As filed with the Securities and Exchange Commission on
August 30, 1999
Registration No. 33-1978
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Post-Effective Amendment No. 16
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. It is proposed that this filing will become effective:
|_| immediate upon filing pursuant to paragraph b
|X| on November 1, 1999 pursuant to paragraph a of Rule 485
|_| on pursuant to paragraph b of Rule 485
<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
17 Summary, Policy Rights
18 The Funds; Calvert Variable Series, Inc. Ameritas Portfolios,
Variable Insurance Products Fund
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
45 Not Applicable
46 The Funds; Accumulation Value
47 The Funds
48 State Regulation
49 Not Applicable
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
-------------- --------------------------
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 VARAIBLE LIFE INSURANCE COMPANY LOGO
PROSPECTUS
5900 "O" Street
P.O. Box 82550/Lincoln, NE 68501
UniVar--A Flexible Premium Variable Universal Life Insurance Policy
issued by Ameritas Variable Life Insurance Company
- --------------------------------------------------------------------------------
Ameritas Variable Life Insurance Company ("AVLIC") is not offering the sale of
Flexible Premium Variable Universal Life Insurance (UniVar Life) Policies (Form
#4002) pursuant to this prospectus. AVLIC stopped issuing UniVar Policies as of
March 1, 1990. The purpose of the prospectus is to inform present Policy Owners
concerning their Policy and further to inform them of AVLIC's offer to exchange
the UniVar Policy for AVLIC's Variable Universal Life Insurance Policy (Applause
Life) (Policy Form #4010). AVLIC proposes to exchange presently owned UniVar
Policies for the new Applause Life Policy as of the original UniVar Issue Date
without additional evidence of insurability on the same size Policy. The UniVar
Policy Owner accepting the exchange offer will first be refunded all of the
sales and acquisition charges deducted from the premium payments, except premium
taxes, plus 12% interest thereon. After the amount is added to the Policy
Owner's Accumulation Values, the exchange will take place on a relative net
asset basis without deducting Surrender Charges on the Surrendered Policy or
sales or acquisition charges on the new Policy. The Policy Owner would then
enjoy the benefits and be subject to charges and contract provisions as
described in the Applause Life prospectus. (See the section on Exchange Offer.)
UniVar is a flexible premium variable universal life insurance Policy ("Policy")
previously issued by Ameritas Variable Life Insurance Company ("AVLIC"). Like
traditional life insurance policies, a UniVar Policy provides Death Benefits to
Beneficiaries and gives you, the Policy Owner, the opportunity to increase the
Policy's value. Unlike traditional policies, UniVar 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 UniVar 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 UniVar include investment portfolios
managed by Ameritas Investment Corp. and Fidelity Management & Research Company.
Each of these portfolios has its own investment objective andpolicies. These are
described in the prospectuses for each investment portfolio which must accompany
this UniVar prospectus. You may also choose to allocate premium payments to the
Fixed Account managed by AVLIC.
A UniVar Policy was issued after AVLIC accepted a Policy Owner's application.
Generally, an application must specify a minimum Death Benefit of $50,000, but
lower minimums may be requested. The Policy was available only to persons with
an Issue Age of 80 or less. A UniVar Policy, once purchased, may generally be
canceled within 10 days after you receive it.
This UniVar prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of a UniVar 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 UniVar
Policy, information about AVLIC, a list of the investment portfolios to which
you may allocate payments, as well as a detailed description of the UniVar
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 UniVar.
Although the UniVar Policy is designed to provide life insurance, a UniVar
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 UniVar Policy involves investment risk,
including the possible loss of principal. For this reason, a UniVar may not be
suitable for all individuals. It may not be advantageous to purchase a UniVar
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 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.
November 1, 1999
UNIVAR
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..........................16
Fixed Account..............................................................16
EXCHANGE OFFER................................................................17
POLICY BENEFITS...............................................................18
Purposes of the Policy.....................................................18
Death Benefit Proceeds.....................................................19
Death Benefit Options......................................................19
Methods of Affecting Insurance Protection..................................20
Duration of the Policy.....................................................21
Cash Value.................................................................21
Benefits at Maturity.......................................................22
Payment of Policy Benefits.................................................22
POLICY RIGHTS.................................................................23
Loan Benefits..............................................................23
Surrenders.................................................................24
Partial Withdrawals........................................................24
Transfers..................................................................24
Refund Privilege...........................................................25
Exchange Privilege.........................................................25
PAYMENT AND ALLOCATION OF PREMIUMS............................................26
Issuance of a Policy.......................................................26
Premiums...................................................................26
Allocation of Premiums and Cash Value......................................27
Policy Lapse and Reinstatement.............................................28
CHARGES AND DEDUCTIONS........................................................28
Charges from Cash Value....................................................29
Surrender Charge...........................................................32
Daily Charges Against the Separate Account.................................34
Fund Expense Summary.......................................................34
GENERAL PROVISIONS............................................................36
DISTRIBUTION OF THE POLICIES..................................................38
FEDERAL TAX MATTERS...........................................................39
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS..................................41
THIRD PARTY SERVICES..........................................................41
VOTING RIGHTS.................................................................41
STATE REGULATION OF AVLIC.....................................................41
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC.....................................42
LEGAL MATTERS.................................................................43
LEGAL PROCEEDINGS.............................................................43
EXPERTS.......................................................................43
ADDITIONAL INFORMATION........................................................44
FINANCIAL STATEMENTS..........................................................44
AMERITAS VARIABLE LIFE INSURANCE COMPANY SEPARATE ACCOUNT V................F-I-1
AMERITAS VARIABLE LIFE INSURANCE COMPANY..................................F-II-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.
UNIVAR
2
<PAGE>
DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
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 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 death of the Insured. (See the sections on Beneficiary and
Change of Beneficiary.)
CASH VALUE - The total amount that the Policy provides for investment at any
time. It is equal to the total of the Cash Value held in Separate Account V, the
Fixed Account, and any Cash Value held in the General Account which secures
Outstanding Policy Debt.
CONTINGENT DEFERRED ADMINISTRATIVE CHARGE - An administrative charge for the
underwriting, issuance and initial administration of the Policy that is deducted
upon Surrender of the Policy. This charge is part of the Surrender Charge.
CONTINGENT DEFERRED SALES CHARGE - A sales charge, calculated based on a
percentage of premiums received, is deducted upon Surrender of the Policy. This
charge is part of the Surrender Charge.
COST OF INSURANCE - A charge deducted monthly from the Cash Value to provide the
life insurance protection. The Cost of Insurance is calculated with reference to
an annual Cost of Insurance Rate. This rate is based on the Insured's sex, Issue
Age, Policy duration, Specified Amount, and risk class. 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 Due Proof of Death of the Insured while the Policy is in force. It is
equal to: (l) the Death Benefit; (2) plus additional life insurance proceeds
provided by any riders; (3) minus any Outstanding Policy Debt; (4) minus any
Accrued Expense Charges, including the Monthly Deduction for the month of death.
DUE PROOF OF DEATH - Means all of the following must be submitted:
(1) A certified copy of the death certificate;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that AVLIC may reasonably require to establish the
validity of the claim.
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.
UNIVAR
3
<PAGE>
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 a payment
during the Grace Period such that the Net Cash Surrender Value of the Policy is
sufficient to pay the Monthly Deduction, the Policy will not lapse.
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.
INSURED - The person whose life is insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
ISSUE AGE - The age of the Insured at the Insured's birthday nearest the Policy
Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MATURITY BENEFITS - The amount payable to the Policy Owner, if the Insured is
living, on the Maturity Date. The Maturity Benefit is the Cash Value less any
Outstanding Policy Debt.
MATURITY DATE - The date AVLIC pays any Maturity Benefit to the Policy Owner, if
the Insured is still living.
MINIMUM FIRST YEAR PREMIUM - The premium that must be paid during the first
Policy Year to pay for insurance coverage under the Death Benefit option you
select. It does not include the required premium for coverage under any riders.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date, unless the Monthly Activity Date falls 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 Cash 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 CASH SURRENDER VALUE - The Cash 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 - The amount deducted from each premium received to
cover certain expenses, expressed as a percentage of the premium. This charge
may include a Sales Load Charge and/or a Premium Charge for Taxes. (See the
section on Deductions From Premium Payment.)
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 Guaranteed Death Benefit.
UNIVAR
4
<PAGE>
POLICY - The 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) 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.
PREMIUM CHARGE FOR TAXES - This charge, which is part of the Percent of Premium
Charge, represents the amount AVLIC considers necessary to pay all premium taxes
imposed by the states and their subdivisions and to defray the tax cost due to
capitalizing certain Policy acquisition expenses as required under applicable
federal tax laws. AVLIC does not expect to derive a profit from the Premium
Charge for Taxes.
SALES LOAD CHARGE - This charge, which is part of the Percent of Premium Charge,
is designed to compensate AVLIC for expenses associated with distributing the
Policy; no Sales Load Charge is currently in effect.
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 before the Maturity Date during the
Insured's life for the Net Cash Surrender Value.
SURRENDER CHARGE - This charge is assessed against the Cash Value of the Policy
if the Policy is Surrendered on or before the 15th Policy Anniversary Date or,
in the case of an increase in the Specified Amount, on or before the 15th
anniversary of the increase. The Surrender Charge is comprised of the Contingent
Deferred Administrative Charge and the Contingent Deferred Sales Charge.
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.
UNIVAR
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
Other than the Minimum First Year Premiums, you can vary amount and
frequency.
DEDUCTIONS FROM PREMIUMS
Sales load and distribution expense--8.5% for the Minimum First Year Premium;
7.5% for all other premiums
Per premium payment processing charge--$2.00
Premium Charge for Taxes--2.5%
NET PREMIUM
The Net Premium may be invested in the Fixed Account or in the Separate Account
which offers 5 different Subaccounts. The Subaccounts invest in the Calvert
Variable Series, Inc. Ameritas Portfolios and the Variable Insurance Products
Fund ("Funds").
DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders. Monthly charge for
administrative expenses of $5.00 per month.
Daily charge from the Subaccounts for mortality and expense risks and
administrative expenses, at an annual rate of 0.70% for all Policy Years. This
charge is not deducted from Fixed Account assets.
Fund expense charges, which ranged from .30% to .89% at the most recent fiscal
year end, are also deducted.
