the paid a lump sum or may
Under current practice, unlimited free transfers portion of the loan attributable select any of the five
are permitted. to earnings will become taxable payment methods
You may surrender the policy at any time for its distributions. (See page 22.) available as retirement
Net Cash Surrender Value. You may take payment under benefits.
Some expenses that AVLIC incurs immediately one or more of five different
upon the issuance of the Policy are recovered over payment options.
a period of years. Therefore, a Policy surrender on or
before the 14th anniversary date will be assessed
a Surrender Charge. The charge decreases each year
until no Surrender Charge is applied after the
14th Policy Year. Increases in coverage after
issue will also have a Surrender Charge associated
with them. (See pages 22 and 28.)
Accelerated payment of up to 50% of the lowest
scheduled Death Benefit is available under certain
conditions if the surviving Insured is suffering from
terminal illness.
</TABLE>
BRAVO!
6
<PAGE>
SUMMARY
The following summary is intended to highlight the most important features of a
BRAVO! POLICY that you, as a prospective POLICYOWNER, should consider. You will
find more detailed information in the main portion of the prospectus;
cross-references are provided for your convenience. As you review this summary,
take note of the terms that appear in italics. Each italicized term is defined
in the glossary that begins on page 3 of this prospectus. This summary and all
other parts of this prospectus are qualified in their entirety by the terms of
the BRAVO! POLICY, which is available upon request from AVLIC.
WHO IS THE ISSUER OF A BRAVO! POLICY?
AVLIC is the issuer of each BRAVO! Policy. AVLIC enjoys a rating of A
(Excellent) for financial strength and operating performance from A.M. Best
Company, a firm that analyzes insurance carriers. This is the third highest of
Best's 15 categories. AVLIC is rated AA (Very Strong) for financial insurance
strength from Standard & Poor's. This is the third highest of Standard & Poor's
21 ratings. A stock life insurance company organized in Nebraska, AVLIC is a
wholly owned subsidiary of AMAL Corporation which is, in turn, owned by Ameritas
Life Insurance Corp. ("Ameritas Life") and AmerUs Life Insurance Company
("AmerUs Life"). Ameritas Life, AmerUs Life and AMAL Corporation guarantee the
obligations of AVLIC, including the obligations of AVLIC under each BRAVO!
POLICY; taken together, these companies have aggregate assets of over $13.7
billion as of December 31, 1997 (page 10).
WHY SHOULD I CONSIDER PURCHASING A BRAVO! POLICY?
The primary purpose of a BRAVO! Policy is to provide life insurance protection
on the two INSUREDS named in the POLICY. This means that, so long as the POLICY
is in force, it will provide for:
[ ] payment of a DEATH BENEFIT, which will never be less than the SPECIFIED
AMOUNT the POLICYOWNER selects (page 17)
[ ] POLICY loan, SURRENDER and withdrawal features (page 22)
A BRAVO! POLICY also includes an investment component. This means that, so long
as the POLICY is in force, you will be responsible for selecting the manner in
which NET PREMIUMS will be invested. Thus, the value of a BRAVO! POLICY will
reflect your investment choices over the life of the POLICY.
HOW DOES THE INVESTMENT COMPONENT OF MY BRAVO! POLICY WORK?
AVLIC has established a SEPARATE ACCOUNT, which is separate from all other
assets of AVLIC, as a vehicle to receive and invest premiums received from
BRAVO! POLICYOWNERS and owners of certain other variable universal life products
offered by AVLIC. The SEPARATE ACCOUNT is divided into separate SUBACCOUNTS.
Each SUBACCOUNT invests exclusively in shares of one of the investment
portfolios available through BRAVO! Each POLICYOWNER may allocate NET PREMIUMS
to one or more SUBACCOUNTS, or to AVLIC's FIXED ACCOUNT in the initial
application. These allocations may be changed, without charge, by notifying
AVLIC's Home Office. The aggregate value of your interests in the SUBACCOUNTS,
the FIXED ACCOUNT and any amount held in the GENERAL ACCOUNT to secure POLICY
debt will represent the ACCUMULATION VALUE of your BRAVO! POLICY (page 20).
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE BRAVO! POLICY?
The INVESTMENT OPTIONS available through BRAVO! include 26 investment
portfolios, each of which is a separate series of a mutual fund managed by
Fidelity Management & Research Company, Fred Alger Management, Inc.,
Massachusetts Financial Services Company or Morgan Stanley Asset Management Inc.
These portfolios are:
[ ]FIDELITY MANAGEMENT & RESEARCH COMPANY:
VIP Money Market
VIP Equity-Income
VIP Growth
VIP High Income
VIP Overseas
VIP II Asset Manager
VIP II Investment Grade Bond
VIP II Asset Manager: Growth
VIP II Index 500
VIP II Contrafund
[ ]FRED ALGER MANAGEMENT, INC.:
Growth
Income and Growth
Small Capitalization
Balanced
MidCap Growth
Leveraged AllCap
BRAVO!
7
<PAGE>
[ ]MASSACHUSETTS FINANCIAL SERVICES COMPANY:
Emerging Growth
Utilities
World Governments
Research
Growth With Income
[ ]MORGAN STANLEY ASSET MANAGEMENT INC.:
Emerging Markets Equity
Global Equity
International Magnum
Asian Equity
U.S. Real Estate
Details about the investment objectives and policies of each of the available
investment portfolios, including management fees and expenses, appear on page 13
of this prospectus. In addition to the listed portfolios, you may also elect to
allocate NET PREMIUMS to AVLIC's FIXED ACCOUNT (page 17).
HOW DOES THE LIFE INSURANCE COMPONENT OF A BRAVO! POLICY WORK?
A BRAVO! POLICY provides for the payment of a minimum DEATH BENEFIT upon the
SECOND DEATH. The amount of the minimum DEATH BENEFIT -- sometimes referred to
as the SPECIFIED AMOUNT of your BRAVO! POLICY -- is chosen by you at the time
your BRAVO! POLICY is established. However, DEATH BENEFIT PROCEEDS -- the actual
amount that will be paid after AVLIC receives SATISFACTORY PROOF OF DEATH -- may
vary over the life of your BRAVO! POLICY, depending on which of the two
available coverage options you select.
If you choose Option A, the DEATH BENEFIT payable under your BRAVO! POLICY will
be the SPECIFIED AMOUNT of your BRAVO! POLICY OR the applicable percentage of
its ACCUMULATION VALUE, whichever is greater. If you choose Option B, the DEATH
BENEFIT payable under your BRAVO! POLICY will be the SPECIFIED AMOUNT of your
BRAVO! POLICY PLUS the Accumulation Value of your BRAVO! Policy, or if it is
higher, the applicable percentage of the ACCUMULATION VALUE on the SECOND DEATH.
In either case, the applicable percentage is established based on the ATTAINED
AGE at the SECOND DEATH (page 18).
ARE THERE ANY RISKS INVOLVED IN OWNING A BRAVO! POLICY?
Yes. Over the life of your BRAVO! POLICY, the SUBACCOUNTS to which you allocate
your premiums will fluctuate with changes in the stock market and overall
economic factors. These fluctuations will be reflected in the ACCUMULATION VALUE
of your BRAVO! POLICY and may result in loss of principal. For this reason, the
purchase of a BRAVO! POLICY may not be suitable for all individuals. It may not
be advantageous to purchase a BRAVO! POLICY to replace or augment your existing
insurance arrangements. Appendix A includes tables illustrating the impact that
hypothetical market returns would have on ACCUMULATION VALUES under a BRAVO!
POLICY (page 40).
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP A BRAVO! POLICY IN FORCE?
Like traditional life insurance policies, a BRAVO! POLICY requires the payment
of periodic premiums in order to keep the POLICY in force. You will be asked to
establish a payment schedule before your BRAVO! POLICY becomes effective.
The distinction between traditional life policies and a BRAVO! POLICY is that a
BRAVO! POLICY will not lapse simply because premium payments are not made
according to that payment schedule. However, a BRAVO! POLICY will lapse, even if
scheduled premium payments are made, if the NET CASH SURRENDER VALUE of your
BRAVO! POLICY falls below zero or premiums paid do not, in the aggregate, equal
the premium necessary to satisfy the MINIMUM BENEFIT (page 25) or the GUARANTEED
DEATH BENEFIT requirements (page 25).
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your BRAVO! POLICY will be issued after a completed application is accepted, and
the initial premium payment is received, by AVLIC at its Home Office. AVLIC's
Home Office is located at 5900 "O" Street, P.O. Box 82550, Lincoln, NE 68501.
Your initial NET PREMIUM will be allocated on the ISSUE DATE to the SUBACCOUNT
and/or the FIXED ACCOUNT according to the selections you made in your
application. If state or other applicable law or regulation requires return of
at least your premium payments should you return the POLICY pursuant to the
Free-Look Privilege, your initial NET PREMIUM will be allocated to the Money
Market Subaccount. Thirteen days after the ISSUE DATE, the ACCUMULATION VALUE of
the POLICY will be allocated among the SUBACCOUNTS and/or the FIXED ACCOUNT
according to the instructions in your application. You have the right to examine
your BRAVO! POLICY and return it for a refund for a limited time, even after the
ISSUE DATE (page 24).
BRAVO!
8
<PAGE>
You may make subsequent premium payments according to your PLANNED PERIODIC
PREMIUM schedule, although you are not required to do so. AVLIC will send
premium payment notices to you according to any schedule you select. When AVLIC
receives your premium payment at its Home Office, any applicable PERCENT OF
PREMIUM CHARGE FOR TAXES will be deducted and the NET PREMIUM will be allocated
to the SUBACCOUNTS and/or the FIXED ACCOUNT according to your selections (page
26).
As already noted, BRAVO! provides you considerable flexibility in determining
the frequency and amount of premium payments. This flexibility is not, however,
unlimited. You should keep certain factors in mind in determining the payment
schedule that is best suited to your needs. These include the amount of the
MINIMUM PREMIUM, GUARANTEED DEATH BENEFIT PREMIUM and/or NET POLICY FUNDING
requirement needed to keep your BRAVO! POLICY in force (page 25); maximum
premium limitations established under the Federal tax laws (page 25); and the
impact that reduced premium payments may have on the NET CASH SURRENDER VALUE of
your BRAVO! POLICY (page 26).
IS THE ACCUMULATION VALUE OF MY BRAVO! POLICY AVAILABLE WITHOUT SURRENDER?
Yes. You may access the value of your BRAVO! POLICY in one of two ways. First,
you may obtain a loan, secured by the ACCUMULATION VALUE of your BRAVO! POLICY.
The maximum interest rate on any such loan is 6% annually; the current rate is
5.5% annually. After the tenth POLICY ANNIVERSARY, you may borrow against a
limited amount of the NET CASH SURRENDER VALUE of your BRAVO! POLICY at a
maximum annual interest rate of 4%; the current rate for such loans is 3.5%
annually (page 22).
You may also access the value of your BRAVO! POLICY by making a partial
withdrawal. A partial withdrawal is not subject to SURRENDER CHARGES, but is
subject to a maximum charge not to exceed the lesser of $50 or 2% of the amount
withdrawn (currently, the partial withdrawal charge is the lesser of $25 or 2%)
(page 23).
ARE THERE ANY OTHER CHARGES ASSOCIATED WITH OWNERSHIP OF A BRAVO! POLICY?
Certain states impose premium and other taxes in connection with insurance
policies such as BRAVO! AVLIC may deduct up to 3% of each premium as a PERCENT
OF PREMIUM CHARGE FOR TAXES. Currently, 2.25% is deducted for this purpose.
Charges are deducted against the ACCUMULATION VALUE to cover the COST OF
INSURANCE under the POLICY and to compensate AVLIC for administering each
individual BRAVO! POLICY. These charges, which are part of the MONTHLY
DEDUCTION, are calculated and paid on each MONTHLY ACTIVITY DATE. The COST OF
INSURANCE is calculated based on risk factors relating to the INSUREDS as
reflected in relevant actuarial tables. The ADMINISTRATIVE EXPENSE CHARGES are
based on your SPECIFIED AMOUNT and the POLICY duration. They may be increased
during the life of your BRAVO! POLICY, up to a maximum of $16 per month plus
$.05 per month per $1000 of SPECIFIED AMOUNT.
For its services in administering the SEPARATE ACCOUNT and SUBACCOUNTS and as
compensation for bearing certain mortality and expense risks, AVLIC is also
entitled to receive fees. These fees are calculated daily during the first 15
years of each BRAVO! POLICY, at a combined annual rate of 0.90% of the value of
the net assets of the SEPARATE ACCOUNT. After the 15th POLICY ANNIVERSARY DATE,
the combined annual rate will decrease to .45% of the daily net assets of the
SEPARATE ACCOUNT. No MORTALITY AND EXPENSE RISK CHARGE will be deducted from the
amounts in the FIXED ACCOUNT. (page 29).
Finally, because AVLIC incurs expenses immediately upon the issuance of a BRAVO!
