<PAGE> 1
As filed with the Securities and Exchange Commission on
February 29, 2000
Registration No. 333-71505
======================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Post-Effective Amendment No. 2
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
effective date.
It is proposed that this filing will become effective:
Immediately upon filing pursuant to paragraph (b).
---
On pursuant to paragraph (b).
---
60 days after filing pursuant to paragraph (a)(1).
---
X On May 1, 2000 pursuant to paragraph (a)(1) of Rule 485.
---
<PAGE> 2
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2
AND THE PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C>
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 Ameritas Variable Life Insurance Company - Separate Account V
6 Ameritas Variable Life Insurance Company - Separate Account V
7 Not Required
8 Not Required
9 Legal Proceedings
10 Summary; Addition, Deletion of 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; Calvert Variable Series, Inc. Ameritas Portfolios, Calvert Variable
Series, Inc., Variable Insurance Products Fund, Variable Insurance Products Fund
II, The Alger American Fund, MFS Variable Insurance Trust, and The Universal Institutional
Funds, Inc.
17 Summary, Policy Rights
18 Calvert Variable Series, Inc. Ameritas Portfolios, Calvert Variable Series, Inc.,
Variable Insurance Products Fund, Variable Insurance Products Fund II, The
Alger American Fund, MFS Variable Insurance Trust, and The Universal Institutional Funds, Inc.
19 General Provisions; Voting Rights
20 Not Applicable
21 Summary; Policy Rights, Loan Benefits; 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 Policies
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
<S> <C>
42 Not Applicable
43 Not Applicable
44 Cash Value, Payment and Allocation of Premium
45 Not Applicable
46 The Funds; Cash Value
47 The Funds
48 State Regulation of AVLIC
49 Not Applicable
50 The Separate Account
51 Cover Page; Summary; Policy Benefits; Payment and Allocation of Premiums,
Charges and Deductions
52 Addition, Deletion or Substitution of Investments
53 Summary; Federal Tax Matters
54 Not Applicable
55 Not Applicable
56 Not Required
57 Not Required
58 Not Required
59 Financial Statements
</TABLE>
<PAGE> 4
PROSPECTUS
[AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO]
BRAVO! -- A Survivorship Flexible Premium Variable Universal Life 5900 "O"
Street
Insurance Policy issued by Ameritas Variable Life Insurance Company P.O. Box
82550/Lincoln, NE 68501
- --------------------------------------------------------------------------------
BRAVO! is a survivorship flexible premium variable universal life insurance
Policy ("Policy"), issued by Ameritas Variable Life Insurance Company ("AVLIC"),
that pays a death benefit upon the Second Death. There is no benefit payable on
the death of the first Insured. Like traditional life insurance policies, a
BRAVO! Policy provides Death Benefits to Beneficiaries and gives you, the Policy
Owner, the opportunity to increase the Policy's value. Unlike traditional
policies, BRAVO! lets you vary the frequency and amount of premium payments,
rather than follow a fixed premium payment schedule. It also lets you change the
level of Death Benefits as often as once each year.
A BRAVO! Policy is different from traditional life insurance policies in another
important way: you select how Policy premiums will be invested. Although each
Policy Owner is guaranteed a minimum Death Benefit, the value of the Policy, as
well as the actual Death Benefit, will vary with the performance of investments
you select.
The Investment Options available through BRAVO! include investment portfolios
managed by Ameritas Investment Corp., Calvert Asset Management Company, Inc.,
Fidelity Management & Research Company, Fred Alger Management, Inc.,
Massachusetts Financial Services Company, and Morgan Stanley Dean Witter
Investment Management Inc. Each of these portfolios has its own investment
objective and policies. These are described in the prospectuses for each
investment portfolio which must accompany this BRAVO! prospectus. You may also
choose to allocate premium payments to the Fixed Account managed by AVLIC.
A BRAVO! Policy will be issued after AVLIC accepts a prospective Policy Owner's
application. Generally, an application must specify a Death Benefit no less than
$100,000. BRAVO! Policies are available to cover individuals between the ages of
20 and 90 at the time of purchase, although at least one of the individuals must
be no older than 85. A BRAVO! Policy, once purchased, may generally be canceled
within 10 days after you receive it.