LIVING BENEFITS
You may make partial withdrawals, subject to certain restrictions. The Death
Benefit will be reduced by the amount of the partial withdrawal. Each year you
may make up to 9 free transfers between the Investment Options. If you have
amounts in the Calvert Variable Series, Inc. Ameritas Portfolios ("Ameritas
Portfolios") as a result of the substitution which occurred at the close of
business on October 29, 1999, the following procedure applies until December 1,
1999: you may transfer amounts out of the Ameritas Portfolios to any other
Subaccount available under the Policy without any administrative charge and
without the transfer counting as one of your "free transfers." Accelerated
payment of up to 50% of the lowest scheduled Death Benefit is available under
certain conditions to Insureds suffering from terminal illness. You may
surrender the Policy at any time for its Net Cash Surrender Value. AVLIC incurs
expenses immediately upon the issuance of the Policy that are recovered over a
period of years. Therefore, a Policy Surrender on or before the 15th anniversary
date will be assessed a Surrender Charge consisting of the Contingent Deferred
Sales Charge and the Contingent Deferred Administrative Charge. The charge
decreases each year until no Surrender Charge is applied after the 15th Policy
Year. Increases in coverage after issue will also have a Surrender Charge
associated with them. (See pages 24 and 32.)
RETIREMENT INCOME BENEFITS
After the first Policy Anniversary Date, you may take loans up to 75% of the
Cash Value of the Policy (100% in Texas and Virginia). The interest rate on
loans is 8% per year. Should the Policy lapse while loans are outstanding, the
portion of the loan attributable to earnings will become taxable distributions.
(See page 24.) You may Surrender the Policy or make a partial withdrawal and
take values as payments under one or more of five different payment options
DEATH BENEFITS
Generally, Death Benefit Income is tax free to the Beneficiary. The Beneficiary
may be paid a lump sum or may select any of the five payment methods available
as retirement benefits.
UNIVAR
6
<PAGE>
SUMMARY
The following summary is intended to highlight the most important features of a
UniVar 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. Capitalized terms are defined in
the Definitions section of this prospectus. This summary and all other parts of
this prospectus are qualified in their entirety by the terms of the UniVar
Policy, which is available upon request from AVLIC.
WHO IS THE ISSUER OF A UNIVAR POLICY?
AVLIC is the issuer of each UniVar 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 UniVar
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.)
HOW DOES THE INVESTMENT COMPONENT OF MY UNIVAR 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
UniVar 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 UniVar. 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 and the Fixed Account will represent the Cash Value of your UniVar
Policy. (See the section on Cash Value.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE UNIVAR POLICY?
The Investment Options available through UniVar include 5 investment portfolios,
each of which is a separate series of a mutual fund managed by Amertias
Investment Corp. or Fidelity Management & Research Company. These portfolios
are:
O AMERITAS INVESTMENT CORP.:
Ameritas Money Market
O FIDELITY MANAGEMENT & RESEARCH COMPANY:
VIP Equity-Income
VIP Growth
VIP High Income
VIP Overseas
UNIVAR
7
<PAGE>
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 UNIVAR POLICY WORK?
A UniVar Policy provides for the payment of a minimum Death Benefit upon the
death of the Insured. The amount of the minimum Death Benefit--sometimes
referred to as the Specified Amount of your UniVar Policy--is chosen by you at
the time your UniVar Policy is established. However, Death Benefit Proceeds--the
actual amount that will be paid after AVLIC receives Due Proof of Death of the
Insured--will vary over the life of your UniVar Policy, depending on which of
the two available coverage options you select.
If you choose Option A, Death Benefit Proceeds payable under your UniVar Policy
will be the Specified Amount of your UniVar Policy or the applicable percentage
of its Cash Value, whichever is greater. If you choose Option B, Death Benefit
Proceeds payable under your UniVar Policy will be the Specified Amount of your
UniVar Policy plus the Cash Value of your UniVar Policy, or if it is higher, the
applicable percentage of the Cash Value on the date of death. In either case,
the applicable percentage is established based on the age of the Insured at the
date of death. (See the section on Death Benefit Options.)
If the Extended Maturity Option is in effect, the Death Benefit will be the Cash
Value.
ARE THERE ANY RISKS INVOLVED IN OWNING A UNIVAR POLICY?
Yes. Over the life of your UniVar 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 Cash Value of your
UniVar Policy and may result in loss of principal. For this reason, the purchase
of a UniVar Policy may not be suitable for all individuals. It may not be
advantageous to purchase a UniVar Policy to replace or augment your existing
insurance arrangements. Appendix A includes tables illustrating the impact that
hypothetical market returns would have on Cash Values under a UniVar Policy.
UNIVAR
8
<PAGE>
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP A UNIVAR POLICY IN FORCE? Like
traditional life insurance policies, a UniVar 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 UniVar Policy becomes effective.
The distinction between traditional life policies and a UniVar Policy is that a
UniVar Policy will not lapse simply because premium payments are not made
according to that payment schedule. However, a UniVar Policy will lapse, even if
scheduled premium payments are made, if the Net Cash Surrender Value of your
UniVar Policy falls below zero or premiums paid do not, in the aggregate, equal
the premium necessary to satisfy the Guaranteed Death Benefit. (See the section
on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your UniVar 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 premium will be allocated to the Money Market Subaccount for 13
days following the Issue Date, and then will be allocated to the Subaccounts
and/or the Fixed Account, according to selections you made in your application.
You have the right to examine your UniVar 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 and allocate the Net Premium to the Subaccounts and/or
the Fixed Account according to your selections. (See the sections on Premiums
and Allocations of Premiums and Cash Value.)
As already noted, UniVar 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
Guaranteed Death Benefit Premium and/or Net Policy Funding requirement needed to
keep your UniVar 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 UniVar Policy. (See the section on
Premiums.)
IS THE CASH VALUE OF MY UNIVAR POLICY AVAILABLE BEFORE THE MATURITY DATE WITHOUT
SURRENDER?
Yes. You may access the value of your UniVar Policy in one of two ways. First,
you may obtain a loan, secured by the Cash Value of your UniVar Policy following
its first Policy Anniversary. The amount of the loan may be up to 75% of the
Cash Value of the Policy (100% in Texas and Virginia). The maximum interest rate
on any such loan is 8% annually. (See the section on Loan Benefits.)
You may also access the value of your UniVar 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 UNIVAR POLICY?
AVLIC is authorized to deduct a Percent of Premium Charge, which includes both a
Sales Load Charge and a Premium Charge for Taxes. The Sales Load Charge, of up
to 8.5% for the Minimum First Year Premium on the Policy and 7.5% thereafter,
may be deducted from each premium payment made on a UniVar Policy. Certain
states impose premium and other taxes in connection with insurance policies such
as UniVar. AVLIC may deduct 2.5% of each premium paid as a Premium Charge for
Taxes.
Charges are also deducted against the Cash Value to cover the Cost of Insurance
under the Policy and to compensate AVLIC for administering each individual
UniVar 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 Insured as reflected in
relevant actuarial tables. The Monthly
UNIVAR
9
<PAGE>
Deduction also includes a flat Administrative Expense Charge. This charge is
$5.00 per Policy per month for each Policy Year.(See the section on Charges from
Cash Value.)
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 20
years of each UniVar Policy, at a combined current annual rate of 0.70% of the
value of the net assets of Separate Account V. No Mortality and Expense Risk
Charges will be deducted from the amount 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 UniVar
Policy that are recovered over a period of years, a UniVar Policy that is
Surrendered on or before its 15th Policy Anniversary Date is subject to a
Surrender Charge. In the first Policy Year the Surrender Charge is 21.50% of the
premiums actually paid, up to the Minimum First Year Premium for the Policy. In
Policy Years 2-11 the Surrender Charge is 21.5% of the Minimum First Year
Premium, plus 2.5% of premiums actually paid in the second Policy Year, up to a
second amount equal to the Minimum First Year Premium. In Policy Years 12-15 the
Surrender Charge gradually decreases, until it is zero beginning in Policy Year
16. Surrender Charges are not affected by increases or decreases in the
Specified Amount of the Policy or for partial withdrawals of Cash Value. Because
the Surrender Charge may be significant upon early Surrender, you should
purchase a UniVar Policy only if you intend to maintain your UniVar Policy for a
substantial period. (See the sections on Exchange Offer and 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.)
WHAT EXCHANGE PRIVILEGES AND EXCHANGE OFFICERS ARE AVAILABLE FOR MY POLICY?
During the first 24 months after the Policy Date, subject to certain
restrictions, the Policy Owner may exchange the Policy for a flexible premium
adjustable life insurance policy issued by AVLIC or an affiliate. The policy
provisions and applicable charges for the new policy will be based on the same
policy date and issue age as under the Policy. (See the section on Exchange
Privilege.)
AVLIC and Separate Account V will exchange the flexible premium variable life
insurance policy offered by AVLIC and registered with the Securities and
Exchange Commission known as Applause Flexible Premium Variable Universal Life
(Applause Life) (Policy Form #4010) for previously issued UniVar Flexible
Premium Variable Universal Life Insurance Policies (Policy Form #4002). More
detailed information is found in the section on Exchange Offer and in the
prospectus for the Applause Policy.
WHEN DOES MY UNIVAR POLICY TERMINATE?
You may terminate your UniVar Policy by Surrendering the Policy during the
lifetime of the Insured for its Net Cash Surrender Value. As noted above, your
UniVar 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.)
Finally, your UniVar Policy will terminate on its Maturity Date if the named
Insured is living on that date unless you have elected the Extended Maturity
Option. The Maturity Date is the Policy Anniversary nearest to the Insured's
100th birthday. On the Maturity Date, AVLIC will pay to you, the Policy Owner,
an amount--referred to as the Maturity Benefit--equal to the Cash Value of your
UniVar Policy, less any Outstanding Policy Debt. (See the section on Benefits at
Maturity.)
UNIVAR
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<PAGE>
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"), a Nebraska stock life insurance company, which owns a
majority interest in AMAL Corporation; and AmerUs Life Insurance Company
("AmerUs Life"), an Iowa stock life insurance company, which owns a minority
interest in AMAL Corporation. The Home Offices of both AVLIC and Ameritas Life
are at 5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska 68501 ("Home Office").
On April 1, 1996 Ameritas Life consummated an agreement with AmerUs Life whereby
AVLIC became a wholly owned subsidiary of a newly formed holding company, AMAL
Corporation. Under terms of the agreement AMAL Corporation is 66% owned by
Ameritas Life and 34% owned by AmerUs Life. AmerUs Life has options to purchase
an additional interest in AMAL Corporation if certain conditions are met. There
are no other owners of 5% or more of the outstanding voting securities of AVLIC.
Ameritas Life and its subsidiaries had total assets at December 31, 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 financial insurance 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
UNIVAR
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<PAGE>
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 Cash Values invested in Separate
Account V. Nevertheless, to the extent assets in the 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 Cash Value, Net Cash Surrender
Value and Death Benefit based on historical investment returns of the Funds for
a sample Insured based on assumptions as to age, sex, and other Policy specific
assumptions.