POLICY that are recovered over a period of years, a BRAVO! POLICY that is
SURRENDERED on or before its 14th POLICY ANNIVERSARY DATE is subject to a
SURRENDER CHARGE. Additional SURRENDER CHARGES may apply if you increase the
SPECIFIED AMOUNT of your BRAVO! POLICY. Because the SURRENDER CHARGE may be
significant upon early SURRENDER, you should purchase a BRAVO! POLICY only if
you intend to maintain your BRAVO! POLICY for a substantial period (page 28).
POLICYOWNERS who choose to allocate NET PREMIUMS to one or more of the
SUBACCOUNTS will also bear a pro rata share of the management fees and expenses
paid by each of the investment portfolios in which the various SUBACCOUNTS
invest. No such management fees are assessed against NET PREMIUMS allocated to
the FIXED ACCOUNT (page 29).
WHEN DOES MY BRAVO! POLICY TERMINATE?
You may terminate your BRAVO! POLICY BY SURRENDERING the POLICY while at least
one INSURED is alive for its NET CASH SURRENDER VALUE (page 22). As noted above,
your BRAVO! POLICY will terminate if you fail to pay required premiums or
maintain sufficient NET CASH SURRENDER VALUE to cover POLICY charges (page 20).
YEAR 2000
Like other insurance companies and their separate accounts, AVLIC and the
Separate Account could be adversely affected if the computer systems they rely
upon do not properly process date-related information and data involving the
years 2000 and after. This issue arose because both mainframe and PC-based
computer hardware and software have traditionally used two digits to identify
the year. For example, the year 1998 is input, stored and calculated as "98."
BRAVO!
9
<PAGE>
Similarly, the year 2000 would be input, stored and calculated as "00." If
computers assume this means 1900, it could cause errors in calculations,
comparisons, and other computing functions.
Like all insurance companies, AVLIC makes extensive use of dates and date
calculations. We began a corporate-wide Year 2000 (Y2K) project in mid-1996. Our
goal is to ensure that our computer systems continue to operate smoothly with no
service disruptions before, during or after the year 2000.
As of December 31, 1998, all of our computer application and operating systems
had been updated for the year 2000. Continuous testing and monitoring throughout
1999 will help AVLIC continue to meet our contractual and service obligations to
our customers. In addition to our internal efforts, AVLIC is working closely
with vendors and other business partners to confirm that they too are addressing
Y2K issues on a timely basis. We believe that we are Y2K-compliant; however, in
the event we or our service providers, vendors, financial institutions or others
with which we conduct business, fail to be Y2K - compliant, there would be a
materially adverse effect on us.
AMERITAS VARIABLE LIFE INSURANCE COMPANY AND THE SEPARATE 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 __.
AVLIC is a wholly owned subsidiary of AMAL Corporation, a Nebraska stock
company. AMAL Corporation is a joint venture of Ameritas Life Insurance Corp.
("Ameritas Life"), which owns a majority interest in AMAL Corporation; and
AmerUs Life Insurance Company ("AmerUs Life"), an Iowa stock life insurance
company, which owns a minority interest in AMAL Corporation. The Home Offices of
both AVLIC and Ameritas Life are at 5900 "O" Street, P.O. Box 82550, Lincoln,
Nebraska 68501 ("Home Office").
On April 1, 1996 Ameritas Life consummated an agreement with AmerUs Life whereby
AVLIC became a wholly owned subsidiary of a newly formed holding company, AMAL
Corporation. Under terms of the agreement AMAL Corporation is 66% owned by
Ameritas Life and 34% owned by AmerUs Life. AmerUs Life has options to purchase
an additional interest in AMAL Corporation if certain conditions are met. There
are no other owners of 5% or more of the outstanding voting securities of AVLIC.
Ameritas Life and its subsidiaries had total assets at December 31, 1997 of over
$3.4 billion. AmerUs Life had total assets as of December 31, 1997 of over $10.3
billion.
AVLIC has a rating of A (Excellent) for financial strength and operating
performance from A.M. Best Company, a firm that analyzes insurance carriers.
This is the third highest of Best's 15 categories. AVLIC is rated AA (Very
Strong) for insurer financial strength from Standard & Poor's. This is the
third-highest of Standard & Poor's 21 ratings. Ameritas Life enjoys a long
standing A+ (Superior) rating from A.M. Best, the second highest of its ratings.
Ameritas Life, AmerUs Life and AMAL Corporation guarantee 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 which has a
financial rating by a national rating agency equal to or greater than Ameritas
Life and which agrees to assume the guarantee. AmerUs Life will be relieved of
its obligations under the guarantee if it sells its interest in AMAL Corporation
to another insurance company which has a financial rating by a national rating
agency equal to or greater than that of AmerUs Life, and the purchaser assumes
the guarantee.
Ameritas Investment Corp. ("AIC"), 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. Published material may also include charts and other
information concerning dollar cost averaging, portfolio rebalancing, earnings
sweep, tax-deference, asset allocation, diversification, long term market
trends, index performance and other investment methods and programs. The purpose
of the ratings is 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 Separate
Account") was established under Nebraska law on August 28, 1985. The assets of
the Separate 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,
BRAVO!
10
<PAGE>
and are not affected by income, gains, or losses of AVLIC. Although the assets
maintained in the Separate 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 Separate
Account of a total market value at least equal to the reserve and other contract
liabilities of the Separate Account. The Separate Account will at all times
contain assets equal to or greater than Accumulation Values invested in the
Separate Account. Nevertheless, to the extent assets in the Separate Account
exceed AVLIC's liabilities in the Separate 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 Separate 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
Separate Account. For state law purposes, the Separate Account is treated as a
Division of AVLIC.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of the Separate Account and the
Funds available for investment by the Separate Account may appear in
advertisements, sales literature, or reports to Policyowners or prospective
purchasers. AVLIC may also provide a hypothetical illustration of Accumulation
Value, Net Cash Surrender Value and Death Benefit based on historical investment
returns of the Funds for a sample Policy based on assumptions as to age, sex,
and risk class of each Insured, and other Policy specific assumptions.
AVLIC may also provide individualized hypothetical illustrations of Accumulation
Value, Net Cash Surrender Value and Death Benefit based on historical investment
returns of the Funds. These illustrations will reflect deductions for Fund
expenses and Policy and Separate Account charges, including the Monthly
Deduction, Percent of Premium Charge for Taxes, and the Surrender Charge. These
hypothetical illustrations will be based on the actual historical experience of
the Funds as if the Subaccounts had been in existence and a Policy issued for
the same periods as those indicated for the Funds.
THE FUNDS
There are currently 26 Subaccounts within the Separate Account available to
Policyowners for new allocations. The assets of each Subaccount are invested in
shares of a corresponding portfolio of one of the following mutual Funds
(collectively, the "Funds"): Variable Insurance Products Fund and Variable
Insurance Products Fund II, (respectively, "VIP" and "VIP II"; collectively
"Fidelity Funds"); The Alger American Fund ("Alger American Fund"); MFS Variable
Insurance Trust ("MFS Trust"); and Morgan Stanley Universal Funds, Inc. ("Morgan
Stanley Fund"). VIP, which is managed by Fidelity Management & Research Company
("Fidelity"), offers the following portfolios: VIP Money Market, VIP
Equity-Income, VIP Growth, VIP High Income, and VIP Overseas. VIP II, also
managed by Fidelity, offers the following portfolios: VIP II Asset Manager, VIP
II Investment Grade Bond, VIP II Asset Manager: Growth, VIP II Index 500, and
VIP II Contrafund. The Alger American Fund, which is managed by Fred Alger
Management, Inc. ("Alger Management"), offers the following portfolios: Alger
American Growth ("Growth"), Alger American Income and Growth ("Income and
Growth"), Alger American Small Capitalization ("Small Capitalization"), Alger
American Balanced ("Balanced"), Alger American MidCap Growth ("MidCap Growth"),
and Alger American Leveraged AllCap ("Leveraged AllCap"). The MFS Trust, managed
by Massachusetts Financial Services Company ("MFS Co."), offers the following
portfolios or series in connection with this Policy: MFS Emerging Growth, MFS
Utilities, MFS World Governments, MFS Research, and MFS Growth With Income. The
Morgan Stanley Fund offers the following portfolios in connection with the
Policy, all of which are managed by Morgan Stanley Asset Management Inc.
("MSAM"): Emerging Markets Equity, Global Equity, International Magnum, Asian
Equity, and U.S. Real Estate. Each Fund is registered with the SEC under the
Investment Company Act of 1940 as an open-end management investment company.
The assets of each portfolio of the Funds are held separately 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. All
underlying Fund information, including Fund prospectuses, has been provided to
AVLIC by the underlying Funds. AVLIC has not independently verified this
information. 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
BRAVO!
11
<PAGE>
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. In addition, certain of the portfolios may invest in
securities of foreign issuers.
The Leveraged AllCap portfolio may borrow 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.
Certain of the portfolios are permitted to invest a portion of their assets in
non-investment grade, high risk debt securities; these portfolios include the
VIP High Income, VIP Equity-Income, VIP II Asset Manager: Growth, VIP II Asset
Manager portfolios of the Fidelity Funds, and the Research portfolio of the MFS
Fund. Certain portfolios are designed to invest a substantial portion of their
assets overseas, such as the VIP Overseas portfolio and the International Magnum
portfolio of the Morgan Stanley Fund. Other portfolios invest primarily in the
securities markets of emerging nations. Investments of this type involve
different risks than investments in more established economies, and will be
affected by greater volatility of currency exchange rates and overall economic
and political factors. Such portfolios include the Emerging Markets Equity and
Asian Equity portfolios of the Morgan Stanley Fund. The Emerging Markets Equity
portfolio may also invest in non-investment grade, high risk debt securities
(also known as "junk bonds") and securities of Russian companies. Investment in
Russian companies may involve risks associated with that nation's system of
share registration and custody. Securities of non-U.S. issuers (including
issuers in emerging nations) may also be purchased by each of the portfolios of
the MFS Trust and the Global Equity portfolio of the Morgan Stanley Fund.
Investments acquired by the U.S. Real Estate portfolio of the Morgan Stanley
Fund may be subject to the risks associated with the direct ownership of real
estate and direct investments in real estate investment trusts. Further
information about the risks associated with investments in each of the Funds and
their respective portfolios is contained in the prospectus relating to that
Fund. These prospectuses, together with this prospectus, should be read
carefully and retained.
You 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 Separate Account will purchase and redeem shares from the portfolios at the
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 among Investment Options as you request. Any
dividend or capital gain distribution received is automatically reinvested in
the corresponding Subaccount.
Since each of the Funds is 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 Separate 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 their 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.
BRAVO!
12
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
FIDELITY FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ------------------------------------------------------------------------------------------------------------------------------------
VIP Money Market High-quality U.S. dollar denominated money market Seeks to obtain as high a level
instruments of domestic and foreign Issuers. (Commercial of current income as is
Paper, Certificate of Deposit.) consistent with preserving
capital and providing liquidity.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP Equity-Income At least 65% in income producing common or preferred Seeks reasonable income by
stock. The remainder will normally be invested in investing primarily in income
convertible and non-convertible debt obligations. producing equity securities. The
goal is to achieve yield in
excess of the composite yield of
the Standard & Poor's 500
Composite Stock Price Index.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP Growth Portfolio purchases normally will be common stocks of Seeks to achieve capital
both well-known established companies and smaller, less- appreciation by investing
known companies, although the investments are not primarily in common stocks.
restricted to any one type of security. Dividend income
will only be considered if it might have an effect on stock
values.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP High Income At least 65% in income producing debt securities and Seeks to obtain a high level of
preferred stocks, up to 20% in common stocks and other current income by investing in
equity securities, and up to 15% in securities subject to high income producing lower-
restriction on resale. rated debt securities (sometimes
called "junk bonds"), preferred
stocks including convertible
securities and restricted
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP Overseas At least 65% invested in securities of issuers outside of Seeks long-term growth of
North America. Most issuers will be located in developed capital primarily through
countries in the Americas, the Far East and Pacific Basin, investments in foreign
Scandinavia and Western Europe. While the primary securities.
purchases will be common stocks, all types of securities
may be purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager Equities (Growth, High Dividends, Utility), bonds Seeks to obtain high total return
(Government, Agency, Mortgage backed, Convertible and with reduced risk over the long
Zero Coupon) and money market instruments. term by allocating its assets
among domestic and foreign
stocks, bonds, and short-term
fixed-income securities.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP II Investment A portfolio of investment grade fixed-income securities Seeks as high a level of current
Grade Bond with a dollar weighted average maturity of less than ten income as is consistent with the
years. preservation of capital.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BRAVO!
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager: Focuses on stocks for high potential returns but also Seeks to maximize total return
Growth purchases bonds and short-term instruments. by allocating its assets among
foreign and domestic stocks,
bonds, short-term instruments
and other investments.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP II Index 500 At least 80% (65% if fund assets are below $20 million) in Seeks investment results that
equity securities of companies that compose the Standard correspond to the total return of
& Poor's 500. Also purchases short-term debt securities for common stocks of companies
cash management purposes and uses various investment that compose the Standard &
techniques, such as futures contracts, to adjust its exposure Poor's 500.
to the Standard & Poor's 500.
