As filed with the Securities and Exchange Commission on
June 16, 1999
Registration No. 333-71501
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Pre-Effective Amendment No. 1
to
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
SEPARATE ACCOUNT V
(EXACT NAME OF REGISTRANT)
----------------
AMERITAS VARIABLE LIFE INSURANCE COMPANY
(Depositor)
5900 "O" Street
Lincoln, Nebraska 68510
----------------
DONALD R. STADING
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 The Separate Account
6 The Separate Account
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; The Funds; Calvert Variable Series, Inc.
Ameritas Portfolios, Variable Insurance Products Fund,
Variable Insurance Products Fund II, Alger American
Fund, MFS Variable Insurance Trust, Morgan Stanley
Dean Witter Universal Funds, Inc.
17 Summary, Policy Rights
18 The Funds; Calvert Variable Series, Inc. Ameritas
Portfolios, Variable Insurance Products Fund, Variable
Insurance Products Fund II, Alger American Fund, MFS
Variable Insurance Trust, Morgan Stanley Dean Witter
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 Required
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 Premiums
<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 The Separate Account
51 Cover Page; Summary; Policy Benefits; Payment
and Allocation of Premiums; 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>
AMERITAS LIFE INSURANCE CORP. LOGO
PROSPECTUS
BRAVO! -- A Survivorship Flexible Premium Variable Universal Life
5900 "O" Street
Insurance Policy issued by Ameritas Variable Life Insurance Company
P.O. Box 82550/Lincoln, NE 68501
- --------------------------------------------------------------------------------
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 Policy Owner, the opportunity to increase the Policy's 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
Policy Owner is guaranteed a minimum Death Benefit, the 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 Ameritas Investment Corp., Fidelity Management & Research Company,
Fred Alger Management, Inc., Massachusetts Financial Services Company, and
Morgan Stanley Dean Witter Investment Management Inc. 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 Policy Owner'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 Policy Owners 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 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, 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 ("SEC") 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.
June 16, 1999
BRAVO!
1
<PAGE>
TABLE OF CONTENTS PAGE
DEFINITIONS.................................................................. 3
SUMMARY...................................................................... 6
YEAR 2000.................................................................... 11
AVLIC, THE SEPARATE ACCOUNT AND THE FUNDS ................................... 11
Ameritas Variable Life Insurance Company............................ 11
The Separate Account .............................................. 12
Performance Information............................................. 12
The Funds........................................................... 12
Investment Objectives and Policies of the Funds' Portfolios......... 14
Addition, Deletion or Substitution of Investments................... 20
Fixed Account....................................................... 20
POLICY BENEFITS.............................................................. 21
Purposes of the Policy.............................................. 21
Death Benefit Proceeds.............................................. 21
Death Benefit Options............................................... 21
Methods of Affecting Insurance Protection........................... 23
Duration of Policy.................................................. 23
Accumulation Value.................................................. 23
Payment of Policy Benefits.......................................... 24
POLICY RIGHTS................................................................ 25
Loan Benefits....................................................... 25
Surrenders.......................................................... 26
Partial Withdrawals................................................. 26
Transfers........................................................... 26
Systematic Programs................................................. 27
Free Look Privilege................................................. 27
PAYMENT AND ALLOCATION OF PREMIUMS........................................... 27
Issuance of a Policy................................................ 27
Premiums............................................................ 28
Allocation of Premiums and Accumulation Value....................... 29
Policy Lapse and Reinstatement...................................... 29
CHARGES AND DEDUCTIONS....................................................... 30
Deductions From Premium Payments.................................... 30
Charges From Accumulation Value..................................... 30
Surrender Charge.................................................... 31
Daily Charges Against the Separate Account.......................... 32
Fund Expense Summary................................................ 32
GENERAL PROVISIONS........................................................... 35
DISTRIBUTION OF THE POLICIES................................................. 37
FEDERAL TAX MATTERS.......................................................... 38
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................................. 40
THIRD PARTY SERVICES......................................................... 40
VOTING RIGHTS................................................................ 40
STATE REGULATION OF AVLIC.................................................... 41
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC.................................... 41
LEGAL MATTERS................................................................ 43
LEGAL PROCEEDINGS............................................................ 43
EXPERTS...................................................................... 43
ADDITIONAL INFORMATION....................................................... 43
FINANCIAL STATEMENTS......................................................... 44
AMERITAS VARIABLE LIFE INSURANCE COMPANY SEPARATE ACCOUNT V............... F-I-1
AMERITAS VARIABLE LIFE INSURANCE COMPANY................................. F-II-I
APPENDICES............................................................... A-1
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 Separate
Account V, the Fixed Account, and any Accumulation Value held in the General
Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge, which is part of the Monthly
Deduction, to cover the cost of administering the Policy.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of Separate Account V to provide for expenses of ongoing
administrative services to the Policy Owners 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 ("we, us, our") - 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. 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.
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 - A rating 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 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 Separate Account
V.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policy Owner's last known address. If the Policy Owner 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 Separate Account V 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 Policy Owner 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.
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 OWNER - ("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 Policy Owner. A collateral assignee is not the
Policy Owner.
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 V - 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 Policy Owner to Separate Account V.
Separate Account V 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 Policy Owner.
SUBACCOUNT - A subdivision of Separate Account V. 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 Separate Account V
which offers 27 different Subaccounts. The Subaccounts invest in the
corresponding portfolios of Calvert Variable Series, Inc. Ameritas Portfolios,
Variable Insurance Products Fund, Variable Insurance Products Fund II, The Alger
American Fund, MFS Variable Insurance Trust, or Morgan Stanley Dean Witter
Universal Funds, Inc. ("Funds").
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 a
charge per month per $1000 of Specified Amount that varies by the younger
Insured's Issue Age).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Current Monthly Charge Plus Current Monthly Charge
For Specified Amounts: By Issue Age (/1000/month):
Up to $1,000,000 up $5,000,000
$1,000,000 to $5,000,000 or more 20 - 44 45 - 64 65 +
---------- ------------- ------- ------- ------- ----
Policy Year:
1 - 5 $16.00 $ 8.00 $ 0.00 $.10 $.08 $.05
6 + $ 8.00 $ 4.00 $ 0.00 $.00 $.00 $.00
Maximum
Monthly Charge: $16.00 $16.00 $16.00 Plus $.10 $.08 $.05
</TABLE>
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.
Fund expense charges, which ranged from .28% to 1.95% at the most recent fiscal
year end, are also deducted.
BRAVO!
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIVING BENEFITS RETIREMENT INCOME DEATH BENEFITS
You may make partial withdrawals, subject to Loans may be available on a Generally, Death
certain restrictions. The Death Benefit will be more favorable interest rate Benefit income is tax
reduced by the amount of the partial withdrawal. basis after the tenth Policy Year. free to the 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 26) available as retirement
Net Cash Surrender Value. benefits.
Some expenses that AVLIC incurs immediately You may Surrender the Policy
upon the issuance of the Policy are recovered over or make a partial withdrawal and
a period of years. Therefore, a Policy Surrender on or take values as payments
before the 14th anniversary date will be assessed under one or more of five
a Surrender Charge. The charge decreases each year different payment options.
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 26 and 31.)
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!
7
<PAGE>
SUMMARY
The following summary is intended to highlight the most important features of a
BRAVO! Policy that you, as a prospective Policy Owner, 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 Definitions section 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 $14.5
billion as of December 31, 1998. (See the section on Ameritas Variable Life
Insurance Company.)
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:
|X| payment of a Death Benefit, which will never be less than the Specified
Amount the Policy Owner selects (See the section on Death Benefit Options.)
|X| Policy loan, Surrender and withdrawal features (See the section on Policy
Rights.)
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 Separate Account V, which is separate from all other
assets of AVLIC, as a vehicle to receive and invest premiums received from
BRAVO! Policy Owners and owners of certain other variable universal life
products offered by AVLIC. Separate Account V is divided into separate
Subaccounts. Each Subaccount invests exclusively in shares of one of the
investment portfolios available through BRAVO! Each Policy Owner 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.
(See the section on Accumulation Value.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE BRAVO! POLICY?
The Investment Options available through BRAVO! include 27 investment
portfolios, each of which is a separate series of a mutual fund managed by
Ameritas Investment Corp., Fidelity Management & Research Company, Fred Alger
Management, Inc., Massachusetts Financial Services Company, or Morgan Stanley
Dean Witter Investment Management Inc. These portfolios are:
|X|Ameritas Investment Corp.:
Ameritas Money Market
Ameritas Index
Ameritas Growth
Ameritas Income & Growth
Ameritas Small Capitalization
Ameritas MidCap Growth
Ameritas Emerging Growth
Ameritas Research
Ameritas Growth With Income
BRAVO!
8
<PAGE>
|X|Fidelity Management & Research Company:
VIP Equity-Income: Service Class
VIP Growth: Service Class
VIP High Income: Service Class
VIP Overseas: Service Class
VIP II Asset Manager: Service Class
VIP II Investment Grade Bond
VIP II Asset Manager: Growth: Service Class
VIP II Contrafund: Service Class
|X|Fred Alger Management, Inc.:
Balanced
Leveraged AllCap
|X|Massachusetts Financial Services Company:
Utilities
Global Governments
New Discovery
|X|Morgan Stanley Dean Witter Investment 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 and management fees and expenses, appear in the sections
on Investment Objectives and Policies of the Funds' Portfolios and Fund Expense
Summary. In addition to the listed portfolios, you may also elect to allocate
Net Premiums to AVLIC's Fixed Account. (See the section on Fixed Account.)
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. (See the section on Death Benefit Options.)
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
BRAVO!
9
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existing insurance arrangements. Appendix A includes tables illustrating the
impact that hypothetical market returns would have on Accumulation Values under
a BRAVO! Policy (page A-1).
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 or the Guaranteed Death
Benefit requirements. (See the section on Premiums.)
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. (See the section on Issuance of a Policy.)
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, we will deduct any applicable
Percent of Premium Charge for Taxes and the Net Premium will be allocated to the
Subaccounts and/or the Fixed Account according to your selections. (See the
sections on Premiums and Allocations of Premiums and Accumulation Value.)
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; maximum premium
limitations established under the federal tax laws; and the impact that reduced
premium payments may have on the Net Cash Surrender Value of your BRAVO! Policy.
(See the section on Premuims.)
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. (See the section on Loan Benefits.)
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%).
(See the section on Partial Withdrawals.)
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 a
charge of up to $.10 per month per $1000 of Specified Amount that depends on the
younger Insured's Issue Age.
For its services in administering Separate Account V 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 Separate Account
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V. After the 15th Policy Anniversary Date, the combined annual rate will
decrease to .45% of the daily net assets of Separate Account V. These charges
will not be deducted from the amounts in the Fixed Account. (See the section on
Daily Charges Against the Separate Account.)
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. (See the
section on Surrender Charge. )
Policy Owners 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. (See the section on Fund Expense Summary.)
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. 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. (See the sections
on Surrenders and Premiums.)
YEAR 2000
Like other insurance companies and their separate accounts, AVLIC and Separate
Account V 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." 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. Certain vendors and/or business partners, due
to their exposure to foreign markets, may face additional Y2K issues. Please see
the Funds' prospectuses for information on the Funds' preparedness for Y2K.
AVLIC, THE SEPARATE ACCOUNT AND THE FUNDS
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 F-II-1.
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.
BRAVO!
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Ameritas Life and its subsidiaries had total assets at December 31, 1998 of over
$4.1 billion. AmerUs Life had total assets as of December 31, 1998 of over $10.4
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 Best's
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 Policy Owners, 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 of AVLIC. The ratings do not
relate to the performance of Separate Account V.
THE SEPARATE ACCOUNT
Ameritas Variable Life Insurance Company Separate Account V ("Separate Account
V") was established under Nebraska law on August 28, 1985. The assets of
Separate Account V are held by AVLIC segregated from all of AVLIC's other
assets, are not chargeable with liabilities arising out of any other business
which AVLIC may conduct, and are not affected by income, gains, or losses of
AVLIC. Although the assets maintained in Separate Account V 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
Separate Account V of a total market value at least equal to the reserve and
other contract liabilities of Separate Account V. Separate Account V will at all
times contain assets equal to or greater than Accumulation Values invested in
Separate Account V. Nevertheless, to the extent assets in Separate Account V
exceed AVLIC's liabilities in Separate Account V, 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.
Separate Account V 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
Separate Account V. For state law purposes, Separate Account V is treated as a
Division of AVLIC.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of Separate Account V and the Funds
available for investment by Separate Account V may appear in advertisements,
sales literature, or reports to Policy Owners 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 V 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 27 Subaccounts within Separate Account V available to Policy
Owners 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"): Calvert Variable Series, Inc. Ameritas Portfolios ("Ameritas
Fund"); 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 Dean Witter Universal Funds, Inc. ("MSDW Universal
Funds"). The Ameritas Fund receives investment advisory services from Ameritas
Investment Corp. ("AIC"). AIC is a registered investment adviser under
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the Investment Advisers Act of 1940 and is an affiliate of AVLIC. AIC also
contracts with subadvisers. The following subadvisers provide investment
subadvisory services to the indicated portfolios:
<TABLE>
<CAPTION>
<S> <C>
Portfolio Subadviser
Ameritas Money Market Calvert Asset Management Company,
Inc.
Ameritas Index State Street Global Advisors
Ameritas Growth Fred Alger Management, Inc. ("Alger
Management")
Ameritas Income & Growth Alger Management
Ameritas Small Capitalization Alger Management
Ameritas MidCap Growth Alger Management
Ameritas Emerging Growth Massachusetts Financial Services
Company ("MFS Co.")
Ameritas Research MFS Co.
Ameritas Growth With Income MFS Co.
</TABLE>
VIP, which is managed by Fidelity Management & Research Company ("Fidelity"),
offers the following portfolios: VIP Equity-Income: Service Class, VIP Growth:
Service Class, VIP High Income: Service Class, and VIP Overseas: Service Class.
VIP II, also managed by Fidelity, offers the following portfolios: VIP II Asset
Manager: Service Class, VIP II Investment Grade Bond, VIP II Asset Manager:
Growth: Service Class, and VIP II Contrafund: Service Class. The Alger American
Fund, which is managed by Fred Alger Management, Inc. ("Alger Management"),
offers the following portfolios: Alger American Balanced ("Balanced") 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 Utilities, MFS Global
Governments, and MFS New Discovery. The MSDW Universal Funds offer the following
portfolios in connection with the Policy, all of which are managed by Morgan
Stanley Dean Witter Investment Management Inc. ("MSDW Investment Management"):
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 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: Service Class, VIP Equity-Income: Service Class, VIP II Asset
Manager: Growth: Service Class, VIP II Asset Manager: Service Class portfolios
of the Fidelity Funds, and the Research portfolio of the Ameritas Fund. Certain
portfolios are designed to invest a substantial portion of their assets
overseas, such as the VIP Overseas: Service Class portfolio and the
International Magnum portfolio of the MSDW Universal Funds. 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 MSDW Universal Funds. 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
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the portfolios of the MFS Trust, by the Emerging Growth, Research, and Growth
With Income portfolios of the Ameritas Fund, and by the Global Equity portfolio
of the MSDW Universal Funds. Investments acquired by the U.S. Real Estate
portfolio of the MSDW Universal Funds 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.
The investments in the Funds may be managed by Fund managers which manage one or
more other mutual funds that have similar names, investment objectives, and
investment styles as the Funds. You should be aware that the Funds are likely to
differ from the other mutual funds in size, cash flow pattern, and tax matters.
Thus, the holdings and performance of the Funds can be expected to vary from
those of the other mutual funds.
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.
Separate Account V 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 requested. 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 Separate Account V 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.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
<TABLE>
<CAPTION>
<S> <C> <C>
AMERITAS FUND
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ----------------------------------------------------------------------------------------------------------------------------
Ameritas Money Invests in U.S. dollar-denominated money market Seeks as high a level of current
Market securities of domestic and foreign issuers, including U.S. income as is consistent with
Government Securities and repurchase agreements. Invests preservation of capital and
more than 25% of total assets in the financial services liquidity.
industry.
Ameritas Index Under normal circumstances, seeks to invest at least 80% Seeks investment results that
of its assets in common stock included in the Standard & correspond to the total return of
Poor's 500. common stocks publicly traded
in the United States, as
represented by the Standard &
Poor's 500.
Ameritas Growth Focuses on companies that generally have broad product Seeks long-term capital
lines, markets, financial resources and depth of appreciation.
management. Under normal circumstances, the portfolio
invests primarily in equity securities, such as common or
preferred stocks, of large companies listed on U.S.
exchanges or in the U.S. over-the-counter market. The
portfolio considers a large company to have a market
capitalization of $1 billion or greater.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Ameritas Income & Under normal circumstances, invests in dividend paying Primarily seeks to provide a
Growth equity securities, such as common or preferred stocks, high level of dividend income.
preferably those which the subadvisor believes also offer Its secondary goal is to provide
opportunities for capital appreciation. capital appreciation.
Ameritas Small It focuses on small, fast-growing companies that offer Seeks long-term capital
Capitalization innovative products, services or technologies to a rapidly appreciation.
expanding marketplace. Under normal circumstances, the
portfolio invests primarily in the equity securities, such as
common or preferred stocks, of small capitalization
companies listed on U.S. exchanges or in the U.S. over-the-
counter market. A small capitalization company is one that
has a market capitalization within the range of companies
in the Russell 2000 Growth Index or the S&P SmallCap
600 Index.
Ameritas MidCap Invests in midsize companies with promising growth Seeks long-term capital
Growth potential. Under normal circumstances, the portfolio appreciation.
invests primarily in the equity securities, such as common
or preferred stocks, of companies listed on U.S. exchanges
or in the U.S. over-the-counter market and having a market
capitalization within the range of companies in the S&P
MidCap 400 Index.
Ameritas Emerging Invests, under normal market conditions, at least 65% of its Seeks long-term growth of
Growth total assets in common stocks and related securities, such capital.
as preferred stocks, convertible securities and
depositary receipts for those securities, of emerging
growth companies.
Ameritas Research Invests, under normal market conditions, at least 80% of its Seeks long-term growth of
total assets in common stocks and related securities, such capital and future income.
as preferred stocks, convertible securities and depositary
receipts. The portfolio focuses on companies that the
subadvisor believes have favorable prospects for long-term
growth, attractive valuations based on current and expected
earnings or cash flow, dominant or growing market share
and superior management. The fund may invest in
companies of any size. The portfolio's investments may
include securities traded on securities exchanges or in the
over-the-counter markets.
Ameritas Growth Invests, under normal market conditions, at least 65% of its Seeks to provide reasonable
With Income total assets in common stocks and related securities, such current income and long-term
as preferred stocks, convertible securities and depositary growth of capital and income.
receipts for those securities. These securities may be listed
on a securities exchange or traded in the over-the-counter
markets. While the portfolio may invest in companies of
any size, it may generally focus on companies with larger
market capitalizations that the subadvisor believes have
sustainable growth prospects and attractive valuations
based on current and expected earnings or cash flow.
FIDELITY FUNDS
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
VIP Equity-Income: Investing at least 65% in income-producing equity Seeks reasonable income. Will
Service Class securities, which tends to lead to investments in large cap also consider the potential for
"value" stocks. capital appreciation. Seeks a
yield which exceeds the
composite yield on the securities
comprising the Standard & Poor's
500.
VIP Growth: Service Investing primarily in common stocks. Investing in Seeks capital appreciation.
Class companies that it believes have above-average growth
potential (stocks of these companies are often called
"growth" stocks). Investing in domestic and foreign
issuers.
VIP High Income: Investing at least 65% of total assets in income-producing Seeks a high level of current
Service Class debt securities, preferred stocks and convertible securities, income while also considering growth
with an emphasis on lower-quality debt securities. of capital.
VIP Overseas: Service Investing at least 65% of total assets in foreign securities. Seeks long-term growth of
Class Investing primarily in common stocks. capital.
VIP II Asset Manager: Allocating the fund's assets among stocks, bonds, and Seeks high total return
Service Class short-term and money market instruments. Maintaining a with reduced risk over the long
neutral mix over time of 50% of assets in stocks, 40% of term by allocating its assets
assets in bonds, and 10% of assets in short-term and among stocks, bonds, and short-term
money market instruments. instruments .
VIP II Investment Investing in U.S. dollar-denominated investment-grade Seeks as high a level of current
Grade Bond bonds. income as is consistent with the
preservation of capital.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
VIP II Asset Manager: Allocating the fund's assets among stocks, bonds, and Seeks to maximize total return
Growth: Service Class short-term and money market instruments. Maintaining a by allocating its assets among
neutral mix over time of 70% of assets in stocks, 25% of stocks, bonds, short-term instruments
assets in bonds, and 5% of assets in short-term and money and other investments.
market instruments.
VIP II Contrafund: Investing primarily in common stocks. Investing in Seeks long-term capital
Service Class securities of companies whose value it believes is not fully appreciation.
recognized by the public.
ALGER AMERICAN
FUND
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Balanced The portfolio focuses on stocks of companies with growth Seeks current income and long-
potential and fixed income securities, with emphasis on term capital appreciation by
income-producing securities which appear to have some investment in common stocks
potential for capital appreciation. Under normal and fixed income and
circumstances, it invests in common stocks and fixed convertible securities, with
income securities, which include commercial paper and emphasis on income producing
bonds rated within the 4 highest rating categories by an securities which appear to have
established rating agency or if not rated, which are potential for capital
determined by the manager to be of comparable quality. appreciation.
Ordinarily, at least 25% of the portfolio's net assets are
invested in fixed-income securities.
Leveraged AllCap Under normal circumstances, the portfolio invests in the Seeks long-term capital
equity securities of companies of any size which appreciation.
demonstrate promising growth potential. The portfolio can
leverage, that is, borrow money, up to one-third of its total
assets to buy additional securities. By borrowing money,
the portfolio has the potential to increase its returns if the
increase in the value of the securities purchased exceeds
the cost of borrowing, including interest paid on the money
borrowed.
MFS FUNDS
Utilities Invests, under normal market conditions, at least 65% of its Will seek capital growth and
total assets in equity and debt securities of both domestic current income (income above
and foreign companies in the utilities industry. that available from a portfolio
invested entirely in equity
securities).
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Global Invests, under normal market conditions, at least 65% of its Will seek to provide income and
Governments total assets in debt obligations that are issued or guaranteed capital appreciation.
as to principal and interest by either (1) the U.S.
Government, its agencies, authorities or instrumentalities or
(2) the governments of foreign countries (including
emerging markets). May also invest in corporate bonds
(including lower rated bonds commonly known as junk
bonds) and mortgage-backed and assets-backed securities.
New Discovery Invests, under normal market conditions, at least 65% of its Will seek capital appreciation.
total assets in common stocks and related securities, such
as preferred stocks, convertible securities and depositary
receipts for those securities, of emerging growth
companies.
MSDW UNIVERSAL FUNDS
Emerging Markets Invests primarily in equity securities of emerging market Long-term capital appreciation.
Equity country issuers with a focus on those issuers with attractive
growth characteristics, reasonable valuations, and
management teams that focus on shareholder value.
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, Australasia, Far East
Index, commonly known as the "EAFE Index."
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Asian Equity Invests primarily in equity securities of Asian issuers, Long-term capital appreciation.
excluding Japan, using a disciplined, value-oriented
approach to security selection.
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, combine, or
substitute investments in Separate Account V if, in our judgment, marketing
needs, tax considerations, or investment conditions warrant. This may happen due
to a change in law or a change in a Fund's objectives or restrictions, or for
some other reason. AVLIC may operate Separate Account V 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. AVLIC
may also transfer the assets of Separate Account V to another separate account.
If necessary, we will notify the SEC and/or state insurance authorities and will
obtain any required approvals before making these changes.
If any changes are made, AVLIC may, by appropriate endorsement, change the
Policy to reflect the changes. In addition, AVLIC may, when permitted by law,
restrict or eliminate any voting rights of Policy Owners or other persons who
have voting rights as to Separate Account V. AVLIC will determine the basis for
making any new Subaccounts available to existing Policy Owners.
You will be notified of any material change in the investment policy of any Fund
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 Separate Account V and
the Fixed Account. (See the section on Transfers.)
Payments allocated to the Fixed Account and transferred from Separate Account V
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
credited thereto, less any deduction for charges and expenses. The Policy Owner
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
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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 Policy Owner 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 Policy Owner 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.
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account V. Thus the Policy
Owner 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 Separate Account V. 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 Policy
Owner, or to your estate.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options. The Policy Owner 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 Net Amount at Risk for Option
A will generally be less than the Net Amount at Risk for Option B. If you choose
Option A, your Cost of Insurance deduction will generally be lower than if you
choose Option B. (See the section on Charges and Deductions.) The following
graphs illustrate the differences in the two Death Benefit options.
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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. Policy Owners who prefer to have
favorable investment performance, if any, reflected in higher Accumulation
Value, rather than increased insurance coverage, generally should select Option
A.
OPTION B.
OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION B, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE
ACCUMULATION VALUE.
Death Benefit Option B. Pays a 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). Policy Owners 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
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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 Policy Owner 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.
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 Policy Owner, 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 Policy Owner 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 you
have 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
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(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
(3) A charge for administrative service expenses at a n 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 Policy
Owner may decide the form in which Death Benefit Proceeds will be paid. While at
least one Insured is alive, the Policy Owner 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.
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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 Policy Owner, using the
rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. The Policy Owner 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. Policy Owners in certain states may
borrow 100% of the Net Cash Surrender Value after deducting Monthly Deductions
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 Policy Owners 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 Policy Owner 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 Policy Owner 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 Policy Owner 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 Policy Owner 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.
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SURRENDERS
At any time while at least one Insured is alive, the Policy Owner 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. Surrenders may be subject to Surrender
Charges. (See the section on Surrender Charge.) 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 Policy Owner may elect to have the amount paid in a lump sum or
under a payment option. (See the section on Payment Options.)
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 Separate Account
V 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. Currently, no charge is imposed for additional
transfers. This charge will be deducted pro rata from each Subaccount (and if
applicable, the Fixed Account) in which the Policy Owner is invested. (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. AVLIC may at any time revoke or
modify the transfer privilege, including the minimum amount transferable.
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
Policy Owner 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.
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The privilege to initiate transactions by telephone will be made available to
Policy Owners automatically. The registered representative designated on the
application will have the authority to initiate telephone transfers. Policy
Owners 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 Policy Owner 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.
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.
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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 Subaccounts 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.
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 Policy Owner 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 according to 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
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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 Policy Owner, 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.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy Owner
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 in writing or by telephone. 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 Policy Owner, 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. We will reinstate your Policy 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.
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The amount 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.
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 up to $.10
per month per $1000 of Specified Amount, depending on the younger Insured's
Issue Age. For Issue Ages 20-44, the rate is $.10, for Issue Ages 45-64, the
rate is $.08, and for Issue Ages 65 and over, the rate is $.05, At the current
time we anticipate that the 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 $.10 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 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.
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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
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 Policy Owners.
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 Policy Owners should purchase a Policy only if they do not intend to
Surrender the Policy for a substantial period.
The maximum Surrender Charge on a Policy we issue is $60 per $1,000 of Specified
Amount.
<TABLE>
<CAPTION>
<S> <C> <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 the 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 Policy Owner 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.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
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A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of Separate Account V to compensate AVLIC for mortality and expense
risks assumed in connection with the Policy. This daily charge from Separate
Account V 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
Separate Account V, 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 Separate Account V 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 Separate Account V described just above,
management fees and expenses will be assessed by AIC, Fidelity, Alger
Management, MFS Co. and MSDW Investment Management 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, other than the Ameritas Fund, 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 Ameritas Fund is managed by AIC, an AVLIC affiliate.
Unless otherwise noted, the amount of expenses, including the asset based
advisory fee referred to above, borne by each portfolio for the fiscal year
ended December 31, 1998, was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PORTFOLIO INVESTMENT 12B-1 OTHER TOTAL TOTAL
ADVISORY & EXPENSE EXPENSES (Reflecting
MANAGEMENT waivers and/or
reimbursements,
If any)
AMERITAS FUND(1)
Ameritas Money Market .20% - .10% .30% .30%
Ameritas Index .24% - .04% .28% .28%
Ameritas Growth .75% - .04% .79% .79%
Ameritas Income & Growth .625% - .075% .70% .70%
Ameritas Small Capitalization .85% - .04% .89% .89%
Ameritas MidCap Growth .80% - .04% .84% .84%
Ameritas Emerging Growth .75% - .10% .85% .85%
Ameritas Research .75% - .11% .86% .86%
Ameritas Growth With Income .75% - .13% .88% .88%
FIDELITY FUNDS
VIP Equity-Income:
Service Class .49% .10% .09% .68% .67%(2)
VIP Growth:
Service Class .59% .10% .11% .80% .75%(2)
VIP High Income:
Service Class .58% .10% .14% .82% .82%
VIP Overseas:
Service Class .74% .10% .17% 1.01% .97%(2)
VIP II Asset Manager:
Service Class .54% .10% .14% .78% .77%(2)
VIP II Investment Grade Bond .43% - .14% .57% .57%
VIP II Asset Manager: Growth:
Service Class .59% .10% .20% .89% .88%(2)
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIP II Contrafund:
Service Class .59% .10% .11% .80% .75%(2)
ALGER AMERICAN FUND(3)
Balanced .75% - .17% .92% .92%
Leveraged AllCap .85% - .11% .96% .96%
MFS TRUST
Utilities .75% - .26%(4) 1.01% 1.01%
Global Governments .75% - .36%(4) 1.11% 1.00%(5)
New Discovery .90% - 4.32%(4) 5.22% 1.15%(5)
MSDW UNIVERSAL FUNDS
Emerging Markets Equity 1.25% - 2.20% 3.45% 1.95%(6)
Global Equity .80% - .83% 1.63% 1.15%(6)
International Magnum .80% - 1.00% 1.80% 1.15%(6)
Asian Equity .80% - 2.00% 2.80% 1.21%(6)
U.S. Real Estate .80% - .93% 1.73% 1.10%(6)
</TABLE>
(1) This is a new Fund. AIC has agreed to reimburse the Fund for expenses
and/or waive its fees so that the aggregate expenses will not exceed
the amounts listed through October 1, 2000. Without such reimbursements
or waivers, the total expenses are estimated to be as follows: .35% for
Ameritas Money Market; .41% for Ameritas Index; .89% for Ameritas
Growth; .82% for Ameritas Income & Growth; 1.00% for Ameritas Small
Capitalization; .97% for Ameritas MidCap Growth; .91% for Ameritas
Emerging Growth; 1.15% for Ameritas Research; and 1.00% for Ameritas
Growth With Income.
(2) A portion of the brokerage commissions that certain Funds pay was used
to reduce Fund expenses. In addition, certain Funds, or Fidelity on
behalf of certain Funds, have entered into arrangements with their
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce custodian expenses. The total operating
expenses reflect these reductions.
(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 Balanced,
1.25% and Alger American Leveraged AllCap, 1.50%. Included in "Other
Expenses" of Leveraged AllCap is .03% of interest expense.
(4) Each MFS Trust 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. Each
series may enter into other such arrangements and directed brokerage
arrangements (which would also have the effect of reducing the series'
expenses). Expenses do not take into account these expense reductions
and are therefore higher than the actual expenses of the series.
(5) MFS has agreed to bear expenses for the Global Governments Series and
New Discovery Series, subject to reimbursement by the 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. Utilities
Series has no such limitation. The payments made by MFS on behalf of
the Global Governments Series and New Discovery Series under this
arrangement are subject to reimbursement by the series to MFS, which
will be accomplished by the payment of an expense reimbursement fee by
the series to MFS computed and paid monthly at a percentage of the
series average daily net assets for its then current fiscal year, with
a limitation that immediately after such payment the series "Other
Expenses" will not exceed the percentage set forth above for that
series. The obligation of MFS to bear a series "Other Expenses"
pursuant to this arrangement and the series' obligation to pay the
reimbursement fee to MFS, terminates on the earlier of the date on
which payments made by the series equal the prior payment of such
reimbursement expenses by MFS, or December 31, 2004.
(6) For the fiscal year ended December 31, 1998 portfolio expenses were
voluntarily reduced by the Fund's investment adviser. After reduction,
the total expenses were as stated.
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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 Separate
Account V or the Fixed Account for any federal, state or local income taxes.
AVLIC may, however, make such a charge in the future if income or gains within
Separate Account V 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 Policy Owner 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 Policy Owner, if living; otherwise to any successor-owner or
owners, if living; otherwise to the estate of the last Policy Owner to die.
BENEFICIARY. Policy Owners 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 Beneficiary(ies) of the next class; otherwise to the Policy
Owner; otherwise to the estate of the Policy Owner.
CHANGE OF BENEFICIARY. The Policy Owner 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 POLICY OWNER OR ASSIGNMENT. In order to change the Policy Owner of
the Policy or assign Policy rights, an assignment of the Policy must be made in
writing and filed with AVLIC at its Home Office. 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
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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 Policy Owner, if living; otherwise to any successor-owner, if
living; otherwise to the Policy Owner'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.