AVLIC may also provide individualized hypothetical illustrations of Cash 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, 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 5 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
Portfolios") and Variable Insurance Products Fund ("VIP").
The Ameritas Portfolios receive investment advisory services from Ameritas
Investment Corp. ("AIC"). AIC is a registered investment adviser under the
Investment Advisers Act of 1940 and is an affiliate of AVLIC. AIC also contracts
with subadvisers. Calvert Asset Management Company, Inc. provides investment
subadvisory services to the Ameritas Money Market portfolio.
VIP, which is managed by Fidelity Management & Research Company ("Fidelity"),
offers the following portfolios: VIP Equity-Income, VIP Growth, VIP High Income
and VIP Overseas.
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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 Fund are held separate from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this prospectus. 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 VIP High Income portfolio is permitted to invest a portion of its assets in
non-investment grade, high risk debt securities. The VIP Overseas portfolio is
designed to invest a substantial portion of its assets overseas. 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 Fund 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.
UNIVAR
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<PAGE>
<TABLE>
<CAPTION>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- ------------- -------------------- -------------
<S> <C> <C>
AMERITAS PORTFOLIOS
Ameritas Money Market Invests in U.S. dollar-denominated money Seeks as high a level of current
market securities of domestic and foreign income as is consistent with
issuers, including U.S. Government securities preservation of capital and
and repurchase agreements. Invests more than liquidity.
25% of total assets in the financial services
industry.
FIDELITY FUNDS
VIP Equity-Income Investing at least 65% in income-producing Seeks reasonable income. Will also consider
equity securities, which tends to lead to the potential for capital appreciation. Seeks a
investments in large cap "value" stocks. yield which exceeds the composite yield on
the securities comprising the Standard &
Poor's 500.
VIP Growth Investing primarily in common stocks. Seeks capital appreciation.
Investing in 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 Seeks a high level of current income while
income-producing debt securities, also considering growth of capital.
preferred stocks and convertible securities,
with an emphasis on lower-quality debt securities.
VIP Overseas Investing at least 65% of total assets in Seeks long-term growth of capital.
foreign securities. Investing primarily in
common stocks.
</TABLE>
UNIVAR
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UNIVAR
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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
UNIVAR
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<PAGE>
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, 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
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 an effective annual rate of at
least 4.5%. 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 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.
EXCHANGE OFFER
On June 13, 1990, the SEC, after application by AVLIC and public notice in the
Federal Register, granted AVLIC's request that it be allowed to offer to
exchange previously issued UniVar Life Insurance Policies for Applause Life
Insurance Policies.
The exchange offer provisions are designed to allow the old UniVar Life Policy
Owner to acquire the new Applause Life Insurance Policy as if he had owned it
from the date of issue on the old UniVar Life Insurance Policy.
AVLIC and Separate Account V will exchange the flexible premium variable life
insurance policy offered by AVLIC and registered with the Securities and
Exchange Commission known as Applause Flexible Premium Variable Universal Life
(Applause Life) (Policy Form #4010) for previously issued UniVar Flexible
Premium Variable Universal Life Policies (Policy Form #4002). More detailed
information, including a description of policy changes and provisions is found
below and in the prospectus for the Applause Life policy.
The exchange is offered under the following terms:
1. The Applause Life Insurance Policy will be issued as of the original date of
issue of the exchanged UniVar Life Insurance Policy.
2. The Applause Life Insurance Policy will be issued to UniVar Policy Owners
without additional evidence of insurability of the Insured for the same
amount of insurance.
3. The UniVar Life Policy Owner will be refunded all of the sales and
acquisition charges deducted from his/her premium payment, except premium
taxes, plus 12% interest thereon, which amount will be added to the UniVar
Policy's accumulation value.
4. After the additions to the accumulation value, AVLIC will then exchange the
UniVar Life Policy for and issue the Applause Life Insurance Policy on a
relative net asset basis without deducting Surrender Charges on the UniVar
Life Policy Surrender or sales or acquisition charges on the Applause Life
Insurance Policy acquisition. AVLIC expects to recover certain of the
refunded sales and acquisition charges through Surrender Charges on the
Applause Life Insurance Policy if Surrendered before the 15th Policy Year
dating from the original UniVar Issue Date. AVLIC does not expect to recover
the remainder of the refunded charge.
5. The new Applause Life Policy Owner will then enjoy the benefits and be
subject to the charges and contract provisions as set out in the Applause
Life prospectus. A table summarizing the charges under the respective
policies are set out as follows:
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
OLD POLICY NEW POLICY
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PREMIUM 2.5% 2.5% (not charged on accumulation values transferred
TAX from the old Policy)
SALES CHARGE 7.5% of all premiums (8.5% of minimum 5% (not charged on accumulation values transferred
first year premiums) (refunded plus 12% from the old Policy)
interest in the exchange)
ADMINISTRA- Charges deducted from first year premiums No deductions are made from premiums for the
TIVE CHARGES based upon table at page 25. Administrative costs of issue. A Deferred
FOR ISSUE Administrative costs charge will be assessed if the Policy
is surrendered before Policy Year 15.
MORTALITY Daily deductions at an annual rate of 70%. Daily.deductions currently charged at an annual rate of
AND EXPENSE .90% for the first 20 policy years and.65% thereafter
CHARGES (guaranteed .90%).
SURRENDER A contingent deferred sales load based upon A contingent deferred sales load of 25% of premiums
CHARGES amounts paid in the first two policy years actually paid in the first two years up to the Guaranteed
(up to 21.5% of the minimum first year Death Benefit premiums, and 5% of the premiums in
premium to 2.5% of additional amounts paid excess of that amount. This charge is subject to a limit of
during the first two years , up to a second $12 per $1000 of insurance. And, a contingent deferred
minimum first year premium) is deducted administrative charge based upon an amount per $1000
upon surrenders prior to the sixteenth policy of face amount of insurance. This amount varies by age
anniversary. 100% of the charge is deducted at date of issue as described in the Applause! Prospectus.
in policy years 1 through 11 and then grades 100% of the surrender charges are deducted in policy
to 0 in the 16th policy year. years 1 through 5 and then graded to 0 in the 15th policy
year.
- ------------------ --------------------------------------------------------------------------------------------------------
</TABLE>
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 to the Policy Anniversary nearest the Insured's 95th birthday and
flexibility in the amount and frequency of premium payments and with the level
of life insurance proceeds payable under the Policy.
Other than the Minimum First Year Premium, 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 the Guaranteed Death Benefit Premium required. If the Specified Amount
is decreased, however, the 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 Cash 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 Guaranteed Death Benefit
Premiums are satisfied by Net Policy Funding, AVLIC will keep the Policy in
force during the Guaranteed Death Benefit 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.
UNIVAR
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<PAGE>
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, AVLIC will, pay the Death Benefit
Proceeds of the Policy upon Due Proof of Death, according to the Death Benefit
option in effect at the time of the Insured's death. The amount of the Death
Benefits payable will be determined at the end of the valuation period during
which the Insured's death occurred. The Death Benefit Proceeds may be paid in a
lump sum or under one or more of the payment options set forth in the Policy.
(See the section on Payment Options.)
Death Benefit Proceeds will be paid to the surviving Beneficiary or
Beneficiaries you specified in the application or 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, unless the Extended Maturity
Option is in effect. If the Extended Maturity Option is in effect, the Death
Benefit will be the same as the Cash Value. Extension of the Maturity Date may
result in adverse tax consequences. (See the section on Benefits at Maturity.)
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 generally
$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.
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 Cash Value at the date of death.
The applicable percentage is 250% for Insureds with an Attained Age 40 or
younger on the Policy Anniversary Date prior to the date of death. For Insureds
with an Attained Age 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 95 is 100%. Accordingly, under
Option A the Death Benefit will remain level at the Specified Amount unless the
applicable percentage of Cash Value exceeds the current Specified Amount, in
which case the amount of the Death Benefit will vary as the Cash Value
varies. Policy Owners who prefer to have favorable investment performance, if
any, reflected in higher Cash 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.
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Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Cash Value of the Policy or, if greater, the applicable percentage of the
Cash Value on the date of death. The applicable percentage is the same as under
Option A: 250% for Insureds with an Attained Age 40 or younger on the Policy
Anniversary Date prior to the date of death. For Insureds with an Attained Age
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 Cash
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 Cash 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 Cash 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 Cash 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 (i.e. the amount by which the Death Benefit as calculated on a Monthly
Activity Date exceeds the Cash Value on that date). Changing from Option B to
Option A generally will decrease the net amount at risk in the future, and will
therefore decrease the Cost of Insurance. Changing from Option A to Option B
generally will result in an increase in the Cost of Insurance over time because
the Cost of Insurance Rate will increase with the Insured's age, even though the
net amount at risk will generally remain level. If, however, the change was from
Option B to Option A, the Cost of Insurance Rate may be different for the
increased Death Benefit. On a change from Option A to Option B, the Specified
Amount will decrease so that the Cost of Insurance Rate may be different. (See
the sections on Charges and Deductions and Federal Tax Matters.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the second
Policy Year, a Policy Owner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount may affect the Cost of Insurance Rate and
the net amount at risk, both of which may affect a Policy Owner's Cost of
Insurance and 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 $50,000 in
the first three Policy Years and $35,000 in later Policy Years. In addition, if
a decrease in the Specified Amount makes the Policy not comply with the maximum
premium limit required by federal tax law the decrease may be limited or the
Cash 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 second 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 10% of the initial
Specified Amount or $25,000, whichever is greater, and an increase cannot be
made if the Insured's Attained Age is over 75. An increase in the Specified
Amount will also increase Surrender Charges. An increase in the Specified Amount
during the time 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 Cash 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 Cash Value. Certain of these changes
may have federal tax consequences. The consequences of each of these methods
will depend upon the individual circumstances.
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DURATION OF THE POLICY
The duration of the Policy generally depends upon the Cash Value. The Policy
will remain in force so long as the Net Cash Surrender Value is sufficient to
pay the Monthly Deduction. (See the section on Charges from Cash 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. During the first
Policy Year, the Policy will lapse regardless of the Net Cash Surrender Value if
a pro rata portion of the Minimum First Year Premium is not paid and a Grace
Period expires without sufficient payment. (See the section on Policy Lapse and
Reinstatement.)
CASH VALUE
The Cash 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. You 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 Cash Value.
Cash Value is determined on each Valuation Date. On the Issue Date, the Cash
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 Cash Value.)
After that, on each Valuation Date, the Cash 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 Cash Value impaired by Outstanding Policy Debt held in the
General Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation
Date; less
(6) Any Monthly Deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Cash
Value.
In computing the Policy's Cash 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 Cash Value depends on a number of variables, a Policy's Cash 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 not exceeding an annual rate of .70% for mortality and expense
and;
(3) 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.