This BRAVO! prospectus is designed to assist you in understanding the
opportunity and risks associated with the purchase of a BRAVO! Policy.
Prospective Policy Owners are urged to read the prospectus carefully and retain
it for future reference.
This prospectus includes a summary of the most important features of the BRAVO!
Policy, information about AVLIC, a list of the investment portfolios to which
you may allocate premium payments, and a detailed description of the BRAVO!
Policy. The appendix to the prospectus includes tables designed to illustrate
how values and Death Benefits may change with the investment experience of the
Investment Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through BRAVO!
Although the BRAVO! Policy is designed to provide life insurance, a BRAVO!
Policy is considered to be a security. It is not a deposit with, an obligation
of, or guaranteed or endorsed by any banking institution, nor is it insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency. The purchase of a BRAVO! Policy involves investment risk,
including the possible loss of principal. For this reason, BRAVO! may not be
suitable for all individuals. It may not be advantageous to purchase a BRAVO!
Policy as a replacement for another type of life insurance or as a way to obtain
additional insurance protection if the purchaser already owns another
survivorship flexible premium variable universal life insurance policy.
The Securities and Exchange Commission ("SEC") maintains a web site
(http://www.sec.gov) that contains other information regarding registrants that
file electronically with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
May 1, 2000
BRAVO!
1
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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..... 18
Fixed Account......................................... 18
POLICY BENEFITS............................................. 19
Purposes of the Policy................................ 19
Death Benefit Proceeds................................ 19
Death Benefit Options................................. 19
Methods of Affecting Insurance Protection............. 21
Duration of Policy.................................... 21
Accumulation Value.................................... 22
Payment of Policy Benefits............................ 22
POLICY RIGHTS............................................... 23
Loan Benefits......................................... 23
Surrenders............................................ 24
Partial Withdrawals................................... 25
Transfers............................................. 25
Systematic Programs................................... 26
Free Look Privilege................................... 26
PAYMENT AND ALLOCATION OF PREMIUMS.......................... 26
Issuance of a Policy.................................. 26
Premiums.............................................. 27
Allocation of Premiums and Accumulation Value......... 28
Policy Lapse and Reinstatement........................ 28
CHARGES AND DEDUCTIONS...................................... 29
Deductions From Premium Payments...................... 29
Charges From Accumulation Value....................... 29
Surrender Charge...................................... 30
Daily Charges Against the Separate Account............ 31
Fund Expense Summary.................................. 32
GENERAL PROVISIONS.......................................... 35
DISTRIBUTION OF THE POLICIES................................
FEDERAL TAX MATTERS......................................... 38
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 41
THIRD PARTY SERVICES........................................ 41
VOTING RIGHTS............................................... 41
STATE REGULATION OF AVLIC................................... 42
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC................... 42
LEGAL MATTERS............................................... 44
LEGAL PROCEEDINGS........................................... 44
EXPERTS..................................................... 44
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
APPENDICES.................................................. A-1
</TABLE>
The Policy, certain Funds, and/or certain riders are not available in all
states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
BRAVO!
2
<PAGE> 6
DEFINITIONS
ACCRUED EXPENSE CHARGES - Any Monthly Deductions that are due and unpaid.
ACCUMULATION VALUE - The total amount that the Policy provides for investment at
any time. It is equal to the total of the Accumulation Value held in Separate
Account V, the Fixed Account, and any Accumulation Value held in the General
Account which secures Outstanding Policy Debt.
ADMINISTRATIVE EXPENSE CHARGE - A charge, which is part of the Monthly
Deduction, to cover the cost of administering the Policy.
ASSET-BASED ADMINISTRATIVE EXPENSE CHARGE - A daily charge that is deducted from
the overall assets of Separate Account V to provide for expenses of ongoing
administrative services to the Policy Owners as a group.
ATTAINED AGE - The Issue Age of the younger Insured plus the number of complete
Policy Years that the Policy has been in force.
AVLIC ("WE, US, OUR") - Ameritas Variable Life Insurance Company, a Nebraska
stock company. AVLIC's Home Office is located at 5900 "O" Street, P.O. Box
82550, Lincoln, NE 68501.