- ------------------------------------------------------------------------------------------------------------------------------------
VIP II Contrafund Portfolio purchases will normally be common stock or Seeks long-term capital
securities convertible into common stock of companies appreciation.
believed to be undervalued due to an overly pessimistic
appraisal by the public.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ALGER
AMERICAN FUND
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ------------------------------------------------------------------------------------------------------------------------------------
Growth The portfolio will invest its assets in companies whose Seeks long-term capital
securities are traded on domestic stock exchanges or in the appreciation.
over-the-counter market. Except during temporary
defensive periods, the portfolio will invest at least 65% of
its total assets in the securities of companies that have a
total market capitalization of $1 billion or greater.
- ------------------------------------------------------------------------------------------------------------------------------------
Income and The portfolio attempts to invest 100% of its assets, and Seeks to provide a high level of
Growth except during temporary defensive periods, it is a dividend income to the extent
fundamental policy of the portfolio to invest, at least 65% consistent with prudent
of its total assets in dividend paying equity securities. investment management.
Capital appreciation is a
secondary objective of the
portfolio.
- ------------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Except during temporary defensive periods, the portfolio Seeks long-term capital
invests at least 65% of its total assets in equity securities of appreciation.
companies that, at the time of purchase of the securities,
have total market capitalization within the range of
companies included in the Russell 2000 Growth Index or
the S&P SmallCap 600 Index, updated quarterly. The
portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have
total market capitalization outside the range of companies
included in those Indexes and in excess of that amount (up
to 100% of its assets) during temporary defensive periods.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BRAVO!
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced The portfolio will invest its assets in common stocks and Seeks current income and long-
investment grade preferred stock and debt securities as well term capital appreciation by
as securities convertible into common stocks. Except investment in common stocks
during defensive periods, it is anticipated that 25% of the and fixed income and
portfolio assets will be invested in fixed income senior convertible securities, with
securities. emphasis on income producing
securities which appear to have
potential for capital
appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
MidCap Growth Except during temporary defensive periods, the portfolio Seeks long-term capital
invests at least 65% of its total assets in equity securities of appreciation.
companies that, at the time of purchase of the securities,
have total market capitalization within the range of
companies included in the S&P MidCap 400 Index,
updated quarterly. The S&P MidCap 400 Index is
designed to track the performance of medium capitalization
companies. The portfolio may invest up to 35% of its total
assets in securities that, at the time of purchase, have total
market capitalization outside the range of companies
included in the S&P MidCap 400 Index and in excess of
that amount (up to 100% of its assets) during temporary
defensive periods.
- ------------------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Invests at least 85% of net assets in equity securities of Seeks long-term capital
companies of any size, except during defensive periods. appreciation.
May purchase put and call options and sell covered options
to increase gain and to hedge. May enter into futures
contracts and purchase and sell options on these futures
contracts. May also borrow money for purchase of
additional securities.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MFS FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Growth At least 80% normally will be invested in equity securities Seeks to provide long-term
Series of emerging growth companies. Up to 25% may be capital growth; dividend and
invested in foreign securities not including ADRs. interest income is incidental.
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities Series At least 65%, but up to 100% normally will be invested in Seeks capital growth and current
equity and debt securities of both domestic and foreign income (above that available
companies in the utilities industry. Normally, not more from a portfolio invested
than 35% will be invested in equity and debt securities of entirely in equity securities).
issuers in other industries, including foreign
securities, emerging market securities and non-dollar
denominated securities.
- ------------------------------------------------------------------------------------------------------------------------------------
World Governments At least 80% normally will be invested in debt securities. Seeks to provide long-term
Series May invest up to 100% of assets in foreign securities, growth of capital and future
including emerging markets securities. income.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BRAVO!
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Research Series Invests in common stocks or securities convertible into Seeks to provide long-term
common stocks of companies believed to possess better growth of capital and future
than average prospects for long-term growth. Up to 10% income.
may be invested in non-investment grade debt; up to 20%
may be invested in foreign securities (including emerging
market issues.)
- ------------------------------------------------------------------------------------------------------------------------------------
Growth With Income At least 65% will normally be invested in common stocks Seeks to provide reasonable
Series or securities convertible into common stocks of companies current income and long-term
believed to have long-term prospects for growth and growth of capital and income.
income. Expects to invest not more than 15% in foreign
securities (including emerging market issues.)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MORGAN
STANLEY FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Invests primarily in equity securities of emerging market Long-term capital appreciation.
Equity country issuers with a focus on those countries whose
economies the portfolio's adviser believes to be
developing strongly and in which markets are becoming
more sophisticated.
- ------------------------------------------------------------------------------------------------------------------------------------
Global Equity Invests primarily in equity securities of issuers throughout Long-term capital appreciation.
the world, including U.S. issuers and emerging market
countries, using an approach that is oriented to the
selection of individual stocks that the portfolio's
adviser believes are undervalued.
- ------------------------------------------------------------------------------------------------------------------------------------
International Magnum Invests primarily in equity securities of non-U.S. issuers, Long-term capital appreciation.
generally in accordance with weightings determined by
the portfolio's adviser, in countries comprising the
Morgan Stanley Capital International Europe,
Australia, Far East Index, commonly known as the
"EAFE Index."
- ------------------------------------------------------------------------------------------------------------------------------------
Asian Equity Invests primarily in equity securities of Asian issuers, Long-term capital appreciation.
excluding Japan, using an approach that is oriented
to the selection of individual stocks believed by the
portfolio's adviser to be undervalued.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Real Estate Invests primarily in equity securities of companies Above-average current income
primarily engaged in the U.S. real estate industry, including and long-term capital
real estate investment trusts. appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, to add, delete, or
substitute investments in the Separate Account. AVLIC will notify the SEC and/or
state insurance authorities and will obtain required approvals before making
additions, deletions, or substitutions. The Separate Account may, to the extent
permitted by law, purchase other securities for other policies or permit a
conversion between policies upon your request.
AVLIC may, in its sole discretion, also establish additional Subaccounts of the
Separate 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
BRAVO!
16
<PAGE>
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 AVLIC considers it to be in the best interest of Policyowners, and subject to
any approvals that may be required under applicable law, the Separate 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 Separate 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 Separate Account.
If any of these substitutions or changes are made, AVLIC may, by appropriate
endorsement, change the Policy to reflect the substitution or change. You will
be notified of any material change in the investment policy of any portfolio in
which you have an interest.
FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium payments to the
Fixed Account, and you may also transfer monies between the Separate Account and
the Fixed Account. (See the section on Transfers.)
Payments allocated to the Fixed Account and transferred from the Separate
Account to the Fixed Account are placed in AVLIC's General Account. The General
Account includes all of AVLIC's assets, except those assets segregated in
AVLIC's 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, plus interest
credits, less any deduction for charges and expenses. 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 exemptions 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 Investment Company Act of
1940. Accordingly, neither the General Account nor any interest in it 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, these disclosures
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 a Declared Rate of at least
3.5%. AVLIC may, at its discretion, set a higher Declared Rate(s). Each month
AVLIC will establish the Declared Rate for the Policies with a Policy Date or
Policy Anniversary Date in that month. Each month is assumed to have 30 days,
and each year to have 360 days for purposes of crediting interest on the Fixed
Account. The Policyowner will earn interest on the amounts transferred or
allocated to the Fixed Account at the Declared Rate effective for the month in
which the Policy was issued, which rate is guaranteed for the remainder of the
first Policy Year. During later Policy Years, all amounts in the Fixed Account
will earn interest at the Declared Rate in effect in the month of the last
Policy Anniversary. Declared interest rates may increase or decrease from
previous periods, but will not fall below 3.5%. AVLIC reserves the right to
change the declaration practice, and the period for which a Declared Rate will
apply.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus;
however prospectus disclosure regarding the Policy is qualified in its entirety
by the Policy itself, a copy of which is available upon request from AVLIC.
PURPOSES OF THE POLICY
The Policy is designed to provide the Policyowner with both lifetime insurance
protection and flexibility in the amount and frequency of premium payments and
with the level of life insurance proceeds payable under the Policy.
You are not required to pay scheduled premiums to keep the Policy in force, but
you may, subject to certain limitations, vary the frequency and amount of
premium payments. You also may 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 both the Minimum Premium and the Guaranteed Death
Benefit Premium required. If the Specified Amount is decreased, however, the
Minimum Premium and Guaranteed Death Benefit Premium will not decrease. Thus, as
insurance needs or financial conditions change, you have the flexibility to
adjust life insurance benefits and vary premium payments.
BRAVO!
17
<PAGE>
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of the Separate 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 Separate Account. If the Minimum Premium or
Guaranteed Death Benefit Premium is satisfied by Net Policy Funding, AVLIC will
keep the Policy in force during the appropriate period and provide a Death
Benefit. In certain instances, this Net Policy Funding will not, after the
payment of Monthly Deductions, generate positive Net Cash Surrender Values.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, AVLIC will pay the Death Benefit
Proceeds of the Policy upon Satisfactory Proof of Death, according to the Death
Benefit option in effect at the time of the Second Death. The amount of the
Death Benefits payable will be determined at the end of the Valuation Period
during which the Second Death occurs. 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 the section on Payment Options.)
Death Benefit Proceeds will be paid to the surviving Beneficiary or
Beneficiaries you specified in the application or as subsequently changed. If
you do not choose a Beneficiary, the proceeds will be paid to you, as the
Policyowner, or to your estate.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options. 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 the section on Policy Lapse and Reinstatement.) The
minimum initial Specified Amount is $100,000. The following graphs illustrate
the differences in the two Death Benefit options.
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 Death Benefit equal to the Specified Amount
or the Accumulation Value multiplied by the Death Benefit percentage
(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 at the Second
Death. The applicable percentage is 250% for Attained Ages 40 or younger on the
Policy Anniversary Date prior to the Second Death. For Attained Ages over 40 on
that Policy Anniversary Date, the percentage declines. For example, the
percentage at Attained Age 40 is 250%, at Attained Age 50 is 185%, at Attained
Age 60 is 130%, at Attained Age 70 is 115%, at Attained Age 80 is 105%, and at
Attained Age 90 is 105%. The applicable percentage will never be less than 101%.
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.
BRAVO!
18
<PAGE>
OPTION B.
[Omitted graph illustrates payout under Death Benefit Option B, specifically by
showing the relaionships over time, between the Specified Amount and the
Accumulation Value.]
Death Benefit Option B. Pays a Death Benefit equal to the Specified Amount
plus the Policy's Accumulation Value or the Accumulation Value multiplied
by the Death Benefit percentage, 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 at the Second Death. The applicable percentage is the
same as under Option A: 250% for Attained Ages 40 or younger on the Policy
Anniversary Date prior to the Second Death. For Attained Ages over 40 on that
Policy Anniversary Date 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.
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 Specified
Amount after the change will equal the Specified Amount before the change less
the Accumulation Value as of the date of the change. 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 Cost of Insurance because this charge varies depending on the Net
Amount at Risk. Changing from Option B to Option A generally will decrease the
Net Amount at Risk in the future, and will therefore decrease the Cost of
Insurance. Changing from Option A to Option B generally will result in an
increase in the Cost of Insurance over time because the Cost of Insurance rate
will increase with the ages of the Insureds, even though the Net Amount at Risk
will generally remain level. (See the sections on Charges and Deductions and
Federal Tax Matters.)
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 affects the Net Amount at Risk, which
affects the Cost of Insurance and may have federal tax consequences. (See the
sections on Charges and Deductions and Federal Tax Matters.)
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 $100,000.
In addition, if a decrease in the Specified Amount makes the Policy not comply
with the maximum premium limits required by federal tax law, the decrease may be
limited or the Accumulation Value may be returned to you, at your election, to
the extent necessary to meet the requirements. (See the section on Premiums.)
Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, you must submit a written supplemental
application. AVLIC may also require additional evidence of insurability.
BRAVO!
19
<PAGE>
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to put the
requested increase in effect. (See the section on Premiums upon Increases in
Specified Amount.) The minimum amount of any increase is $50,000, and an
increase cannot be made if either Insured was over age 85 on the previous Policy
Anniversary Date. An increase in the Specified Amount will also increase
Surrender Charges. An increase in the Specified Amount during the time either
the Minimum Benefit or the Guaranteed Death Benefit provision is in effect will
increase the respective premium requirements. (See the section on Charges and
Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION
You 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 your 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 Net Cash Surrender Value is
sufficient to pay the Monthly Deduction or if the Minimum Benefit or Guaranteed
Death Benefit provision is in effect. (See the section on Charges from
Accumulation Value.) However, when the Net Cash 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 the section on Policy Lapse and Reinstatement.)