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 Policy Owners; (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
Separate Account V'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 Policy
Owner's bank.
REPORTS AND RECORDS. AVLIC will maintain all records relating to Separate
Account V and will mail to the Policy Owner, 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 Policy Owner may receive confirmation of such transactions in
their quarterly statements. The Policy Owner 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 Policy
Owner 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.
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.
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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 Policy Owner 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.
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 Policy Owner 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 was organized under Nebraska law
on December 29, 1983, and 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
1998, AIC received gross variable universal life compensation of $12,564,917,
and retained $394,171 in underwriting fees, and $3,514 in brokerage commissions
on AVLIC's variable universal life policies. AIC offers its clients a wide
variety of financial products and services and has the ability to execute stock
and bond transactions on a number of national exchanges. AIC also serves as
principal underwriter for AVLIC's variable annuities, and for Ameritas Life's
variable life and variable annuity. AIC is the underwriter for the Ameritas
Fund, and also serves as its investment advisor. It also has executed selling
agreements with a variety of mutual funds, unit investment trusts and direct
participation programs.
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,
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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 except premium taxes. (See discussion in the section on Deductions from
Premium Payments - Percent of Premium Charge for Taxes.) 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, Policy Owner 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 Separate Account V 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 Separate
Account V 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 V 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.
AVLIC does not currently expect to incur any federal income tax liability
attributable to Separate Account V with respect to the sale of the
Policies. Accordingly, no charge is being made currently to Separate
Account V for federal income taxes. If, however, AVLIC determines that it
may incur such taxes attributable to Separate Account V, it may assess a
charge for such taxes against Separate Account V.
AVLIC may also incur state and local taxes (in addition to premium taxes
for which a deduction from premiums is currently made). At present, they
are not charges against Separate Account V. If there is a material change
in state or local tax laws, charges for such taxes attributable to Separate
Account V, if any, may be assessed against Separate Account V.
(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.
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Certain benefits the Policy Owner may elect under this Policy may be
material changes affecting 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 Policy Owner 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. Separate Account V, 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.
While AIC, an AVLIC affiliate, is the advisor to certain of the Funds,
AVLIC does not have control over any of 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 policy owners 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 Policy
Owner from being considered the owner of the assets of Separate Account V
or otherwise to qualify the Policy for favorable tax treatment.
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 Policy Owner 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."
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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 Policy Owner 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 Policy Owner (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 Policy Owner 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 Policy Owner
and that no part of any loan under a Policy will constitute income to the
Policy Owner 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.
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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. Policy Owners 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
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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 made prior to the taxpayer's age 59 1/2. The 10% penalty tax
does not apply if the distribution is made because the taxpayer 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 taxpayer or the joint lives of the
taxpayer 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 Policy Owners (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
Policy Owner, the excess generally will be taxed as ordinary income.
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 Policy Owner 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 Separate Account V. 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 Policy Owners 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 Policy Owner's behalf by
such third parties or any investment allocation recommendations made by such
parties. Policy Owners 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 Separate
Account V 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 shareholder
meeting. To the extent required by law,
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AVLIC will vote all shares of each of the Funds held in Separate Account V at
regular and special shareholder meetings of the Funds according to instructions
received from Policy Owners 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 Policy Owner 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 Policy Owners are received and Fund
shares held in each Subaccount which do not support Policy Owner 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 Policy Owners of that
action and its reasons for the action in the next annual report or proxy
statement to Policy Owners.
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 Separate Account V 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 Separate Account V.
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
This list shows name and position(s) with AVLIC followed by the principal
occupations for the last five years. 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.
LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD, AND CHIEF EXECUTIVE OFFICER*
Director, Chairman of the Board, and Chief Executive Officer: Ameritas Life;
also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life.
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: Ameritas Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life.
GARY R. MCPHAIL, DIRECTOR, EXECUTIVE VICE PRESIDENT**
Director, President, and Chief Executive Officer: AmerUs Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of AmerUs Life;
Executive Vice President - Marketing and Individual Operations: New York Life
Insurance Company; President: Lincoln National Sales Corporation.
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CHARLES J. CAVANAUGH, SENIOR VICE PRESIDENT, NATIONAL SALES MANAGER*
Director, Product Manufacturing and Supply: Merrill Lynch Insurance Group;
Director of Marketing: ITT Hartford Life Insurance Companies.
BRIAN J. CLARK, VICE PRESIDENT-FIXED ANUITY PRODUCT DEVELOPMENT **
Senior Vice President - Product Management: AmerUs Life.
MICHAEL G. FRAIZER, DIRECTOR**
Controller: AmerUs Life; 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 (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.
JOSEPH K. HAGGERTY, ASSISTANT GENERAL COUNSEL**
Senior Vice President and General Counsel: AmerUs Life Holdings, Inc.; Senior
Vice President and General Counsel: AmerUs Life (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.
SANDRA K. HOLMES, VICE PRESIDENT-FIXED ANNUITY CUSTOMER SERVICE**
Senior Vice President: AmerUs Life (f.k.a. American Mutual Life Insurance
Company, f.k.a. Central Life Assurance Company***).
KENNETH R. JONES, VICE PRESIDENT-CORPORATE COMPLIANCE AND ASSISTANT SECRETARY*
Vice President, Corporate Compliance & Assistant Secretary: Ameritas Life; also
serves as officer of other subsidiaries and/or affiliates of Ameritas Life.
CYNTHIA J. LAVELLE, VICE PRESIDENT-OPERATIONS AND SUPPORT*
Assistant Vice President - Variable Operations: Ameritas Life.
WILLIAM W. LESTER, TREASURER*
Senior Vice President - Investments and Treasurer: Ameritas Life; also serves as
officer of affiliates of AVLIC.
JOANN M. MARTIN, DIRECTOR, CONTROLLER*
Senior Vice President and Chief Financial Officer: Ameritas Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life.
SHEILA SANDY, ASSISTANT SECRETARY**
Manager Annuity Services: AmerUs Life (f.k.a. American Mutual Life Insurance
Company).
DONALD R. STADING, SECRETARY AND GENERAL COUNSEL*
Senior Vice President, Secretary and Corporate General Counsel: Ameritas Life;
also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life.
BRAVO!
42
<PAGE>
KEVIN WAGONER, ASSISTANT TREASURER**
Director Investment Accounting: AmerUs Life (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
** 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 Donald R. Stading, Secretary and General Counsel of
AVLIC.
LEGAL PROCEEDINGS
There are no legal proceedings to which Separate Account V is a party or to
which the assets of Separate Account V 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 Separate Account V. AIC is
not involved in any litigation that is of material importance in relation to its
ability to perform under its underwriting agreement.
EXPERTS
The financial statements of AVLIC as of December 31, 1998 and 1997, and for each
of the three years in the period ended December 31, 1998, and the financial
statements of Separate Account V as of December 31, 1998, and for each of the
three years in the period then ended, included in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein, and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Thomas P.
McArdle, Assistant Vice President and Asssociate 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 Separate Account V, 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.
BRAVO!
43
<PAGE>
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 Separate Account V.
BRAVO!
44
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Variable Life Insurance Company
Lincoln, Nebraska
We have audited the accompanying statement of net assets of Ameritas Variable
Life Insurance Company Separate Account V as of December 31, 1998, and the
related statements of operations and changes in net assets for each of the three
years in the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company
Separate Account V as of December 31, 1998, and the results of its operations
and changes in its net assets for each of the three years in the period then
ended, in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 1999
F-I-1
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
VARIABLE INSURANCE PRODUCTS FUND:
Money Market Portfolio -- 11,105,124.310 shares at
$1.00 per share (cost $11,105,124).................... $ 11,105,124
Equity Income Portfolio -- 1,160,172.618 shares at
$25.42 per share (cost $20,499,629)................... 29,491,589
Growth Portfolio -- 1,030,142.884 shares at $44.87 per
share (cost $24,624,171).............................. 46,222,512
High Income Portfolio -- 716,563.299 shares at $11.53
per share (cost $7,807,467)........................... 8,261,973
Overseas Portfolio -- 729,187.972 shares at $20.05 per
share (cost $11,215,340).............................. 14,620,219
VARIABLE INSURANCE PRODUCTS FUND II:
Asset Manager Portfolio -- 1,752,919.543 shares at
$18.16 per share (cost $24,869,155)................... 31,833,018
Investment Grade Bond Portfolio -- 343,207.716 shares
at $12.96 per share (cost $4,095,562)................. 4,447,972
Contrafund Portfolio -- 562,154.419 shares at $24.44
per share (cost $10,069,000).......................... 13,739,056
Index 500 Portfolio -- 140,383.148 shares at $141.25
per share (cost $14,386,677).......................... 19,829,119
Asset Manager Growth Portfolio -- 194,121.333 shares at
$17.03 per share (cost $2,789,533).................... 3,305,886
ALGER AMERICAN FUND:
Small Capitalization Portfolio -- 506,281.724 shares at
$43.97 per share (cost $17,693,318)................... 22,261,208
Growth Portfolio -- 438,715.956 shares at $53.22 per
share (cost $15,340,061).............................. 23,348,463
Income and Growth Portfolio -- 533,655.926 shares at
$13.12 per share (cost $5,605,420).................... 7,001,566
Midcap Growth Portfolio -- 390,902.572 shares at $28.87
per share (cost $7,966,295)........................... 11,285,358
Balanced Portfolio -- 210,014.615 shares at $12.98 per
share (cost $2,268,208)............................... 2,725,989
Leveraged Allcap Portfolio -- 158,890.232 shares at
$34.90 per share (cost $3,600,937).................... 5,545,268
MFS VARIABLE INSURANCE TRUST:
Emerging Growth Series Portfolio -- 568,954.541 shares
at $21.47 per share (cost $8,532,284)................. 12,215,454
World Governments Series Portfolio -- 51,660.465 shares
at $10.88 per share (cost $532,514)................... 562,066
Utilities Series Portfolio -- 166,350.240 shares at
$19.82 per share (cost $2,770,572).................... 3,297,063
Research Series Portfolio -- 156,106.437 shares at
$19.05 per share (cost $2,571,889).................... 2,973,827
Growth with Income Series Portfolio -- 175,680.697
shares at $20.11 per share (cost $3,038,764).......... 3,532,938
MORGAN STANLEY UNIVERSAL FUNDS:
Asian Equity Portfolio -- 63,862.444 shares at $5.23
per share (cost $388,097)............................. 334,000
Emerging Markets Equity Portfolio -- 115,841.118 shares
at $7.11 per share (cost $1,187,272).................. 823,632
Global Equity Portfolio -- 159,586.755 shares at $13.14
per share (cost $1,951,259)........................... 2,096,971
International Magnum Portfolio -- 83,104.465 shares at
$11.23 per share (cost $938,486)...................... 933,263
U.S. Real Estate Portfolio -- 87,708.290 shares at
$9.80 per share (cost $951,045)....................... 859,540
------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS......... $282,653,074
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I-2
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I-3
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------
MONEY EQUITY
MARKET INCOME GROWTH
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- ---------- -----------
<S> <C> <C> <C> <C>
1998
INVESTMENT INCOME:
Dividend distributions received.............. $ 3,349,781 $ 571,068 $ 350,608 $ 167,972
Mortality and expense risk charge............ (2,163,874) (100,578) (257,976) (354,109)
----------- --------- ---------- -----------
NET INVESTMENT INCOME (LOSS)................... 1,185,907 470,490 92,632 (186,137)
----------- --------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments...... 17,147,973 -- 1,247,753 4,393,780
Net change in unrealized appreciation
(depreciation)............................ 30,032,940 -- 1,327,445 8,556,162
----------- --------- ---------- -----------
NET GAIN (LOSS) ON INVESTMENTS................. 47,180,913 -- 2,575,198 12,949,942
----------- --------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $48,366,820 $ 470,490 $2,667,830 $12,763,805
=========== ========= ========== ===========
1997
INVESTMENT INCOME:
Dividend distributions received.............. $ 2,670,710 $ 463,675 $ 290,414 $ 177,070
Mortality and expense risk charge............ (1,574,558) (84,611) (201,066) (278,073)
----------- --------- ---------- -----------
NET INVESTMENT INCOME (LOSS)................... 1,096,152 379,064 89,348 (101,003)
----------- --------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments...... 6,045,040 -- 1,460,138 792,600
Net change in unrealized appreciation
(depreciation)............................ 21,418,187 -- 3,371,385 5,089,744
----------- --------- ---------- -----------
NET GAIN (LOSS) ON INVESTMENTS................. 27,463,227 -- 4,831,523 5,882,344
----------- --------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $28,559,379 $ 379,064 $4,920,871 $ 5,781,341
=========== ========= ========== ===========
1996
INVESTMENT INCOME:
Dividend distributions received.............. $ 1,837,028 $ 383,333 $ 19,764 $ 56,401
Mortality and expense risk charge............ (1,085,616) (71,053) (141,453) (223,387)
----------- --------- ---------- -----------
NET INVESTMENT INCOME (LOSS)................... 751,412 312,280 (121,689) (166,986)
----------- --------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments...... 4,152,296 -- 566,577 1,424,128
Net change in unrealized appreciation
(depreciation)............................ 7,185,902 -- 1,388,228 1,591,342
----------- --------- ---------- -----------
NET GAIN (LOSS) ON INVESTMENTS................. 11,338,198 -- 1,954,805 3,015,470
----------- --------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $12,089,610 $ 312,280 $1,833,116 $ 2,848,484
=========== ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I-4
<PAGE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
------------------------ ---------------------------------------------------------------------
ASSET INVESTMENT ASSET MANAGER
HIGH INCOME OVERSEAS MANAGER GRADE BOND CONTRAFUND INDEX 500 GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ---------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 558,849 $ 271,677 $ 882,316 $146,622 $ 56,896 $ 131,792 $ 49,741
(73,002) (128,820) (271,404) (39,733) (93,506) (135,441) (25,300)
----------- ---------- ---------- -------- ---------- ---------- --------
485,847 142,857 610,912 106,889 (36,610) (3,649) 24,441
----------- ---------- ---------- -------- ---------- ---------- --------
355,102 800,734 2,646,949 17,396 418,590 305,253 232,615
(1,057,850) 959,668 637,938 179,497 2,407,939 3,342,102 175,258
----------- ---------- ---------- -------- ---------- ---------- --------
(702,748) 1,760,402 3,284,887 196,893 2,826,529 3,647,355 407,873
----------- ---------- ---------- -------- ---------- ---------- --------
$ (216,901) $1,903,259 $3,895,799 $303,782 $2,789,919 $3,643,706 $432,314
=========== ========== ========== ======== ========== ========== ========
$ 456,382 $ 183,138 $ 782,791 $138,030 $ 28,971 $ 32,977 $ --
(65,009) (115,217) (232,839) (25,608) (50,896) (71,508) (14,685)
----------- ---------- ---------- -------- ---------- ---------- --------
391,373 67,921 549,952 112,422 (21,925) (38,531) (14,685)
----------- ---------- ---------- -------- ---------- ---------- --------
56,407 727,004 1,963,611 -- 76,565 66,916 1,179
585,776 646,688 1,992,988 89,590 991,738 1,946,609 322,064
----------- ---------- ---------- -------- ---------- ---------- --------
642,183 1,373,692 3,956,599 89,590 1,068,303 2,013,525 323,243
----------- ---------- ---------- -------- ---------- ---------- --------
$ 1,033,556 $1,441,613 $4,506,551 $202,012 $1,046,378 $1,974,994 $308,558
=========== ========== ========== ======== ========== ========== ========
$ 346,977 $ 95,857 $ 701,929 $110,640 $ -- $ 523 $ 8,340
(52,366) (87,506) (192,161) (22,366) (12,082) (6,403) (2,489)
----------- ---------- ---------- -------- ---------- ---------- --------
294,611 8,351 509,768 88,274 (12,082) (5,880) 5,851
----------- ---------- ---------- -------- ---------- ---------- --------
67,887 105,443 578,783 -- 1,845 1,346 14,028
303,796 931,213 1,567,972 (39,903) 270,650 153,497 19,517
----------- ---------- ---------- -------- ---------- ---------- --------
371,683 1,036,656 2,146,755 (39,903) 272,495 154,843 33,545
----------- ---------- ---------- -------- ---------- ---------- --------
$ 666,294 $1,045,007 $2,656,523 $ 48,371 $ 260,413 $ 148,963 $ 39,396
=========== ========== ========== ======== ========== ========== ========
</TABLE>
F-I-5
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ALGER AMERICAN FUND
--------------------------------------------------------
SMALL INCOME AND MIDCAP
CAPITALIZATION GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1998
INVESTMENT INCOME:
Dividend distributions received............ $ -- $ 41,754 $ 17,735 $ --
Mortality and expense risk charge.......... (169,257) (155,688) (49,041) (81,791)
---------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................. (169,257) (113,934) (31,306) (81,791)
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments.... 2,446,741 2,551,580 490,671 742,049
Net change in unrealized appreciation
(depreciation).......................... 623,620 4,267,982 1,071,043 1,766,399
---------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS............... 3,070,361 6,819,562 1,561,714 2,508,448
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATION................... $2,901,104 $6,705,628 $1,530,408 $2,426,657
========== ========== ========== ==========
1997
INVESTMENT INCOME:
Dividend distributions received............ $ -- $ 32,883 $ 12,791 $ 3,623
Mortality and expense risk charge.......... (142,416) (98,937) (28,862) (62,763)
---------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................. (142,416) (66,054) (16,071) (59,140)
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments.... 550,941 59,552 105,818 88,340
Net change in unrealized appreciation
(depreciation).......................... 1,210,960 2,142,136 755,171 768,190
---------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS............... 1,761,901 2,201,688 860,989 856,530
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. $1,619,485 $2,135,634 $ 844,918 $ 797,390
========== ========== ========== ==========
1996
INVESTMENT INCOME:
Dividend distributions received............ $ -- $ 3,908 $ 24,326 $ --
Mortality and expense risk charge.......... (118,508) (58,005) (13,912) (38,781)
---------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................. (118,508) (54,097) 10,414 (38,781)
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments.... 51,224 165,191 813,188 74,978
Net change in unrealized appreciation
(depreciation).......................... 368,251 592,282 (557,847) 330,732
---------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS............... 419,475 757,473 255,341 405,710
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. $ 300,967 $ 703,376 $ 265,755 $ 366,929
========== ========== ========== ==========
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
The accompanying notes are an integral part of these financial statements.
F-I-6
<PAGE>
<TABLE>
<CAPTION>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
----------------------- -------------------------------------------------------------------------------
LEVERAGED EMERGING WORLD UTILITIES RESEARCH GROWTH WITH
BALANCED ALLCAP GROWTH SERIES GOVERNMENTS SERIES SERIES INCOME SERIES
PORTFOLIO PORTFOLIO PORTFOLIO SERIES PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(2)
--------- ---------- ------------- ---------------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 24,247 $ -- $ -- $ 3,936 $ 24,469 $ 2,571 $ --
(16,462) (31,317) (83,222) (3,503) (20,971) (17,327) (19,348)
--------- ---------- ---------- ------- -------- -------- --------
7,785 (31,317) (83,222) 433 3,498 (14,756) (19,348)
--------- ---------- ---------- ------- -------- -------- --------
107,704 147,338 76,320 -- 111,249 33,714 --
417,950 1,626,709 2,714,274 29,642 262,317 383,697 490,661
--------- ---------- ---------- ------- -------- -------- --------
525,654 1,774,047 2,790,594 29,642 373,566 417,411 490,661
--------- ---------- ---------- ------- -------- -------- --------
$ 533,439 $1,742,730 $2,707,372 $30,075 $377,064 $402,655 $471,313
========= ========== ========== ======= ======== ======== ========
$ 12,338 $ -- $ -- $ 3,537 $ -- $ -- $ 6,744
(10,092) (17,451) (44,359) (1,978) (7,542) (2,824) (2,761)
--------- ---------- ---------- ------- -------- -------- --------
2,246 (17,451) (44,359) 1,559 (7,542) (2,824) 3,983
--------- ---------- ---------- ------- -------- -------- --------
16,729 -- -- 1,603 -- -- 31,548
162,920 298,847 937,800 (6,568) 255,610 18,241 3,513
--------- ---------- ---------- ------- -------- -------- --------
179,649 298,847 937,800 (4,965) 255,610 18,241 35,061
--------- ---------- ---------- ------- -------- -------- --------
$ 181,895 $ 281,396 $ 893,441 $(3,406) $248,068 $ 15,417 $ 39,044
========= ========== ========== ======= ======== ======== ========
$ 29,838 $ -- $ -- $ -- $ 9,070 $ -- $ --
(6,215) (5,432) (9,549) (913) (1,520) -- --
--------- ---------- ---------- ------- -------- -------- --------
23,623 (5,432) (9,549) (913) 7,550 -- --
--------- ---------- ---------- ------- -------- -------- --------
199,719 4,125 21,561 -- 23,532 -- --
(168,250) 17,914 32,735 7,363 9,810 -- --
--------- ---------- ---------- ------- -------- -------- --------
31,469 22,039 54,296 7,363 33,342 -- --
--------- ---------- ---------- ------- -------- -------- --------
$ 55,092 $ 16,607 $ 44,747 $ 6,450 $ 40,892 $ -- $ --
========= ========== ========== ======= ======== ======== ========
</TABLE>
F-I-7
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
MORGAN STANLEY UNIVERSAL FUNDS
----------------------------------------------
EMERGING GLOBAL
ASIAN EQUITY MARKETS EQUITY EQUITY
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
1998 ------------ -------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend distributions received........................ $ 2,129 $ 4,381 $ 14,013
Mortality and expense risk charge...................... (2,084) (7,282) (13,265)
-------- --------- ---------
NET INVESTMENT INCOME (LOSS)............................. 45 (2,901) 748
-------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments................ -- -- 12,591
Net change in unrealized appreciation (depreciation)... (2,798) (219,226) 143,561
-------- --------- ---------
NET GAIN (LOSS) ON INVESTMENTS........................... (2,798) (219,226) 156,152
-------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. $ (2,753) $(222,127) $ 156,900
======== ========= =========
1997
INVESTMENT INCOME:
Dividend distributions received........................ $ 232 $ 4,896 $ 5,533
Mortality and expense risk charge...................... (495) (3,435) (2,294)
-------- --------- ---------
NET INVESTMENT INCOME (LOSS)............................. (263) 1,461 3,239
-------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments................ -- 21,661 11,816
Net change in unrealized appreciation (depreciation)... (51,298) (144,415) 2,150
-------- --------- ---------
NET GAIN (LOSS) ON INVESTMENTS........................... (51,298) (122,754) 13,966
-------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. $(51,561) $(121,293) $ 17,205
======== ========= =========
1996
INVESTMENT INCOME:
Dividend distributions received........................ $ -- $ -- $ --
Mortality and expense risk charge...................... -- -- --
-------- --------- ---------
NET INVESTMENT INCOME (LOSS)............................. -- -- --
-------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments................ -- -- --
Net change in unrealized appreciation (depreciation)... -- -- --
-------- --------- ---------
NET GAIN (LOSS) ON INVESTMENTS........................... -- -- --
-------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................. $ -- $ -- $ --
======== ========= =========
</TABLE>
- ---------------
(1) Commenced business 04/22/97
(2) Commenced business 04/08/97
(3) Commenced business 04/17/97
(4) Commenced business 04/07/97
(5) Commenced business 04/28/97
The accompanying notes are an integral part of these financial statements.
F-I-8
<PAGE>
<TABLE>
<CAPTION>
MORGAN STANLEY UNIVERSAL FUNDS DREYFUS
---------------------------------- -----------
INTERNATIONAL U.S. REAL
MAGNUM ESTATE STOCK INDEX
PORTFOLIO(4) PORTFOLIO(5) PORTFOLIO
------------- ------------ -----------
<S> <C> <C> <C>
$ 2,795 $ 24,210 $ --
(6,689) (6,758) --
-------- --------- --------
(3,894) 17,452 --
-------- --------- --------
3,255 6,589 --
39,545 (110,595) --
-------- --------- --------
42,800 (104,006) --
-------- --------- --------
$ 38,906 $ (86,554) $ --
======== ========= ========
$ 15,852 $ 9,641 $ 9,192
(1,903) (1,584) (5,350)
-------- --------- --------
13,949 8,057 3,842
-------- --------- --------
1,056 11,556 --
(44,768) 19,091 54,025
-------- --------- --------
(43,712) 30,647 54,025
-------- --------- --------
$(29,763) $ 38,704 $ 57,867
======== ========= ========
$ -- $ -- $ 46,122
-- -- (21,515)
-------- --------- --------
-- -- 24,607
-------- --------- --------
-- -- 38,741
-- -- 366,600
-------- --------- --------
-- -- 405,341
-------- --------- --------
$ -- $ -- $429,948
======== ========= ========
</TABLE>
F-I-9
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
--------------------------------------------
MONEY EQUITY
MARKET INCOME GROWTH
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)........... $ 1,185,907 $ 470,490 $ 92,632 $ (186,137)
Net realized gain (loss) on
investments......................... 17,147,973 -- 1,247,753 4,393,780
Net change in unrealized appreciation
(depreciation)...................... 30,032,940 -- 1,327,445 8,556,162
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. 48,366,820 470,490 2,667,830 12,763,805
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS........................... 36,557,125 3,082,148 2,101,252 1,105,036
------------ ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................. 84,923,945 3,552,638 4,769,082 13,868,841
NET ASSETS AT JANUARY 1, 1998............ 197,729,129 7,552,486 24,722,507 32,353,671
------------ ----------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1998.......... $282,653,074 $11,105,124 $29,491,589 $46,222,512
============ =========== =========== ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)........... $ 1,096,152 $ 379,064 $ 89,348 $ (101,003)
Net realized gain (loss) on
investments......................... 6,045,040 -- 1,460,138 792,600
Net change in unrealized appreciation
(depreciation)...................... 21,418,187 -- 3,371,385 5,089,744
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. 28,559,379 379,064 4,920,871 5,781,341
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS........................... 33,090,017 (464,346) 2,617,832 382,227
------------ ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................. 61,649,396 (85,282) 7,538,703 6,163,568
NET ASSETS AT JANUARY 1, 1997............ 136,079,733 7,637,768 17,183,804 26,190,103
------------ ----------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1997.......... $197,729,129 $ 7,552,486 $24,722,507 $32,353,671
============ =========== =========== ===========
1996
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)........... $ 751,412 $ 312,280 $ (121,689) $ (166,986)
Net realized gain (loss) on
investments......................... 4,152,296 -- 566,577 1,424,128
Net change in unrealized appreciation
(depreciation)...................... 7,185,902 -- 1,388,228 1,591,342
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. 12,089,610 312,280 1,833,116 2,848,484
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS........................... 30,380,460 1,711,961 2,778,194 2,837,486
------------ ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................. 42,470,070 2,024,241 4,611,310 5,685,970
NET ASSETS AT JANUARY 1, 1996............ 93,609,663 5,613,527 12,572,494 20,504,133
------------ ----------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1996.......... $136,079,733 $ 7,637,768 $17,183,804 $26,190,103
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I-10
<PAGE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
--------------------------------- --------------------------------------------------------------------
ASSET INVESTMENT ASSET MANAGER
HIGH INCOME OVERSEAS MANAGER GRADE BOND CONTRAFUND INDEX 500 GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ----------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 485,847 $ 142,857 $ 610,912 $ 106,889 $ (36,610) $ (3,649) $ 24,441
355,102 800,734 2,646,949 17,396 418,590 305,253 232,615
(1,057,850) 959,668 637,938 179,497 2,407,939 3,342,102 175,258
----------- ----------- ----------- ---------- ----------- ----------- ----------
(216,901) 1,903,259 3,895,799 303,782 2,789,919 3,643,706 432,314
353,039 (628,523) 353,744 1,166,836 3,190,211 5,349,378 582,288
----------- ----------- ----------- ---------- ----------- ----------- ----------
136,138 1,274,736 4,249,543 1,470,618 5,980,130 8,993,084 1,014,602
8,125,835 13,345,483 27,583,475 2,977,354 7,758,926 10,836,035 2,291,284
----------- ----------- ----------- ---------- ----------- ----------- ----------
$ 8,261,973 $14,620,219 $31,833,018 $4,447,972 $13,739,056 $19,829,119 $3,305,886
=========== =========== =========== ========== =========== =========== ==========
$ 391,373 $ 67,921 $ 549,952 $ 112,422 $ (21,925) $ (38,531) $ (14,685)
56,407 727,004 1,963,611 -- 76,565 66,916 1,179
585,776 646,688 1,992,988 89,590 991,738 1,946,609 322,064
----------- ----------- ----------- ---------- ----------- ----------- ----------
1,033,556 1,441,613 4,506,551 202,012 1,046,378 1,974,994 308,558
104,745 1,242,175 614,816 422,976 3,787,942 6,930,829 1,426,686
----------- ----------- ----------- ---------- ----------- ----------- ----------
1,138,301 2,683,788 5,121,367 624,988 4,834,320 8,905,823 1,735,244
6,987,534 10,661,695 22,462,108 2,352,366 2,924,606 1,930,212 556,040
----------- ----------- ----------- ---------- ----------- ----------- ----------
$ 8,125,835 $13,345,483 $27,583,475 $2,977,354 $ 7,758,926 $10,836,035 $2,291,284
=========== =========== =========== ========== =========== =========== ==========
$ 294,611 $ 8,351 $ 509,768 $ 88,274 $ (12,082) $ (5,880) $ 5,851
67,887 105,443 578,783 -- 1,845 1,346 14,028
303,796 931,213 1,567,972 (39,903) 270,650 153,497 19,517
----------- ----------- ----------- ---------- ----------- ----------- ----------
666,294 1,045,007 2,656,523 48,371 260,413 148,963 39,396
1,995,433 2,133,197 518,914 167,556 2,534,900 1,776,610 503,059
----------- ----------- ----------- ---------- ----------- ----------- ----------
2,661,727 3,178,204 3,175,437 215,927 2,795,313 1,925,573 542,455
4,325,807 7,483,491 19,286,671 2,136,439 129,293 4,639 13,585
----------- ----------- ----------- ---------- ----------- ----------- ----------
$ 6,987,534 $10,661,695 $22,462,108 $2,352,366 $ 2,924,606 $ 1,930,212 $ 556,040
=========== =========== =========== ========== =========== =========== ==========
</TABLE>
F-I-11
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ALGER AMERICAN FUND
----------------------------------------------------------
SMALL INCOME AND MIDCAP
CAPITALIZATION GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................. $ (169,257) $ (113,934) $ (31,306) $ (81,791)
Net realized gain (loss) on investments...... 2,446,741 2,551,580 490,671 742,049
Net change in unrealized appreciation
(depreciation)............................. 623,620 4,267,982 1,071,043 1,766,399
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. 2,901,104 6,705,628 1,530,408 2,426,657
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. 1,708,481 3,802,750 1,281,319 1,308,265
----------- ----------- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 4,609,585 10,508,378 2,811,727 3,734,922
NET ASSETS AT JANUARY 1, 1998.................. 17,651,623 12,840,085 4,189,839 7,550,436
----------- ----------- ---------- -----------
NET ASSETS AT DECEMBER 31, 1998................ $22,261,208 $23,348,463 $7,001,566 $11,285,358
=========== =========== ========== ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................. $ (142,416) $ (66,054) $ (16,071) $ (59,140)
Net realized gain (loss) on investments...... 550,941 59,552 105,818 88,340
Net change in unrealized appreciation
(depreciation)............................. 1,210,960 2,142,136 755,171 768,190
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. 1,619,485 2,135,634 844,918 797,390
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. 1,904,475 2,704,106 1,369,132 1,117,517
----------- ----------- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 3,523,960 4,839,740 2,214,050 1,914,907
NET ASSETS AT JANUARY 1, 1997.................. 14,127,663 8,000,345 1,975,789 5,635,529
----------- ----------- ---------- -----------
NET ASSETS AT DECEMBER 31, 1997................ $17,651,623 $12,840,085 $4,189,839 $ 7,550,436
=========== =========== ========== ===========
1996
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................. $ (118,508) $ (54,097) $ 10,414 $ (38,781)
Net realized gain (loss) on investments...... 51,224 165,191 813,188 74,978
Net change in unrealized appreciation
(depreciation)............................. 368,251 592,282 (557,847) 330,732
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. 300,967 703,376 265,755 366,929
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................. 3,449,194 2,618,412 791,272 2,585,782
----------- ----------- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........ 3,750,161 3,321,788 1,057,027 2,952,711
NET ASSETS AT JANUARY 1, 1996.................. 10,377,502 4,678,557 918,762 2,682,818
----------- ----------- ---------- -----------
NET ASSETS AT DECEMBER 31, 1996................ $14,127,663 $ 8,000,345 $1,975,789 $ 5,635,529
=========== =========== ========== ===========
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
The accompanying notes are an integral part of these financial statements.