BENEFICIARY - The person or persons to whom the Death Benefit Proceeds are
payable upon the Second Death. (See the sections on Beneficiary and Change of
Beneficiary.)
COST OF INSURANCE - A charge deducted monthly from the Accumulation Value to
provide the life insurance protection. The Cost of Insurance is calculated with
reference to an annual "Cost of Insurance Rate." This rate is based on the Issue
Age, sex, and risk class of each Insured and the Policy duration. The Cost of
Insurance is part of the Monthly Deduction.
DEATH BENEFIT - The amount of insurance coverage provided under the selected
Death Benefit option of the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
AVLIC of Satisfactory Proof of Death of both Insureds while the Policy is in
force. It is equal to: (l) the Death Benefit; (2) plus additional life insurance
proceeds provided by any riders; (3) minus any Outstanding Policy Debt; (4)
minus any Accrued Expense Charges, including the Monthly Deduction for the month
of the Second Death.
FIXED ACCOUNT - An account that is a part of AVLIC's General Account to which
all or a portion of Net Premiums and transfers may be allocated for accumulation
at fixed rates of interest.
GENERAL ACCOUNT - The General Account of AVLIC includes all of AVLIC's assets
except those assets segregated into separate accounts such as Separate Account
V.
GRACE PERIOD - A 61 day period from the date written notice of lapse is mailed
to the Policy Owner's last known address. If the Policy Owner makes the payment
specified in the notification of lapse, the Policy will not lapse.
GUARANTEED DEATH BENEFIT (IN MARYLAND, "GUARANTEED DEATH BENEFIT TO PREVENT
LAPSE") PERIOD - The number of years the "Guaranteed Death Benefit" provision
will apply. The period extends to Attained Age 85 but in no event is less than
10 years, and may be restricted as a result of state law. Not available in
Massachusetts. This benefit is provided without an additional Policy charge.
GUARANTEED DEATH BENEFIT PREMIUM - A specified premium which, if paid in advance
on a monthly prorated basis, will keep the Policy in force during the Guaranteed
Death Benefit Period so long as other Policy provisions are met, even if the Net
Cash Surrender Value is zero or less.
INSUREDS - The two persons whose lives are insured under the Policy.
INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
ISSUE AGE - The actual age of each Insured on the Policy Date.
BRAVO!
3
<PAGE> 7
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MINIMUM PREMIUM - A specified premium which, if paid in advance on a monthly
prorated basis, will keep the Policy in force during the first sixty Policy
months ("Minimum Benefit" Period) so long as other Policy provisions are met,
even if the Net Cash Surrender Value is zero or less.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date except should such Monthly Activity Date fall on a date other than a
Valuation Date, the Monthly Activity Date will be the next Valuation Date.
MONTHLY DEDUCTION - The deductions taken from the Accumulation Value on the
Monthly Activity Date. These deductions are equal to: (1) the current Cost of
Insurance; (2) the Administrative Expense Charge; and (3) rider charges, if any.
MORTALITY AND EXPENSE RISK CHARGE - A daily charge that is deducted from the
overall assets of Separate Account V to provide for the risk that mortality and
expense costs may be greater than expected.
NET AMOUNT AT RISK - The amount by which the Death Benefit as calculated on a
Monthly Activity Date exceeds the Accumulation Value on that date.
NET CASH SURRENDER VALUE - The Accumulation Value of the Policy on any Valuation
Date (including for this purpose, the date of Surrender), less any Surrender
Charges and any Outstanding Policy Debt.
NET POLICY FUNDING - Net Policy Funding is the sum of all premiums paid, less
any partial withdrawals and less any Outstanding Policy Debt.
NET PREMIUM - Premium paid less the Percent of Premium Charge for Taxes.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PERCENT OF PREMIUM CHARGE FOR TAXES - The amount deducted from each premium
received to cover certain expenses, expressed as a percentage of the premium.
PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at
fixed intervals. The Policy Owner is not required to follow this schedule, nor
does following this schedule ensure that the Policy will remain in force unless
the payments meet the requirements of the Minimum Benefit or the Guaranteed
Death Benefit.