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BENEFITS AT MATURITY
If the Insured is living on the Maturity Date, AVLIC will pay the Policy Owner
the Cash Value of the Policy, less Outstanding Policy Debt ("Maturity
Benefits"). The Policy will mature on the Policy Anniversary Date nearest the
Insured's 95th birthday.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after AVLIC receives Due Proof of Death. Maturity Benefits will ordinarily be
paid within seven days of receipt of a written request. 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
or Maturity Benefits will be paid. During the Insured's lifetime, 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 Cash Value Benefit 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 death of the Insured, the Beneficiary may
select one or more of the optional methods of payment. Further, if the Policy is
assigned, any amounts due to the assignee will first be paid in one sum. The
balance, if any, may be applied under any payment option. Once payments have
begun, the payment option may not be changed.
PAYMENT OPTIONS FOR DEATH BENEFIT PROCEEDS OR MATURITY BENEFITS ("POLICY
PROCEEDS"). The minimum amount of each payment is $25. If a payment would be
less than $25, AVLIC has the right to make payments less often so that the
amount of each payment is at least $25. Once a payment option is in effect,
Policy Proceeds will be transferred to AVLIC's General Account. AVLIC may make
other payment options available in the future. For additional information
concerning these options, see the Policy itself. The following payment options
are currently available:
OPTION AI-INTEREST PAYMENT OPTION. AVLIC will hold any amount applied
under this option. Interest on the unpaid balance will be paid or
credited each month at a rate determined by AVLIC.
OPTION AII-FIXED AMOUNT PAYABLE OPTION. Each payment will be for an
agreed fixed amount. Payments continue until the amount AVLIC holds runs
out.
OPTION B-FIXED PERIOD PAYMENT OPTION. Equal payments will be made for
any period selected up to 20 years.
OPTION C-LIFETIME PAYMENT OPTION. Equal monthly payments are based on
the life of a named person. Payments will continue for the lifetime of
that person. Variations provide for guaranteed payments for a period of
time.
OPTION D-JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based
on the lives of two named persons. While both are living, one payment
will be made each month. When one dies, the same payment will continue
for the lifetime of the other.
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As an alternative to the above payment options, Death Benefits Proceeds or
Maturity Benefits 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. After the first Policy Anniversary Date, the Policy Owner may
borrow an amount up to 75% of 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 the Insured is living,
prior to the Maturity Date. 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 a tax consequence. (See the section on Federal Tax Matters.)
INTEREST. AVLIC charges interest to Policy Owners at 8% per year. 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 4.5% interest on the Cash Values securing the
loans.
EFFECT OF POLICY LOANS. When a loan is made, Cash 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 Cash 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 Cash 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 Cash 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 Guaranteed Death Benefit
provision is 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 Cash 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 Cash 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 loan only if the Policy Owner so requests. As a
loan is repaid, the Cash 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 during the lifetime of the Insured and prior to the Maturity Date,
the Policy Owner may partially withdraw a portion of the Cash Value or Surrender
the Policy by sending a written request to AVLIC. The amount available for
Surrender is the Net Cash Surrender Value at the end of the Valuation Period
when the Surrender request is received at AVLIC's Home Office. Surrenders will
generally be paid within seven days of receipt of the written request. (See the
section on Postponement of Payments.) Surrenders may have tax consequences. Once
a Policy is Surrendered, it may not be reinstated. (See the section on Tax
Treatment of Policy Proceeds.) Surrenders may be subject to Surrender Charges.
(See the section on Surrender Charge.)
If the Policy is being Surrendered in its entirety, the Policy itself should 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 Cash 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 charge 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 Cash Value will be reduced.
The Specified Amount remaining in force after a partial withdrawal may not be
less than $50,000 in the first three Policy Years, and $35,000 after that. Any
request for a partial withdrawal that would reduce the Specified Amount below
this amount will not be implemented. A fee which does not exceed the lesser of
$50 or 2% of the amount withdrawn is deducted from the Cash 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 Guaranteed Death Benefit provision is met.
TRANSFERS Cash Value may be transferred among the Subaccounts of Separate
Account V and to the Fixed Account as often as desired. However, transfers out
of the Fixed Account may only be made during the 30 day period 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 9 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. This amount
will be deducted pro rata from each Subaccount (and if applicable, the Fixed
Account) in which the Policy Owner is invested. If you have amounts in the
Ameritas Portfolios as a result of the substitution which occurred at the close
of business on October 29, 1999 ("Substitution Date") the following procedure
applies until December 1, 1999: you may transfer amounts out of the Ameritas
Portfolios to any other Subaccount available under the Policy without any
administrative charge and without the transfer counting as one of your "free
transfers." (See the section on Transfer Charge.) Additional restrictions on
transfers may be imposed at the Fund level. Specifically, Fund managers may have
the right to refuse sales, or suspend or terminate the offering of portfolio
shares, if they determine that such action is necessary in the best interests of
the portfolio's shareholders. If a Fund manager refuses a transfer for any
reason, the transfer will not be allowed. AVLIC will not be able to process the
transfer if the Fund manager refuses. Transfers resulting from Policy loans or
exercise of the exchange privilege will not be subject to a transfer charge and
will not be counted towards the 9 free transfers per Policy Year. AVLIC may at
any time revoke or modify the transfer privilege, including the minimum amount
transferable.
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The privilege to initiate transactions by telephone will be made available to
Policy Owners automatically. AVLIC will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, and if it does not,
AVLIC may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures AVLIC follows for transactions initiated by
telephone include, but are not limited to, requiring the 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.
REFUND 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.)
EXCHANGE PRIVILEGE
During the first 24 Policy Months after the Policy Date of the Policy, you may
exchange the Policy for a flexible premium adjustable life insurance policy
approved for exchange and issued by AVLIC or an affiliate. No new evidence of
insurability will be required. The policy date, issue age and rate class for the
Insured will be the same under the new policy as under the old. In addition, the
policy provisions and applicable charges for the new policy and its riders will
be based on the same policy date and issue age as under the Policy. Cash Values
for the exchange and payments will be established after making adjustments for
investment gains or losses and after recognizing variance, if any, between
payment or charges, dividends or Cash Values under the flexible contract and
under the new policy. You may elect either the same specified amount or the same
net amount at risk for the new policy as under the old.
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To make the change, the Policy, a completed application for exchange and any
required payment must be received by AVLIC. The exchange will be effective on
the valuation date when all financial and contractual arrangements for the new
policy have been completed.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office ( 5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska
68501). A Policy will generally be issued only to individuals 80 years of age or
less on their nearest birthday who supply satisfactory evidence of insurability
to AVLIC. Acceptance is subject to AVLIC's underwriting rules, and AVLIC
reserves the right to reject an application for any reason.
The Policy Date is the effective date for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all financial,
contractual and administrative requirements have been met and processed for the
Policy. The Policy Date and the Issue Date will be the same unless: (1) an
earlier Policy Date is specifically requested, or (2) additional premiums or
application amendments are needed. When there are additional requirements before
issue (see below) the Policy Date will be the date the Policy is sent for
delivery and the Issue Date will be the date the requirements are met.
When all required premiums and application amendments have been received by
AVLIC in its Home Office, the Issue Date will be the date the Policy is mailed
to you or sent to the agent for delivery to you. When application amendments or
additional premiums need to be obtained upon delivery of the Policy, the Issue
Date will be when the Policy receipt and federal funds (monies of member banks
within the Federal Reserve System which are held on deposit at a Federal Reserve
Bank) are received and available to AVLIC, and the application amendments are
received and reviewed in AVLIC's Home Office. On the Issue Date, the initial
premium payment will be allocated to the Money Market Subaccount for 13 days.
After the expiration of the 13-day period, the Cash Value will be reallocated to
the Investment Options you select.
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 the smaller of (1) the amount of
insurance applied for, (2) $100,000, or (3) $25,000 if the proposed Insured is
under age 10 or over age 60 at their nearest birthday.
PREMIUMS
The initial premium is due no later than the Issue Date. 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 1/12 of the Minimum First Year
Premium for the Policy, including any riders. 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 Charges, the Policy may have a zero
Net Cash Surrender Value and lapse. (See the section on Policy Benefits,
Purposes of the Policy.)
MINIMUM FIRST YEAR PREMIUM. During the first Policy Year, you must pay a pro
rata portion of the Minimum First Year Premium on or before each Monthly
Activity Date in order to keep the Policy in force. The Minimum First Year
Premium is equal to the amount designated in the Policy, which is based on the
annual level premium that would be required to provide the future benefits under
the contract. It is computed using certain assumptions, including an assumed
interest rate of 5% and standard guaranteed Cost of Insurance rates. The Policy
may lapse even if you pay annual premiums equal to the Minimum First Year
Premium since the Minimum First Year Premium is computed using certain
assumptions that may not apply to a particular Policy. Moreover, since this
premium is determined using an annual mode and standard underwriting class, the
premium may not be sufficient to cover the first year administrative charge,
premium transaction fees and Cost of Insurance charges if the mode of premium
payment is other than annual or if the Insured is not in a standard underwriting
class. AVLIC may require you to pay a premium sufficient to cover these charges
at issue to place the Policy in force.
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PREMIUM FLEXIBILITY. A Policy Owner may make unscheduled premium payments at any
time in any amount, or skip premium payments, subject to the Minimum First Year
Premium requirements and subject to the premium limitations described below.
Therefore, unlike conventional insurance policies, this Policy does not obligate
you to pay premiums according to a rigid and inflexible premium schedule. AVLIC
reserves the right to limit the number and amount of additional or unscheduled
premium payments.
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 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 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.) 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 LIMIT. 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 limit 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
limit 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 accept only that portion of the
premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limit 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 Cash 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 Cash Value of
the Policy will be immediately increased by the amount of the payment, less the
applicable Percent of Premium Charge.
ALLOCATION OF PREMIUMS AND CASH 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. 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 premium payment will be allocated to the Money
Market Subaccount for 13 days. Thereafter, the Cash 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 Cash 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 Cash 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.
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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. 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 greater of (1) the amount necessary to cover the
Monthly Deductions and Percent of Premium Charges for the three Policy Months
after commencement of the Grace Period, or (2) the amount necessary to raise the
Net Cash Surrender Value above zero as of the date of reinstatement. Failure to
pay the required premium within the Grace Period will result in lapse of the
Policy. If the Insured dies during the Grace Period, any overdue Monthly
Deductions and Outstanding Policy Debt will be deducted from the Death Benefit
Proceeds. (See the section on Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within two years (five
years in Missouri) after the beginning of the Grace Period, but before the
Maturity Date. We will reinstate your Policy based on the Insured's rating class
at the time of the reinstatement. Reinstatement is subject to the following:
(1) Evidence of insurability of the Insured 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 Monthly Deductions for the three Policy months beginning
with the date reinstatement is effective;
(b) any due and unpaid charges associated with increases in
premium;
(c) any due and unpaid acquisition charges; and
(d) any Minimum First Year Premium that would have been due.