F-I-12
<PAGE>
<TABLE>
<CAPTION>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
----------------------- ----------------------------------------------------------------------------
LEVERAGED EMERGING WORLD UTILITIES RESEARCH GROWTH WITH
BALANCED ALLCAP GROWTH SERIES GOVERNMENTS SERIES SERIES INCOME SERIES
PORTFOLIO PORTFOLIO PORTFOLIO SERIES PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(2)
---------- ---------- ------------- ---------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 7,785 $ (31,317) $ (83,222) $ 433 $ 3,498 $ (14,756) $ (19,348)
107,704 147,338 76,320 -- 111,249 33,714 --
417,950 1,626,709 2,714,274 29,642 262,317 383,697 490,661
---------- ---------- ----------- -------- ---------- ---------- ----------
533,439 1,742,730 2,707,372 30,075 377,064 402,655 471,313
844,417 1,370,291 2,799,432 310,132 1,222,669 1,600,841 1,428,853
---------- ---------- ----------- -------- ---------- ---------- ----------
1,377,856 3,113,021 5,506,804 340,207 1,599,733 2,003,496 1,900,166
1,348,133 2,432,247 6,708,650 221,859 1,697,330 970,331 1,632,772
---------- ---------- ----------- -------- ---------- ---------- ----------
$2,725,989 $5,545,268 $12,215,454 $562,066 $3,297,063 $2,973,827 $3,532,938
========== ========== =========== ======== ========== ========== ==========
$ 2,246 $ (17,451) $ (44,359) $ 1,559 $ (7,542) $ (2,824) $ 3,983
16,729 -- -- 1,603 -- -- 31,548
162,920 298,847 937,800 (6,568) 255,610 18,241 3,513
---------- ---------- ----------- -------- ---------- ---------- ----------
181,895 281,396 893,441 (3,406) 248,068 15,417 39,044
253,322 962,301 3,250,610 41,843 1,057,600 954,914 1,593,728
---------- ---------- ----------- -------- ---------- ---------- ----------
435,217 1,243,697 4,144,051 38,437 1,305,668 970,331 1,632,772
912,916 1,188,550 2,564,599 183,422 391,662 -- --
---------- ---------- ----------- -------- ---------- ---------- ----------
$1,348,133 $2,432,247 $ 6,708,650 $221,859 $1,697,330 $ 970,331 $1,632,772
========== ========== =========== ======== ========== ========== ==========
$ 23,623 $ (5,432) $ (9,549) $ (913) $ 7,550 $ -- $ --
199,719 4,125 21,561 -- 23,532 -- --
(168,250) 17,914 32,735 7,363 9,810 -- --
---------- ---------- ----------- -------- ---------- ---------- ----------
55,092 16,607 44,747 6,450 40,892 -- --
421,333 1,071,187 2,401,694 161,157 332,223 -- --
---------- ---------- ----------- -------- ---------- ---------- ----------
476,425 1,087,794 2,446,441 167,607 373,115 -- --
436,491 100,756 118,158 15,815 18,547 -- --
---------- ---------- ----------- -------- ---------- ---------- ----------
$ 912,916 $1,188,550 $ 2,564,599 $183,422 $ 391,662 $ -- $ --
========== ========== =========== ======== ========== ========== ==========
</TABLE>
F-I-13
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
MORGAN STANLEY UNIVERSAL FUNDS
----------------------------------------------
EMERGING GLOBAL
ASIAN EQUITY MARKETS EQUITY EQUITY
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3)
1998 ------------ -------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).......................... $ 45 $ (2,901) $ 748
Net realized gain (loss) on investments............... -- -- 12,591
Net change in unrealized appreciation(depreciation)... (2,798) (219,226) 143,561
-------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ (2,753) (222,127) 156,900
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS... 149,362 308,380 1,088,835
-------- --------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS................. 146,609 86,253 1,245,735
NET ASSETS AT JANUARY 1, 1998........................... 187,391 737,379 851,236
-------- --------- ----------
NET ASSETS AT DECEMBER 31, 1998......................... $334,000 $ 823,632 $2,096,971
======== ========= ==========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).......................... $ (263) $ 1,461 $ 3,239
Net realized gain (loss) on investments............... -- 21,661 11,816
Net change in unrealized appreciation
(depreciation)..................................... (51,298) (144,415) 2,150
-------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ (51,561) (121,293) 17,205
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS... 238,952 858,672 834,031
-------- --------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS................. 187,391 737,379 851,236
NET ASSETS AT JANUARY 1, 1997........................... -- -- --
-------- --------- ----------
NET ASSETS AT DECEMBER 31, 1997......................... $187,391 $ 737,379 $ 851,236
======== ========= ==========
1996
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).......................... $ -- $ -- $ --
Net realized gain (loss) on investments............... -- -- --
Net change in unrealized appreciation
(depreciation)..................................... -- -- --
-------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ -- -- --
NET INCREASE (DECREASE) FROM POLICYOWNER TRANSACTIONS... -- -- --
-------- --------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS................. -- -- --
NET ASSETS AT JANUARY 1, 1996........................... -- -- --
-------- --------- ----------
NET ASSETS AT DECEMBER 31, 1996......................... $ -- $ -- $ --
======== ========= ==========
</TABLE>
- ---------------
(1) Commenced business 04/22/97
(2) Commenced business 04/08/97
(3) Commenced business 04/17/97
(4) Commenced business 04/07/97
(5) Commenced business 04/28/97
The accompanying notes are an integral part of these financial statements.
F-I-14
<PAGE>
<TABLE>
<CAPTION>
MORGAN STANLEY
UNIVERSAL FUNDS DREYFUS
----------------------------- -----------
INTERNATIONAL U.S. REAL
MAGNUM ESTATE STOCK INDEX
PORTFOLIO(4) PORTFOLIO(5) PORTFOLIO
------------- ------------ -----------
<S> <C> <C> <C>
$ (3,894) $ 17,452 $ --
3,255 6,589 --
39,545 (110,595) --
-------- --------- -----------
38,906 (86,554) --
363,729 313,960 --
-------- --------- -----------
402,635 227,406 --
530,628 632,134 --
-------- --------- -----------
$933,263 $ 859,540 $ --
======== ========= ===========
$ 13,949 $ 8,057 $ 3,842
1,056 11,556 --
(44,768) 19,091 54,025
-------- --------- -----------
(29,763) 38,704 57,867
560,391 593,430 (2,270,889)
-------- --------- -----------
530,628 632,134 (2,213,022)
-- -- 2,213,022
-------- --------- -----------
$530,628 $ 632,134 $ --
======== ========= ===========
$ -- $ -- $ 24,607
-- -- 38,741
-- -- 366,600
-------- --------- -----------
-- -- 429,948
-- -- (409,104)
-------- --------- -----------
-- -- 20,844
-- -- 2,192,178
-------- --------- -----------
$ -- $ -- $ 2,213,022
======== ========= ===========
</TABLE>
F-I-15
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I-16
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND ACCOUNTING POLICIES
Ameritas Variable Life Insurance Company Separate Account V (the Account) was
established on August 28, 1985, under Nebraska law by Ameritas Variable Life
Insurance Company (AVLIC), a wholly-owned subsidiary of AMAL Corporation, a
holding company 66% owned by Ameritas Life Insurance Corp (ALIC) and 34% owned
by AmerUs Life Insurance Company (AmerUs). The assets of the Account are
segregated from AVLIC's other assets and are used only to support variable life
products issued by AVLIC.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At December 31, 1998, there are twenty-six
subaccounts within the Account. Five of the subaccounts invest only in a
corresponding Portfolio of Variable Insurance Products Fund and five invest only
in a corresponding Portfolio of Variable Insurance Products Fund II. Both funds
are diversified open-end management investment companies and are managed by
Fidelity Management and Research Company. Six of the subaccounts invest only in
a corresponding Portfolio of Alger American Fund which is a diversified open-end
management investment company managed by Fred Alger Management, Inc. Five of the
subaccounts invest only in a corresponding Portfolio of MFS Variable Insurance
Trust which is a diversified open-end management investment company managed by
Massachusetts Financial Services Company. Five of the subaccounts invest only in
a corresponding Portfolio of Morgan Stanley Universal Funds, Inc. which is a
diversified open-end management investment company managed by Morgan Stanley
Asset Management, Inc. All five funds are registered under the Investment
Company Act of 1940, as amended. Each Portfolio is registered under the
Investment Company Act of 1940, as amended. Each Portfolio pays the manager a
monthly fee for managing its investments and business affairs. The assets of the
Account are carried at the net asset value of the underlying Portfolios of the
Funds.
Pursuant to an order of the SEC allowing for the substitution, all policyowner
funds invested in a Portfolio of Dreyfus Stock Index Fund were transferred to
the Index 500 subaccount of the Fidelity Variable Insurance Products Fund II as
of March 31, 1997.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
The assets of the Account are carried at the net asset value of the underlying
Portfolios of the Funds. The value of the policyowners' units corresponds to the
Account's investment in the underlying subaccounts. The availability of
investment portfolio and subaccount options may vary between products. Share
transactions and security transactions are accounted for on a trade date basis.
FEDERAL AND STATE TAXES
The operations of the Account are included in the federal income tax return of
AVLIC, which is taxed as a life insurance company under the Internal Revenue
Code. AVLIC has the right to charge the Account any federal income taxes, or
provision for federal income taxes, attributable to the operations of the
Account or to the policies funded in the Account. Currently, AVLIC does not make
a charge for income or other taxes. Charges for state and local taxes, if any,
attributable to the Account may also be made.
2. POLICYOWNER CHARGES
AVLIC charges the Account for mortality and expense risks assumed. A daily
charge is made on the average daily value of the net assets representing equity
of policyowners held in each subaccount per each product's current policy
provisions. Additional charges are made at intervals and in amounts per each
product's current policy provisions. These charges are prorated against the
balance in each investment option of the policyowner, including the Fixed
Account option which is not reflected in this separate account.
F-I-17
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. SHARES OWNED
The Account invests in shares of mutual funds. Share activity and total
shares were as follows:
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-------------------------------------------------------------------------------------
MONEY MARKET EQUITY INCOME GROWTH HIGH INCOME OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1998..................... 7,552,485.910 1,018,225.148 872,066.612 598,367.840 695,077.235
Shares acquired............ 96,112,872.130 590,346.286 801,025.403 2,095,006.665 2,333,977.875
Shares disposed of......... (92,560,233.730) (448,398.816) (642,949.131) (1,976,811.206) (2,299,867.138)
--------------- ------------- ------------- -------------- --------------
Shares owned at December
31, 1998................. 11,105,124.310 1,160,172.618 1,030,142.884 716,563.299 729,187.972
=============== ============= ============= ============== ==============
Shares owned at January 1,
1997..................... 7,637,767.850 817,109.096 841,043.772 558,109.727 565,907.403
Shares acquired............ 57,423,437.350 511,389.228 339,254.481 1,118,068.428 1,175,596.501
Shares disposed of......... (57,508,719.290) (310,273.176) (308,231.641) (1,077,810.315) (1,046,426.669)
--------------- ------------- ------------- -------------- --------------
Shares owned at December
31, 1997................. 7,552,485.910 1,018,225.148 872,066.612 598,367.840 695,077.235
=============== ============= ============= ============== ==============
Shares owned at January 1,
1996..................... 5,613,527.070 652,438.732 702,196.341 358,988.159 438,914.420
Shares acquired............ 47,496,829.850 398,549.753 641,337.814 1,195,240.651 726,524.452
Shares disposed of......... (45,472,589.070) (233,879.389) (502,490.383) (996,119.083) (599,531.469)
--------------- ------------- ------------- -------------- --------------
Shares owned at December
31, 1996................. 7,637,767.850 817,109.096 841,043.772 558,109.727 565,907.403
=============== ============= ============= ============== ==============
</TABLE>
F-I-18
<PAGE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
- ------------------------------------------------------------------------- -----------------------------
INVESTMENT ASSET MANAGER SMALL
ASSET MANAGER GRADE BOND CONTRAFUND INDEX 500 GROWTH CAPITALIZATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------- ------------ ------------ ----------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1,531,564.418 237,050.443 389,113.666 94,728.864 140,054.018 403,465.664 300,282.630
678,058.443 639,413.242 496,047.058 128,107.356 152,783.138 441,926.395 397,157.183
(456,703.318) (533,255.969) (323,006.305) (82,453.072) (98,715.823) (339,110.335) (258,723.857)
- ------------- ------------ ------------ ----------- ----------- ------------ ------------
1,752,919.543 343,207.716 562,154.419 140,383.148 194,121.333 506,281.724 438,715.956
============= ============ ============ =========== =========== ============ ============
1,326,763.623 192,186.776 176,606.628 21,656.138 42,445.800 345,335.196 233,042.387
598,138.814 120,594.995 358,431.197 129,171.432 137,282.584 311,521.638 204,589.158
(393,338.019) (75,731.328) (145,924.159) (56,098.706) (39,674.366) (253,391.170) (137,348.915)
- ------------- ------------ ------------ ----------- ----------- ------------ ------------
1,531,564.418 237,050.443 389,113.666 94,728.864 140,054.018 403,465.664 300,282.630
============= ============ ============ =========== =========== ============ ============
1,221,448.421 171,179.054 9,382.665 61.274 1,153.239 263,321.551 150,146.226
469,994.138 113,295.550 299,411.174 26,095.586 53,791.445 280,059.510 162,856.038
(364,678.936) (92,297.828) (132,187.211) (4,500.722) (12,498.884) (198,045.865) (79,959.877)
- ------------- ------------ ------------ ----------- ----------- ------------ ------------
1,326,763.623 192,176.776 176,606.628 21,656.138 42,445.800 345,335.196 233,042.387
============= ============ ============ =========== =========== ============ ============
</TABLE>
F-I-19
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
3. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
ALGER AMERICAN FUND
-----------------------------------------------------------
INCOME AND MIDCAP LEVERAGED
GROWTH GROWTH BALANCED ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares owned at January 1, 1998........ 381,241.041 312,259.570 125,291.131 104,973.976
Shares acquired........................ 471,468.634 272,665.784 179,874.177 159,683.710
Shares disposed of..................... (319,053.749) (194,022.782) (95,150.693) (105,767.454)
------------ ------------ ----------- ------------
Shares owned at December 31, 1998...... 533,655.926 390,902.572 210,014.615 158,890.232
============ ============ =========== ============
Shares owned at January 1, 1997........ 234,654.249 263,959.188 98,800.487 61,392.043
Shares acquired........................ 389,297.914 245,052.311 64,650.229 108,499.936
Shares disposed of..................... (242,711.122) (196,751.929) (38,159.585) (64,918.003)
------------ ------------ ----------- ------------
Shares owned at December 31, 1997...... 381,241.041 312,259.570 125,291.131 104,973.976
============ ============ =========== ============
Shares owned at January 1, 1996........ 51,644.863 138,005.038 32,000.820 5,780.602
Shares acquired........................ 238,851.986 257,678.903 91,879.454 94,532.096
Shares disposed of..................... (55,842.600) (131,724.753) (25,079.787) (38,920.655)
------------ ------------ ----------- ------------
Shares owned at December 31, 1996...... 234,654.249 263,959.188 98,800.487 61,392.043
============ ============ =========== ============
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 04/22/97
(4) Commenced business 04/08/97
F-I-20
<PAGE>
<TABLE>
<CAPTION>
MFS VARIABLE INSURANCE TRUST MORGAN STANLEY UNIVERSAL FUNDS
------------------------------------------------------------------------------ -------------------------------
EMERGING WORLD UTILITIES RESEARCH GROWTH WITH ASIAN EMERGING MARKETS
GROWTH SERIES GOVERNMENTS SERIES SERIES INCOME SERIES EQUITY EQUITY
PORTFOLIO SERIES PORTFOLIO PORTFOLIO PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) PORTFOLIO(4)
------------- ---------------- ------------ ------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
415,653.648 21,729.618 94,348.503 61,452.261 99,317.062 33,225.337 78,194.995
513,918.012 88,429.719 186,751.323 173,038.858 226,820.471 99,976.563 334,441.671
(360,617.119) (58,498.872) (114,749.586) (78,384.682) (150,456.836) (69,339.456) (296,795.548)
------------ ----------- ------------ ----------- ------------ ----------- ------------
568,954.541 51,660.465 166,350.240 156,106.437 175,680.697 63,862.444 115,841.118
============ =========== ============ =========== ============ =========== ============
193,700.823 17,336.705 28,672.191 -- -- -- --
457,734.629 37,542.368 107,581.620 72,826.540 110,180.302 51,430.390 140,386.479
(235,781.804) (33,149.455) (41,905.308) (11,374.279) (10,863.240) (18,205.053) (62,191.484)
------------ ----------- ------------ ----------- ------------ ----------- ------------
415,653.648 21,729.618 94,348.503 61,452.261 99,317.062 33,225.337 78,194.995
============ =========== ============ =========== ============ =========== ============
10,355.688 1,555.043 1,475.513 -- -- -- --
232,976.138 34,612.233 35,187.917 -- -- -- --
(49,631.003) (18,830.571) (7,991.239) -- -- -- --
------------ ----------- ------------ ----------- ------------ ----------- ------------
193,700.823 17,336.705 28,672.191 -- -- -- --
============ =========== ============ =========== ============ =========== ============
</TABLE>
F-I-21
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
3. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
MORGAN STANLEY UNIVERSAL FUNDS DREYFUS
--------------------------------------------- --------------
GLOBAL INTERNATIONAL U.S. REAL
EQUITY MAGNUM ESTATE STOCK INDEX
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO(3) FUND PORTFOLIO
------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares owned at January 1, 1998......... 72,507.289 51,120.253 55,401.749 --
Shares acquired......................... 172,405.252 120,740.453 136,182.392 --
Shares disposed of...................... (85,325.786) (88,756.241) (103,875.851) --
----------- ----------- ------------ ------------
Shares owned at December 31, 1998....... 159,586.755 83,104.465 87,708.290 --
=========== =========== ============ ============
Shares owned at January 1, 1997......... -- -- -- 109,123.387
Shares acquired......................... 93,896.403 77,530.448 97,640.967 2,530.208
Shares disposed of...................... (21,389.114) (26,410.195) (42,239.218) (111,653.595)
----------- ----------- ------------ ------------
Shares owned at December 31, 1997....... 72,507.289 51,120.253 55,401.749 --
=========== =========== ============ ============
Shares owned at January 1, 1996......... -- -- -- 127,452.178
Shares acquired......................... -- -- -- 33,926.076
Shares disposed of...................... -- -- -- (52,254.867)
----------- ----------- ------------ ------------
Shares owned at December 31, 1996....... -- -- -- 109,123.387
=========== =========== ============ ============
</TABLE>
- ---------------
(1) Commenced business 04/17/97
(2) Commenced business 04/07/97
(3) Commenced business 04/28/97
F-I-22
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
MARCH 31, 1999
(UNAUDITED)
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
VARIABLE INSURANCE PRODUCTS FUND:
Money Market Portfolio--15,084,388.180 shares at $1.00 per
share (cost $15,084,388) $ 15,084,388
Equity Income Portfolio--1,201,360.863 shares at $24.68 per
share (cost $21,460,371) 29,649,587
Growth Portfolio--1,157,962.549 shares at $43.37 per share
(cost $29,998,748) 50,220,837
High Income Portfolio--815,522.648 shares at $10.99 per
share (cost $8,944,174) 8,962,593
Overseas Portfolio--679,023.138 shares at $19.77 per share
(cost $10,167,709) 13,424,289
VARIABLE INSURANCE PRODUCTS FUND II:
Asset Manager Portfolio--1,869,097.149 shares at $16.96 per
share (cost $26,833,386) 31,699,886
Investment Grade Bond Portfolio--364,179.103 shares at
$12.26 per share (cost $4,364,205) 4,464,836
Contrafund Portfolio--621,138.992 shares at $24.74 per share
(cost $11,495,890) 15,366,981
Index 500 Portfolio--153,294.162 shares at $145.58 per
share (cost $16,222,329) 22,316,563
Asset Manager Growth Portfolio--211,953.390 shares at
$16.15 per share (cost $3,079,956) 3,423,048
ALGER AMERICAN FUND:
Small Capitalization Portfolio--490,085.425 shares at $44.28
per share (cost $16,986,215) 21,700,984
Growth Portfolio--458,418.657 shares at $59.06 per share
(cost $16,441,366) 27,074,205
Income and Growth Portfolio--548,099.899 shares at $13.89
per share (cost $5,785,207) 7,613,108
Midcap Growth Portfolio--404,650.544 shares at $30.23 per
share (cost $8,366,383) 12,232,586
Balanced Portfolio--227,915.161 shares at $14.20 per share
(cost $2,512,117) 3,236,395
Leveraged Allcap Portfolio--213,091.409 shares at $42.87 per
share (cost $5,727,247) 9,135,227
MFS VARIABLE INSURANCE TRUST:
Emerging Growth Series Portfolio--582,149.947 shares at $22.25
per share (cost $8,827,207) 12,952,836
World Governments Series Portfolio--37,864.728 shares at
$10.79 per share (cost $383,201) 408,560
Utilities Series Portfolio--182,705.288 shares at $19.69 per
share (cost $3,093,489) 3,597,467
Research Series Portfolio--166,119.693 shares at $19.34 per
share (cost $2,763,885) 3,212,754
Growth with Income Series Portfolio--154,622.070 shares at
$20.28 per share (cost $2,614,878) 3,135,736
MORGAN STANLEY UNIVERSAL FUNDS:
Asian Equity Portfolio--65,193.646 shares at $5.42 per share
(cost $395,698) 353,348
Emerging Markets Equity Portfolio--100,118.403 shares at $7.97
per share (cost $1,069,420) 797,945
Global Equity Portfolio--181,539.527 shares at $12.67 per
share (cost $2,237,744) 2,300,107
International Magnum Portfolio--97,497.917 shares at $11.24
per share (cost $1,097,834) 1,095,876
U.S. Real Estate Portfolio--83,452.264 shares at $9.40 per
share (cost $909,091) 784,450
------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $304,244,592
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I(U)-1
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
STATEMENT OF OPERATIONS:
<S> <C> <C> <C> <C>
VARIABLE INSURANCE PRODUCTS FUND
--------------------------------
MONEY EQUITY
MARKET INCOME GROWTH
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
----- --------- --------- ---------
1999
INVESTMENT INCOME:
Dividend distributions
received $ 3,279,232 $ 155,548 $ 438,682 $ 82,737
Mortality and expense
risk charge (655,805) (29,755) (66,932) (110,351)
---------- -------- ------- ----------
NET INVESTMENT INCOME (LOSS) 2,623,427 125,793 371,750 (27,614)
---------- -------- ------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments 8,733,219 -- 969,719 5,202,111
Net change in unrealized
appreciation (depreciation) 1,527,450 -- (802,744) (1,376,252)
----------- --------- ---------- -----------
NET GAIN (LOSS) ON INVESTMENTS 10,260,669 -- 166,975 3,825,859
----------- --------- -------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $12,884,096 $ 125,793 $ 538,725 $3,798,245
=========== ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS:
VARIABLE INSURANCE PRODUCTS FUND
--------------------------------
MONEY EQUITY
MARKET INCOME GROWTH
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
----- --------- --------- ---------
1999
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income
(loss) $ 2,623,427 $ 125,793 $ 371,750 $ (27,614)
Net realized gain
(loss) on investments 8,733,219 -- 969,719 5,202,111
Net change in unrealized
appreciation (depreciation) 1,527,450 -- (802,744) (1,376,252)
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS 12,884,096 125,793 538,725 3,798,245
NET INCREASE (DECREASE) FROM
POLICYOWNER TRANSACTIONS 8,707,422 3,853,471 (380,727) 200,080
---------- ---------- ---------- ---------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 21,591,518 3,979,264 157,998 3,998,325
NET ASSETS AT JANUARY 1, 1999 282,653,074 11,105,124 29,491,589 46,222,512
------------ ----------- ----------- -----------
NET ASSETS AT MARCH 31, 1999 $304,244,592 $15,084,388 $29,649,587 $50,220,837
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I(U)-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
- -------------------------------- --------------------------------------------------------------------------------------
ASSET
ASSET
ASSET INVESTMENT MANAGER
HIGH INCOME OVERSEAS MANAGER GRADE BOND CONTRAFUND INDEX 500 GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- --------- ---------
$ 792,857 $ 226,340 $ 1,054,568 $178,023 $ 68,862 $ 201,036 $ 80,579
(18,374) (32,195) (72,046) (11,068) (32,073) (46,684) (7,335)
--------- --------- ---------- -------- --------- --------- -------
774,483 194,145 982,522 166,955 36,789 154,352 73,244
--------- --------- ---------- -------- --------- --------- -------
29,640 365,064 1,335,786 55,850 504,989 136,417 133,643
(436,087) (148,301) (2,097,363) (251,779) 201,025 651,792 (173,261)
--------- ---------- ----------- ---------- -------- -------- ---------
(406,447) 216,763 (761,577) (195,929) 706,014 788,209 (39,618)
--------- --------- ----------- ---------- -------- -------- ---------
$ 368,036 $ 410,908 $ 220,945 $(28,974) $ 742,803 $ 942,561 $ 33,626
========= ========= ========== ========= ========== ========= ========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
- -------------------------------- --------------------------------------------------------------------------------------
ASSET INVESTMENT MANAGER
HIGH INCOME OVERSEAS MANAGER GRADE BOND CONTRAFUND INDEX 500 GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- --------- ---------
$ 774,483 $194,145 $ 982,522 $ 166,955 $36,789 $ 154,352 $ 73,244
29,640 365,064 1,335,786 55,850 504,989 136,417 133,643
(436,087) (148,301) (2,097,363) (251,779) 201,025 651,792 (173,261)
--------- ---------- ----------- --------- --------- -------- ---------
368,036 410,908 220,945 (28,974) 742,803 942,561 33,626
332,584 (1,606,838) (354,077) 45,838 885,122 1,544,883 83,536
--------- ---------- --------- -------- -------- ---------- ---------
700,620 (1,195,930) (133,132) 16,864 1,627,925 2,487,444 117,162
8,261,973 14,620,219 31,833,018 4,447,972 13,739,056 19,829,119 3,305,886
--------- ---------- ---------- --------- ---------- ---------- ---------
$ 8,962,593 $13,424,289 $31,699,886 $ 4,464,836 $15,366,981 $22,316,563 $3,423,048
=========== =========== =========== =========== =========== =========== ==========
</TABLE>
F-I(U)-3
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
ALGER AMERICAN FUND
-------------------------------------------------------------------
SMALL INCOME AND MIDCAP
CAPITALIZATION GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
1999
INVESTMENT INCOME:
Dividend distributions
received $ -- $ -- $ -- $ --
Mortality and expense
risk charge (48,663) (55,429) (16,246) (25,575)
--------- --------- ---------- ----------
NET INVESTMENT INCOME (LOSS) (48,663) (55,429) (16,246) (25,575)
--------- --------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments -- -- -- --
Net change in unrealized
appreciation (depreciation) 146,879 2,624,437 431,755 547,140
--------- ---------- -------- --------
NET GAIN (LOSS) ON INVESTMENTS 146,879 2,624,437 431,755 547,140
--------- ---------- -------- --------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATION $ 98,216 $2,569,008 $415,509 $521,565
========= ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS:
<S> <C> <C> <C> <C>
ALGER AMERICAN FUND
------------------------------------------------------------------------
SMALL INCOME AND MIDCAP
CAPITALIZATION GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
1999
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income (loss) $ (48,663) $ (55,429) $ (16,246) $ (25,575)
Net realized gain (loss)
on investments -- -- -- --
Net change in unrealized
appreciation (depreciation) 146,879 2,624,437 431,755 547,140
------- ---------- -------- --------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS 98,216 2,569,008 415,509 521,565
NET INCREASE (DECREASE) FROM
POLICYOWNER TRANSACTIONS (658,440) 1,156,734 196,033 425,663
--------- ---------- -------- --------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (560,224) 3,725,742 611,542 947,228
NET ASSETS AT JANUARY 1, 1999 22,261,208 23,348,463 7,001,566 11,285,358
----------- ----------- ---------- -----------
NET ASSETS AT MARCH 31, 1999 $21,700,984 $27,074,205 $7,613,108 $12,232,586
=========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I(U)-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
- ------------------------------------- ---------------------------------------------------------------------------
GROWTH
EMERGING WORLD WITH
LEVERAGED GROWTH GOVERNMENTS UTILITIES RESEARCH INCOME
BALANCED ALLCAP SERIES SERIES SERIES SERIES SERIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- --------- ---------
$ -- $ -- $ -- $ -- $ -- $ -- $ --
(6,524) (15,473) (28,342) (1,006) (7,394) (6,425) (7,083)
--------- ---------- ---------- ------- ------- ------- -------
(6,524) (15,473) (28,342) (1,006) (7,394) (6,425) (7,083)
---------- ---------- ---------- -------- -------- ------- -------
-- -- -- -- -- -- --
266,497 1,463,649 442,459 (4,192) (22,512) 46,931 26,684
--------- ---------- -------- -------- --------- ------- -------
266,497 1,463,649 442,459 (4,192) (22,512) 46,931 26,684
--------- ---------- -------- -------- --------- ------- -------
$ 259,973 $1,448,176 $414,117 $(5,198) $(29,906) $40,506 $19,601
========= ========== ======== ======== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
------------------------------ ----------------------------------------------------------------------
GROWTH
EMERGING WORLD WITH
LEVERAGED GROWTH GOVERNMENTS UTILITIES RESEARCH INCOME
BALANCED ALLCAP SERIES SERIES SERIES SERIES SERIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- --------- ---------
$ (6,524) $ (15,473) $ (28,342) $ (1,006) $ (7,394) $ (6,425) $ (7,083)
-- -- -- -- -- -- --
266,497 1,463,649 442,459 (4,192) (22,512) 46,931 26,684
---------- ------------ ---------- --------- ---------- -------- ---------
259,973 1,448,176 414,117 (5,198) (29,906) 40,506 19,601
250,433 2,141,783 323,265 (148,308) 330,310 198,421 (416,803)
---------- ------------ ---------- ---------- --------- -------- ----------
510,406 3,589,959 737,382 (153,506) 300,404 238,927 (397,202)
2,725,989 5,545,268 12,215,454 562,066 3,297,063 2,973,827 3,532,938
---------- ------------ ----------- -------- ---------- ---------- ----------
$3,236,395 $ 9,135,227 $ 12,952,836 $408,560 $3,597,467 $3,212,754 $3,135,736
========== ============ ============ ======== ========== ========== ==========
</TABLE>
F-I(U)-5
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
MORGAN STANLEY UNIVERSAL FUNDS
------------------------------
EMERGING GLOBAL
ASIAN EQUITY MARKETS EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
1999
INVESTMENT INCOME:
Dividend distributions received $ -- $ -- $ --
Mortality and expense risk charge (694) (1,702) (4,626)
-------- --------- --------
NET INVESTMENT INCOME (LOSS) (694) (1,702) (4,626)
--------- -------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments -- -- --
Net change in unrealized
appreciation (depreciation) 11,748 92,165 (83,349)
-------- -------- ---------
NET GAIN (LOSS) ON INVESTMENTS 11,748 92,165 (83,349)
-------- -------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 11,054 $ 90,463 $(87,975)
======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS:
MORGAN STANLEY UNIVERSAL FUNDS
------------------------------
EMERGING GLOBAL
ASIAN EQUITY MARKETS EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
1999
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income (loss) $ (694) $ (1,702) $ (4,626)
Net realized gain (loss) on
investments -- -- --
Net change in unrealized
appreciation(depreciation) 11,748 92,165 (83,349)
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 11,054 90,463 (87,975)
NET INCREASE (DECREASE) FROM
POLICYOWNER TRANSACTIONS 8,294 (116,150) 291,111
-------- --------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 19,348 (25,687) 203,136
NET ASSETS AT JANUARY 1, 1999 334,000 823,632 2,096,971
-------- -------- ----------
NET ASSETS AT MARCH 31, 1999 $ 353,348 $ 797,945 $2,300,107
========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I(U)-6
<PAGE>
MORGAN STANLEY UNIVERSAL FUNDS
----------------------------------
INTERNATIONAL U.S. REAL
MAGNUM ESTATE
PORTFOLIO PORTFOLIO
--------- ---------
$ -- $ --
(2,137) (1,673)
-------- ---------
(2,137) (1,673)
--------- ----------
-- --
3,265 (33,136)
--------- ---------
3,265 (33,136)
--------- ---------
$ 1,128 $ (34,809)
========= =========
Morgan Stanley Universal Funds
----------------------------------
International U.S. Real
Magnum Estate
Portfolio Portfolio
--------- ---------
$ (2,137) $ (1,673)
-- --
3,265 (33,136)
-------- ----------
1,128 (34,809)
161,485 (40,281)
-------- -----------
162,613 (75,090)
933,263 859,540
---------- ----------
$1,095,876 $ 784,450
========== ==========
F-I(U)-7
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Variable Life Insurance Company Separate Account V (the Account) was
established on August 28, 1985, under Nebraska law by Ameritas Variable Life
Insurance Company (AVLIC), a wholly-owned subsidiary of AMAL Corporation, a
majority-owned affiliate of Ameritas Life Insurance Corp. (ALIC) The assets of
the Account are segregated from AVLIC's other assets and are used only to
support variable life products issued by AVLIC.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. At March 31, 1999, there are twenty-six subaccounts
within the Account. Five of the subaccounts invest only in a corresponding
Portfolio of Variable Insurance Products Fund and five invest only in a
corresponding Portfolio of Variable Insurance Products Fund II. Both funds are
diversified open-end management investment companies and are managed by Fidelity
Management and Research Company. Six of the subaccounts invest only in a
corresponding Portfolio of Alger American Fund which is a diversified open-end
management investment company managed by Fred Alger Management, Inc. Five of the
subaccounts invest only in a corresponding Portfolio of MFS Variable Insurance
Trust which is a diversified open-end management investment company managed by
Massachusetts Financial Services Company. Five of the subaccounts invest only in
a corresponding Portfolio of Morgan Stanley Universal Funds, Inc. which is a
diversified open-end management investment company managed by Morgan Stanley
Asset Management, Inc. All five funds are registered under the Investment
Company Act of 1940, as amended. Each Portfolio pays the manager a monthly fee
for managing its investments and business affairs. The assets of the Account are
carried at the net asset value of the underlying Portfolios of the Funds. The
value of the policyowners' units corresponds to the Account's investment in the
underlying subaccounts. The availability of investment portfolio and subaccount
options may vary between products.