ACCUMULATION VALUE
The Accumulation Value will reflect the investment performance of the chosen
Investment Options, the Net Premiums paid, any partial withdrawals, and the
charges assessed in connection with the Policy. A Policyowner may Surrender the
Policy at any time and receive the Policy's Net Cash Surrender Value. (See the
section on Surrenders.) There is no guaranteed minimum Accumulation Value.
Accumulation Value is determined on each Valuation Date. On the Issue Date, the
Accumulation Value will equal the portion of any Net Premium allocated to the
Investment Options, reduced by the portion of the first Monthly Deduction
allocated to the Investment Options. (See the section on Allocation of Premiums
and Accumulation Value.) Thereafter, on each Valuation Date, the Accumulation
Value of the Policy will equal:
(1) The aggregate values belonging to the Policy in each of the Subaccounts
on the Valuation Date, determined by multiplying each Subaccount's unit
value by the number of Subaccount units allocated to the Policy; plus
(2) The value of allocations to the Fixed Account; plus
(3) Any Accumulation Value impaired by Outstanding Policy Debt held in the
General Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation Date;
less
(6) Any Monthly Deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Accumulation
Value.
In computing the Policy's Accumulation Value on the Valuation Date, the number
of Subaccount units allocated to the Policy is determined after any transfers
among Investment Options (and deduction of transfer charges), but before any
other Policy transactions, such as receipt of Net Premiums and partial
withdrawals. Because the Accumulation Value depends on 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 is calculated
by:
(1) Multiplying the net asset value per share of each Fund portfolio on the
Valuation Date times the number of shares held by that Subaccount,
before the purchase or redemption of any shares on that Valuation Date;
minus
(2) A charge for mortality and expense risk at an annual rate of .75% in
Policy Years 1-15, decreasing to .30% thereafter; minus
BRAVO!
20
<PAGE>
(3) A charge for administrative service expenses at an annual rate of .15%;
and
(4) 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 Valuation Date. (See the section on Daily Charges Against the
Separate Account.)
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. The net asset value for
each Fund portfolio is determined as of the close of regular trading on the
NYSE. The net investment return for each Subaccount and all transactions and
calculations with respect to the Policies as of any Valuation Date are
determined as of that time. 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.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after AVLIC receives Satisfactory Proof of Death. Payments may be postponed in
certain circumstances. (See the section on Postponement of Payments.) The
Policyowner may decide the form in which Death Benefit Proceeds will be paid.
While at least one Insured is alive, 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. If no election is made, AVLIC will pay Death Benefit
Proceeds or Accumulation Value Benefits in a lump sum. When Death Benefit
Proceeds are payable in a lump sum and no election for an optional method of
payment is in force at the Second Death 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 FOR DEATH BENEFIT PROCEEDS. The minimum amount of each payment
is $100. If a payment would be less than $100, AVLIC has the right to make
payments less often so that the amount of each payment is at least $100. Once a
payment option is in effect, Death Benefit 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, Death Benefits 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. The Policyowner may borrow an amount up to the current Net Cash
Surrender Value less twelve times the most recent Monthly Deduction, at regular
or reduced loan rates (described below). Loans usually are funded within seven
days after receipt of a written request. The loan may be repaid at any time
while at least one Insured is living. Policyowners in certain states may borrow
100% of the Net Cash Surrender Value after deducting Monthly Deductions
BRAVO!
21
<PAGE>
and any interest on policy loans that will be due for the remainder of the
Policy Year. Loans may have tax consequences. (See the section on Federal Tax
Matters.)
LOAN INTEREST. AVLIC charges interest to Policyowners at regular and reduced
rates. Regular loans will accrue interest on a daily basis at a rate of up to 6%
per year; currently the interest rate on regular Policy loans is 5.5%. Each year
after the tenth Policy Anniversary Date, the Policyowner may borrow a limited
amount of the Net Cash Surrender Value at a reduced interest rate. For those
loans, interest will accrue on a daily basis at a rate of up to 4% per year; the
current reduced loan rate is 3.5%. The amount available at the reduced loan rate
is (1) the Accumulation Value , minus (2) total premiums paid minus any partial
withdrawals previously taken, and minus (3) any Outstanding Policy Debt held at
a reduced loan rate. However, this amount may not exceed the maximum loan amount
described above. (See the section on Loan Privileges.) If unpaid when due,
interest will be added to the amount of the loan and bear interest at the same
rate. The Policyowner earns 3.5% interest on the Accumulation Values held in the
General Account 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 Investment Options to the
General Account as security for the loan. The Accumulation Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. 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 Investment Options. In any Policy Year that
loan interest is not paid when due, AVLIC will add the interest due to the
principal amount of the Policy loan on the next Policy Anniversary. This loan
interest due will be transferred from the Investment Options as set out above.
No charge will be made for these transfers. A Policy loan will permanently
affect the Accumulation Value and may permanently affect the amount of the Death
Benefits, even if the loan is repaid. Policy loans will also affect Net Policy
Funding for determining whether the Minimum Benefit and Guaranteed Death Benefit
provisions are met.
Interest earned on amounts held in the General Account will be allocated to the
Investment Options on each Policy Anniversary in the same proportion that Net
Premiums are being allocated to those Investment Options at the time. Upon
repayment of loan amounts, the portion of the repayment allocated in accordance
with the repayment of loan provision (see below) will be transferred to increase
the Accumulation Value in that Investment Option.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on Policy loans. If the Outstanding Policy
Debt exceeds the Accumulation Value less any Surrender Charge and any Accrued
Expense Charges, the Policyowner must pay the excess. AVLIC will send a notice
of the amount which must be paid. If you do not make the required payment within
the 61 days after AVLIC sends the notice, the Policy will terminate without
value ("lapse"). Should the Policy lapse while Policy loans are outstanding, the
portion of the loans attributable to earnings will become taxable. You 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 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 you
experience a substantial reduction, you may need to lower anticipated
withdrawals and loans, repay loans, make additional premium payments, or take
other action to avoid Policy lapse. A lapsed Policy may later be reinstated.
(See the section on Policy Lapse and Reinstatement.)
REPAYMENT OF LOAN. Unscheduled premiums paid while a Policy loan is outstanding
are treated as repayment of the debt only if the Policyowner so requests. As a
loan is repaid, the Accumulation Value in the General Account securing the
repaid loan 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 while at least one Insured is alive, the Policyowner may withdraw a
portion of the Accumulation Value or Surrender the Policy by sending a written
request to AVLIC. The amount available for Surrender is the Net Cash Surrender
Value at the end of the Valuation Period when 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 the section on Postponement of Payments.)
Surrenders may have tax consequences. Once a Policy is Surrendered, it may not
be reinstated. (See the section on Tax Treatment of Policy Proceeds.)
If the Policy is being Surrendered in its entirety, the Policy itself must be
returned to AVLIC along with the request. AVLIC will pay the Net Cash 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 the section on Payment Options.)
BRAVO!
22
<PAGE>
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. The amount of a partial withdrawal may not
be less than $500. The Net Cash Surrender Value after a partial withdrawal must
be at least $1,000 or an amount sufficient to maintain the Policy in force for
the remainder of the Policy Year.
The amount paid will be deducted from the Investment Options according to your
instructions when you request the withdrawal. However, 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 Investment Options.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way the Cost of Insurance is calculated and the amount of pure
insurance protection under the Policy. (See the sections on Monthly Deduction -
Cost of Insurance and Death Benefit Options - Methods of Affecting Insurance
Protection.) If Death Benefit option B is in effect, the Specified Amount will
not change, but the Accumulation Value will be reduced.
A fee which does not exceed the lesser of $50 or 2% of the amount withdrawn is
deducted from the Accumulation Value. Currently, the charge is the lesser of $25
or 2% of the amount withdrawn. (See the section on Partial Withdrawal Charge.)
Partial withdrawals will also affect Net Policy Funding for determining whether
the Minimum Benefit and Guaranteed Death Benefit provisions are met.
TRANSFERS
Accumulation Value may be transferred among the Subaccounts of the Separate
Account and to the Fixed Account as often as desired. However, you may make only
one transfer out of the Fixed Account per Policy Year. We may limit the transfer
period to the 30 days following the Policy Anniversary Date. 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. The first 15 transfers per Policy Year will be permitted free
of charge. After that, a transfer charge of $10 may be imposed each additional
time amounts are transferred and will be deducted from the Accumulation Value on
a pro rata basis. Currently, no charge is imposed for additional transfers. (See
the section on Transfer Charge.) Additional restrictions on transfers may be
imposed at the fund level. Specifically, fund managers may have the right to
refuse sales, or suspend or terminate the offering of portfolio shares, if they
determine that such action is necessary in the best interests of the portfolio's
shareholders. If a Fund manager refuses a transfer for any reason, the transfer
will not be allowed. AVLIC will not be able to process the transfer if the Fund
manager refuses. Transfers resulting from Policy loans or exercise of the
exchange privilege will not be subject to a transfer charge and will not be
counted towards the guaranteed 15 free transfers per Policy Year.
Transfers out of the Fixed Account, unless part of the dollar cost averaging
systematic program described below, are limited to one per Policy Year.
Transfers out of the Fixed Account are limited to the greater of (1) 25% of the
Fixed Account attributable to the Policy; (2) the largest transfer made by the
Policyowner out of the Fixed Account during the last 13 months; or (3) $1,000.
This provision is not available while dollar cost averaging from the Fixed
Account.
The privilege to initiate transactions by telephone will be made available to
Policyowners automatically. The registered representative designated on the
application will have the authority to initiate telephone transfers.
Policyowners who do not wish to authorize AVLIC to accept telephone transactions
from their registered representative must so specify on the application. 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
AVLIC providing written confirmation of telephone transactions.
SYSTEMATIC PROGRAMS
AVLIC may offer systematic programs as discussed below. These programs will be
subject to administrative guidelines AVLIC may establish from time to time.
Transfers of Accumulation Value made pursuant to these programs will be counted
in determining whether any transfer fee may apply. Lower minimum amounts may be
allowed to transfer as part of a systematic program. No other separate fee is
assessed when one of these options is chosen. All other normal transfer
restrictions, as described above, also apply.
BRAVO!
23
<PAGE>
You can request participation in the available programs when purchasing the
Policy or at a later date. You can change the allocation percentage or
discontinue any program by sending written notice or calling the Home Office.
Other scheduled programs may be made available. AVLIC reserves the right to
modify, suspend or terminate such programs at any time. Use of systematic
programs may not be advantageous, and does not guarantee success.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
AVLIC to reallocate the Accumulation Value among the Subaccounts (but not the
Fixed Account) on a systematic basis according to your specified allocation
instructions.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
AVLIC to automatically transfer, on a systematic basis, a predetermined amount
or specified percentage from the Fixed Account or the Money Market Subaccount to
any other Subaccount(s). Dollar cost averaging is permitted from the Fixed
Account if each monthly transfer is no more than 1/36th of the value of the
Fixed Account at the time dollar cost averaging is established.
EARNINGS SWEEP. This program permits systematic redistribution of earnings among
Investment Options.
FREE-LOOK PRIVILEGE
You may cancel the Policy within 10 days after you receive it, within 10 days
after AVLIC delivers a notice of your right of cancellation, or within 45 days
of completing Part I of the application, whichever is later. When allowed by
state law, the amount of the refund is the net premiums allocated to the
Investment Options, adjusted by investment gains and losses, plus the sum of all
charges deducted from premiums paid. Otherwise, the amount of the refund will
equal the gross premiums paid. To cancel the Policy, you should mail or deliver
it to the selling agent, or to AVLIC at the Home Office. A refund of premiums
paid by check may be delayed until the check has cleared your bank. (See the
section on Postponement of Payments.)
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 (5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska
68501). A Policy will generally be issued only to individuals between the ages
of 20 and 90 at the time of purchase, although at least one of the individuals
must be no older than 85, and both of whom supply satisfactory evidence of
insurability to AVLIC. 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 for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all financial,
contractual and administrative requirements have been met and processed for the
Policy. The Policy Date and the Issue Date will be the same unless: (1) an
earlier Policy Date is specifically requested, or (2) additional premiums or
application amendments are needed. When there are additional requirements before
issue (see below) the Policy Date will be the date the Policy is sent for
delivery and the Issue Date will be the date the requirements are met.
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 you or sent to the agent for delivery to you. 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 (monies of member banks
within the Federal Reserve System which are held on deposit at a Federal Reserve
Bank) are received and available to AVLIC, and the application amendments are
received and reviewed in AVLIC's Home Office. Your initial Net Premium will be
allocated on the Issue Date to the Subaccaounts and/or the Fixed Account
according to the selections you made in your application. When state or other
applicable law or regulation requires return of at least your premium payments
if you return the Policy under the free-look privilege, your initial Net Premium
will be allocated to the Money Market Subaccount. Then, thirteen days after the
Issue Date, the Accumulation Value of the Policy will be allocated among the
Subaccounts and/or Fixed Account according to the instructions in your
application.
BRAVO!