The amount of Cash 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 Charges and the amounts stated in (4) (b)
and (c) above, plus
(4) That part of the Contingent Deferred Sales Charge and Contingent
Deferred Administrative Charge that would apply if the Policy
were Surrendered on the date of reinstatement.
The last addition to the Cash 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. Cash Value calculations will then proceed as described
under the section on "Cash 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.
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PREMIUM CHARGES. Prior to allocating premium payments among the Subaccounts or
the Fixed Account, premiums paid will be reduced by a Percent of Premium Charge
and a per payment processing charge of $2.00. The per payment processing charge
is designed to reimburse AVLIC for expenses. The amount of charge is guaranteed
not to increase and ALVIC does not expect to make any profit from it. During the
first Policy Year a Percent of Premium Charge equal to 11% of the Minimum First
Year Premium for the Policy and no more than 10% of any premium paid in excess
of the Minimum First Year Premium for the Policy will be deducted. Thereafter,
the Percent of Premium Charge will be no more than 10.0% of all premiums paid.
The Percent of Premium Charge consists of the "sales loads," which compensates
AVLIC for distribution expenses, and a 2.5% charge to reimburse AVLIC for
premium taxes.
SALES CHARGE. Sales charges, generally called "sales load" will be deducted to
compensate AVLIC for the cost of selling the Policy. This cost includes agents'
commissions, the printing of prospectuses and sales literature, and advertising.
There are two types of sales loads under the Policy. The first, a front-end
Sales Load Charge, will be deducted from each premium payment upon receipt prior
to allocation of net premiums to Separate Account V or the Fixed Account. The
front-end Sales Load Charge is no more than 7.5% of the premium paid, except
during the first Policy Year when a charge of 8.5% is deducted from any premium
paid up to the Minimum First Year Premium for the Policy. The second, a
Contingent Deferred Sales Charge, will reduce the assets in Separate Account V
attributable to the Policy in the event of Surrender.
The sales charge in any Policy Year are not necessarily related to actual
distribution expenses incurred in that year. Instead, AVLIC expects to incur the
majority of distribution expenses in the early Policy Years and to recover
amounts to pay such expenses over the life of the Policy. To the extent that
sales and distribution expenses exceed sales loads (both front-end and deferred)
in any year, AVLIC will pay them from its other assets or surplus in its General
Account, which includes amounts derived from mortality and expense risk charges
and other charges made under the Policy. AVLIC believes that this distribution
financing arrangement will benefit Separate V Account and the Policy Owners.
PREMIUM CHARGE FOR TAXES. A deduction of 2.5% of the premium is made from each
premium payment to pay applicable taxes.. The deduction is an amount AVLIC
considers necessary to pay all premium taxes imposed by the states and their
subdivisions, and to 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 Premium Charge for Taxes.
CHARGES FROM CASH VALUE
MONTHLY DEDUCTION. Charges will be deducted on each Monthly Activity Date from
the Cash Value of the Policy to compensate AVLIC for administrative expenses and
insurance provided. These charges will be allocated among the Subaccounts, and
the Fixed Account on a pro rata basis. Each of these charges is described in
more detail below.
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 $5.00 per Policy charge. The Administrative Expense
Charge is levied throughout the life of the Policy and is guaranteed not to
increase above $5.00 per month. AVLIC does not expect to make any profit from
the Administrative Expense Charge.
ACQUISITION CHARGE. In addition to ordinary administrative expenses, AVLIC
expects to incur certain additional administrative expenses in connection with
the issuance of the Policy, including medical exams, review of applications for
insurance underwriting decisions, and processing of the applications and
establishing Policy records. Similar expenses are expected in connection with
future changes in the Policy initiated by the Policy Owner which involve
insurability decisions such as certain changes in the Death Benefit option. To
compensate
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AVLIC for these expenses during the first Policy Year only, a monthly
acquisition charge will be deducted from the Cash Value as part of the monthly
deduction on the first twelve Monthly Activity Dates. This monthly amount will
be specified in the Policy and will be based on the Insured's Issue Age and the
initial Specified Amount of the Policy. AVLIC does not expect to make a profit
from the acquisition charge. The amount of the acquisition charge will be shown
in the schedule pages of the Policy and is guaranteed not to be increased. It is
based on the following table which shows the annual charges per $1000 of initial
Specified Amount by Issue Age:
CHARGE PER $1000 CHARGE PER $1000
ISSUE INITIAL ISSUE INITIAL
AGE SPECIFIED AMOUNT AGE SPECIFIED AMOUNT
- --- ---------------- --- ----------------
0 0.64 41 3.26
1 0.66 42 3.33
2 0.86 43 3.40
3 0.73 44 3.49
4 0.77 45 3.57
5 0.81 46 3.64
6 0.86 47 3.70
7 0.90 48 3.77
8 0.94 49 3.83
9 1.00 50 3.88
10 1.04 51 3.96
11 1.10 52 4.02
12 1.16 53 4.08
13 1.23 54 4.15
14 1.29 55 4.22
15 1.35 56 4.29
16 1.40 57 4.37
17 1.47 58 4.45
18 1.56 59 4.64
19 1.64 60 4.73
20 1.73 61 4.83
21 1.82 62 4.94
22 1.90 63 5.05
23 1.98 64 5.16
24 2.07 65 5.28
25 2.15 66 5.40
26 2.23 67 5.53
27 2.30 68 5.65
28 2.37 69 5.79
29 2.44 70 5.93
30 2.50 71 6.08
31 2.57 72 6.22
32 2.64 73 6.36
33 2.70 74 6.51
34 2.76 75 6.67
35 2.82 76 6.83
36 2.88 77 7.01
37 2.94 78 7.20
38 3.01 79 7.39
39 3.08 80 7.48
40 3.17
The monthly charge will be 1/12th of the annual 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. The net amount
at risk on any Monthly Activity Date is based on the amount by which the Death
Benefit which would have been payable on that Monthly Activity Date exceeds the
Cash Value on that date.
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COST OF INSURANCE RATE. The Annual Cost of Insurance Rate is based on the
Insured's sex, Issue Age, Policy duration, Specified Amount, and rating class.
The rate will vary depending upon tobacco use and other risk factors. For the
initial Specified Amount, the Cost of Insurance Rate will not exceed those shown
in the Schedule of Guaranteed Annual Cost of Insurance Rates shown in the
schedule pages of the Policy. These guaranteed rates are based on the Insured's
Attained Age and are equal to the 1980 Insurance Commissioners Standard Ordinary
Smoker and Non-Smoker, Male and Female Mortality Tables. Any change in the Cost
of Insurance Rates will apply to all persons of the same age, sex, Specified
Amount, and rating class and whose Policies have been in effect for the same
length of time.
If the rating class for any increase in the Specified Amount is not the same as
the rating class at issue, the Cost of Insurance Rate used after such increase
will be a composite rate based upon a weighted average of the rates of the
different rating classes. Decreases may be reflected in the Cost of Insurance
Rate, as discussed earlier.
The actual charges made during the Policy Year will be shown in the annual
report delivered to Policy Owners.
RATING CLASS. The rating class of an 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, an Insured in the standard rating class will have a lower Cost
of Insurance Rate than an Insured in a rating class with higher mortality risks.
If, when issued, a Policy is rated with a tabular extra rating, the guaranteed
rate is a multiple of the guaranteed rate for a standard issue Policy. This
multiple factor is shown in the Schedule of Benefits in the Policy, and may be
from 1.18 to 4 times the guaranteed rate for a standard issue Policy.
If appropriate, Insureds may also be assigned a flat extra rating charge to
reflect higher mortality risks. The flat extra rating charge will be added to
the Cost of Insurance Rate and thus will be deducted as part of the Monthly
Deduction on each Monthly Activity Date.
CHARGE FOR AN INCREASE IN THE SPECIFIED AMOUNT OF INSURANCE. The Policy Owner
has the option of changing the Specified Amount of the Policy. If you elect to
increase the Specified Amount, charges for each increase will be deducted from
the Cash Value on each Monthly Activity Date during the twelve months following
the increase. This is in addition to any increase in the Cost of Insurance
charge caused by the increase. The charges are based on the Insured's Attained
Age at the time of the increase and the amount of the increase. The charges are
guaranteed not to be increased above those stated in the Policy. The monthly
administrative charge for each increase will equal 1/12 of the per $1,000 charge
multiplied by the number of thousands in the increase. A schedule of the
administrative charge for increases follows:
CHARGE PER $1000 OF CHARGE PER $1000 OF
AGE AMOUNT OF INCREASE AGE AMOUNT OF INCREASE
- --- ------------------ --- ------------------
1 0.38 39 2.80
2 0.40 40 2.89
3 0.45 41 2.98
4 0.49 42 3.05
5 0.53 43 3.12
6 0.58 44 3.21
7 0.62 45 3.29
8 0.66 46 3.36
9 0.72 47 3.42
10 0.76 48 3.49
11 0.82 49 3.55
12 0.88 50 3.60
13 0.95 51 3.68
14 1.01 52 3.74
15 1.07 53 3.80
16 1.12 54 3.87
17 1.19 55 3.94
18 1.28 56 4.01
19 1.36 57 4.09
20 1.45 58 4.17
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CHARGE PER $1000 OF CHARGE PER $1000 OF
AGE AMOUNT OF INCREASE AGE AMOUNT OF INCREASE
- --- ------------------ --- ------------------
21 1.54 59 4.36
22 1.62 60 4.45
23 1.70 61 4.55
24 1.79 62 4.66
25 1.87 63 4.77
26 1.95 64 4.88
27 2.01 65 5.00
28 2.09 66 5.12
29 2.16 67 5.25
30 2.22 68 5.37
31 2.28 69 5.51
32 2.36 70 5.65
33 2.42 71 5.80
34 2.47 72 5.94
35 2.53 73 6.08
36 2.60 74 6.23
37 2.66 75 6.39
38 2.73
The administrative charge for increases covers the cost of underwriting the
increase, such as the cost of medical examinations and review of applications,
the cost of processing applications and establishing policy records. AVLIC does
not expect to make a profit on this portion of the charge.
There is also a Sales Load Charge for increases to cover the distribution costs.
This charge is 7.5% of two times the Minimum First Year Premium required for a
Policy with a Specified Amount equal to the increase for the Insured's Attained
Age. One-twelfth of this Sales Load Charge will be deducted along with the
administrative charge on each of the 12 months following the increase.