AVLIC currently does not expect to incur any federal income tax liability
attributable to the Account with respect to the sale of variable life insurance
policies. If, however, AVLIC determines that it may incur such taxes
attributable to the Account, it may assess a charge for such taxes against the
Account.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statements have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statements should be read in conjunction with the
audited financial statements and notes thereto for the years ended December 31,
1998, 1997, and 1996.
F-1(U)-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Variable Life Insurance Company
Lincoln, Nebraska
We have audited the accompanying balance sheets of Ameritas Variable Life
Insurance Company as of December 31, 1998 and 1997, and the related statements
of operations, comprehensive income, stockholder's equity, and cash flows for
each of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Ameritas Variable Life Insurance Company as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Lincoln, Nebraska
February 5, 1999
F-II- 1
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities, available for sale (amortized
cost $146,650 -- 1998 and $113,158 -- 1997)............ $ 150,462 $ 115,955
Equity securities, available for sale (amortized cost
$2,031 -- 1998 $4,061 -- 1997)......................... 2,020 4,135
Loans on insurance policies............................... 10,949 7,482
Other invested assets..................................... 10,020 2,206
---------- ----------
Total investments................................. 173,451 129,778
Cash and cash equivalents................................... 12,011 13,711
Accrued investment income................................... 2,425 1,801
Reinsurance recoverable -- affiliates....................... 455 514
Prepaid reinsurance premium -- affiliates................... 2,380 2,298
Deferred policy acquisition costs........................... 121,236 98,746
Other....................................................... 1,695 199
Separate Accounts........................................... 1,709,448 1,265,348
---------- ----------
$2,023,101 $1,512,395
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy and contract reserves.............................. $ 1,681 $ 941
Policy and contract claims................................ 625 925
Accumulated contract values............................... 213,874 154,281
Unearned policy charges................................... 1,814 1,498
Unearned reinsurance ceded allowance...................... 3,596 3,268
Federal income taxes --
Current................................................ 2,941 1,466
Deferred............................................... 8,348 9,326
Other..................................................... 8,086 10,200
Separate Accounts......................................... 1,709,448 1,265,348
---------- ----------
Total Liabilities................................. 1,950,413 1,447,253
---------- ----------
Commitments and contingencies
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share; authorized 50,000
shares, issued and outstanding 40,000 shares........... 4,000 4,000
Additional paid-in capital................................ 40,370 40,370
Retained earnings......................................... 27,434 20,180
Accumulated other comprehensive income.................... 884 592
---------- ----------
Total Stockholder's Equity........................ 72,688 65,142
---------- ----------
$2,023,101 $1,512,395
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 2
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Contract charges.......................................... $42,775 $33,717 $26,345
Premium-reinsurance ceded................................. (7,836) (6,840) (5,895)
Reinsurance ceded allowance............................... 3,169 2,752 2,235
Investment revenues:
Investment income, net.................................... 14,052 8,277 3,603
Realized gains, net....................................... 79 368 19
Other....................................................... 2,269 980 567
------- ------- -------
54,508 39,254 26,874
------- ------- -------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits............................................ 2,200 1,356 716
Interest credited......................................... 13,400 7,258 2,736
Increase in policy and contract reserves.................. 740 192 140
Other..................................................... 222 92 52
Sales and operating expenses................................ 15,980 11,641 10,041
Amortization of deferred policy acquisition costs........... 11,847 9,584 5,531
------- ------- -------
44,389 30,123 19,216
------- ------- -------
INCOME BEFORE FEDERAL INCOME TAXES.......................... 10,119 9,131 7,658
------- ------- -------
Income taxes -- current..................................... 4,000 4,305 3,819
Income taxes -- deferred.................................... (1,135) (844) (811)
------- ------- -------
Total income taxes................................... 2,865 3,461 3,008
------- ------- -------
NET INCOME.................................................. $ 7,254 $ 5,670 $ 4,650
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 3
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net income.................................................. $7,254 $5,670 $4,650
Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains arising during the period (net
of deferred tax of $185, $378, and ($159) for 1998,
1997 and 1996, respectively).......................... 343 702 (295)
Reclassification adjustment for gains included in net
income (net of deferred tax of $28, $129 and $7 for
1998, 1997 and 1996, respectively).................... (51) (239) (12)
------ ------ ------
Other comprehensive income (loss)......................... 292 463 (307)
------ ------ ------
Comprehensive income........................................ $7,546 $6,133 $4,343
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 4
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
---------------- PAID-IN RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME TOTAL
------ ------ ---------- -------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996................. 40,000 $4,000 $ 29,700 $ 9,860 $ 436 $ 43,996
Return of capital...................... -- -- (15,000) -- -- (15,000)
Capital contribution from AMAL
Corporation.......................... -- -- 25,670 -- -- 25,670
Net unrealized investment loss, net.... -- -- -- -- (307) (307)
Net income............................. -- -- -- 4,650 -- 4,650
------ ------ -------- ------- ----------- --------
BALANCE, December 31, 1996............... 40,000 4,000 40,370 14,510 129 59,009
Net unrealized investment gain, net.... -- -- -- -- 463 463
Net income............................. -- -- -- 5,670 -- 5,670
------ ------ -------- ------- ----------- --------
BALANCE, December 31, 1997............... 40,000 4,000 40,370 20,180 592 65,142
Net unrealized investment gain, net.... -- -- -- -- 292 292
Net income............................. -- -- -- 7,254 -- 7,254
------ ------ -------- ------- ----------- --------
BALANCE, December 31, 1998............... 40,000 $4,000 $ 40,370 $27,434 $ 884 $ 72,688
====== ====== ======== ======= =========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 5
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income.................................................. $ 7,254 $ 5,670 $ 4,650
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of deferred policy acquisition costs......... 11,847 9,584 5,531
Policy acquisition costs deferred......................... (34,820) (30,642) (26,596)
Interest credited to contract values...................... 13,400 7,258 2,736
Amortization of discounts or premiums..................... (28) (40) (83)
Net gains on other invested assets........................ (3,732) (631) --
Net realized gains on investment transactions............. (79) (368) (19)
Deferred income taxes..................................... (1,135) (844) (811)
Change in assets and liabilities:
Accrued investment income.............................. (624) (705) (306)
Reinsurance recoverable-affiliates..................... 59 (505) 48
Prepaid reinsurance premium-affiliates................. (82) (142) (650)
Other assets........................................... (1,496) 284 (377)
Policy and contract reserves........................... 740 192 140
Policy and contract claims............................. (300) 819 106
Unearned policy charges................................ 316 255 279
Federal income tax payable-current..................... 1,475 591 (310)
Unearned reinsurance ceded allowance................... 328 129 860
Other liabilities...................................... (2,114) 2,172 3,762
-------- -------- --------
Net cash from operating activities........................ (8,991) (6,923) (11,040)
-------- -------- --------
INVESTING ACTIVITIES
Purchase of fixed maturity securities available for sale.... (70,904) (92,291) (31,514)
Purchase of equity securities available for sale............ -- (4,311) --
Purchase of other invested assets........................... (7,760) (1,611) --
Proceeds from maturities or repayment of fixed maturity
securities available for sale............................. 23,124 25,168 5,307
Proceeds from sales of fixed maturity securities available
for sale.................................................. 14,447 16,419 3,014
Proceeds from the sale of equity securities available for
sale...................................................... 1,979 252 --
Proceeds from the sale of other invested assets............. 3,678 35 --
Net change in loans on insurance policies................... (3,467) (3,173) (1,670)
-------- -------- --------
Net cash from investing activities........................ (38,903) (59,512) (24,863)
-------- -------- --------
FINANCING ACTIVITIES
Return of capital........................................... -- -- (15,000)
Capital contribution........................................ -- -- 25,670
Net change in accumulated contract values................... 46,194 69,462 30,257
-------- -------- --------
Net cash from financing activities........................ 46,194 69,462 40,927
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (1,700) 3,027 5,024
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 13,711 10,684 5,660
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 12,011 $ 13,711 $ 10,684
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes.................................. $ 2,525 $ 3,714 $ 4,129
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 6
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Variable Life Insurance Company (the Company), a stock life insurance
company domiciled in the State of Nebraska, was a wholly-owned subsidiary of
Ameritas Life Insurance Corp. (ALIC), until April of 1996 when it became a
wholly-owned subsidiary of AMAL Corporation, a holding company 66% owned by ALIC
and 34% owned by AmerUs Life Insurance Company (AmerUs). The Company began
issuing variable life insurance and variable annuity policies in 1987, fixed
premium annuities in 1996 and equity indexed annuities in 1997. The variable
life, variable annuity, fixed premium annuity and equity indexed annuity
policies are not participating with respect to dividends.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The principal accounting and reporting practices followed are:
INVESTMENTS
The Company classifies its securities into categories based upon the Company's
intent relative to the eventual disposition of the securities. The first
category, held to maturity securities, is comprised of fixed maturity securities
which the Company has the positive intent and ability to hold to maturity. These
securities are carried at amortized cost. The second category, available for
sale securities, may be sold to address the liquidity and other needs of the
Company. Securities classified as available for sale are carried at fair value
on the balance sheet with unrealized gains and losses excluded from operations
and reported as a separate component of stockholder's equity, net of related
deferred acquisition costs and income tax effects. The third category, trading
securities, is for debt and equity securities acquired for the purpose of
selling them in the near term. The Company has classified all of its securities
as available for sale. Realized investment gains and losses on sales of
securities are determined on the specific identification method.
Other Invested Assets consist of exchange and privately traded options tied to
the Standard and Poor's Index and are valued at fair value with changes in the
fair value of these investments and realized gains on these investments included
in net investment income.
The Company records write-offs or allowances for its investments based upon a
evaluation of specific problem investments. The Company reviews, on a continual
basis, all invested assets to identify investments where the Company may have
credit concerns. Investments with credit concerns include those the Company has
identified as experiencing a deterioration in financial condition. The Company
has no write-offs or allowances recorded as of December 31, 1998, 1997 and 1996.
CASH EQUIVALENTS
The Company considers all highly liquid debt securities purchased with remaining
maturity of less than three months to be cash equivalents.
SEPARATE ACCOUNTS
The Company operates separate accounts on which the earnings or losses accrue
exclusively to contractholders. The assets (mutual fund investments) and
liabilities of each account are clearly
F-II- 7
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
identifiable and distinguishable from other assets and liabilities of the
Company. Assets are reported at fair value.
PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS
RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO
POLICYOWNERS
Universal life-type policies are insurance contracts with terms that are not
fixed and guaranteed. The terms that may be changed could include one or more of
the amounts assessed the policyowner, premiums paid by the policyowner or
interest accrued to policyowners balances. Amounts received as payments for such
contracts are reflected as deposits in accumulated contract values and are not
reported as premium revenues.
Revenues for universal life-type policies consist of charges assessed against
policy account values for deferred policy loading, mortality risk expense, the
cost of insurance and policy administration. Policy benefits and claims that are
charged to expense include interest credited to contracts under the fixed
account investment option and benefit claims incurred in the period in excess of
related policy account balances.
RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO POLICYOWNERS
Contracts that do not subject the Company to risks arising from policyowner
mortality or morbidity are referred to as investment contracts. Certain deferred
annuities are considered investment contracts. Amounts received as payments for
such contracts are reflected as deposits in accumulated contract values and are
not reported as premium revenues.
Revenues for investment products consist of investment income and policy
administration charges. Contract benefits that are charged to expense include
benefit claims incurred in the period in excess of related contract balances,
and interest credited to contract balances.
POLICY ACQUISITION COSTS
Those costs of acquiring new business, which vary with and are directly related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable from future premiums. Such costs include
commissions, certain costs of policy issuance and underwriting, and certain
variable distribution expenses.
Costs deferred related to universal life-type policies and investment-type
contracts are amortized generally over the lives of the policies, in relation to
the present value of estimated gross profits from mortality, investment and
expense margins. The estimated gross profits are reviewed periodically based on
actual experience and changes in assumptions.
F-II- 8
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
A roll-forward of the amounts reflected in the balance sheets as deferred
acquisition costs is as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------
1998 1997 1996
-------- ------- -------
<S> <C> <C> <C>
Beginning balance........................................... $ 98,746 $79,272 $57,664
Acquisition costs deferred.................................. 34,820 30,642 26,596
Amortization of deferred policy acquisition costs........... (11,847) (9,584) (5,531)
Adjustment for unrealized investment (gain)/loss............ (483) (1,584) 543
-------- ------- -------
Ending balance.............................................. $121,236 $98,746 $79,272
======== ======= =======
</TABLE>
To the extent that unrealized gains or losses on available for sale securities
would result in an adjustment of deferred policy acquisition costs had those
gains or losses actually been realized, the related unamortized deferred policy
acquisition costs are recorded as an adjustment of the unrealized investment
gains or losses included in stockholder's equity.
FUTURE POLICY AND CONTRACT BENEFITS
Liabilities for future policy and contract benefits left with the Company on
variable universal life and annuity-type contracts are based on the policy
account balance, and are shown as accumulated contract values. In addition the
Company carries as future policy benefits a liability for additional coverages
offered under policy riders.
INCOME TAXES
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the cumulative differences in assets and liabilities
determined on a tax return and financial statement basis at the current enacted
tax rates.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, entitled "Accounting for Derivative
Instruments and Hedging Activities" (SFAS no. 133). The statement requires that
all derivatives (including certain derivatives embedded in contracts) be
recorded on the balance sheet and measured at fair value. SFAS no. 133 requires
that changes in the fair value of derivatives be recognized currently in
operations unless specific hedge accounting criteria are met. If such criteria
are met, the derivative's gain or loss will offset related results of the hedged
item in the statement of operations. A company must formally document, designate
and assess the effectiveness of transactions to apply hedge accounting
treatment.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999, with
earlier implementation permitted. The statement must be implemented as of the
beginning of a quarter and retroactive application to financial statements of
prior periods is prohibited. The Company has not determined the financial
statement impact of adopting this statement.
RECLASSIFICATIONS
Certain items on the prior year financial statements have been restated to
conform to current year presentation.
F-II- 9
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 9,099 $6,622 $3,308
Equity Securities available for sale........................ 179 156 --
Loans on insurance policies................................. 590 370 214
Cash equivalents............................................ 659 642 618
Other invested assets....................................... 3,732 631 --
------- ------ ------
Gross investment income................................... 14,259 8,421 4,140
Investment expenses......................................... 207 144 537
------- ------ ------
Net investment income..................................... $14,052 $8,277 $3,603
======= ====== ======
</TABLE>
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net gains on disposals of fixed maturity securities
available for sale........................................ $131 $365 $19
Net gains (losses) on disposal of equity securities
available for sale........................................ (52) 3 --
---- ---- ---
Net gains on disposal of securities available for sale...... $ 79 $368 $19
==== ==== ===
</TABLE>
Proceeds from sales of securities available for sale and gross gains and losses
realized on those sales were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $22,282 $433 $302
Equity securities available for sale........................ 1,979 -- $ 52
------- ---- ----
Total securities available for sale....................... $24,261 $433 $354
======= ==== ====
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $16,419 $161 $8
Equity securities available for sale........................ 252 2 --
------- ---- --
Total securities available for sale....................... $16,671 $163 $8
======= ==== ==
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $3,014 $30 $--
====== === ==
</TABLE>
F-II- 10
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
The amortized cost and fair value of investments in securities by type of
investment were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------ ------ --------
<S> <C> <C> <C> <C>
U. S. Corporate................................... $ 98,658 $3,146 $159 $101,645
Mortgage-backed................................... 35,314 430 14 35,730
U.S. Treasury securities and obligations of U.S.
government agencies............................. 12,678 409 -- 13,087
-------- ------ ---- --------
Total fixed maturity securities available for
sale......................................... 146,650 3,985 173 150,462
-------- ------ ---- --------
Equity securities available for sale.............. 2,031 -- 11 2,020
-------- ------ ---- --------
Total securities available for sale............. $148,681 $3,985 $184 $152,482
======== ====== ==== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------------------
GROSS UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
--------- ------ ------ --------
<S> <C> <C> <C> <C>
U.S. Corporate................................... $ 75,705 $2,024 $16 $ 77,713
Mortgage-backed.................................. 25,518 592 -- 26,110
U.S. Treasury securities and obligations of
U.S. government agencies....................... 11,935 221 24 12,132
-------- ------ --- --------
Total fixed maturity securities available for
sale........................................ 113,158 2,837 40 115,955
-------- ------ --- --------
Equity securities available for sale............. 4,061 74 -- 4,135
-------- ------ --- --------
Total securities available for sale............ $117,219 $2,911 $40 $120,090
======== ====== === ========
</TABLE>
The amortized cost and fair value of fixed maturity securities available for
sale by contractual maturity at December 31, 1998 are shown below. Expected
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
<S> <C> <C>
Due in one year or less..................................... $ 3,933 $ 3,964
Due after one year through five years....................... 39,120 40,029
Due after five years through ten years...................... 54,266 56,034
Due after ten years......................................... 14,017 14,705
Mortgage-backed securities.................................. 35,314 35,730
-------- --------
Total..................................................... $146,650 $150,462
======== ========
</TABLE>
The Company purchases exchange and privately traded options to support certain
equity index annuity policyowner liabilities. These derivatives, reflected as
other invested assets, are used to manage fluctuations in the equity market risk
granted to the policyowners of the equity advantage annuities. These derivatives
involve, to varying degrees, elements of credit risk and market risk. Credit
risk is the risk of loss from a private party failing to perform according to
the terms of the contract. Market risk is the possibility that future changes in
market prices may make the derivative less valuable, which offset guarantees
granted to policyowners. The options value on the balance sheet reflects the
risk of potential loss to the entity.
F-II- 11
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS -- (CONTINUED)
The Company's outstanding positions, which expire over various terms ranging
from 1 to 7 years, shown in notional or contract amounts, along with their cost
and estimated fair values, are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
---------------------------------
NOTIONAL FAIR
AMOUNT COST VALUE
-------- ---- -----
<S> <C> <C> <C>
Options..................................................... $18,655 $7,096 $10,020
======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------
NOTIONAL FAIR
AMOUNT COST VALUE
-------- ---- -----
<S> <C> <C> <C>
Options..................................................... $1,340 $1,544 $2,206
====== ====== ======
</TABLE>
3. INCOME TAXES
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
-----------------
1998 1997
---- ----
<S> <C> <C>
Net unrealized investment gains on securities available for
sale...................................................... $ 1,365 $ 1,080
Deferred policy acquisition costs........................... 36,031 29,271
Prepaid expenses............................................ 833 804
------- -------
Gross deferred tax liability................................ 38,229 31,155
------- -------
Future policy and contract benefits......................... 27,810 20,014
Deferred future revenues.................................... 1,894 1,668
Other....................................................... 177 147
------- -------
Gross deferred tax asset.................................... 29,881 21,829
------- -------
Net deferred tax liability................................ $ 8,348 $ 9,326
======= =======
</TABLE>
The difference between the U.S. federal income tax rate and the consolidated tax
provision rate is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate.................................. 35.0% 35.0% 35.0%
Other....................................................... (6.7) 2.9 4.3
---- ---- ----
Effective tax rate........................................ 28.3% 37.9% 39.3%
==== ==== ====
</TABLE>
The Company's federal income tax returns have been examined by the Internal
Revenue Service (IRS) through 1995. The Company is currently appealing certain
adjustments proposed by the IRS for tax years 1993 through 1995. Management
believes adequate provisions have been made for any additional taxes which may
become due with respect to the adjustments proposed by the IRS.
F-II- 12
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
4. RELATED PARTY TRANSACTIONS
Affiliates provide technical, financial, legal, marketing and investment
advisory support to the Company under administrative service agreements. The
cost of these services to the Company for years ended December 31, 1998, 1997
and 1996 was $11,737, $12,082 and $10,922, respectively.
The Company entered into reinsurance agreements (yearly renewable term) with
affiliates. Under this agreement, these affiliates assume life insurance risk in
excess of the Company's retention limit. These reinsurance contracts do not
relieve the Company of its obligations to its policyowners. The Company paid
$4,104, $3,810 and $3,301 of net reinsurance premiums to affiliates for the
years ended December 31, 1998, 1997 and 1996, respectively. The Company has
received reinsurance recoveries from affiliates of $3,310, $2,260 and $659 for
the years ended December 31, 1998, 1997 and 1996, respectively.
The Company has entered into guarantee agreements with ALIC, AmerUs and AMAL
Corporation whereby, they guarantee the full, complete and absolute performance
of all duties and obligations of the Company.
The Company's variable life and annuity products are distributed through
Ameritas Investment Corp., a wholly-owned subsidiary of AMAL Corporation. The
Company received $93 and $54 for the years ended December 31, 1997 and 1996,
respectively, from this affiliate to partially defray the costs of materials and
prospectuses. The Company received no recovery to defray these cost for the year
ended December 31, 1998. Policies placed by this affiliate generated commission
expense of $28,353, $23,232 and $20,373 for the years ended December 31, 1998,
1997 and 1996, respectively.
Transactions with related parties are not necessarily indicative of revenues and
expenses which would have occurred had the parties not been related.
5. BENEFIT PLANS
The Company provides retirement and postretirement medical benefits to
qualifying employees. Prior to August 1, 1997 these benefits were provided under
plans which covered substantially all employees of Ameritas Life Insurance Corp.
and its subsidiaries. Concurrent with the transfer of a significant number of
employees to the Company, effective August 1, 1997, AMAL Corporation assumed the
benefit obligations associated with these plans.
The Company is included in a multiple employer noncontributory defined benefit
plan that covers substantially all full-time employees of Ameritas Life
Insurance Corp. and its subsidiaries and AMAL Corporation and its subsidiaries.
Pension costs include current service costs, which are accrued and funded on a
current basis, and post service costs, which are amortized over the average
remaining service life of all employees on the adoption date. Total Company
contributions for the years ended December 31, 1998 and 1997 were $163 and $29,
respectively. The Company had no full time employees during 1996.
The Company's employees also participate in a defined contribution thrift plan
that covers substantially all full time employees of Ameritas Life Insurance
Corp. and its subsidiaries. Company matching contributions under the plan range
from 1% to 3% of the participant's compensation. Total Company contributions for
the years ended December 31, 1998 and 1997 were $47 and $24, respectively. The
Company had no full time employees during 1996.
The Company is also included in the postretirement benefit plan providing group
medical coverage to retired employees of AMAL Corporation and its subsidiaries.
Prior to August 1, 1997 these benefits were provided under a plan with Ameritas
Life Insurance Corp. These benefits are a specified percentage of premium until
age 65 and a flat dollar amount thereafter. Employees become eligible for these
benefits upon the attainment of age 55, 15 years of service and participation in
the plan for the immediately preceding 5 years. Benefit costs include the
expected cost of postretirement benefits for newly eligible
F-II- 13
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
5. BENEFIT PLANS -- (CONTINUED)
employees, interest cost, and gains and losses arising from differences between
actuarial assumptions and actual experience. Total Company contributions for the
years ended December 31, 1998 and 1997 were $12 and $5, respectively. The
Company had no full time employees during 1996.
Expenses for the defined benefit plan and postretirement group medical plan are
allocated to the Company based on the number of associates in AMAL Corporation
and its subsidiaries.
6. INSURANCE REGULATORY MATTERS
Net income (loss), as determined in accordance with statutory accounting
practices, was $321, $2,048 and $855 for 1998, 1997 and 1996, respectively. The
Company's statutory surplus was $44,589, $45,265 and $44,100 at December 31,
1998, 1997 and 1996, respectively. Effective January 1, 1996 the Company changed
reserving methods used for most existing products resulting in an increase in
statutory surplus of approximately $20,601. The Company is required to maintain
a certain level of surplus to be in compliance with state laws and regulations.
Company surplus is monitored by state regulators to ensure compliance with risk
based capital requirements.
Under statutes of the Insurance Department of the State of Nebraska, the Company
is limited in the amount of dividends it can pay to its stockholder. On February
28, 1996 the Board of Directors declared a return of paid-in-capital of $15,000
payable by way of a note due on or before August 15, 1996. The note was retired
on August 15, 1996. This action was approved by the State of Nebraska Insurance
Department and any additional distributions of capital or surplus will require
approval of the Insurance Department.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures are made regarding fair value information about
certain financial instruments for which it is practicable to estimate that
value. In cases where quoted market prices are not available, fair values are
based on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates, in many cases, may not be realized in immediate settlement
of the instrument. All nonfinancial instruments are excluded from disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1998 and 1997. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for each class of financial instrument for which it is
practicable to estimate a value:
FIXED MATURITY SECURITIES AVAILABLE FOR SALE -- For publicly traded
securities, fair value is determined using an independent pricing source.
For securities without a readily ascertainable fair value, the value has
been determined using an interest rate spread matrix based upon quality,
weighted average maturity and Treasury yields.
EQUITY SECURITIES AVAILABLE FOR SALE -- Fair value is determined using
an independent pricing source.
LOANS ON INSURANCE POLICIES -- Fair values for loans on insurance
policies are estimated using a discounted cash flow analysis at interest
rates currently offered for similar loans with similar remaining
F-II- 14
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 -- (CONTINUED)
(IN THOUSANDS)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
terms. Loans on insurance policies with similar characteristics are
aggregated for purposes of the calculations.
OTHER INVESTED ASSETS -- Fair value is determined using an independent
pricing source.
CASH AND CASH EQUIVALENTS, ACCRUED INVESTMENT INCOME AND REINSURANCE
RECOVERABLE -- The carrying amounts equal fair value.
ACCUMULATED CONTRACT VALUES -- Funds on deposit which do not have
fixed maturities are carried at the amount payable on demand at the
reporting date, which approximates fair value.
Estimated fair values are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------
1998 1997
---------------------- ----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Fixed maturity securities, available for sale..... $150,462 $150,462 $115,955 $115,955
Equity securities, available for sale............. 2,020 2,020 4,135 4,135
Loans on insurance policies....................... 10,949 10,286 7,482 6,657
Other invested assets............................. 10,020 10,020 2,206 2,206
Cash and cash equivalents......................... 12,011 12,011 13,711 13,711
Accrued investment income......................... 2,425 2,425 1,801 1,801
Reinsurance recoverable -- affiliates............. 455 455 514 514
Financial liabilities:
Accumulated contract values excluding amounts held
under insurance contracts...................... 199,585 199,585 144,109 144,109
</TABLE>
8. SEPARATE ACCOUNTS
The Company is currently marketing variable life and variable annuity products
which have separate accounts as an investment option. Separate Account V
(Account V) was formed to receive and invest premium receipts from variable life
insurance policies issued by the Company. Separate Account VA-2 (Account VA-2)
was formed to receive and invest premium receipts from variable annuity policies
issued by the Company. Both Separate Accounts are registered under the
Investment Company Act of 1940, as amended, as unit investment trusts. Account V
and VA-2's assets and liabilities are segregated from the other assets and
liabilities of the Company.
Amounts in the Separate Accounts are:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Separate Account V.......................................... $ 282,653 $ 197,729
Separate Account VA-2....................................... 1,426,795 1,067,619
---------- ----------
$1,709,448 $1,265,348
========== ==========
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
The Company has a $15,000 unsecured line of credit entered into in September,
1998. No balance was outstanding at any time during 1998.
F-II- 15
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEET
(in thousands, except per share data)
(UNAUDITED)
<S> <C>
ASSETS
March 31, 1999
--------------
Investments:
Fixed maturity securities, available for sale
(amortized cost $158,282) $ 159,300
Equity securities, available for sale (amortized
cost $2,031) 1,844
Loans on insurance policies 11,944
Other invested assets 11,313
----------
Total investments 184,401
Cash and cash equivalents 11,667
Accrued investment income 2,663
Prepaid reinsurance premium--affiliates 2,412
Deferred policy acquisition costs 128,289
Other 1,282
Separate Accounts 1,834,626
----------
$2,165,340
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy and contract reserves $ 1,878
Policy and contract claims 546
Accumulated contract values 226,963
Unearned policy charges 1,934
Unearned reinsurance ceded allowance 3,547
Federal income taxes--
Current 3,023
Deferred 7,308
Other 10,895
Separate Accounts 1,834,626
---------
Total Liabilities 2,090,720
Commitments and contingencies ---------
STOCKHOLDER'S EQUITY:
Common stock, par value $100 per share;
authorized 50,000 shares, issued and
outstanding 40,000 shares 4,000
Additional paid-in capital 41,870
Retained earnings 28,629
Accumulated other comprehensive income 121
----------
Total Stockholder's Equity 74,620
----------
$2,165,340
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II(U)-1
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(UNAUDITED)
<S> <C>
INCOME:
Insurance revenues:
Contract charges $11,634
Premium-reinsurance ceded (1,872)
Reinsurance ceded allowance 832
Investment revenues:
Investment income, net 3,900
Realized gains, net (51)
Other 598
-------
15,041
-------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits 843
Interest credited 3,120
Increase in policy and contract reserves 197
Other 59
Sales and operating expenses 14,225
Amortization of deferred policy
acquisition costs (5,257)
-------
13,187
-------
INCOME BEFORE FEDERAL INCOME TAXES 1,854
-------
Income taxes--current 1,289
Income taxes--deferred (630)
-------
Total income taxes 659
-------
NET INCOME $ 1,195
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II(U)-2
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(UNAUDITED)
<S> <C>
Net income $1,195
Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains arising
during the period (net of deferred
tax of $429) (796)
Reclassification adjustment for gains
included in net income (net of deferred
tax of $17) 33
------
Other comprehensive income (loss) (763)
------
Comprehensive income $ 432
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II(U)-3
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands, except shares)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
ACCUMULATED
ADDITIONAL OTHER
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE
------------
SHARES AMOUNT CAPITAL EARNINGS INCOME TOTAL
------ ------ ------- -------- ------ -----
BALANCE, January 1, 1999 40,000 $4,000 $ 40,370 $ 27,434 $ 884 $ 72,688
Capital contribution from
AMAL Corporation -- -- 1,500 -- -- 1,500
Net unrealized investment
loss, net -- -- -- -- (763) (763)
Net income -- -- - 1,195 -- 1,195
------ ------ ------- -------- -------- --------
BALANCE, March 31, 1999 40,000 $4,000 $ 41,870 $ 28,629 $ 121 $ 74,620
------ ------ -------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II(U)-4
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
(UNAUDITED)
<S> <C>
OPERATING ACTIVITIES
Net Income $ 1,195
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred policy acquisition
costs 3,625
Policy acquisition costs deferred (8,882)
Interest credited to contract values 3,120
Amortization of discounts or premiums (49)
Net gains on other invested assets (1,009)
Net realized gains on investment transactions 51
Deferred income taxes (630)
Change in assets and liabilities:
Accrued investment income (238)
Reinsurance recoverable-affiliates 455
Prepaid reinsurance premium-affiliates (32)
Other assets 413
Policy and contract reserves 197
Policy and contract claims (79)
Unearned policy charges 120
Federal income tax payable-current 82
Unearned reinsurance ceded allowance (49)
Other liabilities 2,810
-----------
Net cash from operating activities 1,100
-----------
INVESTING ACTIVITIES
Purchase of fixed maturity securities
available for sale (16,718)
Purchase of other invested assets (206)
Proceeds from sales,maturities or repayment of
fixed maturity securities available for sale 5,006
Net change in loans on insurance policies (995)
----------
Net cash from investing activities (12,913)
----------
FINANCING ACTIVITIES
Capital contribution 1,500
Net change in accumulated contract values 9,969
----------
Net cash from financing activities 11,469
----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (344)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 12,011
---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $11,667
=========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ 1,207
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II(U)-5
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(in thousands)
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ameritas Variable Life Insurance Company (the Company), a stock life insurance
company domiciled in the State of Nebraska, is a wholly-owned subsidiary of AMAL
Corporation, a holding company 66% owned by ALIC and 34% owned by AmerUs Life
Insurance Company (AmerUs). The Company began issuing variable life insurance
and variable annuity policies in 1987, fixed premium annuities in 1996 and
equity indexed annuities in 1997. The variable life, variable annuity, fixed
premium annuity and equity indexed annuity policies are not participating with
respect to dividends.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. BASIS OF PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS:
Management believes that all adjustments, consisting of only normal recurring
accruals, considered necessary for a fair presentation of the unaudited interim
financial statements have been included. The results of operations for any
interim period are not necessarily indicative of results for the full year. The
unaudited interim financial statements should be read in conjunction with the
audited financial statements and notes thereto for the years ended December 31,
1998, 1997 and 1996.