POLICY - The survivorship flexible premium variable universal life insurance
Policy offered by AVLIC and described in this prospectus.
POLICY ANNIVERSARY DATE - The same day as the Policy Date for each year the
Policy remains in force.
POLICY DATE - The effective date for all coverage provided in the application.
The Policy Date is used to determine Policy Anniversary Dates, Policy Years and
Monthly Activity Dates. Policy Anniversaries are measured from the Policy Date.
The Policy Date and the Issue Date will be the same unless: (1) an earlier
Policy Date is specifically requested, or (2) unless there are additional
premiums or application amendments at time of delivery. (See the section on
Issuance of a Policy.)
POLICY OWNER - ("YOU, YOUR") The owner of the Policy, as designated in the
application or as subsequently changed. If a Policy has been absolutely
assigned, the assignee is the Policy Owner. A collateral assignee is not the
Policy Owner.
POLICY YEAR - The period from one Policy Anniversary Date until the next Policy
Anniversary Date. A "Policy Month" is measured from the same date in each
succeeding month as the Policy Date.
SATISFACTORY PROOF OF DEATH - Satisfactory Proof of Death must be provided to us
at the time of death of each Insured. Satisfactory Proof of Death means all of
the following must be submitted:
(1) A certified copy of both death certificates;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that AVLIC may reasonably require to establish the
validity of the claim.
BRAVO!
4
<PAGE> 8
SECOND DEATH - The later of the dates of death of the Insureds.
SEPARATE ACCOUNT V - This term refers to Separate Account V, a separate
investment account established by AVLIC to receive and invest the Net Premiums
paid under the Policy and allocated by the Policy Owner to Separate Account V.
Separate Account V is segregated from the General Account and all other assets
of AVLIC.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy, as selected by
the Policy Owner.
SUBACCOUNT - A subdivision of Separate Account V. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy for the Net Cash Surrender Value while
at least one Insured is alive.
SURRENDER CHARGE - This charge is assessed against the Accumulation Value of the
Policy if the Policy is Surrendered on or before the 14th Policy Anniversary
Date or, in the case of an increase in the Specified Amount, on or before the
14th anniversary of the increase.
VALUATION DATE - Any day on which the New York Stock Exchange is open for
trading.
VALUATION PERIOD - The period between two successive Valuation Dates, commencing
at the close of the New York Stock Exchange ("NYSE") on one Valuation Date and
ending at the close of the NYSE on the next succeeding Valuation Date.
BRAVO!
5
<PAGE> 9
SUMMARY
The following summary of prospectus information and diagram of the Policy should
be read along with the detailed information found elsewhere in this prospectus.
Unless stated otherwise, this prospectus assumes that the Policy is in force and
that there is no Outstanding Policy Debt.
DIAGRAM OF POLICY
---------------------------------------------------
PREMIUM PAYMENTS
You can vary amount and frequency.
---------------------------------------------------
- --------------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS
Percent of Premium Charge for Taxes -- currently 2.25% (maximum 3.0%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET PREMIUMS
The net premium may be invested in the Fixed Account or in Separate Account V
which offers 31 different Subaccounts. The Subaccounts invest in the
corresponding portfolios of Calvert Variable Series, Inc. Ameritas Portfolios,
Calvert Variable Series, Inc., Variable Insurance Products Fund, Variable
Insurance Products Fund II, The Alger American Fund, MFS(R) Variable Insurance
Trust, or The Universal Institutional Funds, Inc. ("Funds").
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS
Monthly charge for Cost of Insurance and cost of any riders.
Monthly charge for administrative expenses of the Policy (maximum charge
$16.00/month plus a charge per month per $1000 of Specified Amount that varies
by the younger Insured's Issue Age).