If there is insufficient Cash Value in the Policy to bear the Sales Load Charge,
the Policy Owner will be required to make a premium payment. In determining
whether there is sufficient Cash Value, the SEC has prescribed a method by which
the Cash Value must be apportioned between the Specified Amount of the original
contract (original Specified Amount) and the amount of the increase in the
Specified Amount (increased Specified Amount). The portion attributable to the
increased Specified Amount will depend upon the ratio between the Minimum First
Year Premium required for the original Specified Amount and two times the
Minimum First Year Premium required for the increased Specified Amount. The
portion of the Cash Value attributable to the increased Specified Amount must be
large enough so that if it were paid as a premium, it would support the Sales
Load Charge. If the Policy Owner is required to make a premium payment, the
portion of the premium attributable to the original Specified Amount (using the
SEC required apportionment) is subject to a front-end Sales Load Charge of no
greater than 7.5%. The 7.5% Sales Load Charge on the portion of the payment
attributable to the increased Specified Amount will be deducted from Cash Value
as described above, on each of the 12 months following the increase.
SURRENDER CHARGE If a Policy is Surrendered before the 15th Policy Anniversary
Date, AVLIC will assess a Surrender Charge based upon percentages of the
premiums actually paid, up to a cap of the Minimum First Year Premium for the
Policy.
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In the first Policy Year the Surrender Charge is 21.5% of the premiums actually
paid, up to the Minimum First Year Premium for the Policy. Premium payments in
excess of the Minimum First Year Premium are not subject to a Surrender Charge
in the first Policy Year. In the second Policy Year the Surrender Charge is
21.5% of the Minimum First Year Premium, plus 2.5% of premiums actually paid in
the second Policy Year, up to a second amount equal to the Minimum First Year
Premium. However, if you did not pay the Minimum First Year Premium in the first
Policy Year, any premium payment made in the second Policy Year that is
attributable to the Minimum First Year Premium is not subject to the 2.5%
charge. The Surrender Charge for Policy Years 3-11 is the same as the Surrender
Charge at the end of the second Policy Year. For Policy Years 12-15 the
Surrender Charge gradually decreases, until it is zero beginning in Policy Year
16. There is no additional Surrender Charge for increases in the Specified
Amount of the Policy. No Surrender Charge is made on decreases in the Specified
Amount or partial withdrawals of Cash Value. Because the Surrender Charge may be
significant upon early Surrender, you should purchase the Policy only if you do
not intend to Surrender the Policy for a substantial period. (See the section on
Exchange Offer.)
TRANSFER CHARGE. After 9 transfers among the Investment Options in a Policy
Year, a transfer charge of $10 (guaranteed not to increase) may be imposed for
each additional transfer 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.
If you have amounts in the Ameritas Portfolios as a result of the substitution
which occurred on the Substitution Date, the following procedure applies until
December 1, 1999: you may transfer amounts out of the Ameritas Portfolios to any
other Subaccount available under the Policy without any administrative charge
and without the transfer counting as one of your "free transfers."
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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
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 0.001912% (equivalent to an annual rate of 0.70%).
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 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.
FUND EXPENSE SUMMARY
In addition to the charges against Separate Account V described just above,
management fees and expenses will be assessed by AIC and Fidelity 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. The Ameritas
Portfolios are managed by AIC, an AVLIC affiliate. The Fidelity Funds are
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.
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>
INVESTMENT WAIVERS TOTAL
ADVISORY OTHER AND/OR (REFLECTING
PORTFOLIO & MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS WAIVERS AND/OR
REIMBURSEMENTS,
IF ANY)
<S> <C> <C> <C> <C> <C>
AMERITAS PORTFOLIOS(1)
Ameritas Money Market .20% .15% .35% .05% .30%
FIDELITY FUNDS
VIP Equity-Income .49% .09% .58% .01% .57%(2)
VIP Growth .59% .09% .68% .02% .66%(2)
VIP High Income .58% .12% .70% - .70%
VIP Overseas .74% .17% .91% .02% .89%(2)
(1) This is a new Fund. Total expenses are estimated. The portfolio's aggregate
expenses are limited to the advisory and administrative fees disclosed in
the table under the column "Total (reflecting waivers and/or
</TABLE>
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reimbursements, if any)" for a period of one year following the Substitution
Date. Following this one year period, expenses of the Ameritas Portfolios
will not be permitted to exceed an expense ratio which is .10% greater than
the prior expense ratio of the corresponding replaced fund, unless an
amendment to the investment advisory contract is approved modifying or
eliminating the expense guarantee.
(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.
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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 an reimbursement occurs, it has the effect of lowering the
portfolio's expense ration 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 Insured,
payments will be made to any surviving Beneficiary(ies) 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 during the Insured's lifetime unless otherwise provided in
the previous designation of Beneficiary. The change will take effect as of the
date the change is recorded at the Home Office. AVLIC will not be liable for any
payment made or action taken before the change is recorded.
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 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 the
Insured, 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 on the Maturity Date or 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 during
the lifetime of the Insured 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 during
the lifetime of the Insured 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.
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MISSTATEMENT OF AGE AND SEX. If the age or sex of the 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
Insured's correct age or sex. 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 the Insured, while sane
or insane, commits suicide within two years after the Policy Date, AVLIC will
pay only the premiums received less any partial withdrawals, the cost for
riders, and any outstanding Policy debt. If the Insured, while sane or insane,
commits suicide within two years after the effective date of any increase in the
Specified Amount, AVLIC's liability with respect to such increase will only be
its total Cost of Insurance 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 death or maturity, 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 Cash 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.
(See the section on Charges From Cash Value-Monthly Deduction.)
ACCIDENTAL DEATH BENEFIT RIDER. This rider provides additional insurance
if the Insured's death results from accidental death, as defined in the
rider. Under the terms of the rider, the additional benefits provided in
the Policy
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will be paid upon receipt of proof by AVLIC that death resulted directly
and independently of all other causes from accidental bodily injuries
incurred before the rider terminates and within 91 days after such
injuries were incurred.
CHILDREN'S PROTECTION RIDER. This rider provides for term insurance on
the Insured's children, as defined in the rider. Under the terms of the
rider, the Death Benefit will be payable to the named Beneficiary upon
the death of any insured child. Upon receipt of proof of the Insured's
death before the rider terminates, the rider will be considered paid up
for the term of the rider.
GUARANTEED INSURABILITY RIDER. This rider provides that the Policy Owner
can purchase additional insurance for the Insured by increasing the
Specified Amount of the Policy at certain future dates without evidence
of insurability.
DISABILITY BENEFIT PAYMENT RIDER. 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 Cash
Value.
PAYOR DISABILITY RIDER. This rider provides for the payment by AVLIC of
a disability benefit in the form of premiums while the Covered Person as
defined in the rider is totally disabled. The benefit amount may be
chosen by the Policy Owner when the rider is issued. In addition, while
the Covered Person is totally disabled, the Cost of Insurance for the
rider will not be deducted from Cash Value.
TERM RIDER FOR COVERED INSURED. This rider provides a Specified Amount
of insurance to the Beneficiary upon receipt of Due Satisfactory Proof
of Death of any covered Insured, as identified in the rider.
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 Portfolios, and also serves as its investment
adviser.. 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
100% of the first year target premium paid plus the first year cost of any
riders and 4% for premiums paid in excess of the first year target premium. For
Policy Years two through seven, the commission may equal an amount up to 4% of
premiums paid. Broker-dealers may also receive a service fee up to an annualized
rate of .25% of the Cash Value beginning in the eighth Policy Year. Compensation
arrangements may vary among broker-dealers. In addition, AVLIC may also pay
override payments, expense allowances, bonuses, wholesaler fees, and training
allowances. Registered representatives who meet certain production standards may
receive additional compensation. AVLIC may reduce or waive the sales charge
and/or other charges on any Policy sold to directors, officers or employees of
AVLIC or any of its affiliates, employees and registered representatives of any
broker-dealer that has entered into a sales agreement
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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 Premium Charge for
Taxes) laws. This discussion is based upon AVLIC's understanding of the relevant
laws at the time of filing. Counsel and other competent tax advisors should be
consulted for more complete information before a Policy is purchased. AVLIC
makes no representation as to the likelihood of the continuation of present
federal income tax laws nor of the interpretations by the Internal Revenue
Service. Federal tax laws are subject to change and thus tax consequences to the
Insured, 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 Cash 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 Cash Value to the Death Benefit. AVLIC believes that the
Policy meets the statutory definition of a life insurance contract. If the
Death Benefit of a Policy is changed, the applicable defined limits may
change. In the case of a decrease in the Death Benefit, a partial Surrender,
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 Owners in order
for the Policy to continue complying with the Section 7702 defined limits on
premiums and Cash 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.
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.
Certain benefits the Insured 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. Should
the Policy become a "modified endowment contract" partial withdrawals, full
Surrenders, assignments, pledges, and loans (including loans to pay loan
interest) under the Policy will be taxable to the extent of any gain under
the Policy. A 10% penalty tax also applies to the taxable portion of any
distribution 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 becomes
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. One may avoid a Policy becoming a modified
endowment contract by, among other things, not making excessive payments or
reducing benefits. Should one deposit excessive premiums during a Policy
Year, that portion that is returned by the insurance company within 60 days
after the policy anniversary date will reduce the premiums paid to avoid the
policy 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.
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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 Separate Account V 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 adviser to certain of the portfolios,
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
payable prior to the original Maturity Date 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
Cash Value under the Policy until its actual Surrender. However, in the
event of certain cash distributions under the Policy resulting from any
change which reduces future benefits under the Policy, the distribution will
be taxed in whole or in part as ordinary income (to the extent of gain in
the Policy). (See previous discussion on Tax Status of the Policy.)
AVLIC also believes that loans received under a Policy 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, unless the Policy becomes a "modified endowment contract." (See
discussion of modified endowment contract distributions in the section on
Tax Status of the Policy.) Should the Policy lapse while Policy loans are
outstanding the portion of the loans attributable to earnings will become
taxable. Generally, interest paid on any loan under a Policy owned by an
individual will not be tax-deductible.
Except for policies with respect to a limited number of key persons of an
employer (both as defined in the Internal Revenue Code), and subject to
applicable interest rate caps and debt limits, 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 then 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.
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The right to exchange the Policy for a 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 or when Maturity Benefits are paid, if
the amount received plus any Outstanding Policy Debt exceeds the total
premiums paid (the "basis"), that are not treated as previously withdrawn by
the 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 separate and apart from the General Account assets, except
for the Fixed Account. AVLIC maintains records of all purchases and redemptions
of Funds' shares by each of the Subaccounts.