24
<PAGE>
Subject to approval, a Policy may be backdated, but the Policy Date may not be
more than six months prior to the date of the application. Backdating can be
advantageous if a lower Issue Age for either Insured results in lower Cost of
Insurance Rates. If a Policy is backdated, the minimum initial premium required
will include sufficient premium to cover the backdating period. Monthly
deductions will be made for the period the Policy Date is backdated.
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 the required premium at the time of the application. The
amount of the interim coverage is limited to $100,000. Premium will not be
accepted with applications for coverage in amounts of $1,000,000 or more.
PREMIUMS
No insurance will take effect before the initial premium payment is received by
AVLIC in Federal Funds. The initial premium payment must be at least equal to
the monthly Minimum Premium times one more than the number of months between the
Policy Date and the Issue Date. Subsequent premiums are payable at AVLIC's Home
Office. A Policyowner has flexibility in determining the frequency and amount of
premiums. However, unless you have paid sufficient premiums to pay the Monthly
Deduction and Percent of Premium Charge for Taxes the Policy may have a zero Net
Cash Surrender Value and lapse. Net Policy Funding, if adequate, may satisfy
Minimum Premium and/or Guaranteed Death Benefit Premium requirements. (See the
section on Policy Benefits, Purposes of the Policy.)
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued you may determine a
Planned Periodic Premium schedule that provides for the payment of level
premiums at selected intervals. You may want to consider setting the Planned
Periodic Premium no lower than the Guaranteed Death Benefit Premium to assure
proper funding of the Guaranteed Death Benefit. You are not required to pay
premiums in accordance with this schedule. You have considerable flexibility to
alter the amount and frequency of premiums paid. AVLIC reserves the right to
limit the number and amount of additional or unscheduled premium payments.
You may 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 Minimum Benefit or Guaranteed Death Benefit
provision is in effect. Instead, the duration of the Policy depends upon the
Policy's Net Cash Surrender Value. (See the section on Duration of the Policy.)
Unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect,
even if Planned Periodic Premiums are paid, the Policy will lapse any time the
Net Cash Surrender Value is insufficient to pay the Monthly Deduction, and the
Grace Period expires without a sufficient payment. (See the section on Policy
Lapse and Reinstatement.)
PREMIUM LIMITS. AVLIC's current minimum premium limit is $45, $15 if paid by
automatic bank draft. AVLIC currently has no maximum premium limit, other than
the current maximum premium limits established by federal tax laws. AVLIC
reserves the right to change any premium limit. In no event may the total of all
premiums paid, both planned and unscheduled, exceed the current maximum premium
limits established by federal tax laws. (See the section on Tax Status of the
Policy.)
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limits, 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 limits allowed 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 you of any premium
required to fund the increase, which premium must be made in a single payment.
The Accumulation Value of the Policy will be immediately increased by the amount
of the payment, less the applicable Percent of Premium Charge for Taxes.
BRAVO!
25
<PAGE>
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 and/or to the Fixed Account.
Allocations must be whole number percentages and must total 100%. The allocation
of 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 you
instruct otherwise by proper written notice.
On the Issue Date, the initial Net Premium will be allocated to the Investment
Options you selected. When state or other applicable law or regulation requires
return of at least your premium payments if you return the Policy under the
free-look privilege, the initial Net Premium will be allocated to the Money
Market Subaccount for 13 days. Thereafter, the Accumulation Value will be
reallocated to the Investment Options you selected. 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 and is available
to AVLIC. In no event will interest be credited prior to the Policy Date.
The Accumulation Value of the Subaccounts will vary with the investment
performance of these Subaccounts and you, as the Policyowner, will bear the
entire investment risk. This will affect the Policy's Accumulation Value, and
may affect the Death Benefit as well. You should periodically review your
allocations of premiums and values in light of market conditions and overall
financial planning requirements.
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 Net Cash Surrender Value is insufficient to cover the
Monthly Deduction and a Grace Period expires without a sufficient payment,
unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect.
The Grace Period is 61 days from the date AVLIC mails a notice that the Grace
Period has begun. AVLIC will notify you at the beginning of the Grace Period by
mail addressed to your last known address on file with AVLIC. The notice will
specify the premium required to keep the Policy in force. The required premium
will equal the lesser of (1) Monthly Deductions plus Percent of Premium charges
for the three Policy Months after commencement of the Grace Period, plus
projected loan interest that would accrue over that period, or (2) the premium
required under the Minimum Benefit or Guaranteed Death Benefit provisions, if
applicable, to keep the Policy in effect for three months from the commencement
of the Grace Period. Failure to pay the required premium within the Grace Period
will result in lapse of the Policy. If the Second Death occurs during the Grace
Period, any overdue Monthly Deductions and Outstanding Policy Debt will be
deducted from the Death Benefit Proceeds. (See the section on Charges and
Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the beginning of the Grace Period provided both
Insureds are living. Reinstatement will be based on the rating classes of the
Insureds at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of both Insureds satisfactory to AVLIC
(including evidence of insurability of any person covered by a rider
to reinstate the rider);
(2) Any Outstanding Policy Debt on the date of lapse will be reinstated with
interest due and accrued;
(3) The Policy cannot be reinstated if it has been Surrendered for its full
Net Cash Surrender Value;
(4) The minimum premium required at reinstatement is the greater of:
(a) the amount necessary to raise the Net Cash Surrender Value as
of the date of reinstatement to equal to or greater than zero; or
(b) three times the current Monthly Deduction.
Theamount of Accumulation Value on the date of reinstatement will equal:
(1) The amount of the Net Cash Surrender Value on the date of lapse,
increased by
(2) The premium paid at reinstatement, less
(3) The Percent of Premium Charge, plus
(4) That part of the Surrender Charge that would apply if the Policy were
Surrendered on the date of reinstatement.
BRAVO!
26
<PAGE>
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 Outstanding Policy Debt is reinstated, that debt will
be held in AVLIC's General Account. Accumulation Value calculations will then
proceed as described under the section on Accumulation Value.
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 and payment of
applicable taxes; (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 PAYMENTS
PERCENT OF PREMIUM CHARGE FOR TAXES. A deduction of up to 3% of the premium is
made from each premium payment; currently the charge is 2.25%. The deduction is
intended to partially offset the premium taxes imposed by the states and their
subdivisions, and to help defray the tax cost due to capitalizing certain policy
acquisition expenses as required under applicable federal tax laws. (See the
section on Federal Tax Matters .) AVLIC does not expect to derive a profit from
the Percent of Premium Charge for Taxes.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTIONS. 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 from the Investment Options in accordance with your
instructions. If no instructions are given the charges will be allocated
pro rata among the Investment Options. Each of these charges is described in
more detail below.
ADMINISTRATIVE EXPENSE CHARGE. To compensate AVLIC for the ordinary
administrative expenses expected to be incurred in connection with a Policy, the
Monthly Deduction includes a level per policy charge plus a charge per $1000 of
Specified Amount. For Specified Amounts between $100,000 and $999,999, the
charge is currently $16 per month in Policy Years 1-5 and $8 per month
thereafter; for Specified Amounts between $1,000,000 and $4,999,999, the charge
is currently $8 per month in Policy Years 1-5 and $4 per month thereafter;
currently there is no charge for Specified Amounts $5,000,000 or greater. In
addition, for all Specified Amounts there currently is a charge of $.05 per
month per $1000 of Specified Amount in years 1-5. It is anticipated that that
charge will reduce to $0 in year 6. The Administrative Expense Charge is levied
throughout the life of the Policy and is guaranteed not to increase above $16
per month plus $.05 per month per $1000 of Specified Amount. AVLIC does not
expect to make any profit from the Administrative Expense 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 by multiplying the applicable Cost of
Insurance Rate by the Net Amount at Risk for each Policy Month.
COST OF INSURANCE RATE. The Annual Cost of Insurance Rates are based on the
Issue Age, sex and risk class of each Insured and the Policy duration. The rates
will vary depending upon tobacco use and other risk factors. The rates will be
based on AVLIC's expectations of future experience with regard to mortality,
interest, persistency, and expenses, but will not exceed the Schedule of
Guaranteed Annual Cost of Insurance Rates shown in the Policy. The guaranteed
rates for standard rating classes are calculated from the 1980 Commissioners
Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. The
guaranteed rates for the table-rated substandard Insureds are based on a
multiple (shown in the schedule pages of the Policy) of the above rates.
One-half the amount of any Flat Extra Rating Charge is added to the Cost of
Insurance Rate and thus will be deducted as part of the Monthly Deduction on
each Monthly Activity Date. Any change in the Cost of Insurance Rates will apply
to all Insureds of the same age, sex, risk class and whose Policies have been in
effect for the same length of time.
The Cost of Insurance Rates, Surrender Charges, and payment options for Policies
issued in Montana, and perhaps other states or in connection with certain
employee benefit arrangements, are issued on a sex-neutral (unisex) basis. The
BRAVO!
27
<PAGE>
unisex rates will be higher than those applicable to females and lower than
those applicable to males. The actual charges made during the Policy year will
be shown in the annual report delivered to Policyowners.
RATING CLASS. The rating class of each Insured will affect the Cost of Insurance
Rate. AVLIC currently places Insureds into both standard rating classes and
substandard rating classes that involve a higher mortality risk. In an otherwise
identical Policy, Insureds in the standard rating class will have a lower Cost
of Insurance Rate than when either or both Insureds are in a rating class with
higher mortality risks.
SURRENDER CHARGE
If a Policy is Surrendered on or before the 14th Policy Anniversary Date, AVLIC
will assess a Surrender Charge as shown in the schedule pages of the Policy. The
initial Surrender Charge is calculated based on the Issue Age, sex and risk
class of each Insured, and the Specified Amount of the Policy. The Surrender
Charge, if applicable, will be applied according to the following schedule.
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Policy Year Percent of Initial Policy Year Percent of Initial
Surrender Charge that Surrender Charge that
will apply during Policy will apply during Policy
Year Year
- ------------------------------------------------------------------------------------------------------------------------
1-5 100% 11 40%
- ------------------------------------------------------------------------------------------------------------------------
6 90% 12 30%
- ------------------------------------------------------------------------------------------------------------------------
7 80% 13 20%
- ------------------------------------------------------------------------------------------------------------------------
8 70% 14 10%
- ------------------------------------------------------------------------------------------------------------------------
9 60% 15+ 0%
- ------------------------------------------------------------------------------------------------------------------------
10 50%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
No Surrender Charge will be assessed on decreases in the Specified Amount of the
Policy or partial withdrawals of Accumulation Value. AVLIC will, however,
require additional Surrender Charges due to increases in Specified Amount. The
initial Surrender Charge applicable to the increase in Specified Amount will
equal the initial Surrender Charge for the original Specified Amount, multiplied
by the ratio of the increase in Specified Amount to the original Specified
Amount. Surrender Charges on increases in Specified Amount will be applied with
respect to Surrenders within 14 years of the date of the increase according to
the same grading schedule as for the original Specified Amount.
TRANSFER CHARGE. Currently there is no charge for transfers among the investment
options in excess of 15 per Policy Year. A charge of $10 (guaranteed not to
increase) for each transfer in excess of 15 may be imposed to compensate AVLIC
for the costs of processing the transfer. Since the charge reimburses AVLIC only
for the cost of processing the transfer, AVLIC does not expect to make any
profit from the transfer charge. This charge will be deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which the Policyowner is
invested. 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 will be imposed for each partial withdrawal.
This charge will compensate AVLIC for the administrative costs of processing the
requested payment and in making necessary calculations for any reductions in
Specified Amount which may be required because of the partial withdrawal. This
charge is currently 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). No
Surrender Charge is assessed on a partial withdrawal and a partial withdrawal
charge is not assessed when a Policy is Surrendered.
BRAVO!
28
<PAGE>
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of the Separate Account to compensate AVLIC for mortality and expense
risks assumed in connection with the Policy. This daily charge from the Separate
Account is at the rate of 0.002050% (equivalent to an annual rate of .75%) for
Policy Years 1-15 and 0.000820% (equivalent to an annual rate of .30%)
thereafter. The daily charge will be deducted from the net asset value of the
Separate 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 the applicable daily rate multiplied by the number of
days since the last Valuation Date. No Mortality and Expense Risk 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 survivorship flexible premium variable universal life
policies. The mortality risk assumed by AVLIC is that Insureds may live for a
shorter time than calculated, and that the aggregate amount of Death Benefits
paid will be greater than initially estimated. The expense risk assumed is that
expenses incurred in issuing and administering the policies will exceed the
administrative charges provided in the policies.
An Asset-Based Administrative Expense Charge will also be deducted from the
value of the net assets of the Separate Account on a daily basis. This charge is
applied at a rate of 0.000409% (equivalent to .15% annually). No Asset-Based
Administrative Expense Charge will be deducted from the amounts in the Fixed
Account.