<TABLE>
<CAPTION>
CURRENT MONTHLY CHARGE CURRENT MONTHLY CHARGE
FOR SPECIFIED AMOUNTS: PLUS BY ISSUE AGE (/1000/MONTH):
UP TO TO $1,000,000 $5,000,000
$1,000,000 $5,000,000 OR MORE 20-44 45-64 65+
---------- ---------- ---------- ----- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Policy Year:
1-5 $16.00 $ 8.00 $ 0.00 $.10 $.08 $.05
6+ $ 8.00 $ 4.00 $ 0.00 $.00 $.00 $.00
Maximum Monthly Charge: $16.00 $16.00 $16.00 Plus $.10 $.08 $.05
</TABLE>
Daily charge from the Subaccounts (not deducted from the Fixed Account):
<TABLE>
<CAPTION>
POLICY YEARS 1-15 POLICY YEARS 16+
----------------- ----------------
<S> <C> <C>
Mortality and Expense Risk Charge 0.75% 0.30%
Asset-Based Administrative Expense Charge 0.15% 0.15%
----- -----
Combined annual rate of Subaccount daily charges 0.90% 0.45%
</TABLE>
Fund expense charges, which ranged from .28% to 1.79% at the most recent
fiscal year end, are also deducted. The maximum Surrender Charge on a Policy
we issue is $60 per $1,000 of Specified Amount.
- --------------------------------------------------------------------------------
LIVING BENEFITS
You may make partial withdrawals, subject to certain restrictions. The Death
Benefit will be reduced by the amount of the partial withdrawal. AVLIC
guarantees up to 15 free transfers between the Investment Options each Policy
Year. Under current practice, unlimited free transfers are permitted. You may
Surrender the Policy at any time for its Net Cash Surrender Value.
Some expenses that AVLIC incurs immediately upon the issuance of the Policy are
recovered over a period of years. Therefore, a Policy Surrender on or before the
14th anniversary date will be assessed a Surrender Charge. The charge decreases
each year until no Surrender Charge is applied after the 14th Policy Year.
Increases in coverage after issue will also have a Surrender Charge associated
with them. (See pages 24 and 30.)
Accelerated payment of up to 50% of the lowest scheduled Death Benefit is
available under certain conditions if the surviving Insured is suffering from
terminal illness.
RETIREMENT INCOME
Loans may be available on a more favorable interest rate basis after the tenth
Policy 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 income 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.
BRAVO!
6
<PAGE> 10
SUMMARY
The following summary is intended to highlight the most important features of a
BRAVO! Policy that you, as a prospective Policy Owner, should consider. You will
find more detailed information in the main portion of the prospectus;
cross-references are provided for your convenience. As you review this summary,
take note of the terms that appear in italics. Capitalized terms are defined in
the Definitions section that begins on page 3 of this prospectus. This summary
and all other parts of this prospectus are qualified in their entirety by the
terms of the BRAVO! Policy, which is available upon request from AVLIC.
WHO IS THE ISSUER OF A BRAVO! POLICY?
AVLIC is the issuer of each BRAVO! Policy. AVLIC enjoys a rating of A
(Excellent) for financial strength and operating performance from A.M. Best
Company, a firm that analyzes insurance carriers. This is the third highest of
Best's 15 categories. AVLIC is rated AA (Very Strong) for financial insurance
strength from Standard & Poor's. This is the third highest of Standard & Poor's
21 ratings. A stock life insurance company organized in Nebraska, AVLIC is a
wholly owned subsidiary of AMAL Corporation which is, in turn, owned by Ameritas
Life Insurance Corp. ("Ameritas Life") and AmerUs Life Insurance Company
("AmerUs Life"). Ameritas Life, AmerUs Life and AMAL Corporation guarantee the
obligations of AVLIC, including the obligations of AVLIC under each BRAVO!
Policy; taken together, these companies have aggregate assets of over $15.5
billion as of December 31, 1999. (See the section on Ameritas Variable Life
Insurance Company.)
WHY SHOULD I CONSIDER PURCHASING A BRAVO! POLICY?
The primary purpose of a BRAVO! Policy is to provide life insurance protection
on the two Insureds named in the Policy. This means that, so long as the Policy
is in force, it will provide for:
- - payment of a Death Benefit, which will never be less than the Specified Amount
the Policy Owner selects (See the section on Death Benefit Options.)
- - Policy loan, Surrender and withdrawal features (See the section on Policy
Rights.)