F-II(U)-6
<PAGE>
Appendix A
Illustrations of Death Benefits and Accumulation 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 A-2 through A-5 illustrate a
Policy issued to a male, age 55, under a Preferred rate non-tobacco underwriting
risk classification and a female age 55, 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 A-2 and A-4 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 Accumulation Values shown in the tables on pages A-3 and A-5 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 whereby interest earned on
uninvested cash balances was used to reduce custodian 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 .30% for the Ameritas Money
Market portfolio, .28% for the Ameritas Index portfolio, .79% for the Ameritas
Growth portfolio, .70% for the Ameritas Income & Growth portfolio, .89% for the
Ameritas Small Capitalization portfolio, .84% for the Ameritas MidCap Growth
portfolio, .85% for the Ameritas Emerging Growth portfolio, .86% for the
Ameritas Research portfolio, .88% for the Ameritas Growth With Income portfolio,
1.25% for the Alger American Balanced portfolio; 1.50% for the Alger American
Leveraged All Cap portfolio; 1.75% for the MSDW Emerging Markets Equity, 1.20%
for the MSDW Asian Equity, 1.15% for the MSDW Global Equity and MSDW
International Magnum, 1.10% for the MSDW U.S. Real Estate portfolios of daily
net assets. MFS Co. has agreed to bear expenses for the Global Governments
Series and New Discovery 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 -1.80%, 4.20%, and 10.20%, respectively.
The hypothetical values shown in the tables do not reflect any charges for
federal income tax burden attributable to Separate Account V, 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 Separate Account V, and if no Policy loans
have been made. The tables are also based on the assumptions that the Policy
Owner 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!
A-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 55 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $10820
INITIAL SPECIFIED AMOUNT: $1,000,000
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
(-1.80% Net) (4.20% Net) (10.20% 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 11361 9309 0 1000000 9909 0 1000000 10508 0 1000000
2 23290 18377 7557 1000000 20157 9337 1000000 22010 11190 1000000
3 35816 27189 16369 1000000 30741 19921 1000000 34588 23768 1000000
4 48967 35735 24915 1000000 41660 30840 1000000 48337 37517 1000000
5 62777 44006 33186 1000000 52914 42094 1000000 63362 52542 1000000
6 77277 52986 43256 1000000 65529 55799 1000000 80841 71111 1000000
7 92501 61653 53003 1000000 78523 69873 1000000 99955 91305 1000000
8 108487 69991 62421 1000000 91892 84322 1000000 120851 113281 1000000
9 125273 77987 71497 1000000 105634 99144 1000000 143701 137211 1000000
10 142897 85641 80231 1000000 119764 114354 1000000 168710 163300 1000000
11 161403 92932 88612 1000000 134275 129955 1000000 196083 191763 1000000
12 180834 99859 96619 1000000 149181 145941 1000000 226071 222831 1000000
13 201237 106392 104232 1000000 164469 162309 1000000 258928 256768 1000000
14 222660 112533 111453 1000000 180158 179078 1000000 294970 293890 1000000
15 245154 118234 118234 1000000 196221 196221 1000000 334507 334507 1000000
16 268773 123970 123970 1000000 213513 213513 1000000 379406 379406 1000000
17 293572 129114 129114 1000000 231182 231182 1000000 428874 428874 1000000
18 319612 133565 133565 1000000 249166 249166 1000000 483409 483409 1000000
19 346954 137276 137276 1000000 267459 267459 1000000 543628 543628 1000000
20 375662 139973 139973 1000000 285860 285860 1000000 610130 610130 1000000
25 542228 131323 131323 1000000 375382 375382 1000000 1070577 1070577 1124106
30 754812 45393 45393 1000000 437905 437905 1000000 1835254 1835254 1927017
35 1026129 * * * 329474 329474 1000000 2996881 2996881 3146725
</TABLE>
* In the absence of an additional premium the Policy would lapse.
1) Assumes an annual $10,820 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!
A-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 55 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $10820
INITIAL SPECIFIED AMOUNT: $1,000,000
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
(-1.80% Net) (4.20% Net) (10.20% 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 11361 9214 0 1000000 9810 0 1000000 10407 0 1000000
2 23290 18069 7249 1000000 19831 9011 1000000 21666 10846 1000000
3 35816 26624 15804 1000000 30128 19308 1000000 33925 23105 1000000
4 48967 34860 24040 1000000 40688 29868 1000000 47261 36441 1000000
5 62777 42747 31927 1000000 51488 40668 1000000 61751 50931 1000000
6 77277 50253 40523 100000062499 52769 1000000 77476 67746 1000000
7 92501 57331 48681 1000000 73679 65029 1000000 94512 85862 1000000
8 108487 63918 56348 1000000 84966 77396 1000000 112932 105362 1000000
9 125273 69934 63444 1000000 96280 89790 1000000 132800 126310 1000000
10 142897 75286 69876 1000000 107528 102118 1000000 154184 148774 1000000
11 161403 79875 75555 1000000 118603 114283 1000000 177158 172838 1000000
12 180834 83593 80353 1000000 129392 126152 1000000 201810 198570 1000000
13 201237 86327 84167 1000000 139774 137614 1000000 228245 266085 1000000
14 222660 87948 86868 1000000 149607 148527 1000000 256583 255503 1000000
15 245154 88282 88282 1000000 158707 158707 1000000 286942 286942 1000000
16 268773 87513 87513 1000000 167568 167568 1000000 320759 320759 1000000
17 293572 84889 84889 1000000 175193 175193 1000000 357115 357115 1000000
18 319612 79974 79974 1000000 181147 181147 1000000 396164 396164 1000000
19 346954 72238 72238 1000000 184896 184896 1000000 438105 438105 1000000
20 375662 61074 61074 1000000 185829 185829 1000000 483243 483243 1000000
25 542228 0 0 1000000 119715 119715 1000000 781154 781154 1000000
30 754812 * * * * * * 1319975 1319975 1385974
35 1026129 * * * * * 0 2107683 2107683 2213067
</TABLE>
* In the absence of an additional premium the Policy would lapse.
1) Assumes an annual $10,820 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!
A-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 55 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $72740
INITIAL SPECIFIED AMOUNT: $1,000,000
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
(-1.80% Net) (4.20% Net) (10.20% 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 76377 68746 57926 1068746 72977 62157 1072977 77209 66389 1077209
2 156573 136180 125360 1136180 148942 138122 1148942 162213 151393 1162213
3 240779 202304 191484 1202304 227998 217178 1227998 255785 244965 1255785
4 329196 267124 256304 1267124 310257 299437 1310257 358781 347961 1358781
5 422033 330648 319828 1330648 395837 385017 1395837 472145 461325 1472145
6 519512 393874 384144 1393874 485885 476155 1485885 597972 588242 1597972
7 621865 455796 447146 1455796 579544 570894 1579544 736457 727807 1736457
8 729335 516410 508840 1516410 676937 669367 1676937 888862 881292 1888862
9 842179 575716 569226 1575716 778197 771707 1778197 1056583 1050093 2056583
10 960666 633728 628318 1633728 883476 878066 1883476 1241170 1235760 2241170
11 1085076 690436 686116 1690436 992909 988589 1992909 1444310 1439990 2444310
12 1215707 745852 742612 1745852 1106658 1103418 2106658 1667882 1664642 2667882
13 1352870 799955 797795 1799955 1224860 1222700 2224860 1913924 1911764 2913924
14 1496891 852758 851678 1852758 1347691 1346611 2347691 2184719 2183639 3184719
15 1648113 904220 904220 1904220 1475277 1475277 2475277 2482722 2482722 3482722
16 1806896 958622 958622 1958622 1614644 1614644 2614644 2822063 2822063 3822063
17 1973618 1011675 1011675 2011675 1759859 1759859 2759859 3196898 3196898 4196898
18 2148676 1063269 1063269 2063269 1911063 1911063 2911063 3610870 3610870 4610870
19 2332487 1113355 1113355 2113355 2068462 2068462 3068462 4068079 4068079 5068079
20 2525489 1161622 1161622 2161622 2232006 2232006 3232006 4572782 4572782 5572782
25 3645268 1368199 1368199 2368199 3143384 3143384 4143384 7996340 7996340 8996340
30 5074421 1478243 1478243 2478243 4193481 4193481 5193481 13570891 13570891 14570891
35 6898423 1404284 1404284 2404284 5311185 5311185 6311185 22592923 22592923 23722570
</TABLE>
1) Assumes an annual $72,740 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!
A-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 55 Nontobacco Preferred Underwriting Class
Female Issue Age: 55 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $72740
INITIAL SPECIFIED AMOUNT: $1,000,000
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
(-1.80% Net) (4.20% Net) (10.20% 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 76377 68651 57831 1068651 72879 62059 1072879 77108 66288 1077108
2 156573 135415 124595 1135415 148131 137311 1148131 161356 150536 1161356
3 240779 200832 190012 1200832 226394 215574 1226394 254042 243222 1254042
4 329196 264897 254077 1264897 307762 296942 1307762 355997 345177 1355997
5 422033 327596 316776 1327596 392330 381510 1392330 468125 457305 1468125
6 519512 388908 379178 1388908 480182 470452 1480182 591416 581686 1591416
7 621865 448799 440149 1448799 571397 562747 1571397 726944 718294 1726944
8 729335 507214 499644 1507214 666032 658462 1666032 875873 868303 1875873
9 842179 564079 557589 1564079 764127 757637 1764127 1039463 1032973 2039463
10 960666 619307 613897 1619307 865709 860299 1865709 1219088 1213678 2219088
11 1085076 672799 668479 1672799 970793 966473 1970793 1416247 1411927 2416247
12 1215707 724452 721212 1724452 1079386 1076146 2079386 1632587 1629347 2632587
13 1352870 774153 771993 1774153 1191487 1189327 2191487 1869911 1867751 2869911
14 1496891 821777 820697 1821777 1307078 1305998 2307078 2130190 2129110 3130190
15 1648113 867151 867151 1867151 1426089 1426089 2426089 2415547 2415547 3415547
16 1806896 914236 914236 1914236 1555092 1555092 2555092 2739412 2739412 3739412
17 1973618 958655 958655 1958655 1688003 1688003 2688003 3095627 3095627 4095627
18 2148676 999979 999979 1999979 1824527 1824527 2824527 3487153 3487153 4487153
19 2332487 1037705 1037705 2037705 1964273 1964273 2964273 3917181 3917181 4917181
20 2525489 1071299 1071299 2071299 2106792 2106792 3106792 4389206 4389206 5389206
25 3645268 1158549 1158549 2158549 2843273 2843273 3843273 7529760 7529760 8529760
30 5074421 1042399 1042399 2042399 3542829 3542829 4542829 12488440 12488440 13488440
35 6898423 598845 598845 1598845 4038661 4038661 5038661 20296155 20296155 21310963
</TABLE>
1) Assumes an annual $72,740 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!
A-5
<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:
Calvert Variable Series, Inc.
Ameritas Portfolios
Registration No. 2-80154
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 Pre-Effective Amendment No. 1 to the 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 16th day of
June, 1999.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V, Registrant
AMERITAS VARIABLE LIFE INSURANCE COMPANY, Depositor
Attest: /s/Donald R. Stading 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 June 16, 1999
- -------------------- and Chief Executive Officer
Lawrence J. Arth
/s/William J. Atherton Director, President and June 16, 1999
- ----------------------- Chief Operating Officer
William J. Atherton
/s/Kenneth C. Louis Director, Executive Vice President June 16, 1999
- ---------------------
Kenneth C. Louis
/s/Gary R. McPhail Director, Executive Vice President June 16, 1999
- --------------------
Gary R. McPhail
/s/Thomas C. Godlasky Director, Senior Vice President June 16, 1999
- ---------------------- and Chief Investment Officer
Thomas C. Godlasky
/s/JoAnn M. Martin Director, Controller June 16, 1999
- ---------------------
JoAnn M. Martin
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/Michael G. Fraizer Director June 16, 1999
- ----------------------
Michael G. Fraizer
/s/William W. Lester Treasurer June 16, 1999
- ----------------------
William W. Lester
/s/Donald R. Stading Secretary and General Counsel June 16, 1999
- -----------------------
Donald R. Stading
<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) Thomas P. McArdle
(b) Donald R. Stading
(c) Deloitte & Touche LLP Independent Auditors
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) Form of Policy.
(b) Form of Policy Riders.
(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.*
(e) Form of Participation Agreement in the Calvert Variable Series,
Inc.
(9) Not applicable.
(10) Application for Policy. - To be filed by later amendment
2. (a)(b) Opinion and Consent of Donald R. Stading, 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
7. (a)(b) Opinion and Consent of Actuary
8. Consent of Independent Auditors
9. 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
- ------- ----
1.(5)(a) Form of Policy
1.(5)(b) Form of Policy Riders
1.(8)(e) Form of Participation (Calvert Variable Series)
2.(a)(b) Opinion and Consent of Donald R. Stading
7.(a)(b) Opinion and Consent of Thomas P. McArdle
8. Consent of Deloitte & Touche LLP
---------------------------------------------------------------
INSUREDS FIELD(1
FIELD(158))
POLICY NUMBER FIELD(3)
POLICY TYPE SURVIVORSHIP VARIABLE UNIVERSAL LIFE
--------------------------------------------------------------
Survivorship Flexible Premium Variable Life Insurance Policy.
Death benefit proceeds payable upon the second death.
Flexible premiums payable until the second death.
Some benefits reflect investment results.
Non-participating.
THIS POLICY'S ACCUMULATION VALUE IN THE SEPARATE ACCOUNT IS BASED ON THE
INVESTMENT EXPERIENCE OF THAT ACCOUNT AND MAY INCREASE OR DECREASE DAILY. IT IS
NOT GUARANTEED AS TO DOLLAR AMOUNT. SEE SECTION 7.
THE AMOUNT OR THE DURATION OF THE DEATH BENEFIT (OR BOTH) MAY BE FIXED OR MAY
VARY UNDER THE CONDITIONS DESCRIBED IN SECTIONS 9 AND 10.
Ameritas Variable Life Insurance Company agrees to pay the death benefit
proceeds of this policy to the beneficiary on receipt of satisfactory proof of
death of both Insureds while this policy is in force.
/s/William J. Atherton /s/Donald R. Stading
President Secretary
"NOTICE OF TEN-DAY RIGHT TO EXAMINE POLICY"
You are urged to read this policy carefully. If, after examination, you are
dissatisfied with it for any reason, you may return it to the selling agent or
to Ameritas Variable Life Insurance Company at P.O. Box 82550, Lincoln, Nebraska
68501-2550, for a refund within (1) ten days from the date of delivery of the
policy, (2) ten days after mailing or delivery of a cancellation notice, or (3)
forty-five days after Part I of the application is signed, whichever is later.
If allowed by state law, the amount of the refund will equal the sum of all
charges deducted from premiums paid, plus the net premiums allocated to the
Fixed Account and to the Separate Account adjusted by investment gains and
losses. Otherwise, the amount of the refund will equal the gross premiums paid.
Please read and carefully check the copy of the application attached to this
policy. This application is a part of your policy and this policy was issued on
the basis that the answers to all questions and the information shown on this
application are true and complete. If any information shown on it is not true
and complete, to the best of your knowledge, or if any past medical history has
been omitted, please notify Ameritas Variable Life Insurance Company, a Nebraska
domiciled life insurance company, within ten days from the date of delivery of
the policy to you.
AMERITAS VARIALBLE LIFE INSURANCE COMPANY LOGO
Form 4065
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TABLE OF CONTENTS
POLICY SCHEDULE PAGES
SECTION 1. DEFINITIONS..........................................3
SECTION 2. GENERAL PROVISIONS...................................5
2.1 Meaning of In Force..................................5
2.2 When This Policy Terminates..........................6
2.3 Guaranteed Death Benefit.............................6
2.4 Minimum Benefit......................................6
2.5 The Policy and its Parts.............................6
2.6 Representations and Contestability...................7
2.7 Misstatement of Age or Sex...........................7
2.8 Suicide..............................................7
2.9 The Owner............................................7
2.10 The Beneficiary......................................8
2.11 Changing the Beneficiary.............................8
2.12 Assigning the Policy.................................8
2.13 Non-Participating....................................8
SECTION 3. PREMIUM PAYMENTS.....................................8
3.1 Guaranteed Death Benefit Premium.....................8
3.2 Minimum Premium......................................8
3.3 Planned Periodic Premium.............................9
3.4 Unscheduled Premiums.................................9
3.5 Premium Limits.......................................9
3.6 Where to Pay Premiums................................9
3.7 Net Premium..........................................9
3.8 Percent of Premium Charge for Taxes..................9
3.9 Allocation of Net Premiums..........................10
SECTION 4. GRACE PERIOD AND REINSTATEMENT......................10
4.1 Grace Period........................................10
4.2 Continuation of Insurance...........................10
4.3 Reinstating the Policy..............................10
SECTION 5. SEPARATE ACCOUNT....................................11
5.1 The Account.........................................11
5.2 The Subaccounts.....................................11
5.3 Valuation of Assets.................................11
5.4 Transfer Among Subaccounts..........................12
5.5 The Funds...........................................12
5.6 Portfolio Changes...................................12
SECTION 6. THE FIXED ACCOUNT...................................12
6.1 The Fixed Account...................................12
6.2 Transfers Among the Fixed Account
and the Subaccounts.................................13
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SECTION 7. ACCUMULATION VALUE............................ .....13
7.1 How Accumulation Value of the Policy is Determined..13
7.2 Accumulation Value of the Subaccounts...............13
7.3 Net Asset Value.....................................14
7.4 Subaccount Unit Value...............................14
7.5 Accumulation Value of the Fixed Account.............15
7.6 Interest Credits....................................15
7.7 Administrative Expense Charge.......................15
7.8 Cost of Insurance...................................15
7.9 Cost of Insurance Rates.............................16
7.10 Monthly Deduction...................................16
7.11 Annual Report.......................................16
7.12 Illustrative Reports................................17
SECTION 8. POLICY SURRENDER
AND PARTIAL WITHDRAWALS.............................17
8.1 Surrender of the Policy.............................17
8.2 Net Cash Surrender Value............................17
8.3 Surrender Charge....................................17
8.4 Partial Withdrawal..................................17
8.5 Postponement of Payments............................18
SECTION 9. DEATH BENEFIT.......................................18
9.1 Death Benefit Proceeds..............................18
9.2 Interest on Proceeds................................19
9.3 Death Benefit.......................................19
9.4 Postponement of Payment.............................20
9.5 Death of the First Insured..........................20
9.6 Simultaneous Death..................................20
SECTION 10. POLICY CHANGES
AND EXCHANGE OF POLICY..............................21
10.1 Change in Death Benefit Options.....................21
10.2 Change in the Specified Amount......................21
10.3 Decreasing the Specified Amount.....................21
10.4 Increasing the Specified Amount.....................21
10.5 Surrender Charge for Increases......................22
10.6 Time Period for Special Transfer....................22
SECTION 11. LOAN BENEFITS.......................................22
11.1 Making a Policy Loan................................22
11.2 Loan Interest.......................................23
11.3 Reduced Loan Interest Rate..........................23
11.4 Other Borrowing Rules...............................23
11.5 Repaying a Policy Debt..............................23
SECTION 12. PAYMENT OPTIONS.....................................24
12.1 Payment Option Rules................................24
12.2 Description of Options..............................24
SECTION 13. NOTES ON OUR COMPUTATIONS...........................25
13.1 Basis of Computation................................25
13.2 Methods of Computing Values.........................25
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SECTION 1. DEFINITIONS
"ACCUMULATION VALUE" means the total amount of value held in your accounts at
any time. It is equal to the total of the accumulation value held in the
Account, the Fixed Account, and the accumulation value held in the general
account which secures outstanding policy debt.
"BENEFICIARY" means the person to whom the death benefit proceeds are payable
upon the second death. The beneficiary is named by the Owner in the application.
If changed, the beneficiary is as shown in the latest change filed and recorded
with us. If no beneficiary survives the second death, the Owner or the Owner's
estate will be the beneficiary. The interest of any beneficiary is subject to
that of any assignee.
"DEATH BENEFIT" means the total amount of insurance coverage provided under the
selected death benefit option of this policy.
"Death Benefit Proceeds" means the proceeds payable to the beneficiary upon
receipt by us of the satisfactory proof of the death of both Insureds while this
policy is in force. It is equal to: (1) the death benefit; plus (2) any
additional life insurance proceeds provided by any riders; minus (3) any
outstanding policy debt; minus (4) any overdue monthly deductions, including the
deduction for the month of the second death.
"GUARANTEED DEATH BENEFIT PERIOD" is the period during which the Guaranteed
Death Benefit is in effect and will end on the earliest of the following dates:
a. The expiration date shown on the schedule pages of this policy or any
revised schedule pages.
b. The date that the net policy funding is less than the Guaranteed Death
Benefit requirement. See Section 2.3.
c. The date on which this policy first terminates even if this policy is
reinstated.
"INSURED" AND "INSUREDS" mean the person or persons upon whose lives this policy
is issued.
"ISSUE DATE" means the date that all financial, contractual, and administrative
requirements have been completed and processed. The issue date will be shown in
a confirmation notice sent to you.
"MAXIMUM AVAILABLE LOAN AMOUNT" is equal to the net cash surrender value at the
time of the loan less the monthly deductions remaining for the balance of the
policy year, less interest on the policy debt including the requested loan to
the next policy anniversary date.
"MINIMUM BENEFIT PERIOD" is the period during which the Minimum Benefit is in
effect and will end on the earliest of the following dates:
a. The end of the sixtieth (60th) month after the policy date.
b. The date that the net policy funding is less than the Minimum Benefit
requirements. See Section 2.
c. The date on which this policy first terminates even if this policy is
reinstated.
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"MINIMUM PREMIUM" is a monthly premium listed in this policy for the original
face amount and any increase made during the first sixty months that this policy
is in force. During the first sixty months that this policy is in force, the
policy is guaranteed not to lapse provided the net policy funding equals or
exceeds the sum of the scheduled Minimum Premiums since the policy date and any
increase date. Relying on the Minimum Benefit feature will reduce premium
flexibility.
"MONTHLY ACTIVITY DATE" means the same date in each succeeding month as the
policy date except that whenever the monthly activity date falls on a date other
than a valuation date, the monthly activity date will be deemed the next
valuation date.
"MONTHLY DEDUCTIONS" means the deductions taken from the accumulation value on
the monthly activity date. These deductions are equal to: 1) the current cost of
insurance for the basic policy plus the cost for any riders; and 2) the
administrative expense charge.
"NET CASH SURRENDER VALUE" means the accumulation value on any valuation date,
less any surrender charges and less any outstanding policy debt.
"NET POLICY FUNDING" is the sum of all premiums paid, less any partial
withdrawals and less any outstanding policy debt.
"NET PREMIUM" means the premium paid less the percent of premium charge for
taxes.
"OUTSTANDING POLICY DEBT" means the sum of all unpaid policy loans and accrued
interest on policy loans.
"OWNER" means the Owner or owners (if joint ownership is elected) of this
policy, as designated in the application or as subsequently changed. If a policy
has been absolutely assigned, the assignee is the Owner. A collateral assignee
is not the Owner. See Section 2.9 for the rights and privileges of the Owner.
"PERCENT OF PREMIUM CHARGE FOR TAXES" is an amount deducted from each premium
received to cover certain expenses. This charge is a percentage of the premium.
The maximum applicable percentage can be found on the schedule pages.
"PLANNED PERIODIC PREMIUM" means a selected scheduled premium of a level amount
at a fixed interval. The initial planned periodic premium you selected is shown
on the schedule pages. See Section 3.3 of this policy.
"POLICY DATE" means 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) additional premiums or
application amendments are required at the time of delivery, in which case the
policy date will be earlier.
"POLICY YEAR" means the period from one policy anniversary date until the next
policy anniversary date.
"SEC" means the Securities and Exchange Commission.
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"SATISFACTORY PROOF OF DEATH" means all of the following must be submitted:
a. Certified copy of the death certificates of both Insureds.
b. A Notice of Death Claim.
c. This policy.
d. Any other information that we may reasonably require to establish the
validity of the claim.
"SECOND DEATH" means the later of the dates of death of the Insureds. In the
event of simultaneous deaths, second death means the date of death of the
Insureds.
"SURVIVING INSURED" means the Insured who remains alive after one of the
Insureds has died.
"SPECIFIED AMOUNT" means the minimum death benefit under the policy while this
policy remains in force. The initial specified amount is shown on the schedule
pages. Adjustments and changes to the specified amount can occur as discussed in
Section 10.
"SURRENDER CHARGE" means the charge subtracted from the accumulation value on
the surrender of this policy. Refer to the SCHEDULE OF MAXIMUM CHARGES and the
SCHEDULE OF SURRENDER CHARGES FOR INCREASES on the schedule pages.
"SURRENDER" means the termination of this policy while at least one Insured is
alive for its net cash surrender value. See Section 8 of this policy.
"VALUATION DATE" is any day on which the New York Stock Exchange is open for
trading.
"YOU" AND "YOUR" refer to the Owner of this policy. The Insureds may or may not
be the Owner.
"WE", "US" AND "OUR" refer to Ameritas Variable Life Insurance Company. Our Home
Office means our administrative office at P.O. Box 82550, Lincoln, Nebraska
68501-2550.
SECTION 2. GENERAL PROVISIONS
2.1 MEANING OF IN FORCE
This policy will remain in force as long as on each monthly activity date the
net cash surrender value is sufficient to cover monthly deductions.
However, this policy will remain in force if the requirements of either the
Minimum Benefit or Guaranteed Death Benefit provision is in effect on this
policy, even if the net cash surrender value is insufficient to cover monthly
deductions. See Sections 2.3 and 2.4.
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2.2 WHEN THIS POLICY TERMINATES
This policy will terminate on the earliest of:
a. Any monthly activity date when the net cash surrender value is
insufficient to cover monthly deductions and the grace period ends
without sufficient premium being paid. However, this policy will not
terminate if the Minimum Benefit or Guaranteed Death Benefit is in
effect, even if the net cash surrender value is insufficient to cover
monthly deductions.
b. The second death.
c. You request the coverage be terminated and you return this policy.
2.3 GUARANTEED DEATH BENEFIT
The Guaranteed Death Benefit is a benefit which applies to this policy at issue.
This benefit will ensure that the policy will remain in force as long as the net
policy funding meets or exceeds the Guaranteed Death Benefit requirement and the
policy is within the Guaranteed Death Benefit Period. The Guaranteed Death
Benefit requirement is the cumulative Guaranteed Death Benefit Premium to the
monthly activity date. The Guaranteed Death Benefit Premium and the Guaranteed
Death Benefit Period are shown on the schedule page. Any changes in the
Guaranteed Death Benefit Premium due to increases in specified amount or
additions of riders will be reflected in the requirement from the effective date
of the change.
If the net policy funding is less than the Guaranteed Death Benefit requirement,
the benefit is no longer in effect. You will be notified by mail and will have
61 days from the date we mail the notice to meet the Guaranteed Death Benefit
requirement. The Guaranteed Death Benefit can not be reinstated once this policy
has lapsed.
2.4 MINIMUM BENEFIT
The Minimum Benefit is a benefit which applies to this policy at issue. This
benefit will ensure that the policy will remain in force during the first sixty
(60) months from the policy date as long as the net policy funding meets or
exceeds the Minimum Benefit requirement. The Minimum Benefit requirement is the
cumulative Minimum Premiums to the monthly activity date. The Minimum Premium is
shown in the schedule page. Any changes in the Minimum Premium due to increases
in specified amount or additions of rider will be reflected in the requirement
from the effective date of the change.
If the net policy funding is less than the Minimum Benefit requirement, the
benefit is no longer in effect. You will be notified by mail and will have 61
days from the date we mail the notice to meet the Minimum Benefit requirement.
The Minimum Benefit can not be reinstated once this policy has lapsed.
2.5 THE POLICY AND ITS PARTS
This policy is a legal contract between you and us. It is issued in return for
the application and payment of the initial premium as described in Section 3.1.
This policy, the application, any supplemental applications, riders,
endorsements, and amendments are the entire contract. No change in this policy
will be valid unless it is in writing, attached to this policy, and approved by
either the president or secretary of the company. No agent may change this
policy or waive any of its provisions.
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2.6 REPRESENTATIONS AND CONTESTABILITY
We rely on statements made in the application. In the absence of fraud, they are
considered representations and not warranties. We can contest this policy for
any material misrepresentation of fact. The misrepresentation must have been
made in the application attached to this policy when issued or in a supplemental
application made a part of this policy when a change in coverage or
reinstatement went into effect.
We cannot contest this policy after it has been in force during the life time of
the Insureds for two years from the policy date. Nor can we contest any
increased benefits later than two years after the effective date of the
increased benefits during the lifetime of the Insureds. Any increase or
reinstatement will be contestable, within the two year period, only with regard
to statements made in the supplemental application. This provision does not
apply to riders with their own contestability provision.
We may require evidence that both Insureds are living during the first two years
from the policy date or from the effective date of any increase in benefits.
2.7 MISSTATEMENT OF AGE OR SEX
If the age or sex of either Insured or any person insured by rider has been
misstated on the application, the death benefit and any additional benefits
provided will be those which would have been purchased by the most recent
deduction for the cost of insurance and the cost of any additional benefits at
the insured person(s) correct ages and/or sexes.
2.8 SUICIDE
If either Insured commits suicide while sane or insane, within two years from
the policy date, we will limit the proceeds. The limited amount will equal all
premiums paid for this policy, less outstanding policy debt, partial
withdrawals, and the cost for riders.
If either Insured commits suicide, while sane or insane, within two years from
the effective date of any increase in the specified amount, we will limit the
proceeds payable with respect to the increase. The proceeds thus limited will
equal the total cost of insurance applicable to the increase. This provision
does not apply to riders with their own suicide provision.
2.9 THE OWNER
While either Insured is living you have all the benefits, rights and privileges
under this policy. These include naming a successor-owner, changing the
beneficiary, assigning this policy, enjoying all policy benefits, and exercising
all policy options. If there is more than one Owner at a given time, all must
exercise the right of ownership.
If you are not one of the Insureds, you should name a successor-owner who will
become the Owner if you die before the second death. If you die before the
second death and there is no successor-owner, ownership will pass to your
estate.
Unless otherwise designated in the application or subsequently changed under a
successor-owner designation, joint ownership will be joint tenants with rights
of survivorship. If a successor-owner has been named to be effective on the
first Owner's death, then any death benefit proceeds payable by rider attached
to this policy will be paid in accordance with rider provisions prior to any
ownership change. If no successor-owner has been named or is no longer living,
then the ownership will pass to the Executor or Administrator of the last
Owner's estate unless otherwise indicated.
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2.10 THE BENEFICIARY
You can name primary and contingent beneficiaries. Your original beneficiary
choice is shown in the attached application.
Unless a payment plan is chosen, the proceeds payable at the second death will
be paid in a lump sum to the primary beneficiary. If the primary beneficiary
dies before the second death, the proceeds will be paid to the contingent
beneficiary. If no beneficiary survives the second death, the proceeds will be
paid to your estate.
2.11 CHANGING THE BENEFICIARY
You may change the beneficiary during either Insured's lifetime. We do not limit
the number of changes that may be made. To make the change, we must receive a
completed Change of Beneficiary form and any other forms required by our Home
Office. The change will take effect as of the date we record it at our Home
Office, even if the second death occurs before we do so. Each change will be
subject to any payment we made or any other action we took before the change is
recorded.
2.12 ASSIGNING THE POLICY
You may assign this policy. For an assignment to bind us, we must receive a
signed copy in our Home Office. We are not responsible for the validity of any
assignment.
An assignment is subject to any policy debt. Policy debt is discussed in Section
11.
2.13 NON-PARTICIPATING
This policy is non-participating. In other words, no dividends will be paid
under this policy.