FUND EXPENSE SUMMARY
In addition to the charges against the Separate Account described just above,
management fees and expenses will be assessed by Fidelity, Alger Management, MFS
Co. and MSAM against the amounts invested in the various portfolios. No
portfolio fees will be assessed against amounts placed in the Fixed Account.
The information shown below relating to the Funds was provided to AVLIC by the
Funds and AVLIC has not independently verified such information. Each of the
Funds is managed by an investment advisory organization that is not affiliated
with AVLIC. Each such organization is entitled to receive a fee for its services
based on the value of the relevant portfolio's net assets. The amount of
expenses, including the asset based advisory fee referred to above, borne by
each portfolio for the fiscal year ended December 31, 1997, was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT ADVISORY AND OTHER EXPENSES TOTAL
MANAGEMENT
FIGURES PRESENTED MAY REFLECT FIGURES PRESENTED MAY FIGURES PRESENTED
EXPENSE REIMBURSEMENT REFLECT EXPENSE MAY REFLECT
REIMBURSEMENT EXPENSE
REIMBURSEMENT
- --------------------------------------------------------------------------------------------------------------------------
FIDELITY FUNDS
VIP Money Market .21% .10% .31%
VIP Equity-Income .50% .07% .57%(1)
VIP Growth .60% .07% .67%(1)
VIP High Income .59% .12% .71%
VIP Overseas .75% .15% .90%(1)
VIP II Asset Manager .55% .09% .64%(1)
VIP II Investment Grade Bond .44% .14% .58%
VIP II Asset Manager: Growth .60% .16% .76%(1)
VIP II Index 500 .24% .04% .28%(2)
VIP II Contrafund .60% .08% .68%(1)
ALGER AMERICAN FUND (3)
Growth .75% .04% .79%
Income and Growth .625% .115% .74%
Small Capitalization .85% .04% .89%
Balanced .75% .26% 1.01%
MidCap Growth .80% .04% .84%
Leveraged AllCap .85% .15% 1.00%
</TABLE>
BRAVO!
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MFS TRUST
Emerging Growth .75% .12%(4) .87%(5)
Utilities .75% .25%(4) 1.00%(5)
World Governments .75% .25%(4) 1.00%(5)
Research .75% .13%(4) .88.%(5)
Growth With Income .75% .25%(4) 1.00%(5)
MORGAN STANLEY FUND
Emerging Markets Equity(6) .00% 1.75% 1.75%
Global Equity(7) .00% 1.15% 1.15%
International Magnum(7) .00% 1.15% 1.15%
Asian Equity(7) .00% 1.20% 1.20%
U.S. Real Estate(7) .00% 1.10% 1.10%
</TABLE>
(1) A portion of the brokerage commissions that certain funds pay was used
to reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Without these reductions, the total operating
expenses presented in the table would have been .58% for Equity-Income
Portfolio, .69% for Growth Portfolio, .92% for Overseas Portfolio, .65%
for Asset Manager Portfolio, .71% for Contrafund Portfolio, and .77%
for Asset Manager: Growth Portfolio.
(2) Fidelity agreed to reimburse a portion of Index 500 Portfolio's
expenses during the period. Without this reimbursement, the fund's
management fee, other expenses and total expenses would have been .27%,
.13% and .40% respectively, on an annualized basis.
(3) Fred Alger Management, Inc. ("Alger Management") has agreed to
reimburse the portfolios to the extent that the aggregate annual
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
Capitalization, Alger American MidCap Growth, Alger American Leveraged
All Cap, and the Alger American Growth, 1.50%. Included in "Other
Expenses" of Leveraged AllCap is .04% of interest expense.
(4) MFS has agreed to bear expenses for each series, subject to
reimbursement by each series, such that each series "Other Expenses"
shall not exceed .25% of the average daily net assets of the series
during the current fiscal year. Absent this expense arrangement, "Other
Expenses" and "Total" expenses would be .45% and 1.20%, respectively,
for the Utilities Series; .40% and 1.15%, respectively, for the World
Governments Series; and .35% and 1.10%, respectively, for the Growth
With Income Series.
(5) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series
with its custodian and dividend disbursing agent, and may enter into
other such arrangements and directed brokerage arrangements (which
would also have the effect of reducing the series' expenses). Any such
fee reductions are not reflected under "Other Expenses."
(6) For the fiscal year ended December 31, 1997 fund's expenses were
voluntarily reduced by the fund's investment adviser. Absent
reimbursement the management fee, other expenses and total expenses
would have been 1.25%, 2.87% and 4.12%, respectively.
(7) The fund's expenses were voluntarily reduced by the fund's investment
adviser. Absent reimbursement the management fee, other expenses and
total expenses would have been as follows based on the annualized
period January 2, 1997 through December 31, 1997 for Global Equity and
International Magnum portfolios. The U.S. Real Estate and Asian Equity
portfolios were based on the annualized period March 3, 1997 through
December 31, 1997. Global Equity: .80%; 1.63%; and 2.43%. International
Magnum: .80%; 1.98%; and 2.78%. U.S. Real Estate: .80%; 1.52%; and
2.32%. Asian Equity: .80%; 2.30%; and 3.10%.
Expense reimbursement agreements are expected to continue in future years but
may be terminated at any time. 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.
- ----------------
AVLIC may receive administrative fees from the investment advisers of certain
Funds. AVLIC currently does not assess a separate charge against the Separate
Account or the Fixed Account for any federal, state or local income taxes.
BRAVO!
30
<PAGE>
AVLIC may, however, make such a charge in the future if income or gains within
the Separate 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.
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. The rights and benefits under the
Policy are summarized in this prospectus; however prospectus disclosure
regarding the Policy is qualified in its entirety by the Policy itself, a copy
of which is available upon request from AVLIC.
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 Policyowner to die.
BENEFICIARY. Policyowners 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 Second Death,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiaries of the next class; otherwise to the Policyowner;
otherwise to the estate of the Policyowner.
CHANGE OF BENEFICIARY. The Policyowner may change the Beneficiary by written
request at any time while at least one Insured is alive 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.
CHANGE OF POLICYOWNER OR ASSIGNMENT. In order to change the Policyowner 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. Any such assignment is subject
to Outstanding Policy Debt. 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 Death
Benefit Proceeds is subject to the rights of any assignee of record. A
collateral assignment is not a change of ownership.
PAYMENT OF PROCEEDS. The Death Benefit Proceeds are subject first to any debt 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 at
the time of the Second Death, the Death Benefit 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 upon Surrender shall
be paid in one sum unless an Optional Method of Payment is elected.
INCONTESTABILITY. AVLIC cannot contest the Policy or reinstated Policy while at
least one Insured is alive after it has been in force for two years from the
Policy Date (or reinstatement effective date). After the Policy Date, AVLIC
cannot contest an increase in the Specified Amount or addition of a rider while
at least one Insured is alive, after such increase or addition has been in force
for two years from its effective date. However, this two year provision shall
not apply to riders with their own contestability provision. We may require
proof prior to the end of the appropriate contestability period that both
Insureds are living.
MISSTATEMENT OF AGE AND SEX. If the age or sex of either Insured or any person
insured by rider has been misstated, the amount of the Death Benefit and any
added riders provided will be those that would be purchased by the most recent
deduction for the Cost of Insurance and the cost of any additional riders at the
correct age and sex of the Insureds. The Death Benefit Proceeds will be adjusted
correspondingly.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's Insurance law. If either 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 either 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 applicable 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.
BRAVO!
31
<PAGE>
POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, partial
withdrawal, Policy loans, benefits payable at the Second Death, and transfers
may be postponed whenever: (1) the New York Stock Exchange (NYSE) is closed
other than customary weekend and holiday closings, or trading on the NYSE is
restricted as determined by the SEC; (2) the SEC by order permits postponement
for the protection of Policyowners; (3) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Separate Account's net assets; or (4) 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.
REPORTS AND RECORDS. AVLIC will maintain all records relating to the Separate
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, Net Cash Surrender Value, Death Benefit, premiums
paid, Outstanding Policy Debt and other information. Quarterly statements are
also mailed detailing Policy activity during the calendar quarter. Instead of
receiving an immediate confirmation of transactions made pursuant to some types
of periodic payment plan (such as a dollar cost averaging program, or payment
made by automatic bank draft or salary reduction arrangement), the Policyowner
may receive confirmation of such transactions in their quarterly statements. The
Policyowner should review the information in these statements carefully. All
errors or corrections must be reported to AVLIC immediately to assure proper
crediting to the Policy. AVLIC will assume all transactions are accurately
reported on quarterly statements unless AVLIC is notified otherwise within 30
days after receipt of the statement. 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.
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 the section on Charges From Accumulation Value - Monthly Deduction.)
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER.) Upon
Satisfactory Proof of Death of one Insured, and satisfactory proof of terminal
illness of the surviving Insured 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 that provide
coverage on the surviving Insured. AVLIC may charge the lesser of 2% of the
benefit or $50 as an expense charge to cover the costs of administration.
Satisfactory proof of terminal illness of the last surviving Insured 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 date of the physician's statement. Further, the condition must
first be diagnosed while the Policy is in force.
The accelerated benefit first will be used to repay any Outstanding Policy Debt,
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 Death Benefit Proceeds. Interest on the lien will be
charged at the Policy loan interest rate. There is no extra premium for this
rider.
ESTATE PROTECTION RIDER. This rider provides a specified amount of insurance to
the Beneficiary upon receipt of Satisfactory Proof of Death of both Insureds
during the first four Policy Years.
FIRST-TO-DIE TERM RIDER. This rider provides a specified amount of insurance to
the Beneficiary upon receipt of Satisfactory Proof of Death of either of the two
Insureds.
SECOND-TO-DIE TERM RIDER. This rider provides a specified amount of insurance to
the Beneficiary upon receipt of Satisfactory Proof of Death of both Insureds.
BRAVO!
32
<PAGE>
TERM RIDER FOR COVERED INSURED. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of the
rider Insured, as identified. The rider may be purchased on either Insured or on
an individual other than the Insureds.
TOTAL DISABILITY RIDER. This rider provides for the payment by AVLIC of a
disability benefit in the form of premiums while the Insured is disabled. The
benefit amount may be chosen by the Policyowner at the issue of the rider. In
addition, while the Insured is totally disabled, the Cost of Insurance for the
rider will not be deducted from Accumulation Value. The rider may be purchased
on either or both Insureds.
POLICY SPLIT OPTION. This rider allows the Policy to be split into two
individual policies, subject to evidence of insurability on both Insureds.
DISTRIBUTION OF THE POLICIES
The principal underwriter for the Policies is AIC, a wholly owned subsidiary of
AMAL Corporation and an affiliate of AVLIC. AIC is registered as a broker-dealer
with the SEC and is a member of the National Association of Securities Dealers
("NASD"). AVLIC pays AIC for acting as the principal underwriter under an
Underwriting Agreement. In 1997, AIC received gross variable universal life
compensation of $11,369,404, and retained $438,745 in underwriting fees, and
$2,975 in brokerage commissions on AVLIC's variable universal life policies.
The Policies are sold through registered representatives of AIC or other
broker-dealers which have entered into selling agreements with AVLIC or AIC.
These registered representatives are also licensed by state insurance officials
to sell AVLIC's variable life policies. Each of the broker-dealers with a
selling agreement is registered with the SEC and is a member of the NASD.
Under these selling agreements, AVLIC pays commission to the broker-dealers,
which in turn pay commissions to the registered representative who sells this
Policy. During the first Policy Year, the commission may equal an amount up to
95% of the first year target premium paid plus the first year cost of any riders
and 2% for premiums paid in excess of the first year target premium. For Policy
Years two through four, the commission may equal an amount up to 2% of premiums
paid. Broker-dealers may also receive a service fee up to an annualized rate of
.25% of the Accumulation Value beginning in the fifth Policy Year. Compensation
arrangements may vary among broker-dealers. In addition, AVLIC may also pay
override payments, expense allowances, bonuses, wholesaler fees, and training
allowances. Registered representatives who meet certain production standards may
receive additional compensation. AVLIC may reduce or waive the sales charge
and/or other charges on any Policy sold to directors, officers or employees of
AVLIC or any of its affiliates, employees and registered representatives of any
broker-dealer that has entered into a sales agreement with AVLIC or AIC and the
spouses or children of the above persons. In no event will any such reduction or
waiver be permitted where it would be unfairly discriminatory to any person.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or cover all situations. This discussion is not intended as tax advice.
No attempt has been made to consider in detail any applicable state or other tax
laws. This discussion is based upon AVLIC's understanding of the relevant laws
at the time of filing. Counsel and other competent tax advisors should be
consulted for more complete information before a Policy is purchased. AVLIC
makes no representation as to the likelihood of the continuation of present
federal income tax laws nor of the interpretations by the Internal Revenue
Service. Federal tax laws are subject to change and thus tax consequences to the
Insureds, Policyowner or Beneficiary may be altered.
1. TAXATION OF AVLIC. AVLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, (the "Code"). At this
time, since the Separate Account is not a separate entity 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
Separate 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 Separate
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 the Policy.
BRAVO!