A BRAVO! Policy also includes an investment component. This means that, so long
as the Policy is in force, you will be responsible for selecting the manner in
which Net Premiums will be invested. Thus, the value of a BRAVO! Policy will
reflect your investment choices over the life of the Policy.
HOW DOES THE INVESTMENT COMPONENT OF MY BRAVO! POLICY WORK?
AVLIC has established Separate Account V, which is separate from all other
assets of AVLIC, as a vehicle to receive and invest premiums received from
BRAVO! Policy Owners and owners of certain other variable universal life
products offered by AVLIC. Separate Account V is divided into separate
Subaccounts. Each Subaccount invests exclusively in shares of one of the
investment portfolios available through BRAVO! Each Policy Owner may allocate
Net Premiums to one or more Subaccounts, or to AVLIC's Fixed Account in the
initial application. These allocations may be changed, without charge, by
notifying AVLIC's Home Office. The aggregate value of your interests in the
Subaccounts, the Fixed Account and any amount held in the General Account to
secure Policy debt will represent the Accumulation Value of your BRAVO! Policy.
(See the section on Accumulation Value.)
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE BRAVO! POLICY?
The Investment Options available through BRAVO! include 31 investment
portfolios, each of which is a separate series of a mutual fund managed by
Ameritas Investment Corp., Calvert Asset Management Company, Inc., Fidelity
Management & Research Company, Fred Alger Management, Inc., Massachusetts
Financial Services Company, or Morgan Stanley Dean Witter Investment Management
Inc. On December 1, 1998, Morgan Stanley Asset Management Inc. changed its name
to Morgan Stanley Dean
BRAVO!
7
<PAGE> 11
Witter Investment Management Inc. but continues to do business in certain
instances using the name Morgan Stanley Asset Management. These portfolios are:
- - AMERITAS INVESTMENT CORP.:
Ameritas Money Market
Ameritas Index 500
Ameritas Growth
Ameritas Income & Growth
Ameritas Small Capitalization
Ameritas MidCap Growth
Ameritas Emerging Growth
Ameritas Research
Ameritas Growth With Income
- - CALVERT ASSET MANAGEMENT COMPANY, INC.:
CVS Social Small Cap Growth
CVS Social MidCap Growth
CVS Social International Equity
CVS Social Balanced
- - FIDELITY MANAGEMENT & RESEARCH COMPANY:
VIP Equity-Income: Service Class
VIP Growth: Service Class
VIP High Income: Service Class
VIP Overseas: Service Class
VIP II Asset Manager: Service Class
VIP II Investment Grade Bond: Initial Class
VIP II Asset Manager: Growth: Service Class
VIP II Contrafund(R): Service Class
- - FRED ALGER MANAGEMENT, INC.:
Balanced
Leveraged AllCap
- - MASSACHUSETTS FINANCIAL SERVICES COMPANY:
Utilities
Global Governments
New Discovery
- - MORGAN STANLEY ASSET MANAGEMENT:
Emerging Markets Equity
Global Equity
International Magnum
Asian Equity
U.S. Real Estate
Details about the investment objectives and policies of each of the available
investment portfolios and management fees and expenses, appear in the sections
on Investment Objectives and Policies of the Funds' Portfolios and Fund Expense
Summary. In addition to the listed portfolios, you may also elect to allocate
Net Premiums to AVLIC's Fixed Account. (See the section on Fixed Account.)
HOW DOES THE LIFE INSURANCE COMPONENT OF A BRAVO! POLICY WORK?
A BRAVO! Policy provides for the payment of a minimum Death Benefit upon the
Second Death. There is no benefit payable on the death of the first Insured. The
amount of the minimum Death Benefit -- sometimes referred to as the Specified
Amount of your BRAVO! Policy -- is chosen by you at the time your BRAVO! Policy
is established. However, Death Benefit Proceeds -- the actual amount that will
be
BRAVO!
8
<PAGE> 12
paid after AVLIC receives Satisfactory Proof of Death -- may vary over the life
of your BRAVO! Policy, depending on which of the two available coverage options
you select.