SECTION 3. PREMIUM PAYMENTS
3.1 GUARANTEED DEATH BENEFIT PREMIUM
You have the option to pay a planned premium based on the Guaranteed Death
Benefit Premium. The monthly premium is shown on the schedule pages.
During the Guaranteed Death Benefit Period, also shown on the schedule pages, if
net policy funding meets or exceeds the Guaranteed Death Benefit requirement,
this policy will remain in force, even if the net cash surrender value is
insufficient to cover monthly deductions.
3.2 MINIMUM PREMIUM
You have the option to pay a planned premium based on the Minimum Premium. The
monthly premium is shown on the schedule pages.
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During the first sixty months from the policy date shown on the schedule page,
when net policy funding meets or exceeds the Minimum Benefit requirement, the
policy will remain in force, even if the net cash surrender value is
insufficient to cover monthly deductions.
3.3 PLANNED PERIODIC PREMIUM
This is a flexible premium policy. You may choose to pay planned periodic
premiums, and as indicated in Sections 3.1 and 3.2, you may elect to base your
planned periodic premiums on the Guaranteed Death Benefit Premium or the Minimum
Premium. However, planned periodic premiums are not required. The amount and
frequency of the planned periodic premiums you selected when this policy was
issued is shown on the schedule pages. You may change the frequency of the
payments or the amount by sending a written request to our Home Office. We
reserve the right to limit the amount and frequency of the planned periodic
premiums you choose to pay.
3.4 UNSCHEDULED PREMIUMS
Any premium we receive under this policy in an amount different from the planned
periodic premium will be considered an unscheduled premium. Unscheduled premiums
can be made at any time while this policy is in force, subject to the premium
limits provision below.
3.5 PREMIUM LIMITS
We reserve the right to limit the amount and frequency of premium payments. We
will not accept that portion of a premium payment which affects the tax
qualifications of this policy as described in Section 7702 of the Internal
Revenue Code, as amended. This excess amount will be returned to you.
3.6 WHERE TO PAY PREMIUMS
Each premium after the first one is payable at our Home Office. Upon request, a
receipt signed by our Secretary or an Assistant Secretary will be given for any
premium payment.
3.7 NET PREMIUM
Before the premiums paid are allocated to the Subaccounts and/or Fixed Account,
a percent of premium charge for taxes is deducted. The amount of premium then
allocated is called the net premium.
3.8 PERCENT OF PREMIUM CHARGE FOR TAXES
The percent of premium charge for taxes is deducted from each premium payment
received. The percent of premium charge for taxes is shown on the schedule
pages.
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3.9 ALLOCATION OF NET PREMIUMS
Unless otherwise required by state law, the initial net premium will be
allocated on the issue date to the Subaccounts and/or the Fixed Account as you
have selected on the application. When state or other applicable law or
regulation requires return of at least your premium payments should you return
this policy pursuant to the "Notice of Ten-Day Right to Examine Policy"
provision shown on the policy cover, the initial net premium will be allocated
on the issue date to a money market Subaccount, unless you have allocated 100%
to the Fixed Account. Then, on the 13th day after the issue date, the
accumulation value will be reallocated to the Subaccounts and/or the Fixed
Account as you have selected on the application. If you have allocated 100% to
the Fixed Account, the accumulation value is immediately allocated to the Fixed
Account on the issue date. Any additional premium received will be allocated in
accordance with your instructions. You may change the allocation of later net
premiums without charge. The allocation will apply to future net premiums after
we receive the change. The Subaccounts and the Fixed Account are discussed in
Sections 5 and 6.
SECTION 4. GRACE PERIOD
AND REINSTATEMENT
4.1 GRACE PERIOD
This policy will begin a 61 day grace period when:
a. the net cash surrender value on any monthly activity date is not
sufficient to cover monthly deductions; and
b. the Guaranteed Death Benefit is no longer in effect; and
c. the Minimum Benefit is no longer in effect.
The 61 day grace period will begin on the day we mail a notice of the premium
necessary to keep this policy in force. We will mail this notice to you at your
last known address and to any assignee of record. If sufficient premium is not
paid by the end of the grace period, this policy will terminate without value.
If the second death occurs during the grace period, the overdue monthly
deductions will be deducted from the death proceeds.
4.2 CONTINUATION OF INSURANCE
Insurance coverage under this policy and any benefits provided by any rider(s)
will be continued through the grace period.
4.3 REINSTATING THE POLICY
If both Insureds are living and application is made within five years from the
beginning of any grace period, this policy can be considered for reinstatement
if it terminated because a grace period ended without sufficient premium being
paid.
To qualify for reinstatement, you must send evidence satisfactory to us that
both Insureds are insurable in the same rating classes that were in effect when
the grace period expired. The effective date of the reinstatement will be the
first monthly activity date on or next following the date the application for
reinstatement is approved.
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To reinstate the policy, you will have to pay a premium equal to the greater of:
a. a premium sufficient to bring the net cash surrender value as of the date
of reinstatement to an amount above zero; or
b. three times the current month's monthly deduction, adjusted for the
percent of premium charge for taxes.
We will accept a premium larger than the applicable amount described above.
This policy cannot be reinstated if it has been surrendered for its net cash
surrender value. Any policy debt will be reinstated. The Guaranteed Death
Benefit and Minimum Benefit provisions cannot be reinstated.
SECTION 5. SEPARATE ACCOUNT
5.1 THE ACCOUNT
The word Account, where we use it in this policy without qualification, means
the Ameritas Variable Life Insurance Company Separate Account V. This is a unit
investment trust registered with the SEC under the Investment Company Act of
1940. It is also subject to the laws of Nebraska. We own the assets of the
Account and keep them separate from the assets of our general account.
The Account is used only to fund the variable benefits provided under this
policy and any other variable life policies supported by the Account.
The assets of the Account will be available to cover the liabilities of our
general account only to the extent that the assets of the Account exceed the
liabilities of the Account arising under the variable life policies supported by
the Account.
5.2 THE SUBACCOUNTS
The Account has a number of Subaccounts. We list those available on the policy
date on the schedule pages. The available Subaccounts may change after the
policy date. Any changes will be disclosed by the prospectus. You determine,
using whole percentages, how the net premium will be allocated among the
Subaccounts. You may choose to allocate nothing to a particular Subaccount. The
allocations to the Subaccounts along with allocations to the Fixed Account must
total 100%. The assets of each Subaccount will be used to buy shares in a
corresponding portfolio of the funding vehicles designated on the schedule
pages. See Section 5.5. Income and realized and unrealized gains or losses from
the assets of each Subaccount are credited to or charged against that Subaccount
without regard to income, gains or losses in the other Subaccounts, our general
account or any other separate accounts.
5.3 VALUATION OF ASSETS
The value of the assets of each Subaccount will be determined at the end of each
valuation date.
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5.4 TRANSFER AMONG SUBACCOUNTS
You may transfer amounts among Subaccounts as often as you wish in a policy
year. The transfer will take effect on the later of the date designated in the
request or on the valuation date following receipt of the written request at our
Home Office.
Each transfer must be for a minimum of $100 or the balance in the Subaccount, if
less. The minimum amount which can remain in a Subaccount and/or in the Fixed
Account as a result of a transfer is $100. Any amount below this minimum must be
included in the amount transferred.
Transfers may be subject to additional restrictions by the Funds.
5.5 THE FUNDS
The word Funds, where we use it in this policy without qualification, means the
funding vehicles designated on the schedule pages. The available Funds may
change. Any changes will be disclosed in the prospectus. The Funds are
registered with the SEC under the Investment Company Act of 1940 as diversified
open-end management investment companies. The Funds bear their own expenses. The
Funds have several portfolios; there is a portfolio that corresponds to each of
the Subaccounts. We list those available on the policy date on the schedule
pages.
5.6 PORTFOLIO CHANGES
A portfolio of the Funds might, in our judgment, become unsuitable for
investment by a Subaccount. This might happen because of a change in investment
policy, because of a change in laws or regulations, because the shares are no
longer available for investment, or for some other reason. If that occurs, we
have the right to substitute another portfolio of the Funds, or to invest in
another fund. We would first notify and receive approval from the SEC and the
Nebraska Insurance Department. This approval process is on file with the
insurance commissioner of the state where this policy is delivered. Any
portfolio changes will be disclosed in the prospectus. If the SEC requires that
such action receive approval from a majority of the policyholders in the
Account, then you will be notified of your right to vote. You will be notified
of any material change in the investment policy of any portfolio in which you
have an interest. If you are dissatisfied with any change, you always have the
option to transfer all or a portion of your accumulation value to the Fixed
Account (See Section 6.2) or to one of the other available Subaccounts (See
Section 5.4).
SECTION 6. THE FIXED ACCOUNT
6.1 THE FIXED ACCOUNT
Net premiums allocated to and transfers to the Fixed Account under this policy
become part of the general account assets of Ameritas Variable Life Insurance
Company which support annuity and insurance obligations. The Fixed Account
includes all of Ameritas Variable Life Insurance Company's assets, except those
assets segregated in separate accounts. Ameritas Variable Life Insurance Company
maintains the sole discretion to invest the assets of the Fixed Account, subject
to applicable law.
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You determine, using whole percentages, how the premium will be allocated to the
Fixed Account. You may choose to allocate nothing to the Fixed Account. The
allocations to the Fixed Account along with allocations to the Subaccounts must
total 100%.
6.2 TRANSFERS AMONG THE FIXED ACCOUNT AND THE SUBACCOUNTS
You may transfer amounts into the Fixed Account from the Subaccounts at any time
during the policy year.
You may make one transfer out of the Fixed Account to any of the other
Subaccounts only during the 30 day period following each policy anniversary.
The allowable transfer amount out of the Fixed Account is limited to the greater
of:
a. 25% of the accumulation value in the Fixed Account; or
b. any Fixed Account transfer which occurred during the prior 13 months; or
c. $1,000.
SECTION 7. ACCUMULATION VALUE
7.1 HOW ACCUMULATION VALUE OF THE POLICY IS DETERMINED
The accumulation value of this policy on the issue date is:
a. The net premiums received by us on or before the issue date; minus
b. Any monthly deductions due on or before the issue date.
The accumulation value of this policy on a valuation date is equal to the total
of the values in each Subaccount and the Fixed Account, plus the accumulation
value impaired by policy debt which is held in the general account, plus any net
premium received on that valuation date but not yet allocated.
7.2 ACCUMULATION VALUE OF THE SUBACCOUNTS
To compute the accumulation value held in the Subaccounts on any valuation date,
we multiply each Subaccount's unit value (defined in Section 7.4 below) by the
number of Subaccount units allocated to this policy.
The number of Subaccount units will increase when:
a. Net premiums are credited to that Subaccount;
b. Transfers from other Subaccounts or the Fixed Account are credited to
that Subaccount;
c. Policy debt (principal or interest) is repaid and allocated to the
Subaccount, or interest is credited from the amount held in the general
account to secure the policy debt.
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The number of Subaccount units will decrease when:
a. A policy loan is taken from that Subaccount;
b. A partial withdrawal is taken from that Subaccount;
c. A portion of the monthly deduction is taken from that Subaccount;
d. A transfer is made from that Subaccount to other Subaccounts or the
Fixed Account;
e. Policy loan interest not paid when due is taken from that Subaccount; or
f. A portion of any transfer charge is taken from that Subaccount.
Each transaction above will increase or decrease the number of Subaccount units
allocated to this policy by an amount equal to the dollar value of the
transaction divided by the current unit value on the valuation date for that
transaction.
7.3 NET ASSET VALUE
The net asset value of the shares of each portfolio of the Fund is determined
once daily as of the close of business of the New York Stock Exchange on days
when the Exchange is open for business. The net asset value is determined by
adding the values of all securities and other assets of the portfolio,
subtracting liabilities and expenses and dividing by the number of outstanding
shares of the portfolio. Expenses, including the investment advisory fee, are
accrued daily.
7.4 SUBACCOUNT UNIT VALUE
For each Subaccount, the value of an accumulation unit (unit value) was set when
the Subaccount was established. The unit value of each Subaccount reflects the
investment performance of that Subaccount. The unit value may increase or
decrease from one valuation date to the next.
The unit value of each Subaccount on any valuation date shall be calculated as
follows:
a. The per share net asset value of the corresponding Fund portfolio on the
valuation date times the number of shares held by the Subaccount, before
the purchase or redemption of any shares on that date; minus
b. A daily charge for administrative expenses, called the asset-based
administrative expense charge, shown on the schedule page; minus
c. A daily charge for mortality and expense risk shown on the schedule
page; minus
d. Any taxes payable by the Separate Account; divided by
e. The total number of units held in the Subaccount on the valuation date
before the purchase or redemption of any units on that date.
When transactions are made, the actual dollar amounts are converted to
accumulation units. The number of accumulation units for a transaction is found
by dividing the dollar amount of the transaction by the current unit value on
the valuation date for that transaction.
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<PAGE>
7.5 ACCUMULATION VALUE OF THE FIXED ACCOUNT
The accumulation value of the Fixed Account on a valuation date is equal to:
a. The net premiums credited to the Fixed Account; plus
b. Any transfers from the Subaccounts credited to the Fixed Account; plus
c. Any policy debt (principal or interest) repaid and allocated to the Fixed
Account, or interest credited from the amount held in the general account
to secure the policy debt; minus
d. Any policy loan taken from the Fixed Account; minus
e. Any partial withdrawal and its charge taken from the Fixed Account; minus
f. The portion of the monthly deduction taken from the Fixed Account; minus
g. Any transfer made from the Fixed Account; minus
h. The portion of any transfer charge taken from the Fixed Account; minus
i. Any policy loan interest not paid when due taken from the Fixed Account;
plus
j. Interest credits.
7.6 INTEREST CREDITS
We guarantee that the accumulation value in the Fixed Account will be credited
with an effective annual interest rate of at least 3.5%. We may, at our
discretion, credit a higher current rate of interest.
7.7 ADMINISTRATIVE EXPENSE CHARGE
On each monthly activity date, one-twelfth of the annual administrative expense
charges will be deducted from the accumulation value. The maximum administrative
expense charge is shown on the schedule pages. We have the option of charging a
current administrative expense charge which can be less than the maximum. Any
current administrative expense charge will apply to all policies having the same
specified amount, policy year and policy month as this policy and whose Insureds
are the same issue age, sex and risk class as the Insureds covered by this
policy. The actual charges will be shown on your annual report.
7.8 COST OF INSURANCE
The cost of insurance will be figured each month. It is the cost of insurance
for the basic policy (including any increases in the specified amount) plus the
cost for any riders. The cost for this policy is equal to:
a. the death benefit on the monthly activity date, discounted at the
guaranteed rate of interest for the Fixed Account for one month;
b. less the accumulation value on the monthly activity date, after all
monthly deductions have been taken except for the cost of insurance;
4065 15
<PAGE>
c. the above result multiplied by the monthly cost per $1,000 of insurance
(as described below in the Cost of Insurance Rates section);
d. divided by $1,000.
The charges made during the policy year will be shown on the annual report.
7.9 COST OF INSURANCE RATES
For the initial specified amount, the cost of insurance rates will not exceed
those shown on the SCHEDULE OF GUARANTEED ANNUAL COST OF INSURANCE RATES in the
schedule pages. To calculate the monthly rates, divide by 12 and round to the
nearest six decimal places.
The guaranteed rates shown on the schedule page have been adjusted for any table
rating and/or flat extra rating.
Each year, the annual cost of insurance rates will be declared for the next
policy year. These rates will be based on the issue age, sex, tobacco usage and
risk class of each Insured and the policy duration. The rates will be adjusted
for any table rating and/or flat extra rating.
Any change in the current cost of insurance rates will apply to all Insureds of
the same issue age, sex, tobacco usage and risk class and whose policies have
been in effect for the same length of time.
7.10 MONTHLY DEDUCTION
The monthly deduction is made each policy month against the accumulation value
allocated to the Account and to the Fixed Account. Monthly deductions will be
deducted from the Subaccounts and the Fixed Account in the same proportion as
the balances held in the Subaccounts and the Fixed Account. The monthly
deduction is equal to:
a. The monthly administrative expense charge for the current policy month;
plus
b. The cost of insurance for the current policy month, including the cost
for any rider.
Refer to the SCHEDULE OF GUARANTEED ANNUAL COST OF INSURANCE RATES and the
SCHEDULE OF MAXIMUM CHARGES on the schedule pages for further details.
7.11 ANNUAL REPORT
Each year the Owner will be mailed an annual report that shows the progress of
this policy. This report will show for the last policy year:
a. premiums paid;
b. expense charges;
c. investment gains/losses; and
d. cost of insurance.
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As of the date of the report, the following values will be shown:
a. accumulation value;
b. specified amount of insurance;
c. death benefit; and
d. outstanding debt, if any.
7.12 ILLUSTRATIVE REPORTS
We will send you an illustration of projected future death benefits under both
guaranteed and current assumptions at any time if you send us a written request
for the illustration. If allowed by state law, a reasonable fee not to exceed
$50 may be charged for each report. The fee will be one that is in effect for
this service at the time you make the request.
The illustration will be based on assumptions as to:
a. Specified amount;
b. Type of death benefit option;
c. Future premium payments; and
d. Other necessary items.
SECTION 8. POLICY SURRENDER AND
PARTIAL WITHDRAWALS
8.1 SURRENDER OF THE POLICY
This policy may be surrendered for its net cash surrender value at any time
during the lifetimes of either Insured.
8.2 NET CASH SURRENDER VALUE
The amount payable upon surrender is the accumulation value on the valuation
date we receive your written request, less any surrender charges, and less any
outstanding policy debt. The net cash surrender value is payable in one lump sum
or under one of the payment options. See Section 12.
8.3 Surrender Charge
The surrender charge is based on the initial specified amount of insurance at
issue and any increase in specified amount.
8.4 PARTIAL WITHDRAWAL
A partial withdrawal of this policy may be made for any amount of at least $500
subject to the following rules:
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a. The net cash surrender value remaining after a partial withdrawal must be
at least $1,000 or an amount sufficient to maintain this policy in force
for the remainder of the policy year.
b. A partial withdrawal is irrevocable.
c. The request must be made to us in writing on a form approved by us.
d. A withdrawal charge will be deducted from the amount withdrawn. The
charge will not exceed the lesser of $50 or 2% of the amount withdrawn.
Partial withdrawals will affect other policy values. The accumulation value will
be reduced by the amount of the partial withdrawal. If Death Benefit Option A is
in effect on the date of a partial withdrawal, the specified amount will be
reduced by the amount of the partial withdrawal. These reductions will also
reduce the death benefits. See Section 9. The withdrawal will affect the net
policy funding used to determine if the Guaranteed Death Benefit or Minimum
Benefit is to remain in effect. See Sections 2.3 and 2.4.
You may tell us how to allocate the partial withdrawal among the Subaccounts
and/or the Fixed Account, provided that the minimum amount remaining in a
Subaccount and/or the Fixed Account as a result of the allocation is $100. If
you do not, or if there is not enough value in any Subaccount or in the Fixed
Account, the partial withdrawal will be allocated among the Subaccounts and the
Fixed Account in the same proportion as the balances held in each Subaccount and
the Fixed Account on the date we receive the request in our Home Office.
8.5 POSTPONEMENT OF PAYMENTS
We will usually pay any amounts payable from the Subaccounts as a result of
surrender, partial withdrawal or policy loan within seven (7) days after we
receive written request in our Home Office on a form satisfactory to us. We can
postpone such payments or any transfers of amounts between Subaccounts if:
a. The New York Stock Exchange is closed other than customary weekend and
holiday closings or trading on the New York Stock Exchange is restricted
as determined by the SEC; or
b. The SEC by order permits the postponement for the protection of
policyowners; or
c. An emergency exists as determined by the SEC, as a result of which
disposal of securities is not reasonable, practicable, or it is not
reasonable or practicable to determine the value of the net assets of the
Account.
We may defer the payment of a full surrender, partial withdrawal or policy loan
from the Fixed Account for up to six months from the date we receive your
written request.
SECTION 9. DEATH BENEFIT
9.1 DEATH BENEFIT PROCEEDS
The death benefit proceeds payable to the beneficiary upon our receipt of
satisfactory proof of the death of both Insureds while this policy is in force
will equal:
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a. The death benefit; plus
b. Any additional life insurance proceeds provided by any rider; minus
c. Any outstanding policy debt; minus
d. Any overdue monthly deductions including the deduction for the month of
the second death.
9.2 INTEREST ON PROCEEDS
Death benefit proceeds that are paid in one lump sum will include interest if we
do not pay the proceeds within 30 days of receiving satisfactory proof of death
of both Insureds. The rate of interest will be the greater of:
a. 3% per annum.
b. the current rate of interest payable on death benefit proceeds.
c. the rate required by state law.
Interest will accrue from the date we receive satisfactory proof of death of
both Insureds to the date of payment of the death benefit proceeds.
9.3 DEATH BENEFIT
Subject to the provisions of this policy, the death benefit option at any time
shall be either Option A or Option B. The initial death benefit option is shown
on the schedule pages. It may be changed as described in Section 10.1.
Option A: Basic Coverage
The death benefit will be the greater of:
a. The current specified amount; or
b. A percentage of the accumulation value on the second death, where the
applicable percentage is determined from the table shown below.
Option B: Basic Coverage Plus Accumulation Value
The death benefit will be the greater of:
a. The current specified amount plus the accumulation value on the second
death; or
b. A percentage of the accumulation value on the second death, where the
applicable percentage is determined from the table shown below.
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Younger Younger
Insured's Applicable Insured's Applicable
Age * Percentage Age * Percentage
--------- ---------- --------- ----------
40 or less 250% 60 130%
41 243 61 128
42 236 62 126
43 229 63 124
44 222 64 122
45 215 65 120
46 209 66 119
47 203 67 118
48 197 68 117
49 191 69 116
50 185 70 115
51 178 71 113
52 171 72 111
53 164 73 109
54 157 74 107
55 150 75-90 105
56 146 91 104
57 142 92 103
58 138 93 102
59 134 94 or older 101
</TABLE>
*Younger Insured's Age means age of the younger Insured on the issue date plus
the number of complete policy years this policy has been in effect.
9.4 POSTPONEMENT OF PAYMENT
We will usually pay any death benefit proceeds within seven (7) days after we
receive satisfactory proof of death of both Insureds.
9.5 DEATH OF FIRST INSURED
During the period following the death of one of the Insureds but prior to the
second death, this policy will remain in force subject to the grace period. The
death of the first Insured will have no effect on the cost of insurance rates
for this policy. Satisfactory proof of death of the first Insured should be
submitted to our Home Office within one year of the date of death.
9.6 SIMULTANEOUS DEATH
If a simultaneous death occurs, only one death benefit is payable.
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SECTION 10. POLICY CHANGES
AND EXCHANGE OF POLICY
10.1 CHANGE IN DEATH BENEFIT OPTIONS
You may change the death benefit option which is shown on the schedule pages and
is referred to in Section 9. The death benefit option may not be changed in the
first policy year and may only be changed once a year thereafter. The change
will become effective on the first monthly activity date on or next following
the date we approve your requested change.
If you change from Option A to Option B, the specified amount after the change
will equal the death benefit prior to the change, less the accumulation value as
of the date of change. A change from Option B to Option A will change the
specified amount to an amount equal to the death benefit as of the date of
change.
10.2 CHANGE IN THE SPECIFIED AMOUNT
After this policy has been in effect for one year, you can increase or decrease
the specified amount while both Insureds are living. To make a change, send a
written request to our Home Office. Any change will be effective on the monthly
activity date on or next following the date we approve the request, unless you
specify a later date. You may only change the specified amount once a year.
10.3 Decreasing the Specified Amount
A decrease in the specified amount is subject to the following conditions:
a. A decrease may not be made during the first policy year nor during the
first 12 policy months following an increase in specified amount except
for a decrease which was the result of a partial withdrawal.
b. The specified amount in effect after any decrease may not be less
than $100,000.
c. No decrease is permitted which affects the tax qualifications of this
policy as described in Section 7702 of the Internal Revenue Code, as
amended.
10.4 INCREASING THE SPECIFIED AMOUNT
Any increase of the specified amount is subject to the following conditions:
a. An increase may not be made in the first policy year.
b. A supplemental application for the increase and satisfactory evidence of
insurability that both Insureds are insurable in the same rating classes
currently in effect for this policy.
c. The minimum amount of any increase is $50,000.
d. An increase cannot be made if either Insured was over age 85 on the most
recent policy anniversary.
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e. If an increase occurs during the first five policy years the Minimum
Premium will be increased on the date of change. The Minimum Benefit
requirement will reflect the change in the Minimum Premium from the date
of change.
f. If an increase occurs during the Guaranteed Death Benefit Period, the
Guaranteed Death Benefit Premium will be increased on the date of change.
The Guaranteed Death Benefit requirement will reflect the change in the
Guaranteed Death Benefit Premium from the date of change.
g. At the time of the increase, the accumulation value, less any surrender
charges less any outstanding policy debt must be at least equal to 12
times the current month's monthly deduction reflecting the increase in
specified amount. If this value is not sufficient to support these
monthly deductions for at least one year beyond the effective date of the
increase, additional premiums may be required. You will be notified of
any additional premium due.
10.5 SURRENDER CHARGE FOR INCREASES
An additional surrender charge will be imposed under this policy for each
requested increase in specified amount. The additional surrender charge will be
deducted upon the surrender of this policy at any time during the 14 years
following the increase. The amount of the additional surrender charge is shown
in the schedule pages. The amount of the surrender charge due to the increase in
each policy year after the increase is determined by multiplying the appropriate
rate from the schedule times the amount of the requested increase and dividing
by 1000. See the Schedule of Surrender Charges for Increases.
10.6 TIME PERIOD FOR SPECIAL TRANSFER
At any time within 24 months of the policy date shown on the schedule pages you
may request a transfer of the entire accumulation value in the Subaccounts to
the Fixed Account.
SECTION 11. LOAN BENEFITS
This policy has loan benefits that are described below. The amount of
outstanding loans plus accrued interest is called outstanding policy debt. Any
outstanding policy debt will be deducted from proceeds payable at the second
death, or on surrender.
11.1 MAKING A POLICY LOAN
After the first policy anniversary, you may obtain a policy loan from us. This
policy is the only security required. The Maximum Available Loan Amount is equal
to the net cash surrender value at the time of the loan less the monthly
deductions remaining for the balance of the policy year, less interest on the
policy debt including the requested loan to the next policy anniversary date.
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11.2 LOAN INTEREST
The maximum interest rate on any loan is 6% per year. We have the option of
charging less. Interest accrues daily and becomes a part of the policy debt.
Interest payments are due on each anniversary date. If interest is not paid when
due, it will be added to the policy debt and will bear interest at the rate
charged on the loan.
11.3 REDUCED LOAN INTEREST RATE
The loan interest rate will be reduced to a maximum of 4% for eligible loan
amounts. This reduced loan interest rate is available on and after the 10th
policy anniversary. The eligible loan amount for a reduced loan interest rate
will be equal to the accumulation value plus any previous withdrawals, minus
total premiums paid and minus any outstanding policy debt held at a reduced
interest rate. However, the total reduced loan amount cannot exceed the Maximum
Available Loan Amount. If a regular loan is in effect on the policy anniversary,
it will be converted to a loan with the reduced loan interest rate up to the
eligible amount. Interest on loans with a reduced interest rate will accrue at
the reduced loan rate.
11.4 OTHER BORROWING RULES
When a policy loan is made, or when interest is not paid when due, an amount
sufficient to secure the policy debt is transferred out of the Subaccounts and
the Fixed Account and into our general account. You may tell us how to allocate
that accumulation value among the Subaccounts and/or the Fixed Account provided
that the amount remaining in a Subaccount or the Fixed Account as a result of
the allocation is $100. Without specific direction, the accumulation value will
be allocated among the Subaccounts and/or the Fixed Account in the same
proportion that the policy's accumulation value in each Subaccount and the Fixed
Account bears to the total accumulation value in all Subaccounts and the Fixed
Account on the date we make the loan.
Accumulation value transferred into the general account to secure policy debt
will be credited with 3.5% interest annually. The interest earned will be
allocated to the Subaccounts and/or the Fixed Account in the same manner as net
premiums.
On any monthly activity date, if the policy debt exceeds the accumulation value
less any surrender charge and any accrued expense charges, you must pay the
excess. Unless the Minimum Benefit or Guaranteed Death Benefit is in effect, we
will send you a notice of the amount you must pay. If you do not pay this amount
within 61 days after we send notice, this policy will terminate without value.
We will send the notice to you and to any assignee of record at our Home Office.
See Section 4.1.
Any loan transaction will permanently affect the values of this policy.
11.5 REPAYING A POLICY DEBT
You can repay a policy debt in part or in full anytime during the life of either
Insured while this policy is in force. Repayment must be specifically identified
as such by you. When a loan repayment is made, accumulation value in the general
account related to that payment will be transferred into the Subaccounts and/or
the Fixed Account in the same proportion that net premiums are being allocated.
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SECTION 12. PAYMENT OPTIONS
Death benefit proceeds or the net cash surrender value will be paid in one lump
sum if no option is chosen. Subject to the rules stated below, all or part of
the proceeds can be paid under a payment option. During the lifetime of either
Insured you can choose a payment option. A beneficiary can choose a payment
option if you have not chosen one at the second death.
12.1 PAYMENT OPTION RULES
There are several important payment option rules:
a. An association, corporation, partnership or fiduciary can only receive a
lump sum payment or a payment under Option b.
b. If this policy is assigned, any amount due to the assignee will first be
paid in one sum. The balance, if any, may be applied under any payment
option.
c. If the payments under any option come to less than $100 each, we have the
right to make payments at less frequent intervals.
d. The rate of interest payable under Options ai, aii and b is guaranteed at
3% compounded annually. Payments under Option c and d are based on the
1983 Individual Annuity Tables projected 17 years with an interest rate
of 3%.
To choose an option, you must send a written request satisfactory to us to our
Home Office.
12.2 DESCRIPTION OF OPTIONS
Option ai
Interest Payment Option. We 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 us.
Option aii
Fixed Amount Payable Option. Each payment will be for an agreed fixed amount.
Payments continue until the amount we hold 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 or a lump sum refund.
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<PAGE>
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, payments will continue for the lifetime of the other. Variations
provide for a reduced amount of payment during the lifetime of the surviving
person.
SECTION 13. NOTES ON OUR
COMPUTATIONS
13.1 BASIS OF COMPUTATION
In our computations, we assume that the minimum values and reserves held for
benefits guaranteed in the Fixed Account will earn interest at an annual rate of
3.5%. We use mortality rates from the Commissioners 1980 Standard Ordinary
Smoker and Nonsmoker, Male and Female Continuous Function Mortality Tables in
computing minimum values and reserves for this policy. The nonsmoker values from
these Tables are used for Insureds who are non-tobacco users and the smoker
values from these Tables are used for Insureds who are tobacco users. The male
values from these Tables are used for male Insureds. The female values from
these Tables are used for female Insureds.
13.2 METHODS OF COMPUTING VALUES
We have filed a detailed statement of the method we use to compute policy values
and benefits with the state where this policy was delivered. All these values
and benefits are not less than those required by the laws of that state.
Reserves are calculated in accordance with the Standard Non-Forfeiture Law and
Valuation Law of the state in which this policy is delivered. In no instance
will reserves be less than the net cash surrender values.
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<PAGE>
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<PAGE>
<TABLE>
<CAPTION>
TABLES OF SETTLEMENT OPTIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TABLE B (OPTION B) TABLE D (OPTION D)
Monthly Installments for Monthly Installments for each $1,000 of Net Proceeds
each $1,000 of Net Proceeds
Male & Male & Male & Male & Male &
Years Monthly Years Monthly Age Female Age Female Age Female Age Female Age Female
- ---------------------------- -------------------------------------------------------------------
1 84.47 11 5.86 40 3.16 50 3.50 60 4.05 70 5.07 80 7.08
2 42.86 12 8.24 41 3.19 51 3.54 61 4.13 71 5.21 81 7.37
3 28.99 13 7.71 42 3.22 52 3.59 62 4.21 72 5.36 82 7.69
4 22.06 14 7.26 43 3.25 53 3.63 63 4.29 73 5.53 83 8.03
5 17.91 15 6.87 44 3.28 54 3.68 64 4.38 74 5.70 84 8.40
-------------------------- ------------------------------------------------------------------
6 15.14 16 6.53 45 3.31 55 3.74 65 4.48 75 5.89 85 8.79
7 13.16 17 6.23 46 3.34 56 3.79 66 4.58 76 6.10
8 11.68 18 5.96 47 3.38 57 3.85 67 4.69 77 6.32
9 10.53 19 5.73 48 3.42 58 3.92 68 4.81 78 6.55
10 9.61 20 5.51 49 3.46 59 3.98 69 4.93 79 6.81
- --------------------------- ------------------------------------------------------------------
</TABLE>
Income for payments other than monthly will be furnished by our Home Office
upon request.