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, 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 Cash 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
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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.
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 ANNUITY 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***).
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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--PRODUCT, OPERATIONS AND TECHNOLOGY*
Assistant Vice President--Variable Operations: Ameritas Life.
WILLIAM W. LESTER, TREASURER
Senior Vice President--Investments and Treasurer: Ameritas Life; also serves as
officer of an affiliate of Ameritas Life.
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.
SHIELA 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.
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.
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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.
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.
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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
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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>
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-3
<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-4
<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-5
<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-6
<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-7
<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-8
<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-9
<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-10
<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-11
<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-12
<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-13
<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-14
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-I-15
<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-16
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
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-17
<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-18
<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-19
<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-20
<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-21
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
JUNE 30, 1999
(UNAUDITED)
ASSETS
INVESTMENTS AT NET ASSET VALUE:
VARIABLE INSURANCE PRODUCTS FUND:
Money Market Portfolio--13,560,919.230 shares at $1.00 per
share (cost $13,560,919) $ 13,560,919
Equity Income Portfolio--1,208,468.678 shares at $27.25 per
share (cost $21,648,927) 32,930,771
Growth Portfolio--1,214,766.221 shares at $45.73 per share
(cost $32,585,209) 55,551,259
High Income Portfolio--600,230.495 shares at $11.29 per
share (cost $6,483,788) 6,776,602
Overseas Portfolio--755,971.484 shares at $20.80 per share
(cost $11,714,070) 15,724,207
VARIABLE INSURANCE PRODUCTS FUND II:
Asset Manager Portfolio--1,827,238.568 shares at $17.69 per
share (cost $26,108,017) 32,323,850
Investment Grade Bond Portfolio--337,505.281 shares at
$12.08 per share (cost $4,036,702) 4,077,064
Contrafund Portfolio--667,123.798 shares at $26.10 per share
(cost $12,663,670) 17,411,931
Index 500 Portfolio--169,927.201 shares at $155.65 per
share (cost $18,730,921) 26,449,169
Asset Manager Growth Portfolio--221,836.491 shares at
$17.15 per share (cost $3,242,324) 3,804,496
ALGER AMERICAN FUND:
Small Capitalization Portfolio--561,379.657 shares at $43.58
per share (cost $19,808,247) 24,464,925
Growth Portfolio--531,471.925 shares at $55.84 per share
(cost $20,332,642) 29,677,392
Income and Growth Portfolio--607,709.682 shares at $13.32
per share (cost $6,546,404) 8,094,693
Midcap Growth Portfolio--484,381.913 shares at $27.60 per
share (cost $10,409,836) 13,368,941
Balanced Portfolio--279,071.116 shares at $13.89 per share
(cost $3,197,943) 3,876,298
Leveraged Allcap Portfolio--266,230.450 shares at $40.87 per
share (cost $7,974,738) 10,880,838
MFS VARIABLE INSURANCE TRUST:
Emerging Growth Series Portfolio--597,879.552 shares at
$24.22 per share (cost $9,178,974) 14,480,643
World Governments Series Portfolio--38,588.793 shares at
$9.99 per share (cost $389,345) 385,502
Utilities Series Portfolio--206,496.262 shares at $20.23 per
share (cost $3,570,206) 4,177,419
Research Series Portfolio--188,175.865 shares at $20.48 per
share (cost $3,193,815) 3,853,842
Growth with Income Series Portfolio--171,500.632 shares at
$21.14 per share (cost $2,971,999) 3,625,523
MORGAN STANLEY UNIVERSAL FUNDS:
Asian Equity Portfolio--115,427.953 shares at $7.69 per share
(cost $724,722) 887,641
Emerging Markets Equity Portfolio--148,721.98 shares at $9.82
per share (cost $1,503,308) 1,460,450
Global Equity Portfolio--186,605.597 shares at $13.62 per
share (cost $2,304,695) 2,541,568
International Magnum Portfolio--96,117.145 shares at $11.90
per share (cost $1,082,389) 1,143,795
U.S. Real Estate Portfolio--90,242.886 shares at $10.63 per
share (cost $978,023) 959,283
------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $332,489,021
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-I(U)-1
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
STATEMENT OF OPERATIONS:
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------
MONEY EQUITY
MARKET INCOME GROWTH
TOTAL PORTFOLIO PORTFOLIO PORTFOLIO
------- --------- --------- ---------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions
received $ 3,627,121 $ 326,655 $ 438,682 $ 82,737
Mortality and expense
risk charge (1,368,013) (63,177) (140,442) (228,756)
---------- -------- -------- ----------
NET INVESTMENT INCOME (LOSS) 2,259,108 263,478 298,240 (146,019)
---------- -------- -------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments 17,482,085 -- 969,719 5,202,111
Net change in unrealized
appreciation (depreciation) 11,692,196 -- 2,289,886 1,367,711
----------- --------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS 29,174,281 -- 3,259,605 6,569,822
----------- --------- ---------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $31,433,389 $ 263,478 $ 3,557,845 $ 6,423,803
=========== ========= ========== ==========
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) $ 2,259,108 $ 263,478 $ 298,240 $ (146,019)
Net realized gain
(loss) on investments 17,482,085 -- 969,719 5,202,111
Net change in unrealized
appreciation (depreciation) 11,692,196 -- 2,289,886 1,367,711
----------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS 31,433,389 263,478 3,557,845 6,423,803
NET INCREASE (DECREASE) FROM
POLICYOWNER TRANSACTIONS 18,402,558 2,192,317 (118,663) 2,904,944
---------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 49,835,947 2,455,795 3,439,182 9,328,747
NET ASSETS AT JANUARY 1, 1999 282,653,074 11,105,124 29,491,589 46,222,512
------------ ----------- ----------- -----------
NET ASSETS AT JUNE 30, 1999 $332,489,021 $13,560,919 $32,930,771 $55,551,259
============ =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
F-I(U)-2
<PAGE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
- -------------------------------- --------------------------------------------------------------
ASSET
ASSET INVESTMENT 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>
$ 792,857 $ 226,340 $ 1,054,568 $178,023 $ 68,862 $ 201,036 $ 80,579
(37,144) (64,778) (144,356) (21,258) (68,176) (100,822) (15,137)
---------- --------- ---------- -------- --------- --------- --------
755,713 161,562 910,212 156,765 686 100,214 65,442
--------- --------- ---------- -------- --------- --------- --------
29,640 365,064 1,335,786 55,850 504,989 136,417 133,643
(161,693) 605,258 (748,030) (312,048) 1,078,207 2,275,805 45,820
--------- --------- ---------- ---------- --------- --------- --------
(132,053) 970,322 587,756 (256,198) 1,583,196 2,412,222 179,463
--------- --------- ---------- ---------- --------- --------- --------
$ 623,660 $1,131,884 $1,497,968 $(99,433) $1,583,882 $2,512,436 $244,905
========= ========== ========== ========= ========== ========== ========
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
- -------------------------------- -------------------------------------------------------------
ASSET
ASSET INVESTMENT MANAGER
HIGH INCOME OVERSEAS MANAGER GRADE BOND CONTRAFUND INDEX 500 GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- --------- --------- ---------- --------- ---------
$ 755,713 $ 161,562 $ 910,212 $ 156,765 $ 686 $ 100,214 $ 65,442
29,640 365,064 1,335,786 55,850 504,989 136,417 133,643
(161,693) 605,258 (748,030) (312,048) 1,078,207 2,275,805 45,820
--------- -------- --------- --------- --------- --------- -------
623,660 1,131,884 1,497,968 (99,433) 1,583,882 2,512,436 244,905
(2,109,031) (27,896) (1,007,136) (271,475) 2,088,993 4,107,614 253,705
----------- -------- ----------- ----------- --------- ---------- -------
(1,485,371) 1,103,988 490,832 (370,908) 3,672,875 6,620,050 498,610
8,261,973 14,620,219 31,833,018 4,447,972 13,739,056 19,829,119 3,305,886
--------- ---------- ---------- --------- ---------- ---------- ---------
$ 6,776,602 $15,724,207 $32,323,850 $ 4,077,064 $17,411,931 $26,449,169 $3,804,496
=========== =========== =========== =========== =========== =========== ==========
F-I(U)-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
STATEMENT OF OPERATIONS:
ALGER AMERICAN FUND
-------------------------------------------------------------
SMALL INCOME AND MIDCAP
CAPITALIZATION GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- --------- ----------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions
received $ -- $ 37,125 $ 14,347 $ --
Mortality and expense
risk charge (99,001) (116,905) (33,317) (53,519)
---------- --------- --------- ----------
NET INVESTMENT INCOME (LOSS) (99,001) (79,780) (18,970) (53,519)
---------- --------- --------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments 2,786,842 2,534,821 426,544 1,862,002
Net change in unrealized
appreciation (depreciation) 88,789 1,336,348 152,144 (359,958)
---------- ---------- -------- ----------
NET GAIN (LOSS) ON INVESTMENTS 2,875,631 3,871,169 578,688 1,502,044
---------- ---------- -------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATION $2,776,630 $3,791,389 $559,718 $1,448,525
========== ========== ======== ==========
STATEMENT OF CHANGES IN NET ASSETS:
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) $ (99,001) $ (79,780) $ (18,970) $ (53,519)
Net realized gain (loss)
on investments 2,786,842 2,534,821 426,544 1,862,002
Net change in unrealized
appreciation (depreciation) 88,789 1,336,348 152,144 (359,958)
----------- ---------- -------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS 2,776,630 3,791,389 559,718 1,448,525
NET INCREASE (DECREASE) FROM
POLICYOWNER TRANSACTIONS (572,913) 2,537,540 533,409 635,058
----------- ---------- -------- ---------
TOTAL INCREASE (DECREASE)
IN NET ASSETS 2,203,717 6,328,929 1,093,127 2,083,583
NET ASSETS AT JANUARY 1, 1999 22,261,208 23,348,463 7,001,566 11,285,358
----------- ----------- ---------- -----------
NET ASSETS AT JUNE 30, 1999 $24,464,925 $29,677,392 $8,094,693 $13,368,941
=========== =========== ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
F-I(U)-4
<PAGE>
<TABLE>
<CAPTION>
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
--------- ----------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 39,415 $ -- $ -- $ 21,210 $ 45,844 $ 6,589 $ 12,252
(14,283) (37,791) (58,080) (1,849) (16,144) (13,748) (15,403)
--------- ---------- ---------- ------- -------- ------- -------
25,132 (37,791) (58,080) 19,361 29,700 (7,159) (3,151)
--------- ---------- ---------- ------- -------- ------- -------
199,925 658,702 -- -- 230,507 34,817 14,706
220,573 961,769 1,618,498 (33,395) 80,723 258,088 159,350
--------- ---------- --------- -------- -------- ------- -------
420,498 1,620,471 1,618,498 (33,395) 311,230 292,905 174,056
--------- ---------- --------- -------- -------- ------- -------