33
<PAGE>
AVLIC does not currently expect to incur any federal income tax liability
attributable to the Separate Account with respect to the sale of the
Policies. Accordingly, no charge is being made currently to the Separate
Account for federal income taxes. If, however, AVLIC determines that it may
incur such taxes attributable to the Separate Account, it may assess a
charge for such taxes against the Separate Account.
AVLIC may also incur state and local taxes (including premium taxes). At
present, they are not charges against the Separate Account. If there is a
material change in state or local tax laws, charges for such taxes
attributable to the Separate Account, if any, may be assessed against the
Separate Account.
2. 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. While AVLIC
believes that the Policy meets the statutory definition of a life insurance
contract under Internal Revenue Code Section 7702 and should receive
federal income tax treatment consistent with that of a fixed-benefit life
insurance policy, the area of tax law relating to the definition of life
insurance does not explicitly address all relevant issues (including, for
example, certain tax requirements relating to survivorship variable
universal life policies). AVLIC reserves the right to make changes to the
Policy if deemed appropriate by AVLIC to attempt to assure qualification of
the Policy as a life insurance contract. If the Policy were determined not
to qualify as life insurance under Code Section 7702, the Policy would not
provide the tax advantages normally provided by life insurance. If the
Death Benefit of a Policy is changed, the applicable defined limits may
change.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a
modified endowment contract, distributions from it (including loans) are
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.
Basically, Section 7702A of the Code defines a "modified endowment
contract" as a policy issued or materially changed on or after June 21,
1988 on which the total premiums paid during the first seven years exceed
the amount that would have been paid if the Policy provided for paid up
benefits after seven level annual premiums.
Certain benefits the Policyowner may elect under this Policy may be
material changes that affect or cause retesting under the 7-pay premium
test. These include, but are not limited to, changes in Death Benefits and
changes in the Specified Amount. One may avoid a Policy becoming a modified
endowment contract by, among other things, not making excessive payments or
reducing benefits. Should you deposit excessive premiums during a Policy
Year, that portion that is returned by AVLIC within 60 days after the
Policy Anniversary Date will reduce the premiums paid to prevent the Policy
from becoming a modified endowment contract. All modified endowment
policies issued by AVLIC to the same Policyowner in any 12 month period are
treated as one modified endowment contract for purposes of determining
taxable gain under Section 72(e) of the Internal Revenue Code. Any life
insurance policy received in exchange for a modified endowment contract
will also be treated as a modified endowment contract. You should contact a
competent tax professional before paying additional premiums or making
other changes to the Policy to determine whether such payments or changes
would cause the Policy to become 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 Separate Account to be "adequately diversified" in order
for the Policy to be treated as a life insurance contract for federal tax
purposes. The Separate 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.
AVLIC does not have control over the Funds or their investments. However,
AVLIC believes that the Funds will be operated in compliance with the
diversification requirements of the Internal Revenue Code. 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 Policyowners may
direct their investments to particular divisions of a separate account.
Regulations in this regard may be issued in the 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, AVLIC
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 or otherwise to qualify the Policy for favorable tax treatment.
BRAVO!
34
<PAGE>
The following discussion assumes that the Policy will qualify as a
life insurance contract for federal tax purposes.
3. 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 will generally 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.
Distributions From Policies That Are Not "Modified Endowment Contracts."
---------------------------------------------------------------------------
Distributions (while one or both Insureds are still alive) from a Policy
that is not a modified endowment contract are generally treated as first a
recovery of the investment in the Policy and then only after the return of
all such investment, as disbursing taxable income. However, in the case of
a decrease in the Death Benefit, a partial withdrawal, a change in Death
Benefit option, 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 Policyowner in order for the Policy
to continue complying with the Section 7702 defined limits 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. In addition, upon a complete surrender or lapse of a
Policy that is not a "modified endowment contract," if the amount received
plus the amount of any outstanding Policy Debt exceeds the total investment
in the Policy, the excess will generally be treated as ordinary income for
tax purposes. Investment in the Policy means (1) the total amount of any
premiums paid for the Policy plus the amount of any loan received under the
Policy to the extent the loan is included in gross income of the Policy
owner minus (2) the total amount received under the Policy by the
Policyowner that was excludible from gross income, excluding any
non-taxable loan received under the Policy.
AVLIC also believes that loans received under a Policy that is not a
"modified endowment contract" will be treated as debt 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. 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.
Except for Policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps, the Health Insurance Portability and
Accountability Act of 1996 (the "Health Insurance Act") generally repeals
the deduction for interest paid or accrued after October 13, 1995 on loans
from corporate owned life insurance Policies on the lives of officers,
employees or persons financially interested in the taxpayer's trade or
business. Certain transitional rules for existing debt are included in the
Health Insurance Act. The transitional rules include a phase-out of the
deduction for debt incurred (1) before January 1, 1996, or (2) before
January 1, 1997, for Policies entered into in 1994 or 1995. The phase-out
of the interest expense deduction occurs over a transition period between
October 13, 1995 and January 1, 1999. There is also a special rule for
pre-June 21, 1986 Policies. The Taxpayer Relief Act of 1997 ("TRA '97"),
further expanded the interest deduction disallowance for businesses by
providing, with respect to Policies issued after June 8, 1997, that no
deduction is allowed for interest paid or accrued on any debt with respect
to life insurance covering the life of any individual (except as noted
above under pre-'97 law with respect to key persons and pre-June 21, 1986
policies). TRA '97 also provides that no deduction is permissible for
premiums paid on a life insurance Policy if the taxpayer is directly or
indirectly a Beneficiary under the Policy. Also under TRA '97 and subject
to certain exceptions, for Policies issued after June 8, 1997, no deduction
is allowed for that portion of a taxpayer's interest expense that is
allocable to unborrowed Policy cash values. This disallowance generally
does not apply to Policies owned by natural persons. Policyowners should
consult a competent tax advisor concerning the tax implications of these
changes for their Policies.
Distributions From Policies That Are "Modified Endowment Contracts." Should
--------------------------------------------------------------------
the Policy become a "modified endowment contract" partial withdrawals, 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 Policyowner's age 59 1/2. The 10% penalty tax
does not apply if the Policyowner 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 Policyowner or the joint lives of the Policyowner and Beneficiary.
The right to exchange the Policy for a survivorship flexible premium
adjustable life insurance policy (See the section on Exchange Privilege.),
the right to change Policyowners (See the section on General Provisions.),
and the provision for partial withdrawals (See the section on Surrenders.)
may have tax consequences depending on the circumstances of such exchange,
change, or withdrawal. Upon complete Surrender, 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.
BRAVO!
35
<PAGE>
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Death Benefit 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 Internal Revenue Service on,
and rules with respect to the taxation of, life insurance protection
provided through such plans may apply. The advice of competent tax counsel
should be sought in connection with use of life insurance in a qualified
plan.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
AVLIC holds the assets of the Separate Account. The assets are kept physically
segregated and held separately 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.
THIRD PARTY SERVICES
AVLIC is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
Policies. AVLIC does not engage any such third parties to offer such services of
any type. In certain cases, AVLIC has agreed to honor transfer instructions from
such services where it has received powers of attorney, in a form acceptable to
it, from the Policyowners participating in the service. Firms or persons
offering such services do so independently from any agency relationship they may
have with AVLIC for the sale of Policies. AVLIC takes no responsibility for the
investment allocations and transfers transacted on a Policyowner's behalf by
such third parties or any investment allocation recommendations made by such
parties. Policyowners should be aware that fees paid for such services are
separate and in addition to fees paid under the Policies.
VOTING RIGHTS
AVLIC is the legal holder of the shares held in the Subaccounts of the Separate
Account and as such has the right to vote the shares, to elect Directors of the
Funds, and to vote on matters that are required by the Investment Company Act of
1940 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 each of
the Funds held in the Separate Account at regular and special shareholder
meetings of the Funds according to instructions received from Policyowners based
on the number of shares held as of the record date for such meeting.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policyowner is determined by dividing the 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 Separate 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 Separate Account.
BRAVO!
36
<PAGE>
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.
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, AND CHIEF EXECUTIVE OFFICER*
Director, Chairman of the Board, and Chief Executive Officer: ALIC**; also
serves as officer and/or director of other subsidiaries and/or affiliates of
ALIC.
WILLIAM J. ATHERTON, DIRECTOR, PRESIDENT, AND CHIEF OPERATING OFFICER*
Director: AMAL Corporation; President: North American Security Life Insurance
Company; also served as officer and/or director of other subsidiaries and/or
affiliates of North American.
KENNETH C. LOUIS, DIRECTOR, EXECUTIVE VICE PRESIDENT*
Director, President and Chief Operating Officer: ALIC; also serves as officer
and/or director of other subsidiaries and/or affiliates of ALIC.
GARY R. MCPHAIL, DIRECTOR, EXECUTIVE VICE PRESIDENT****
Director, President, and Chief Executive Officer: AmerUs Life Insurance Company;
also serves as officer and/or director of other subsidiaries and/or affiliates
of AmerUs Life Insurance Company; Executive Vice President - Marketing and
Individual Operations: New York Life Insurance Company; President: Lincoln
National Sales Corporation.
ROBERT W. BUSH, DIRECTOR, SENIOR VICE PRESIDENT-VARIABLE OPERATIONS AND
ADMINISTRATION*
Executive Vice President-Individual Insurance: ALIC; also serves as officer
and/or director of other subsidiaries and/or affiliates of ALIC; Senior Vice
President, CUNA Mutual Insurance Group; also served as officer and/or director
of other subsidiaries and/or affiliates of CUNA.
WAYNE E. BREWSTER, SENIOR VICE PRESIDENT-VARIABLE SALES*
Vice President-Variable Sales: ALIC.
ASHOK CHAWLA, VICE PRESIDENT-FIXED ANNUITY INVESTMENTS****
Senior Vice President - Fixed Income Group: AmerUs Life Insurance Company
(f.k.a. American Mutual Life Insurance Company); Director-Risk Management:
Providian Corp.; Assistant Vice President: Lincoln National Corp.
BRIAN J. CLARK, VICE PRESIDENT-FIXED ANUITY PRODUCT DEVELOPMENT ****
Senior Vice President - Product Management: AmerUs Life Insurance Company.
MICHAEL G. FRAIZER, DIRECTOR****
Controller: AmerUs Life Insurance Company; also serves as director of an
affiliate of AVLIC.
THOMAS C. GODLASKY, DIRECTOR, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT
OFFICER****
Executive Vice President and Chief Investment Officer: AmerUs Life Holdings,
Inc.; Executive Vice President and Chief Investment Officer: AmerUs Life
Insurance Company (f.k.a. American Mutual Life Insurance Company); Manager-Fixed
Income and Derivatives Department: Providian Corporation; also serves as
director of an affiliate of AVLIC; also serves as officer and/or director of
other affiliates of AmerUs Life Insurance Company.
JOSEPH K. HAGGERTY, ASSISTANT GENERAL COUNSEL****
Senior Vice President and General Counsel: AmerUs Life Holdings, Inc.; Senior
Vice President and General Counsel: AmerUs Life Insurance Company (f.k.a.
American Mutual Life Insurance Company f.k.a. Central Life Assurance
Company*****); Senior Vice President, Deputy General Counsel: I.C.H.
Corporation; also serves as an officer to an affiliate of AVLIC, and served as
officer and/or director of other subsidiaries and/or affiliates of I.C.H.
Corporation; also serves as officer of other affiliates of AmerUs Life Insurance
Company.
JON C. HEADRICK, TREASURER*
Executive Vice President-Investments and Treasurer: ALIC; also serves as officer
and/or director of other subsidiaries and/or affiliates of ALIC.
SANDRA K. HOLMES, VICE PRESIDENT-FIXED ANNUITY CUSTOMER SERVICE****
Senior Vice President: AmerUs Life Insurance Company (f.k.a. American Mutual
Life Insurance Company, f.k.a. Central Life Assurance Company*****).
BRAVO!
37
<PAGE>
KENNETH R. JONES, VICE PRESIDENT-CORPORATE COMPLIANCE AND ASSISTANT SECRETARY*
Vice President, Corporate Compliance & Assistant Secretary: ALIC; also serves as
officer of other subsidiaries and/or affiliates of ALIC.
NORMAN M. KRIVOSHA, SECRETARY AND GENERAL COUNSEL*
Executive Vice President, Secretary & Corporate General Counsel: ALIC; also
serves as officer and/or director of other subsidiaries and/or affiliates of
ALIC.
CYNTHIA J. LAVELLE, VICE PRESIDENT-OPERATIONS AND SUPPORT*
Assistant Vice President - Variable Operations: ALIC.
JOANN M. MARTIN, CONTROLLER*
Senior Vice President-Controller and Chief Financial Officer: ALIC; also serves
as officer and/or director of other subsidiaries and/or affiliates of ALIC.
SHEILA SANDY, ASSISTANT SECRETARY****
Manager Annuity Services: AmerUs Life Insurance Company (f.k.a. American Mutual
Life Insurance Company).