Table D values for combinations of ages not shown and values for 2 males or
2 females will be furnished by our Home Office upon request.
TABLE C (OPTION C) Monthly Installments for each $1,000 of Net proceeds
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Female Male
- --------------------------------------------- ------------------------------------------------
Life Months Certain Cash Life Months Certain Cash
Age Only 60 120 180 240 Ref. Age Only 60 120 180 240 Ref.
- --------------------------------------------- ------------------------------------------------
40 3.54 3.54 3.53 3.52 3.50 3.46 40 3.33 3.33 3.33 3.32 3.31 3.29
41 3.58 3.58 3.57 3.56 3.54 3.50 41 3.36 3.36 3.36 3.36 3.35 3.32
42 3.63 3.63 3.62 3.60 3.57 3.54 42 3.40 3.40 3.40 3.39 3.38 3.36
43 3.68 3.67 3.66 3.64 3.62 3.58 43 3.44 3.44 3.43 3.43 3.41 3.39
44 3.73 3.72 3.71 3.69 3.66 3.62 44 3.48 3.48 3.47 3.46 3.45 3.42
- --------------------------------------------- ----------------------------------------------
45 3.78 3.77 3.76 3.74 3.70 3.66 45 3.52 3.52 3.51 3.50 3.49 3.46
46 3.83 3.83 3.81 3.79 3.75 3.70 46 3.56 3.56 3.55 3.54 3.53 3.50
47 3.89 3.89 3.87 3.84 3.80 3.75 47 3.61 3.60 3.60 3.59 3.57 3.54
48 3.95 3.94 3.93 3.89 3.85 3.80 48 3.65 3.65 3.65 3.63 3.61 3.58
49 4.01 4.01 3.99 3.95 3.90 3.85 49 3.70 3.70 3.69 3.68 3.66 3.62
- --------------------------------------------- ----------------------------------------------
50 4.08 4.07 4.05 4.01 3.95 3.90 50 3.76 3.75 3.75 3.73 3.70 3.67
51 4.15 4.14 4.11 4.07 4.00 3.96 51 3.81 3.81 3.80 3.78 3.75 3.72
52 4.22 4.21 4.18 4.13 4.06 4.02 52 3.87 3.87 3.86 3.83 3.80 3.76
53 4.30 4.29 4.26 4.20 4.12 4.08 53 3.93 3.93 3.91 3.89 3.85 3.82
54 4.38 4.37 4.33 4.27 4.18 4.14 54 4.00 3.99 3.98 3.95 3.91 3.87
- --------------------------------------------- ----------------------------------------------
55 4.47 4.45 4.41 4.34 4.24 4.21 55 4.06 4.06 4.04 4.01 3.96 3.93
56 4.56 4.54 4.50 4.42 4.30 4.28 56 4.14 4.13 4.11 4.08 4.02 3.99
57 4.65 4.64 4.59 4.50 4.36 4.35 57 4.21 4.21 4.19 4.14 4.08 4.05
58 4.75 4.74 4.68 4.58 4.43 4.42 58 4.29 4.29 4.26 4.22 4.14 4.12
59 4.86 4.84 4.78 4.66 4.49 3.40 59 4.38 4.37 4.34 4.29 4.21 4.18
- --------------------------------------------- ----------------------------------------------
60 4.98 4.96 4.88 4.75 4.56 4.59 60 4.47 4.46 4.43 4.37 4.28 4.26
61 5.10 5.08 4.99 4.84 4.62 4.67 61 4.57 4.56 4.52 4.45 4.34 4.33
62 5.23 5.20 5.11 4.93 4.69 4.77 62 4.67 4.66 4.62 4.54 4.41 4.41
63 5.38 5.34 5.23 5.03 4.76 4.86 63 4.78 4.77 4.72 4.63 4.48 4.50
64 5.53 5.49 5.35 5.13 4.82 4.96 64 4.90 4.88 4.82 4.72 4.55 4.58
- --------------------------------------------- ---------------------------------------------
65 5.69 5.64 5.49 5.23 4.88 5.07 65 5.02 5.00 4.94 4.82 4.63 4.68
66 5.86 5.80 5.63 5.33 4.95 5.18 66 5.16 5.13 5.06 4.92 4.70 4.78
67 6.04 5.98 5.77 5.43 5.01 5.29 67 5.30 5.27 5.18 5.02 4.77 4.88
68 6.24 6.16 5.92 5.53 5.06 5.41 68 5.45 5.42 5.32 5.13 4.85 4.99
69 6.45 6.36 6.07 5.64 5.12 5.54 69 5.61 5.58 5.46 5.23 4.92 5.10
- --------------------------------------------- ----------------------------------------------
70 6.67 6.56 6.23 5.74 5.17 5.67 70 5.79 5.75 5.60 5.35 4.98 5.22
71 6.91 6.78 6.40 5.84 5.21 5.81 71 5.98 5.93 5.76 5.46 5.05 5.35
72 7.16 7.01 6.57 5.93 5.26 5.96 72 6.19 6.13 5.92 5.57 5.11 5.49
73 7.43 7.25 6.74 6.03 5.30 6.11 73 6.41 6.34 6.10 5.69 5.17 5.63
74 7.72 7.51 6.91 6.12 5.33 6.27 74 6.66 6.56 6.27 5.80 5.22 5.78
- --------------------------------------------- ----------------------------------------------
75 8.03 7.77 7.09 6.20 5.36 6.44 75 6.92 6.81 6.46 5.91 5.27 5.94
76 8.36 8.06 7.26 6.28 5.39 6.62 76 7.20 7.06 6.65 6.02 5.31 6.11
77 8.71 8.35 7.44 6.36 5.42 6.81 77 7.50 7.34 6.85 6.12 5.35 6.29
78 9.09 8.67 7.62 6.43 5.44 7.00 78 7.83 7.63 7.04 6.22 5.38 6.48
79 9.50 8.99 7.79 6.50 5.45 7.21 79 8.18 7.94 7.25 6.31 5.41 6.67
- --------------------------------------------- ----------------------------------------------
80 9.93 9.33 7.96 6.56 5.47 7.43 80 8.56 8.27 7.45 6.39 5.43 6.88
81 10.40 9.68 8.12 6.61 5.48 7.65 81 8.98 8.62 7.65 6.47 5.45 7.11
82 10.89 10.05 8.28 6.66 5.49 7.89 82 9.43 8.99 7.85 6.54 5.47 7.34
83 11.42 10.42 8.43 6.70 5.50 8.15 83 9.92 9.37 8.04 6.60 5.48 7.58
84 11.98 10.80 8.58 6.74 5.50 8.41 84 10.45 9.78 8.22 6.65 5.49 7.84
85 12.58 11.19 8.71 6.77 5.51 8.69 85 11.02 10.20 8.39 8.70 5.50 8.12
- --------------------------------------------- ----------------------------------------------
</TABLE>
Income for payments other than monthly will be furnished by our Home Office
upon request.
Table C values for ages below 40 and above 85, and values for 300 and 360
months certain will be furnished by our Home Office upon request.
4065 27
<PAGE>
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<PAGE>
POLICY SCHEDULE
INSUREDS: John E Specimen POLICY NUMBER: 2100004065
Issue Age: 35 Sex: Male
POLICY DATE: May 1, 1999
Mary E Specimen
Issue Age - 35 Sex: Female * PLANNED ANNUAL
PERIODIC PREMIUM: $1,824.96
INITIAL SPECIFIED INITIAL PREMIUM: $1,824.96
AMOUNT OF INSURANCE: $500,000
Owner: John E Specimen
INITIAL DEATH BENEFIT OPTION: A
MINIMUM PREMIUM: Monthly $ 99.35
GUARANTEED DEATH BENEFIT PREMIUM: Monthly $152.08
GUARANTEED DEATH BENEFIT PERIOD:
The Guaranteed Death Benefit Period will expire on May 1, 2049.
RATING CLASS: John E Specimen
Preferred, No Tobacco Use
Mary E Specimen
Preferred, No Tobacco Use
LOANS:
The maximum loan interest rate is 6.00%. The interest credited on any
loaned part of the values will be no less than 3.50%.
MODES OF PAYMENT FOR PLANNED PERIODIC PREMIUMS:
Annual Semi-Annual Quarterly Monthly
$1,824.96 $912.48 $456.24 $152.08
* This reflects the planned premium and mode you selected at issue. For
further information, see policy Section 3. PREMIUM PAYMENTS.
4065 1-PS
<PAGE>
SCHEDULE OF BENEFITS
INSUREDS: John E Specimen Policy Number: 2100004065
Mary E Specimen
INITIAL
SPECIFIED AMOUNT MATURITY OR
BENEFIT OF INSURANCE EXPIRATION DATE*
- ------- ------------ ----------------
Survivorship Flexible Premium $500,000 Second Death
Variable Life
Form 4065**
* NOTE: It is possible that coverage may not continue to the second death if
premium payments are not sufficient.
** Form number corresponds to form number in the lower left hand corner of
each benefit description.
4065 1.1-SB
<PAGE>
SCHEDULE OF BENEFITS
(Continued)
INSUREDS: John E Specimen POLICY NUMBER: 2100004065
Mary E Specimen
INITIAL
SPECIFIED AMOUNT ANNUAL
BENEFIT OF INSURANCE PREMIUM COST *
- ------- ------------ --------------
(This page is used to show any riders that are a part of the policy.)
* For any rider, this is the annual rider cost of insurance at issue. (NOTE:
These amounts shown are not additional premiums due but are the amounts
deducted from the accumulation value.) See each rider for further
information.
** Form number corresponds to form number in the lower left hand corner of
each benefit description.
4065 1.2-SB
<PAGE>
LIST OF SUBACCOUNTS AND PORTFOLIOS
Each subaccount of the Ameritas Variable Life Insurance Company (AVLIC) Separate
Account V invests in a specific portfolio of the following funds:
Calvert Variable Series, Inc. Ameritas Portfolios ("Ameritas")
Fidelity Variable Insurance Products Fund
Fidelity Variable Insurance Products Fund II
(collectively referred to as "Fidelity")
Alger American Fund ("Alger")
MFS Variable Insurance Trust ("MFS")
Morgan Stanley Dean Witter Universal Funds, Inc. ("MSDW")
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INITIAL
CORRESPONDING ALLOCATION OF
FUND PORTFOLIO SUBACCOUNT NET PREMIUMS
Ameritas Money Market Money Market Subaccount 0%
Index Index Subaccount 0%
Growth Growth Subaccount 0%
Income & Growth Income & Growth Subaccount 0%
Small Capitalization Small Capitalization Subaccount 0%
MidCap Growth MidCap Growth Subaccount 0%
Emerging Growth Emerging Growth Subaccount 0%
Research Research Subaccount 0%
Growth With Income Growth With Income Subaccount 0%
Fidelity Equity-Income: Service Class Equity-Income: Service Class Subaccount 0%
Growth: Service Class Growth: Service Class Subaccount 0%
High Income: Service Class High Income: Service Class Subaccount 0%
Overseas: Service Class Overseas: Service Class Subaccount 0%
Asset Manager: Service Class Asset Manager: Service Class Subaccount 50%
Investment Grade Bond Investment Grade Bond Subaccount 0%
Asset Manager: Growth: Service Class Asset Manager: Growth: Service Class Subaccount 0%
Contrafund: Service Class Contrafund: Service Class Subaccount 0%
Alger Balanced Balanced Subaccount 50%
Leveraged AllCap Leveraged AllCap Subaccount 0%
MFS Utilities Utilities Subaccount 0%
Global Governments Global Government Subaccount 0%
New Discovery New Discovery Subaccount 0%
MSDW Emerging Markets Equity Emerging Markets Equity Subaccount 0%
Global Equity Global Equity Subaccount 0%
International Magnum International Magnum Subaccount 0%
Asian Equity Asian Equity Subaccount 0%
U.S. Real Estate U.S. Real Estate Subaccount 0%
Net premiums may also be allocated to the AVLIC Fixed Account.
INITIAL
ALLOCATION OF
NET PREMIUMS
AVLIC Fixed Account 0%
</TABLE>
4065 1-LSP
<PAGE>
SCHEDULE OF MAXIMUM CHARGES
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE:
The maximum daily asset-based administrative expense charge is .000409%
(.15% annually).
MORTALITY AND EXPENSE RISK CHARGE:
The maximum daily mortality and expense risk charge is .002050% (.75%
annually) for years 1-15 and .000820% (.30% annually) for years 16 and
over.
ADMINISTRATIVE EXPENSE CHARGE:
The maximum annual administrative expense charge is $192 plus $1.20 per
$1000 of Specified Amount.
PERCENT OF PREMIUM CHARGE FOR TAXES:
The maximum percent of premium charge for taxes is 3% of premiums
received.
TRANSFER CHARGE:
The first 15 transfers between Subaccounts and/or the Fixed Account per
policy year are free. Thereafter, the maximum charge for each transfer is
$10.00
PARTIAL WITHDRAWAL CHARGE:
The maximum charge for each partial withdrawal is the lesser of $50 or 2%
of the amount withdrawn.
SURRENDER CHARGE:
The following table shows the surrender charge for the initial specified
amount based on the policy year of surrender.
For any increase in specified amount, a surrender charge based on the
increase will be imposed in addition to the surrender charges stated
below.
POLICY YEAR
OF SURRENDER AMOUNT
------------ ------
1 $1,825.00
2 $1,825.00
3 $1,825.00
4 $1,825.00
5 $1,825.00
6 $1,640.00
7 $1,460.00
8 $1,275.00
9 $1,095.00
10 $ 910.00
11 $ 730.00
12 $ 545.00
13 $ 365.00
14 $ 180.00
15 $ 0.00
4065 1-SC
<PAGE>
SCHEDULE OF GUARANTEED ANNUAL
COST OF INSURANCE RATES*
INSURED: John E Specimen POLICY NUMBER: 2100004065
ISSUE AGE - Sex: 35 Male
POLICY DATE: May 1, 1999
INSURED: Mary E Specimen
ISSUE AGE - SEX 35 Female
<TABLE>
<CAPTION>
<S> <C> <C> <C>
POLICY YEAR RATE PER $1,000 POLICY YEAR RATE PER $1,000
BEGINNING OF AMOUNT BEGINNING OF AMOUNT
MAY 1 AT RISK MAY 1 AT RISK
----- ------- ----- -------
1999 0.002550 2032 8.617181
2000 0.008379 2033 10.096144
2001 0.015407 2034 11.854523
2002 0.023848 2035 13.982464
2003 0.033935 2036 16.585187
2004 0.046379 2037 19.735962
2005 0.061287 2038 23.462341
2006 0.078827 2039 27.767980
2007 0.099432 2040 32.637921
2008 0.123471 2041 38.068816
2009 0.152095 2042 44.111370
2010 0.185551 2043 50.913181
2011 0.224785 2044 58.682210
2012 0.270573 2045 67.625490
2013 0.324602 2046 77.940066
2014 0.388968 2047 89.634942
2015 0.465843 2048 102.590276
2016 0.558910 2049 116.623334
2017 0.671000 2050 131.580191
2018 0.802654 2051 147.321578
2019 0.958487 2052 163.771527
2020 1.138720 2053 181.013310
2021 1.343382 2054 199.155246
2022 1.579127 2055 218.543189
2023 1.857247 2056 239.830634
2024 2.188113 2057 264.566071
2025 2.586999 2058 296.255483
2026 3.077971 2059 341.746492
2027 3.681623 2060 414.234856
2028 4.404184 2061 537.310477
2029 5.253551 2062 743.944811
2030 6.232875 2063 or 899.956253
2031 7.347192 later
</TABLE>
* The rates shown are annual rates per $1000 of amount at risk. To calculate
the monthly rate, the annual rate is divided by 12 and rounded to the
nearest six decimal places. These rates apply to the basic policy and do
not include the cost for riders. The rates shown have been adjusted if
this policy was issued with a tabular and/or flat rating as shown on the
schedule page.
4065 1-COI
<PAGE>
SCHEDULE OF SURRENDER CHARGES FOR INCREASES
The additional surrender charge imposed under this policy for each requested
increase in specified amount will be based on the table shown below. To
calculate the amount of the charge, multiply the appropriate rate times the
amount of the increase and divide by 1000.
POLICY YEARS ADDITIONAL SURRENDER CHARGE PER
SINCE INCREASE $1,000 OF INCREASE IN SPECIFIED AMOUNT
-------------- --------------------------------------
1 3.65
2 3.65
3 3.65
4 3.65
5 3.65
6 3.28
7 2.92
8 2.55
9 2.19
10 1.82
11 1.46
12 1.09
13 0.73
14 0.36
15 0.00
4065 1-SSCI
<PAGE>
This page left intentionally blank.
<PAGE>
Survivorship Flexible Premium Variable Life Insurance Policy.
Death benefit proceeds payable upon the second death.
Flexible premiums payable until the second death.
Some benefits reflect investment results.
Non-participating.
Form 4065
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
NOTICE: As of the effective date of this rider, it is uncertain what effect the
receipt of benefits under this rider will have on your tax status. Please
consult your personal tax advisor prior to requesting such benefits.
ACCELERATED BENEFIT RIDER
FOR TERMINAL ILLNESS
ON SURVIVING INSURED
CONSIDERATION
This rider is attached to and made a part of your policy and is issued in
consideration of the application. A copy of the application is attached to the
policy.
PREMIUMS
There are no additional premiums or cost of insurance deductions for this rider.
BENEFITS
We will pay an accelerated benefit to you if the Surviving Insured is terminally
ill, subject to the provisions of this rider. This amount will be paid as a lump
sum. Payments other than as a lump sum may be made at your request, subject to
our approval.
DEFINITIONS
ELIGIBLE COVERAGES: Eligible Coverages under this rider will be the base policy
and any life insurance riders attached to the policy which provide coverage on
the Surviving Insured.
Eligible Coverages will be determined as of the date we receive satisfactory
proof of terminal illness at the Home Office. Coverage will only be considered
"eligible" when it is outside its two year contestable period and has more than
two years until its maturity or final expiration date.
ELIGIBLE AMOUNT: Eligible Amount is that portion of the current specified amount
of the base policy considered "eligible" under Eligible Coverages. For any
Eligible Coverages which are provided by life insurance riders, the Eligible
Amount will be the lowest scheduled death benefit within two years after
satisfactory proof of terminal illness is received at the Home Office.
MAXIMUM ACCELERATED BENEFIT: The maximum benefit is 50% of the Eligible Amount,
less an amount up to two guideline level premiums for the base policy and any
riders. This maximum benefit is subject to the limitations described in the
Total Accelerated Benefit provision.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider will be
the policy date of the base policy to which this rider is attached.
TIRSL 4099
<PAGE>
"SURVIVING INSURED" means the Insured who remains alive after one of the
Insureds has died.
TERMINAL ILLNESS: A non-correctable medical condition that, with a reasonable
degree of medical certainty, will result in the death of the Surviving Insured
in less than 12 months from the date of the physician's statement and that was
first diagnosed while the policy was in force.
"YOU" AND "YOUR" refer to the owner of the policy to which this rider is
attached. The Owner may also be the Surviving Insured.
"WE", "US" OR "OUR" refer to Ameritas Variable Life Insurance Company. Our
Home Office means our Administrative Office at P.O. Box 82550, Lincoln, Nebraska
68501-2550.
SATISFACTORY PROOF OF TERMINAL ILLNESS
Before payment of any accelerated benefit, we will require you to provide us
with proof, satisfactory to us, that the Surviving Insured has a terminal
illness. Satisfactory proof will include a properly completed claim form and a
written statement from a duly licensed physician who is licensed in the United
States and who is not yourself or the Surviving Insured, nor related to either
the Surviving Insured or yourself. We reserve the right to obtain a second
medical opinion at our expense.
EFFECT ON YOUR POLICY
The accelerated benefit first will be used to repay any outstanding policy loans
and unpaid loan interest. The accelerated benefit will be treated as a lien
against your policy values.
Death proceeds which are payable on the death of the Surviving Insured will be
reduced by the amount of the lien and any policy loans, plus accrued interest.
After payment of the accelerated benefit, and if sufficient premium to keep the
policy in force is not paid by the end of the grace period, premiums will be
paid by an addition to the lien for up to two years from the date we receive
satisfactory proof of terminal illness. After this two year period, you are
required to pay premiums when due to keep the policy in force. If the policy
lapses, the lien, any policy loans, and accrued interest will be deducted from
any accumulation values.
Your access to the net cash surrender value of your policy and to the net cash
surrender value of any riders through policy loans, partial withdrawals, if
permitted, or full surrender is limited to any excess of the net cash surrender
value over the lien including any accrued interest.
INTEREST
We will charge interest on the amount of the lien. The interest accrues daily at
the same interest rate as the policy's loan interest rate.
TIRSL 4099
<PAGE>
Accrued interest will be added to the lien on the policy anniversary. Interest
does not continue to accrue on the lien when the lien and any policy loans, plus
accrued interest, equals the death benefit (prior to the deduction of the lien,
policy loans and accrued interest) of the policy and any riders.
CONDITIONS
The payment of any accelerated benefit is subject to the following conditions:
1. Any Eligible Coverages must be in force on the date we receive
satisfactory proof of terminal illness.
2. Any accumulation value less any applicable surrender charge must be less
than the maximum accelerated benefit.
3. We will not make payment of any accelerated benefit if that payment would
be less than $4,000.
4. The release of any collateral assignees, the release of all parties to
any "split dollar" agreements and the approval of any irrevocable
beneficiaries is required.
5. The policy must be collaterally assigned to us for an amount equal to the
lien and accrued interest. No changes to the policy are permitted without
our consent.
6. This rider allows for the accelerated payment of death benefit proceeds,
which would otherwise be payable to your beneficiary. This is not meant
to cause you to be required to access and exhaust these benefits
involuntarily. Therefore, you are not eligible for this benefit:
a. If you are required by law to use this benefit to meet the claims
of creditors, whether in bankruptcy or otherwise; or
b. If you are required by a government agency to use this benefit in
order to apply for, obtain, or otherwise keep a government benefit
or entitlement.
ADDITIONAL BENEFIT
If the maximum accelerated benefit is not paid initially, an additional
accelerated benefit may be paid up to the difference as long as this amount is
at least $4,000. This additional benefit is only available if it has been less
than 12 months from the date we received satisfactory proof of terminal illness.
We may require additional satisfactory proof of terminal illness at this time.
TOTAL ACCELERATED BENEFIT
The total amount we will pay as an accelerated benefit due to the terminal
illness of the Surviving Insured will not exceed $250,000 even if there is more
than one policy with us or one of our affiliates which provides coverage on the
Surviving Insured.
TIRSL 4099
<PAGE>
ADMINISTRATIVE CHARGE
We may charge a one-time administrative charge which will be deducted from the
accelerated benefit. This charge will not exceed $50.
GENERAL PROVISIONS
INCONTESTABILITY: The validity of this rider cannot be contested after it has
been in force while either Insured is alive for a period of two years from the
effective date of the rider.
REINSTATEMENT: This rider may be reinstated with the policy. It will be
reinstated if you meet the requirements for policy reinstatement. If you have
received benefits under this rider, the lien with accrued interest may be paid
or it will be reinstated as if the policy had never terminated.
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On surrender of this rider to us; or
2. On termination of the policy to which this rider is attached.
NONPARTICIPATING: This rider is nonparticipating.
INCORPORATION OF POLICY PROVISIONS INTO RIDER:
The provisions of the policy are hereby referred to and made a part of this
rider unless otherwise specified in this rider.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
TIRSL 4099
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
DISABILITY BENEFIT RIDER ON
DISABILITY OF A COVERED INSURED
CONSIDERATION
This rider is issued in consideration of the application and payment of its cost
of insurance. A copy of the application is attached to the policy. The cost of
insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
DEFINITIONS
COVERED INSURED: Covered Insured means the person so named in the original
application and as shown on the schedule pages.
DISABILITY BENEFIT: For purposes of this rider, the disability benefit is an
amount shown on the schedule pages, selected by you on the application.
RIDER EFFECTIVE DATE: The effective date of all coverage under this rider shall
be as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any rider issued after the policy date, the effective date shall be
the date shown on a supplement to the schedule pages.
3. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
RIDER EXPIRATION DATE: This date is also shown on the schedule pages. It is the
date on which this rider is no longer effective.
TOTAL DISABILITY: Total disability must begin after the effective date of this
rider as shown in the schedule pages and before the policy anniversary nearest
the Covered Insured's 60th birthday. It must result from bodily injury which
occurs or sickness which first manifests itself while this rider is in force.
Total Disability means:
1. Total loss of the sight of both eyes. This loss must be irrecoverable; or
2. Total loss of the use of both hands, both feet, or one hand and one foot.
This loss must be irrecoverable; or
3. The incapacity of the Covered Insured to engage in any substantial duties
of his or her occupation for at least six consecutive months.
(Substantial duties includes managerial or supervisory functions.)
DBRSL 4099
<PAGE>
During the first 24 months of total disability, occupation means the
usual work, employment, business or profession in which the Covered
Insured was engaged immediately before the date of disability. This
includes attendance at school or college as a full-time student. After 24
months of total disability a Covered Insured who is engaged in any
occupation for remuneration or profit will not be considered totally
disabled.
BENEFITS
While the Covered Insured is totally disabled, the disability benefit will be
applied as premium. The premium will be credited as of the last monthly activity
date, prior to the approval date of the claim and will be credited annually
thereafter, during continuance of total disability. In addition, while the
Covered Insured is totally disabled, the cost of insurance for this rider will
not be deducted from the accumulation value. All other monthly deductions will
apply.
You may choose to continue to pay your planned periodic premiums or make any
unscheduled premium payments while you are receiving a disability benefit.
If total disability begins after the grace period, then no benefits will be paid
under this rider. If any portion of a disability benefit would affect the tax
qualifications of this policy as described in Section 7702 of the Internal
Revenue Code, as amended, the benefit payable will be reduced by that portion
considered to be excess premium.
GENERAL PROVISION
NOTICE OF DISABILITY: To receive this benefit, written notice of claim must be
received at the Home Office. It must be received: (a) while the Covered Insured
is living; (b) while the Covered Insured is totally disabled; and (c) not later
than 9 months after the Covered Insured has become totally disabled.
If such notice is not furnished in the required time limit, the claim will not
be accepted. But a late claim will be accepted if it can be shown that it was
not reasonably possible to meet the requirements and that notice was given as
soon as was reasonably possible. In no event, however, will the Covered Insured
receive any benefit under this rider for a period prior to one year before the
date on which notice was received.
PROOF OF TOTAL DISABILITY: Approval of the initial notice of claim will be
granted after we receive satisfactory written proof that the Covered Insured is
totally disabled. Proof must be presented at the Home Office: (a) while the
Covered Insured is living; (b) before total disability has ended or been
interrupted; and (c) within 12 months after we receive the notice of total
disability. Forms approved by us must be used.
Similar proof that the total disability is continuing may be required at
reasonable intervals. If the Covered Insured fails to furnish such proof, the
disability benefit will cease.
INCONTESTABILITY: While the Covered Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
REINSTATEMENT: Coverage under this rider may be reinstated with the policy if no
more than 3 years have passed since the date of termination. Reinstatement must
DBRSL 4099
<PAGE>
occur before the rider expiration date. Such reinstatement may occur any time
before the policy anniversary nearest the Covered Insured's 60th birthday. The
requirements for reinstatement are:
1. Receipt of evidence of insurability satisfactory to us.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
EXCLUSIONS: The Covered Insured will not be eligible for the disability benefit
if the total disability on which the claim is based results from:
1. Self-inflicted bodily injury while sane or insane, other than accidental
injury; or
2. War or any act of war, whether declared or not, regardless of whether the
Covered Insured is in the armed forces.
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us; or
4. On termination of the policy to which this rider is attached.
5. On death of covered Insured.
CHANGE OF POLICY: Once the disability benefit commences, you cannot change the
specified amount of insurance, the death benefit option, the mode of the planned
periodic premium payments, or change the policy to another form of insurance.
Cost of Insurance Deductions After The Rider Has Terminated: We will not be
liable for the cost of insurance deductions on this rider after it terminates
except to return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider.
NONPARTICIPATING: This rider is nonparticipating.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
DBRSL 4099
<PAGE>
This page intentionally left blank.
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
ESTATE PROTECTION RIDER
LAST SURVIVOR FOUR YEAR TERM INSURANCE
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of both Insureds. Death must occur
while the policy and this rider are in force. Payment is subject to the
provisions of the policy and this rider.
DEFINITIONS
SURVIVING INSURED: Surviving Insured means the Insured who remains alive after
one of the Insureds has died.
BENEFICIARY: Unless otherwise changed, the beneficiary for the benefit payable
under this rider will be the named beneficiary as shown in the application for
the base policy.
While each Insured is living, you may change the beneficiary by written request
in a form satisfactory to us. The change will take effect on the date we record
it in the Home Office.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is
shown in the schedule pages.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand multiplied by the rider specified amount of insurance in thousands. The
rates will
ESP 4099
<PAGE>
be based on the issue age, sex, tobacco usage and risk class of each Insured and
the rider duration. The rates will be adjusted for any table rating and/or flat
extra rating. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
shown in the policy schedule. We have the option of charging less than the
maximum. Each year, the current annual cost of insurance rates for this rider
will be declared for the next policy year. Any change in the current cost of
insurance rates will apply to Insureds covered under this rider having the same
issue age, sex, tobacco usage and risk class and whose riders have been in
effect for the same length of time. We cannot increase rates because of a change
in status of either Insured's health.
general provisions
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached; or
5. On the death of the Surviving Insured.
SATISFACTORY PROOF OF DEATH: All of the following must be submitted upon the
death of the Surviving Insured:
1) A certified copy of the death certificate for both Insureds;
2) A Notice of Death Claim;
3) Any other information that we may reasonably require to establish
the validity of the claim.
REINSTATEMENT: If both Insureds are living, this rider may be reinstated with
the policy if no more than 3 years have passed since the date of termination.
Reinstatement must occur before the expiration date of this rider. The
requirements for reinstatement are:
1. Receipt of satisfactory evidence of insurability that both Insureds are
insurable in the same rating classes as when the rider was issued.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE EXCLUSION: We will limit our liability if the death of either Insured is
as a result of suicide, while sane or insane, within two years from the rider
effective date. The proceeds payable will be an amount equal to the cost of
insurance deductions charged for this rider.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
ESP 4099
<PAGE>
COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable
for the cost of insurance payments on this rider after it terminates except to
return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
ESP 4099
<PAGE>
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<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOG0
FIRST-TO-DIE TERM RIDER
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of either Insured. Death must occur
while the policy and this rider are in force. Payment is subject to the
provisions of the policy and this rider.
DEFINITIONS
BENEFICIARY: Unless otherwise changed, the beneficiary for the benefit payable
under this rider will be the named beneficiary as shown in the application for
this rider.
While both Insureds are alive, you may change the beneficiary by written request
in a form satisfactory to us. The change will take effect on the date we record
it in the Home Office.
Rider Effective Date: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is
shown in the schedule pages.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand multiplied by the rider specified amount of insurance in thousands. The
rates will be based on the issue age, sex, tobacco usage and risk class of each
Insured and the rider duration. The rates will be adjusted for any table rating
and/or flat extra rating. The Maximum Guaranteed Cost of Insurance Rates per
1,000 are shown in the policy schedule. We have the option of charging less
than the maximum. Each year,
FTD 4099
<PAGE>
The current annual cost of insurance rates for this rider will be declared for
the next policy year. Any change in the current cost of insurance rates will
apply to Insureds covered under this rider having the same issue age, sex,
tobacco usage and risk class and whose riders have been in effect for the same
length of time. We cannot increase rates because of a change in status of either
Insured's health.
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached; or
5. On the death of either Insured.
SATISFACTORY PROOF OF DEATH: All of the following must be submitted upon the
death of either Insured:
1) A certified copy of the death certificate;
2) A Notice of Death Claim;
3) Any other information that we may reasonably require to establish
the validity of the claim.
REINSTATEMENT: If both Insureds are living, this rider may be reinstated with
the policy if no more than 3 years have passed since the date of termination.
Reinstatement must occur before the expiration date of this rider. The
requirements for reinstatement are:
1. Receipt of satisfactory evidence of insurability that both Insureds are
insurable in the same rating classes as when the rider was issued.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE EXCLUSION: We will limit our liability if the death of either Insured is
as a result of suicide, while sane or insane, within two years from the rider
effective date. The proceeds payable will be an amount equal to the cost of
insurance deductions charged for this rider.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
FTD 4099
<PAGE>
COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable
for the cost of insurance payments on this rider after it terminates except to
return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
FTD 4099
<PAGE>
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<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
POLICY SPLIT EXCHANGE RIDER
CONSIDERATION
This rider is attached to and made a part of your policy. A copy of the
application is attached to the policy.
PREMIUMS
There are no additional premiums or cost of insurance deductions for this rider.
BENEFITS
We will allow you to exchange the policy to which this rider is attached for two
individual policies, one on the life of each Insured, subject to all the
conditions for exchange. Evidence of insurability satisfactory to us will be
required for each Insured.