$ 445,630 $1,582,680 $1,560,418 $(14,034) $340,930 $285,746 $170,905
========= ========== ========== ========= ======== ======== ========
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
--------- ----------- --------- --------- --------- --------- ---------
$ 25,132 $ (37,791) $ (58,080) $ 19,361 $ 29,700 $ (7,159) $ (3,151)
199,925 658,702 -- -- 230,507 34,817 14,706
220,573 961,769 1,618,498 (33,395) 80,723 258,088 159,350
---------- ----------- ---------- --------- -------- -------- ---------
445,630 1,582,680 1,560,418 (14,034) 340,930 285,746 170,905
704,679 3,752,890 704,771 (162,530) 539,426 594,269 (78,320)
---------- ------------ ---------- ---------- --------- -------- --------
1,150,309 5,335,570 2,265,189 (176,564) 880,356 880,015 92,585
2,725,989 5,545,268 12,215,454 562,066 3,297,063 2,973,827 3,532,938
---------- ------------ ----------- -------- ---------- ---------- ----------
$3,876,298 $ 10,880,838 $ 14,480,643 $385,502 $4,177,419 $3,853,842 $3,625,523
========== ============ ============ ======== ========== ========== ==========
F-I(U)-5
</TABLE>
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
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 (2,001) (4,040) (9,688)
--------- --------- --------
NET INVESTMENT INCOME (LOSS) (2,001) (4,040) (9,688)
---------- -------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments -- -- -- --
Net change in unrealized
appreciation (depreciation) 217,015 320,783 91,162
--------- -------- --------
NET GAIN (LOSS) ON INVESTMENTS 217,015 320,783 91,162
--------- -------- --------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 215,014 $ 316,743 $ 81,474
========= ========= ========
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) $ (2,001) $ (4,040) $ (9,688)
Net realized gain (loss) on
investments -- -- --
Net change in unrealized
appreciation(depreciation) 217,015 320,783 91,162
-------- --------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 215,014 316,743 81,474
NET INCREASE (DECREASE) FROM
POLICYOWNER TRANSACTIONS 338,627 320,075 363,123
-------- -------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 553,641 636,818 444,597
NET ASSETS AT JANUARY 1, 1999 334,000 823,632 2,096,971
-------- -------- ----------
NET ASSETS AT JUNE 30, 1999 $ 887,641 $1,460,450 $2,541,568
========= ========== ==========
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
$ -- $ --
(4,566) (3,632)
-------- ---------
(4,566) (3,632)
--------- ----------
-- --
66,628 72,763
--------- ---------
66,628 72,763
--------- ---------
$ 62,062 $ 69,131
========== =========
MORGAN STANLEY UNIVERSAL FUNDS
---------------------------------
INTERNATIONAL U.S. REAL
MAGNUM ESTATE
PORTFOLIO PORTFOLIO
$ (4,566) $ (3,632)
-- --
66,628 72,763
-------- ---------
62,062 69,131
148,470 30,612
-------- ---------
210,532 99,743
933,263 859,540
---------- ----------
$1,143,795 $ 959,283
========== ==========
F-I(U)-7
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 June 30, 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-I(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 identifiable and distinguishable from
other assets and liabilities of the Company. Assets are reported at fair value.
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)
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>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
ASSETS
JUNE 30, 1999
-------------
Investments:
Fixed maturity securities, available for sale
(amortized cost $167,459) $ 164,317
Equity securities, available for sale (amortized
cost $2,031) 1,813
Loans on insurance policies 13,136
Other invested assets 12,939
----------
Total investments 192,205
Cash and cash equivalents 6,921
Accrued investment income 2,709
Prepaid reinsurance premium--affiliates 2,482
Deferred policy acquisition costs 139,467
Other 1,938
Separate Accounts 2,035,317
----------
$2,381,039
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy and contract reserves $ 2,033
Policy and contract claims 446
Accumulated contract values 244,218
Unearned policy charges 1,898
Unearned reinsurance ceded allowance 3,700
Federal income taxes--
Current 1,596
Deferred 6,622
Other 9,767
Separate Accounts 2,035,317
----------
Total Liabilities 2,305,597
----------
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 30,551
Accumulated other comprehensive income (979)
----------
Total Stockholder's Equity 75,442
----------
$2,381,039
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-II(U)-1
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
INCOME:
Insurance revenues:
Contract charges $24,413
Premium-reinsurance ceded (4,232)
Reinsurance ceded allowance 1,801
Investment revenues:
Investment income, net 8,765
Realized gain(loss), net (51)
Other 1,620
-------
32,316
-------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits 1,061
Interest credited 7,651
Increase in policy and contract reserves 352
Other 118
Sales and operating expenses 10,827
Amortization of deferred policy
acquisition costs 7,492
-------
27,501
-------
INCOME BEFORE FEDERAL INCOME TAXES 4,815
-------
Income taxes--current 2,422
Income taxes--deferred (724)
-------
Total income taxes 1,698
-------
NET INCOME $ 3,117
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-II(U)-2
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
Net income $3,117
Other comprehensive income, net of tax:
Unrealized gain(loss) on securities:
Unrealized holding gains arising
during the period (net of deferred
tax of $1,021) (1,897)
Reclassification adjustment for gain(loss)
included in net income (net of deferred
tax of $18) 34
-------
Other comprehensive income (loss) (1,863)
-------
Comprehensive income $1,254
=======
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 SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
ACCUMULATED
ADDITIONAL OTHER
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME TOTAL
------ ------ ------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
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 -- -- -- -- (1,863) (1,863)
Net income -- -- - 3,117 -- 3,117
------ ------ ------- -------- -------- --------
BALANCE, June 30, 1999 40,000 $4,000 $ 41,870 $ 30,551 $ (979) $ 75,442
------ ------ -------- -------- -------- --------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
F-II(U)-4
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS)
(UNAUDITED)
OPERATING ACTIVITIES
Net Income $ 3,117
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred policy acquisition
costs 7,492
Policy acquisition costs deferred (21,428)
Interest credited to contract values 7,651
Amortization of discounts or premiums 51
Net gains on other invested assets (2,817)
Net realized loss on investment transactions 51
Deferred income taxes (724)
Change in assets and liabilities:
Accrued investment income (284)
Reinsurance recoverable-affiliates 455
Prepaid reinsurance premium-affiliates (102)
Other assets (244)
Policy and contract reserves 352
Policy and contract claims (179)
Unearned policy charges 84
Federal income tax payable-current (1,345)
Unearned reinsurance ceded allowance 104
Other liabilities 1,685
-------
Net cash from operating activities (6,081)
-------
INVESTING ACTIVITIES
Purchase of fixed maturity securities
available for sale (27,822)
Purchase of other invested assets (1,253)
Proceeds from maturities or repayment of
fixed maturity securities available for sale 4,472
Proceeds from sales of fixed maturity securities
available for sale 2,439
Proceeds from the sale of other invested assets 1,150
Net change in loans on insurance policies (2,187)
--------
Net cash from investing activities (23,201)
-------
FINANCING ACTIVITIES
Capital contribution 1,500
Net change in accumulated contract values 22,692
-------
Net cash from financing activities 24,192
-------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (5,090)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 12,011
-------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $6,921
=======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ 3,767
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
JUNE 30, 1999
(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 Ameritas Life Insurance Corporation
(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>
INCORPORATION BY REFERENCE
The Registrant, 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
<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
meets all the requirements for effectiveness of this Post-Effective Amendment
No. 16 to the Registration Statement pursuant to Rule 485(a) under the
Securities Act of 1933 and has caused this Amendment 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 26th day of August, 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 August 26, 1999
- ------------------------ and Chief Executive Officer
Lawrence J. Arth
/s/ William J. Atherton Director, President and August 26, 1999
- ------------------------- Chief Operating Officer
William J. Atherton
/s/ Kenneth C. Louis Director, Executive Vice President August 26, 1999
- -------------------------
Kenneth C. Louis
/s/ Gary R. McPhail Director, Executive Vice President August 26, 1999
- -------------------------
Gary R. McPhail
/s/ Thomas C. Godlasky Director, Senior Vice President August 26, 1999
- ------------------------- and Chief Investment Officer
Thomas C. Godlasky
/s/ JoAnn M. Martin Director, Controller August 26, 1999
- -------------------------
JoAnn M. Martin
<PAGE>
SIGNATURE TITLE DATE
-------------- -------- ---------
/s/ Michael G. Fraizer
- ------------------------- Director August 26, 1999
Michael G. Fraizer
/s/ William W. Lester
- ------------------------- Treasurer August 26, 1999
William W. Lester
/s/ Donald R. Stading
- ------------------------- Secretary and General Counsel August 26, 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 94 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:
(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.*****
(d) Amendment to Principal Underwriting Agreement.**
(4) Not applicable.
(5) (a) Proposed Form of Policy.***
(b) Proposed 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) Form of Participation Agreement in the Calvert Variable Series,
Inc. Ameritas Portfolios******
(9) Not applicable.
(10) Application for Policy.***
(11) Memorandum describing AVLIC's exchange procedure.*
(12) Memorandum describing AVLIC's issuance, transfer, and redemption
procedures for the Policy.**
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
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.
33-1978.
** Incorporated by reference to the Post-Effective Amendment No. 4 for the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 33-30019.
*** Incorporated by reference to the Post-Effective Amendment No. 5 for the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 33-1978.
**** Incorporated by reference to the initial Registration Statement for
Ameritas Variable Life Insurance Company Separate Account V, File No.
333-15585, filed on 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 on January 17, 1997.
****** Incorporated by reference to Post-Effective Amendment No. 5 to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 333-15585, filed August 30, 1999.
<PAGE>
EXHIBIT INDEX
EXHIBIT
2.(a)(b) Opinion and Consent of Donald R. Stading
(8) Consent of Deloitte & Touche LLP
EXHIBIT 2.(A)(B)
Opinion and Consent of Donald R. Stading
<PAGE>
AMERITAS VARAIBLE LIFE INSURANCE COMPANY LOGO
August 30, 1999
Ameritas Variable Life Insurance Company
5900 "O" Street
P.O. Box 81889
Lincoln, Nebraska 68501
Gentlemen:
With reference to Post-Effective Amendment No. 16 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
Post-Effective Amendment No. 16 to said Form S-6 Registration Statement and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Donald R. Stading
Donald R. Stading
Secretary and General Counsel
EXHIBIT 8.
Consent of Deloitte & Touche LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No.16 to Registration
Statement No. 33-1978 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
August 27, 1999