KEVIN WAGONER, ASSISTANT TREASURER****
Director Investment Accounting: AmerUs Life Insurance Company (f.k.a. American
Mutual Life Insurance Company, f.k.a. Central Life Assurance Company*****);
Senior Financial Analyst: Target Stores.
*Principal business address: Ameritas Variable Life Insurance Company
5900 "O" Street, P.O. Box 82550
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.
**** Principal business address: AmerUs Life Insurance Company
611 Fifth Avenue
Des Moines, Iowa 50309
***** Central Life Assurance Company merged with American Mutual Life
Insurance Company on December 31, 1994. Central Life Assurance Company was
the survivor of the merger. Contemporaneous with the merger, Central Life
Assurance Company changed its name to American Mutual Life Insurance
Company. (American Mutual Life Insurance Company changed its name to AmerUs
Life Insurance Company on July 1, 1996.)
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, Secretary and General Counsel of
AVLIC.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. AVLIC is not involved in
any litigation that is of material importance in relation to its ability to meet
its obligations under the Policies, or that relates to the Separate Account. AIC
is not involved in any litigation that is of material importance in relation to
its ability to perform under its underwriting agreement.
BRAVO!
38
<PAGE>
EXPERTS
Actuarial matters included in this prospectus have been examined by __________,
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 Separate 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 Separate Account.
BRAVO!
39
<PAGE>
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND CASH VALUES
The following tables illustrate how the Accumulation Values and Death Benefits
of a Policy may change with the investment experience of the Fund. The tables
show how the Accumulation Values and Death Benefits of a Policy issued to two
Insureds of given ages and specified underwriting risk classifications who pay
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 41 through 44 illustrate a
Policy issued to a male, age 45, under a Preferred rate non-tobacco underwriting
risk classification and a female age 45, also under a Preferred non-tobacco
underwriting risk classification. This Policy provides for a standard tobacco
use and non-tobacco use, and preferred non-tobacco classification. The
Accumulation 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 Insureds 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 Accumulation Values
for uniform hypothetical rates of return shown in these tables. The tables on
pages 41 and 43 are based on the current Cost of Insurance Rates, current
expense deductions and the current percent of premium loads. These reflect the
basis on which AVLIC currently sells its Policies. The maximum allowable Cost of
Insurance Rates under the Policy are based upon the 1980 Commissioner's Standard
Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables (Smoker is
referenced for tobacco use rates; Non-Smoker is referenced for non-tobacco use
rates). Since these are recent tables and are split to reflect tobacco use and
sex, the current Cost of Insurance Rates used by AVLIC are at this time equal to
the maximum 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 42 and 44 are based on the
assumption that the maximum allowable Cost of Insurance Rates as described above
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 expenses paid by each
portfolio available for investment (the equivalent to an annual rate of .86% of
the aggregate average daily net assets of the Fund) and the daily charge by
AVLIC to each Subaccount for assuming mortality and expense risks and
administrative expenses (which is equivalent to a charge at an annual rate of
0.90% for Policy Years 1-15 and 0.45% thereafter of the average net assets of
the Subaccounts). A portion of the brokerage commissions that certain Fidelity
Funds pay was used to reduce Funds expenses. In addition, certain Fidelity Funds
have entered into arrangements with their custodian and transfer agent whereby
interest earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Without these reductions, expenses would have been
higher. 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 portfolios may exclude certain items) were in excess of an
annual rate of .28% for the Index 500 Portfolio, 1.25% for the Alger American
Income and Growth and Alger American Balanced portfolios; 1.50% for the Alger
American Small Capitalization, Alger American Mid-Cap Growth, Alger American
Leveraged All Cap, and Alger American Growth portfolios; 1.75% for the Morgan
Stanley Emerging Markets Equity, 1.20% for the Morgan Stanley Asian Equity,
1.15% for the Morgan Stanley Global Equity and Morgan Stanley International
Magnum, 1.10% for the Morgan Stanley U.S. Real Estate portfolios of daily net
assets. MFS Co. has agreed to bear expenses for each series, subject to
reimbursement by each series, such that each series "Other Expenses" shall not
exceed .25% of the average daily net assets of the series during the current
fiscal year. These agreements are expected to continue in future years but may
be terminated at any time. 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
- -1.76%, 4.24%, and 10.24% respectively, for years 1-15 and -1.31%, 4.69%, and
10.69% for the years thereafter respectively, on pages 41 and 43 and -1.76%,
4.24%, and 10.24% respectively, on pages 42 and 44.
The hypothetical values shown in the tables do not reflect any charges for
Federal Income tax burden attributable to the Separate 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 the section on Federal Tax Matters.)
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 Separate 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 15
transfers have been made in any Policy Year so that no transfer charges have
been incurred. Illustrated values would be different if the proposed Insureds
were tobacco users, in substandard risk classifications, or were other ages, or
if a higher or lower premium was illustrated.
Upon request, AVLIC will provide comparable illustration based upon the proposed
Insureds' ages, sexes and underwriting classifications, the Specified Amount,
the Death Benefit option, and planned periodic premium schedule requested, and
any available riders requested. In addition, upon client request, illustrations
may be furnished reflecting allocation of premiums to specified Subaccounts.
Such illustrations will reflect the expenses of the portfolio in which the
Subaccount invests.
BRAVO!
40
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $6000
INITIAL SPECIFIED AMOUNT: $500000
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.76% Net) ( 4.24% Net) (10.24% 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
---- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
1
2
3
4
5
6
7
8
9
10
15
20
Ages
60
65
70
75
</TABLE>
1) Assumes an annual $6000 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.
BRAVO!
41
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $6000
INITIAL SPECIFIED AMOUNT: $500000
DEATH BENEFIT OPTION: A
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.76% Net) ( 4.24% Net) (10.24% 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
---- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
1
2
3
4
5
6
7
8
9
10
15
20
Ages
60
65
70
75
</TABLE>
* In the absence of an additional premium the Policy would lapse.
1) Assumes an annual $6000 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.
BRAVO!
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $20000
INITIAL SPECIFIED AMOUNT: $500000
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.76% Net) ( 4.24% Net) (10.24% 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
---- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
1
2
3
4
5
6
7
8
9
10
15
20
Ages
60
65
70
75
</TABLE>
1) Assumes an annual $20000 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.
BRAVO!
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $20000
INITIAL SPECIFIED AMOUNT: $500000
DEATH BENEFIT OPTION: B
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Annual Investment Return Annual Investment Return Annual Investment Return
(-1.76% Net) ( 4.24% Net) (10.24% 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
---- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
1
2
3
4
5
6
7
8
9
10
15
20
Ages
60
65
70
75
</TABLE>
1) Assumes an annual $20000 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.
BRAVO!
44
<PAGE>
INCORPORATION BY REFERENCE
The Registrant, AVLIC Separate Account V purchases or will purchase units from
the portfolios of these funds at the direction of its policyholders. The
prospectuses of these funds will be distributed with this prospectus and are
hereby incorporated by reference. The prospectuses incorporated by reference are
as follows:
The Variable Insurance Products Fund
Registration No. 2-75010
The Variable Insurance Products Fund II
Registration No. 33-20773
The Alger American Fund
Registration No. 33-21722
MFS Variable Insurance Trust
Registration No. 33-74668
Morgan Stanley Universal Funds, Inc.
Registration No. 333-3013
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore, or hereafter duly adopted pursuant to authority conferred
in that section.
Registrant makes the following representation pursuant to the National
Securities Markets Improvements Act of 1996:
Ameritas Variable Life Insurance Company represents that the fees and charges
deducted under the contract, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
RULE 484 UNDERTAKING
AVLIC's By-laws provide as follows:
The Company shall indemnify any person who was, or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a director, officer, or employee of the Company or
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses including attorney's fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding to the full extent authorized by the laws of
Nebraska.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Variable Life Insurance Company Separate Account V, certifies that it
has duly caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Lincoln, County of
Lancaster, State of Nebraska on this 22nd day of January, 1999.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V, Registrant
AMERITAS VARIABLE LIFE INSURANCE COMPANY, Depositor
Attest: /s/Norman M. Krivosha By: /s/Lawrence J. Arth
--------------------- ---------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Principal Officers of Ameritas
Variable Life Insurance Company on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/Lawrence J. Arth Director, Chairman of the Board January 22, 1999
- -------------------- and Chief Executive Officer
Lawrence J. Arth
/s/William J. Atherton Director, President and January 22, 1999
- ----------------------- Chief Operating Officer
William J. Atherton
/s/Kenneth C. Louis Director, Executive Vice President January 22, 1999
- ---------------------
Kenneth C. Louis
/s/Gary R. McPhail Director, Executive Vice President January 22, 1999
- --------------------
Gary R. McPhail
Director, Senior Vice President - January 22, 1999
- ---------------------- Variable Operations and Administration
Robert W. Bush
/s/Michael G. Fraizer Director January 22, 1999
- ----------------------
Michael G. Fraizer
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/Thomas C. Godlasky Director, Senior Vice President January 22, 1999
- ---------------------- and Chief Investment Officer
Thomas C. Godlasky
/s/Jon C. Headrick Treasurer January 22, 1999
- ----------------------
Jon C. Headrick
/s/Norman M. Krivosha Secretary and General Counsel January 22, 1999
- -----------------------
Norman M. Krivosha
/s/JoAnn M. Martin Controller January 22, 1999
- ---------------------
JoAnn M. Martin
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 44 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representation pursuant to Rule 6e-3(T).
The signatures.
Written consents of the following:
(a)
(b) Norman M. Krivosha
(c)
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2.
(1) Resolution of the Board of Directors of AVLIC Authorizing Establishment
of the Account.*
(2) Not applicable.
(3) (a) Principal Underwriting Agreement.*
(b) Proposed form of Selling Agreement.*
(c) Commission Schedule. - To be filed by later amendment
(d) Amendment to Principal Underwriting Agreement.**
(4) Not applicable.
(5) (a) Proposed form of Policy. - To be filed by later amendment
(b) Proposed form of Policy Riders. - To be filed by later amendment
(6) (a) Articles of Incorporation of AVLIC.**
(b) Bylaws of AVLIC.***
(7) Not applicable.
(8) (a) Participation Agreement in the Variable Insurance Products Fund.**
(b) Participation Agreement in the Alger American Fund.**
(c) Participation Agreement in the MFS Variable Insurance Trust.*
(d) Participation Agreement in the Morgan Stanley Universal Funds,
Inc.*
(9) Not applicable.
(10) Application for Policy. - To be filed by later amendment
2. (a)(b) Opinion and Consent of Norman M. Krivosha, Secretary and General
Counsel
3. No financial statements will be omitted from the final Prospectus pursuant
to Instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable
6. Opinion and Consent of Actuary - to be filed by later amendment
7. Consent of Independent Auditors - to be filed by later amendment
8. Form of Notice of Withdrawal Right and Refund pursuant to Rule 6e-3(T)(b)
(13)(viii) under the Investment Company Act of 1940.**
- -------------
* Incorporated by reference to the initial Registration Statement for
Ameritas Variable Life Insurance Company Separate Account V. File No. 333-15585,
filed November 5, 1996.
** Incorporated by reference to the Pre-Effective Amendment to the
Registration Statement for Ameritas Variable Life Insurance Company Separate
Account V. File No. 333-15585, filed January 17, 1997.
*** Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement for Ameritas Variable Life Insurance Company Separate
Account VA-2, File No. 333-36507, filed February 20, 1998.
<PAGE>
Exhibit Index
Exhibit Page
2.(a)(b) Opinion and Consent of Norman M. Krivosha
Norman Krivosha Ameritas Variable Life Insurance
Secretary and General Counsel Company Logo
- --------------------------------------------------------------------------------
P.O. Box 82550 / Lincoln, NE 68501-2550 / (402) 467-1122 / 1-800-634-8353
January 29, 1999
Ameritas Variable Life Insurance Company
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
With reference to the Registration Statement on Form S-6 filed by Ameritas
Variable Life Insurance Company and Ameritas Variable Life Insurance Company
Separate Account V with the Securities & Exchange Commission covering flexible
premium life insurance policies, I have examined such documents and such laws as
I considered necessary and appropriate, and on the basis of such examination, it
is my opinion that:
1. Ameritas Variable Life Insurance Company is duly organized and validly
existing under the laws of the State of Nebraska and has been duly
authorized by the Insurance Department of the State of Nebraska to
issue variable life policies.
2. Ameritas Variable Life Insurance Company Separate Account V is a duly
authorized and existing separate account established pursuant to the
provisions of Section 44-402.01 of the Statutes of the State of
Nebraska.
3. The flexible premium variable life policies, when issued as
contemplated by said Form S-6 Registration Statement, will constitute
legal, validly issued and binding obligations of Ameritas Variable Life
Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to said Form S-6
Registration Statement and to the use of my name under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
Sincerely,
/s/Norman Krivoash
Norman Krivosha
Secretary and General Counsel