We will waive all or part of the surrender charge of this policy which will be
credited to the new policy(ies). The portion that we will waive is calculated on
a pro rata basis, never to exceed the full surrender charge amount. To determine
the amount of surrender charge to be waived, divide (a) by (b), and multiply
times (c), where:
(a) is the new policy's specified amount of insurance;
(b) is the original policy's specified amount at the time of
exchange; and
(c) is the original policy's total surrender charge before any
adjustments have been made.
The waived portion(s) of the surrender charge will be credited to the new
policy(ies) on the exchange date. However, if the new policy is returned in
accordance with the policy's Right to Examine provision, any waived surrender
charge that had been credited will not be returned.
DEFINITIONS
EXCHANGE DATE: The exchange date is the monthly activity date on or next
following the date the conditions for exchange are satisfied.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
PSO 4099
<PAGE>
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
CONDITIONS FOR EXCHANGE
The following conditions must be met:
1. The original policy and all riders must be surrendered and returned to us
prior to the exchange date.
2. The release of any collateral assignees, the release of all parties to
any "split dollar" agreements and the approval of any irrevocable
beneficiaries is required.
3. The original policy and this rider must be in force.
4. Both Insureds must be alive at the time of the request and on the
exchange date.
5. Evidence of insurability satisfactory to us will be required for
each Insured.
6. Coverage under the original policy ends on the exchange date.
TERMS OF NEW POLICIES
The new policy(ies) are subject to the following terms:
1. The new policy(ies) will be flexible premium adjustable life contracts
which we are offering on the exchange date.
2. The specified amount, accumulation values and outstanding policy debt as
of the exchange date, will be allocated to the new policy(ies) in
proportion to the percentage split requested. The specified amount
cannot be less than $50,000 for either policy.
3. If the policy value allocated to each new policy is less than the
required minimum premium for that policy, we will require a payment to
be made on the exchange date.
4. The policy date of the new policy(ies) will be the exchange date.
5. Each new policy will be based on the Insured's age, sex, tobacco usage
and risk class on the exchange date.
6. Any rider attached to the original policy may only be added to the new
policy(ies) with our consent.
7. Beneficiary designations must be provided for each policy with your
request for exchange.
8. The policy date of the policy to which this rider is attached will be
treated as the policy date of the new policy(ies) for purposes of the
Suicide provision(s).
PSO 4099
<PAGE>
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached;
5. On the death of either Insured; or
6. On the exchange date.
REINSTATEMENT: This rider may be reinstated with the policy. It will be
reinstated if you meet the requirements for policy reinstatement.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
PSO 4099
<PAGE>
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<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
SECOND-TO-DIE TERM RIDER
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of both Insureds. Death must occur
while the policy and this rider are in force. Payment is subject to the
provisions of the policy and this rider.
CONVERSION OF THIS RIDER
While the policy and this rider are in force, you may convert this rider as an
increase in the specified amount of the policy. It may not be converted to
another policy. You may do this at any time after the rider conversion option
date. Evidence of insurability will not be required, except for additional
benefits.
DEFINITIONS
SURVIVING INSURED: Surviving Insured means the Insured who remains alive after
one of the Insureds has died.
BENEFICIARY: Unless otherwise changed, the beneficiary for the benefit payable
under this rider will be the named beneficiary as shown in the application for
the base policy.
While each Insured is living, you may change the beneficiary by written request
in a form satisfactory to us. The change will take effect on the date we record
it in the Home Office.
RIDER CONVERSION OPTION DATE: The date shown on the schedule pages.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided in
the original application.
2. For any insurance that has been reinstated, the effective date shall be
the monthly activity date on or next following the date we approve the
reinstatement.
STD 4099
<PAGE>
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is
shown in the schedule pages.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand multiplied by the rider specified amount of insurance in thousands. The
rates will be based on the issue age, sex, tobacco usage and risk class of each
Insured and the rider duration. The rates will be adjusted for any table rating
and/or flat extra rating. The Maximum Guaranteed Cost of Insurance Rates per
$1,000 are shown in the policy schedule. We have the option of charging less
than the maximum. Each year, the current annual cost of insurance rates for this
rider will be declared for the next policy year. Any change in the current cost
of insurance rates will apply to Insureds covered under this rider having the
same issue age, sex, tobacco usage and risk class and whose riders have been in
effect for the same length of time. We cannot increase rates because of a change
in status of either Insured's health.
GENERAL PROVISIONS
TERMINATION OF RIDER: This rider will automatically terminate on the earliest of
these conditions:
1. On the rider expiration date;
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us;
4. On termination of the policy to which this rider is attached; or
5. On the death of the Second Insured.
SATISFACTORY PROOF OF DEATH: All of the following must be submitted upon the
death of the Second Insured:
1) A certified copy of the death certificate for both Insureds;
2) A Notice of Death Claim;
3) Any other information that we may reasonably require to establish
the validity of the claim.
REINSTATEMENT: If both Insureds are living, this rider may be reinstated with
the policy if no more than 3 years have passed since the date of termination.
Reinstatement must occur before the expiration date of this rider. The
requirements for reinstatement are:
STD 4099
<PAGE>
1. Receipt of satisfactory evidence of insurability that both Insureds are
insurable in the same rating classes as when the rider was issued.
2. Payment of the minimum cost of insurance sufficient to keep the rider in
force for 3 months.
SUICIDE EXCLUSION: We will limit our liability if the death of either Insured is
as a result of suicide, while sane or insane, within two years from the rider
effective date. The proceeds payable will be an amount equal to the cost of
insurance deductions charged for this rider.
INCONTESTABILITY: While either Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable
for the cost of insurance payments on this rider after it terminates except to
return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NON-PARTICIPATING: This rider is non-participating.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
STD 4099
<PAGE>
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<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
TERM RIDER FOR COVERED INSURED
CONSIDERATION
This rider is issued in consideration of the application and the payment of its
cost of insurance. A copy of the application is attached to the policy. The cost
of insurance for this rider is deducted from the accumulation value at the same
time and in the same manner as the cost of insurance for the policy.
DEFINITIONS
BENEFICIARY: The term "beneficiary" in this rider means only the beneficiary for
the benefit payable at the Covered Insured's death. The term "beneficiary" in
other provisions of the policy means only the beneficiary for the benefits
payable under the policy.
Unless otherwise changed, the beneficiary for the benefit payable under this
rider will be the named beneficiary as shown in the application for this rider.
While the Covered Insured is living, you may change the beneficiary by written
request in a form satisfactory to us. The change will take effect on the date we
record it in the Home Office.
COVERED INSURED: Covered Insured means each person so named in an application
or supplemental application, if approved by us, and shown on the schedule pages.
RIDER CONVERSION OPTION EXPIRATION DATE: The date shown on the schedule pages.
RIDER EFFECTIVE DATE: The effective date of coverage under this rider shall be
as follows:
1. The policy date shall be the effective date for all coverage provided
in the original application.
2. For any rider issued after the policy date or for any coverage on
another Covered Insured, the effective date shall be the date shown on
a supplement to the schedule pages.
3. For any insurance that has been reinstated, the effective date shall be
the monthly activity date that falls on or next follows the date we
approve the reinstatement.
RIDER EXPIRATION DATE: This date is also shown in the schedule pages. It is the
date on which this rider is no longer effective.
RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance for
a Covered Insured is shown for that Covered Insured on the schedule pages.
TRCI 4099
<PAGE>
BENEFITS
We agree to pay the rider specified amount of insurance to the beneficiary upon
receipt of satisfactory proof of the death of any Covered Insured. Death must
occur while this rider is in force with respect to the Covered Insured. Payment
is subject to the provisions of the policy and this rider.
COST OF INSURANCE
The annual cost of insurance upon renewal for this rider will be a rate per
thousand at the attained age of that Covered Insured multiplied by the rider
specified amount of insurance in thousands. The rates will be based on the issue
age, sex, tobacco usage and risk class of the Covered Insured and the rider
duration. The rates will be adjusted for any table rating and/or flat extra
rating. The rating and risk class of the Covered Insured are shown in the policy
schedule. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
attached. We have the option of charging less than the maximum. Each year, the
current annual cost of insurance rates for this rider will be declared for the
next policy year. Any change in the current cost of insurance rates will apply
to Covered Insureds under this rider having the same issue age, sex, tobacco
usage and risk class and whose riders have been in effect for the same length of
time. We cannot increase rates because of a change in status of the Covered
Insured's health.
CONVERSION OF THIS RIDER
While the policy and this rider are in force, you may convert it for a permanent
policy on the life of the Covered Insured. You may do this at any time prior to
attained age 70 of the Covered Insured. Evidence of insurability will not be
required, except for additional benefits.
If the policy terminates prior to the rider conversion option expiration date
due to the death of the insured(s) under the basic policy, the Covered Insured
may still convert within 60 days of the date of termination.
The new policy will have a specified amount of insurance no more than the rider
specified amount of insurance in effect on the date of conversion for that
Covered Insured.
The policy date of the new policy will be the date of conversion. The new policy
will be subject to our then current rules as to the amount and the kind of
policy issued. The rates for the new policy will be adjusted for any table
rating and/or flat extra rating that was being charged for this rider. Any
restrictions found in this rider will also be found in the new policy.
Application must be made and the first premium for the new policy paid to us
before this rider terminates for the Covered Insured on whom coverage is being
converted. In addition, the Covered Insured on whom coverage is being converted
must be alive on the policy date of the new policy.
GENERAL PROVISIONS
Termination of Rider: This rider will automatically terminate for each Covered
Insured on the earliest of these conditions:
1. On the rider expiration date for each Covered Insured;
TRCI 4099
<PAGE>
2. On the monthly activity date on or next following the date we receive
your written request;
3. On surrender of this rider to us; or
4. On termination of this policy.
REINSTATEMENT: This rider may be reinstated with the policy if no more than 3
years have passed since the date of termination. Reinstatement must occur before
the expiration date of this rider. The requirements for reinstatement are:
1. Receipt by us of evidence of insurability of the Covered Insured for
whom coverage is being reinstated. This evidence must be satisfactory
to us.
2. Payment of the minimum cost of insurance sufficient to keep the rider
in force for 3 months.
SUICIDE: If the Covered Insured commits suicide, while sane or insane within 2
years from the rider effective date with respect to that Covered Insured, the
total liability shall be the cost of insurance for that Covered Insured.
INCONTESTABILITY: While the Covered Insured is alive, the validity of this rider
cannot be contested after it has been in force for a period of 2 years from the
rider effective date.
COST OF INSURANCE DEDUCTIONS AFTER RIDER EXPIRATION DATE: We will not be liable
for the cost of insurance deductions on this rider for any Covered Insured after
it terminates except to return them.
INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are
hereby referred to and made a part of this rider unless otherwise specified in
this rider.
This rider has no cash or loan value.
NONPARTICIPATING: This rider is nonparticipating.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
/s/Donald R. Stading /s/William J. Atherton
Secretary President
TRCI 4099
<PAGE>
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<PAGE>
<TABLE>
<CAPTION>
MAXIMUM GUARANTEED ANNUAL COST OF INSURANCE RATES
PER $1000 APPLICABLE UPON RENEWAL
<S> <C> <C> <C> <C> <C> <C>
MALE MALE MALE FEMALE FEMALE FEMALE
AGE PREFERRED NON-TOBACCO TOBACCO PREFERRED NON-TOBACCO TOBACCO
- -------------------------------------------------------------------------------------------------------------------
20 1.68 1.68 2.32 1.01 1.01 1.17
21 1.66 1.66 2.32 1.03 1.03 1.19
22 1.63 1.63 2.28 1.04 1.04 1.22
23 1.59 1.59 2.24 1.06 1.06 1.25
24 1.55 1.55 2.18 1.08 1.08 1.28
25 1.50 1.50 2.11 1.10 1.10 1.31
26 1.47 1.47 2.07 1.13 1.13 1.36
27 1.45 1.45 2.05 1.15 1.15 1.40
28 1.44 1.44 2.05 1.18 1.18 1.45
29 1.44 1.44 2.08 1.22 1.22 1.51
30 1.45 1.45 2.13 1.25 1.25 1.58
31 1.48 1.48 2.20 1.29 1.29 1.64
32 1.52 1.52 2.29 1.33 1.33 1.71
33 1.58 1.58 2.41 1.38 1.38 1.80
34 1.65 1.65 2.55 1.44 1.44 1.90
35 1.73 1.73 2.72 1.51 1.51 2.01
36 1.82 1.82 2.92 1.61 1.61 2.18
37 1.94 1.94 3.17 1.73 1.73 2.38
38 2.07 2.07 3.45 1.86 1.86 2.61
39 2.21 2.21 3.77 2.00 2.00 2.86
40 2.38 2.38 4.14 2.17 2.17 3.16
41 2.56 2.56 4.54 2.35 2.35 3.48
42 2.75 2.75 4.98 2.53 2.53 3.80
43 2.96 2.96 5.46 2.71 2.71 4.12
44 3.19 3.19 5.99 2.89 2.89 4.44
45 3.45 3.45 6.55 3.09 3.09 4.78
46 3.73 3.73 7.13 3.30 3.30 5.13
47 4.03 4.03 7.76 3.53 3.53 5.49
48 4.36 4.36 8.44 3.77 3.77 5.88
49 4.72 4.72 9.18 4.04 4.04 6.31
50 5.13 5.13 10.00 4.34 4.34 6.77
51 5.60 5.60 10.93 4.67 4.67 7.26
52 6.14 6.14 11.98 5.05 5.05 7.82
53 6.76 6.76 13.17 5.47 5.47 8.44
54 7.45 7.45 14.47 5.90 5.90 9.07
55 8.22 8.22 15.86 6.36 6.36 9.72
56 9.06 9.06 17.33 6.82 6.82 10.36
57 9.95 9.95 18.88 7.27 7.27 10.96
58 10.94 10.94 20.51 7.72 7.72 11.55
59 12.05 12.05 22.26 8.23 8.23 12.18
</TABLE>
(Continued on next page)
The annual cost of insurance upon renewal for this rider will be a rate per
thousand at the attained age of that Covered Insured multiplied by the rider
specified amount of insurance in thousands. The rates will be based on the issue
age, sex, tobacco usage and risk class of the Covered Insured and the rider
duration. The rates will be adjusted for any table rating and/or flat extra
rating. The rating and risk class of the Covered Insured are shown in the policy
schedule. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
attached. We have the option of charging less than the maximum. Each year, the
current annual cost of insurance rates for this rider will be declared for the
next policy year. Any change in the current cost of insurance rates will apply
to Covered Insureds under this rider having the same issue age, sex, tobacco
usage and risk class and whose riders have been in effect for the same length of
time. We cannot increase rates because of a change in status of the Covered
Insured's health.
TRCI 4099
<PAGE>
<TABLE>
<CAPTION>
(Continued from previous page)
MAXIMUM GUARANTEED ANNUAL COST OF INSURANCE RATES
PER $1000 APPLICABLE UPON RENEWAL
<S> <C> <C> <C> <C> <C> <C>
MALE MALE MALE FEMALE FEMALE FEMALE
AGE PREFERRED NON-TOBACCO TOBACCO PREFERRED NON-TOBACCO TOBACCO
- -------------------------------------------------------------------------------------------------------------------
60 13.29 13.29 24.21 8.83 8.83 12.93
61 14.67 14.67 26.41 9.57 9.57 13.87
62 16.26 16.26 28.89 10.49 10.49 15.08
63 18.06 18.06 31.66 11.62 11.62 16.55
64 20.06 20.06 34.69 12.89 12.89 18.19
65 22.25 22.25 37.90 14.26 14.26 19.92
66 24.62 24.62 41.26 15.68 15.68 21.68
67 27.16 27.16 44.74 17.13 17.13 23.38
68 29.92 29.92 48.39 18.63 18.63 25.10
69 32.98 32.98 52.35 20.30 20.30 26.97
70 36.44 36.44 56.72 22.26 22.26 29.18
71 40.39 40.39 61.63 24.65 24.65 31.98
72 44.95 44.95 67.18 27.58 27.58 35.41
73 50.11 50.11 73.33 31.09 31.09 39.49
74 55.78 55.78 80.07 35.13 35.13 44.14
75 61.84 61.84 87.27 39.64 39.64 49.22
76 68.24 68.24 94.63 44.52 44.52 54.62
77 74.93 74.93 102.02 49.75 49.75 60.26
78 81.95 81.95 109.49 55.41 55.41 66.22
79 89.52 89.52 117.30 61.68 61.68 72.71
80 97.88 97.88 125.71 68.81 68.81 79.98
81 107.25 107.25 134.96 77.01 77.01 88.23
82 117.82 117.82 145.21 86.46 86.46 97.61
83 129.54 129.54 156.29 97.12 97.12 108.44
84 142.18 142.18 167.83 108.87 108.87 120.18
85 155.45 155.45 179.44 121.58 121.58 132.65
86 169.18 169.18 190.84 135.16 135.16 145.75
87 183.16 183.16 202.54 149.59 149.59 159.35
88 197.33 197.33 214.73 164.88 164.88 173.52
89 211.89 211.89 226.85 181.15 181.15 188.25
90 227.05 227.05 239.08 198.53 198.53 204.58
91 243.16 243.16 251.80 217.42 217.42 222.16
92 260.82 260.82 266.55 238.53 238.53 241.66
93 281.75 281.75 285.47 263.35 263.35 264.56
94 309.83 309.83 311.27 295.23 295.23 295.23
95 351.86 351.86 351.86 341.02 341.02 341.02
96 420.99 420.99 420.99 413.88 413.88 413.88
97 541.00 541.00 541.00 537.24 537.24 537.24
98 745.15 745.15 745.15 743.96 743.96 743.96
99 900.00 900.00 900.00 900.00 900.00 900.00
</TABLE>
The annual cost of insurance upon renewal for this rider will be a rate per
thousand at the attained age of that Covered Insured multiplied by the rider
specified amount of insurance in thousands. The rates will be based on the issue
age, sex, tobacco usage and risk class of the Covered Insured and the rider
duration. The rates will be adjusted for any table rating and/or flat extra
rating. The rating and risk class of the Covered Insured are shown in the policy
schedule. The Maximum Guaranteed Cost of Insurance Rates per $1,000 are
attached. We have the option of charging less than the maximum. Each year, the
current annual cost of insurance rates for this rider will be declared for the
next policy year. Any change in the current cost of insurance rates will apply
to Covered Insureds under this rider having the same issue age, sex, tobacco
usage and risk class and whose riders have been in effect for the same length of
time. We cannot increase rates because of a change in status of the Covered
Insured's health.
TRCI 4099
PARTICIPATION AGREEMENT
AMONG
CALVERT VARIABLE SERIES,
------------------------
CALVERT DISTRIBUTORS, INC.,
---------------------------
AND
AMERITAS VARIABLE LIFE INSURANCE COMPANY
----------------------------------------
THIS AGREEMENT, made and entered into this day of , 1999 by and among
AMERITAS VARIABLE LIFE INSURANCE COMPANY, (hereinafter the "Company"), a
Nebraska corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule C hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the CALVERT VARIABLE SERIES, a corporation organized under the laws of the State
of Maryland (hereinafter the "CVS") and CALVERT DISTRIBUTORS, INC. (hereinafter
the "Underwriter"), a Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in CVS is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, only certain of the Portfolios of CVS set forth in Exhibit "A"
(the "Fund") are subject to this Participation Agreement; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated November 21, 1988 (File No. 812-7095), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e- 2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, CALVERT ASSET MANAGEMENT CO.(the "Adviser") is duly registered
as an investment adviser under the Federal Investment Advisers Act of 1940 and
any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company on the date shown for such Account on Schedule C hereto, to set aside
and invest assets attributable to the aforesaid variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, (hereinafter the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, and the Underwriter agree as follows:
-2-
<PAGE>
ARTICLE I. SALE OF FUND SHARES
-------------------
1.1 The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such order by 9:30 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open trading and on which the Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Directors of the Fund (hereinafter the "Directors") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Directors
acting in good faith and light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Sections 2.5 and 2.12 of
Article II of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each
-3-
<PAGE>
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such request for redemption on the
next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, as such Schedule A may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter forty-five (45) days
written notice of its intention to make such other investment company available
as a funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement; or (d) the Fund or Underwriter consents to the use of
such other investment company.
1.7 The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purposes of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire, telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Funds' shares. The Company hereby
elects to receive all such income, dividends, and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to
-4-
<PAGE>
revoke this election and to receive all such income, dividends, and capital gain
distributions in cash. The Fund shall notify the Company of the number of shares
so issued as payment of such dividends and distributions.
1.10 The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 7:00 p.m.
Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 44- 402.01 of the Nebraska Insurance Code and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Nebraska and all
applicable federal state securities laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the Registration Statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
-5-
<PAGE>
2.4 The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees, and
expenses are and shall at all times remain in compliance with the laws of the
State of Nebraska and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Nebraska to the extent required to perform this
Agreement.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Nebraska and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Nebraska and any applicable state and federal securities laws.
-6-
<PAGE>
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Section 17g- (1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by Section 270.17g-1 of the 1940 Act or related provisions as may be promulgated
from time to time. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.12 The Company represents and warrants that it will not purchase Fund
shares with Account assets derived from the sale of Contracts to deferred
compensation plans with respect to service for state and local governments which
qualify under Section 457 of the federal Internal Revenue Code, as may be
amended. The Company may purchase Fund shares with Account assets derived from
any sale of a Contract to any other type of tax-advantaged employee benefit
plan; provided however that such plan has no more than 500 employees who are
eligible to participate at the time of the first such purchase hereunder by the
Company of Fund shares derived from the sale of such Contract.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
---------------------------------------
3.1 The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
-7-
<PAGE>
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received: so
long as and to the extent that the Securities and
Exchange Commission continues to interpret the Investment
Company Act to require pass-through voting privileges
for variable contract owners. The Company reserves the
right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible
for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in
a manner consistent with the standards set forth in
Schedule B attached hereto and incorporated herein by this
reference, which standards will also be provided to the
other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of the Act) as well as
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange
-8-
<PAGE>
Commission's interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
------------------------------
4.1 The Company Shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen (15) Business Days prior to its use. No such material
shall be used if the Fund or its designee object to such use within fifteen (15)
Business Days after receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen (15) Business Days prior to its
use. No such material shall be used if the Company or its designee object to
such use within fifteen (15) Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
-9-
<PAGE>
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the
Securities and Exchange Commission.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. FEES AND EXPENSES
-----------------
5.1 The Fund and Underwriter shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
-10-
<PAGE>
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal laws and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
all taxes on the issuance or transfer of the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
---------------
6.1 The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation ss. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations.
ARTICLE VII. POTENTIAL CONFLICTS
-------------------
7.1 The Board of Directors of the Fund (the "Board") will monitor the
Fund for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts investing in the Fund.
An irreconcilable material conflict may arise for a variety of reasons,
including; (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance
-11-
<PAGE>
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested Directors, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement; provided, however that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and termination must
take place within six (6) months after the Fund gives written notice that this
provision is being implemented, and until the end of that six (6) month period
the Underwriter and Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
-12-
<PAGE>
7.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement within
six (6) months after the Board informs the Company in writing that it has
determined that such decision has created an irreconcilable material conflict;
provided, however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board. Until the end of the
foregoing six (6) month period, the Underwriter and Fund shall continue to
accept and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.6 For purposes of Sections 7.3 though 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
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<PAGE>
ARTICLE VIII. INDEMNIFICATION
---------------
8.1 INDEMNIFICATION BY THE COMPANY
------------------------------
8.1(A). The Company agrees to indemnify and hold harmless the
Fund and each of its Trustees and officers and each person, if any who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company), or litigation (including legal and other expenses), to which
the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares
or the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the Registration Statement or prospectus
for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Company by or on behalf of the Fund for use in the
Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or
persons under its control, with respect to the sale
or distribution of the Contract or Fund shares; or
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<PAGE>
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading if such a statement or
omission was made in reliance upon information
furnished to the Fund by or on behalf of the Company;
or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under
the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Company in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Company, as limited by and in accordance with the
provisions of Sections 8.1(b) and 8.1(c) hereof.
8.1(B). The Company shall not be liable under this
indemnification provisions with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise
be subject to by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(C). The Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled
to participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the
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<PAGE>
party named in the action. After notice from the Company to such party
of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(D). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings against
them in connection with the issuance or sale of the Fund shares or the
Contracts or the operation of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER
----------------------------------
8.2(A). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to a ny Indemnified
Party if such statement or omission or alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
-16-
<PAGE>
(ii) arise out of or as result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished by the Company by or on
behalf of the Fund; or
(vi) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(B). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to each
Company or the Account, whichever is applicable.
-17-
<PAGE>
8.2(C). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Underwriter in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim
shall have been served upon Indemnified Party (or after such
Indemnified Party shall have received notice of such services on any
designated agent), but failure to notify the Underwriter of any such
claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the
Underwriter will be entitled to participate, at its own expense, in the
defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.2(D). The Company agrees promptly to notify the Underwriter
of the commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or sale of
the Contracts or the operation of each Account.
ARTICLE IX. APPLICABLE LAW
--------------
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules, and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
-18-
<PAGE>
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall terminate:
(a) at the option of any party, upon one year advance written
notice to the other parties; provided, however such notice
shall not be given earlier than one year following the date of
this Agreement; or
(b) at the option of the Company, to the extent that shares of
Portfolios are not reasonably available to meet the
requirements of the Contracts as determined by the Company,
provided, however that such termination shall apply only to
the Portfolio(s) not reasonably available. Prompt notice of
the election to terminate for such cause shall be furnished by
the Company; or
(c) at the option of the Fund, in the event that formal
administrative proceedings are instituted against the Company
by the National Association of Securities Dealers, Inc.
("NASD"), the Securities and Exchange Commission, the
Insurance Commissioner or any other regulatory body regarding
the Company's duties under this Agreement or related to the
sale of the Contracts, with respect to the operation of any
Account, or the purchase of the Fund shares, provided, however
that the Fund determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have
a material adverse effect upon the ability of the Company to
perform its obligations under this Agreement; or
(d) at the option of the Company, in the event that formal
administrative proceedings are instituted against the Fund or
the Underwriter by the NASD, the Securities and Exchange
Commission, or any state securities or insurance department or
any other regulatory body, provided, however that the Company
determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material
adverse effect upon the ability of the Fund or Underwriter to
perform its obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in such Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Portfolio shares of the Fund in
accordance with the terms
-19-
<PAGE>
of the Contracts for which those Portfolio shares had been
selected to serve as the underlying investment media. The
Company will give thirty (30) days' prior written notice to
the Fund of the date of any proposed vote to replace the
Fund's shares; or
(f) at the option of the Company, in the event any of the
Fund's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes
the use of such shares as the underlying investment media of
the Contracts issued or to be issued by the Company; or
(g) at the option of the Company, if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M
of the Code or under any successor or similar provision, or if
the Company reasonably believes that the Fund may fail to so
qualify; or
(h) at the option of the Company, if the Fund fails to meet
the diversification requirements specified in Article VI
hereof; or
(i) at the option of either the Fund or the Underwriter, if
(1) the Fund or the Underwriter, respectively, shall
determine, in their sole judgment reasonably exercised in good
faith, that the Company has suffered a material adverse change
in its business or financial condition or is the subject of
material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact
upon the business and operations of either the Fund or the
Underwriter, (2) the Fund or the Underwriter shall notify the
Company in writing of such determination and its intent to
terminate this Agreement, and (3) after considering the
actions taken by the Company and any other changes in
circumstances since the giving of such notice, such
determination of the Fund or the Underwriter shall continue to
apply on the sixtieth (60th) day following the giving of such
notice, which sixtieth (60th) day shall be the effective date
of termination; or
(j) at the option of the Company, if (1) the Company shall
determine, in its sole judgment reasonably exercised in good
faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business or financial condition
or is the subject of material adverse publicity and such
material adverse change or material adverse publicity will
have a material adverse impact upon the business and
operations of the Company,
-20-
<PAGE>
(2) the Company shall notify the Fund and the Underwriter in
writing of such determination and its intent to terminate the
Agreement, and (3) after considering the actions taken by the
Fund and/or the Underwriter and any other changes in
circumstances since the giving of such notice, such
determination shall continue to apply on the sixtieth (60th)
day following the giving of such notice, which sixtieth (60th)
day shall be the effective date of termination; or
(k) at the option of either the Fund or the Underwriter, if
the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such
notice was given there was no notice of termination
outstanding under any other provision of this Agreement;
provided, however any termination under this Section 10.1(k)
shall be effective forty-five (45) days after the notice
specified in Section 1.6(b) was given.
10.2 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3 Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to terminate
which notice shall set forth the basis for such termination. Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of
Sections 10.1(a), 10.1(i), 10.1(j) or 10.1(k) of this
Agreement, such prior written notice shall be given
in advance of the effective date of termination as
required by such provisions; and
(b) In the event that any termination is based upon the
provisions of Sections 10.1(c) or 10.1(d) of this
Agreement, such prior written notice shall be given
at least ninety (90) days before the effective date
of termination.
10.4 Effective of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without
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<PAGE>
limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.4 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
10.5 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in either Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably satisfactory to the Fund and the Underwriter)
to the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter ninety (90) days
notice of its intention to do so.
ARTICLE XI. NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund: Calvert Variable Series
4550 Montgomery Avenue
Bethesda, MD 20814
Attn: Legal Department
If to the Company: Ameritas Variable Life Insurance Company
5900 "O" Street
P.O. Box 82550
Lincoln, NE 68501
Attn: Legal Department
If to the Underwriter: Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Attn: Legal Department
-22-
<PAGE>
ARTICLE XII. MISCELLANEOUS
-------------
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
directors, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the California Insurance
Commissioner with any information or reports in connection with services
provided under this Agreement which such Commission may request in order to
ascertain whether the variable life insurance operations of the Company are
being conducted in a manner consistent with the California Variable Life
Insurance Regulations and any other applicable law or regulations.
12.7 The Underwriter agrees that to the extent any advisory or other
fees received by the Fund, the Underwriter or the Adviser are determined to be
unlawful in legal or administrative proceedings under
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<PAGE>
the 1973 NAIC model variable life insurance regulation in the states of
California, Colorado, Maryland, and Michigan, the Underwriter shall indemnify
and reimburse the Company for any out of pocket expenses and actual damages the
Company has incurred as a result of any such proceeding; provided, however that
the provisions of Section 8.2(b) of this and 8.2(c) shall apply to such
indemnification and reimbursement obligation. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Underwriter under this Agreement.
12.8 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY:
AMERITAS VARIABLE LIFE INSURANCE
COMPANY
By its authorized officer,
SEAL
By:_____________________________
Title:__________________________
Date:___________________________
FUND:
CALVERT VARIABLE SERIES
By its authorized officer,
SEAL By:____________________________
Title:_________________________
Date:__________________________
UNDERWRITER:
CALVERT DISTRIBUTORS, INC.
By its authorized officer,
SEAL By:__________________________
Title:_______________________
Date:________________________
-24-
June 16, 1999
Ameritas Variable Life Insurance Company
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
With reference to Pre-Effective Amendment No. 1 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 the
Pre-Effective Amendment No. 1 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,
Donald R. Stading
Secretary and General Counsel
June 16, 1999
Ameritas Variable Life Insurance Company
5900 "O" Street
P.O. Box 82550
Lincoln, Nebraska 68501
Gentlemen:
This opinion is furnished in connection with the registration by Ameritas
Variable Life Insurance Company, of a survivorship flexible premium variable
universal life insurance policy ("Contract") under the Securities Act of 1933.
The prospectus included in Pre-Effective Amendment No. 1 to Registration
Statement No. 333-71501 on Form S-6 describes the Contract. The form of Contract
was prepared under my direction and I am familiar with the Registration
Statement and Exhibits thereto. This contract was developed and filed under
Securities and Exchange Commission Rule 6E-3(T), as interpreted at this time by
the SEC staff. In my opinion:
The illustrations of death benefits and accumulation values included in the
section entitled "Illustrations of Death Benefits and Accumulation Values" in
the Appendices of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Contract. The rate
structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to prospective purchasers of the Contract for a male
age 55 and a female age 55, than to prospective purchasers of the Contract
for other ages or for two males or two females.
I hereby consent to the use of this opinion as an exhibit to the Pre-Effective
Amendment No. 1 to the Registration Statement and to the reference to my name
under the heading "Experts" in the prospectus.
Very truly yours,
/s/Thomas P. McArdle
Thomas P. McArdle
Assistant Vice President and
Associate Actuary
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to Registration
Statement No. 333-71501 of Ameritas Variable Life Insurance Company Separate
Account V of our reports dated February 5, 1999, on the financial statements of
Ameritas Variable Life Insurance Company and Ameritas Variable Life Insurance
Company Separate Account V appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.
/s/Deloitte & Touche LLP
Lincoln, Nebraska
June 15, 1999