If you choose Option A, the Death Benefit payable under your BRAVO! Policy will
be the Specified Amount of your BRAVO! Policy OR the applicable percentage of
its Accumulation Value, whichever is greater. If you choose Option B, the Death
Benefit payable under your BRAVO! Policy will be the Specified Amount of your
BRAVO! Policy PLUS the Accumulation Value of your BRAVO! Policy, or if it is
higher, the applicable percentage of the Accumulation Value on the Second Death.
In either case, the applicable percentage is established based on the Attained
Age at the Second Death. (See the section on Death Benefit Options.)
ARE THERE ANY RISKS INVOLVED IN OWNING A BRAVO! POLICY?
Yes. Over the life of your BRAVO! Policy, the Subaccounts to which you allocate
your premiums will fluctuate with changes in the stock market and overall
economic factors. These fluctuations will be reflected in the Accumulation Value
of your BRAVO! Policy and may result in loss of principal. For this reason, the
purchase of a BRAVO! Policy may not be suitable for all individuals. It may not
be advantageous to purchase a BRAVO! Policy to replace or augment your existing
insurance arrangements. Appendix A includes tables illustrating the impact that
hypothetical market returns would have on Accumulation Values under a BRAVO!
Policy (page A-1).
WHAT IS THE PREMIUM THAT MUST BE PAID TO KEEP A BRAVO! POLICY IN FORCE?
Like traditional life insurance policies, a BRAVO! Policy requires the payment
of periodic premiums in order to keep the Policy in force. You will be asked to
establish a payment schedule before your BRAVO! Policy becomes effective.
The distinction between traditional life policies and a BRAVO! Policy is that a
BRAVO! Policy will not lapse simply because premium payments are not made
according to that payment schedule. However, a BRAVO! Policy will lapse, even if
scheduled premium payments are made, if the Net Cash Surrender Value of your
BRAVO! Policy falls below zero or premiums paid do not, in the aggregate, equal
the premium necessary to satisfy the Minimum Benefit or the Guaranteed Death
Benefit requirements. (See the section on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your BRAVO! Policy will be issued after a completed application is accepted, and
the initial premium payment is received, by AVLIC at its Home Office. AVLIC's
Home Office is located at 5900 "O" Street, P.O. Box 82550, Lincoln, NE 68501.
Your initial Net Premium will be allocated on the Issue Date to the Subaccount
and/or the Fixed Account according to the selections you made in your
application. If state or other applicable law or regulation requires return of
at least your premium payments should you return the Policy pursuant to the
Free-Look Privilege, your initial Net Premium will be allocated to the Money
Market Subaccount. Thirteen days after the Issue Date, the Accumulation Value of
the Policy will be allocated among the Subaccounts and/or the Fixed Account
according to the instructions in your application. You have the right to examine
your BRAVO! Policy and return it for a refund for a limited time, even after the
Issue Date. (See the section on Issuance of a Policy.)
You may make subsequent premium payments according to your Planned Periodic
Premium schedule, although you are not required to do so. AVLIC will send
premium payment notices to you according to any schedule you select. When AVLIC
receives your premium payment at its Home Office, we will deduct any applicable
Percent of Premium Charge for Taxes and the Net Premium will be allocated to the
Subaccounts and/or the Fixed Account according to your selections. (See the
sections on Premiums and Allocations of Premiums and Accumulation Value.)
As already noted, BRAVO! provides you considerable flexibility in determining
the frequency and amount of premium payments. This flexibility is not, however,
unlimited. You should keep certain factors in mind in determining the payment
schedule that is best suited to your needs. These include the amount of the
Minimum Premium, Guaranteed Death Benefit Premium and/or Net Policy Funding
requirement needed to keep your BRAVO! Policy in force; maximum premium
limitations established under the federal tax laws; and the impact that reduced
premium payments may have on the Net Cash Surrender Value of your BRAVO! Policy.
(See the section on Premiums.)
BRAVO!
9
<PAGE> 13
IS THE ACCUMULATION VALUE OF MY BRAVO! POLICY AVAILABLE WITHOUT SURRENDER?
Yes. You may access the value of your BRAVO! Policy in one of two ways. First,
you may obtain a loan, secured by the Accumulation Value of your BRAVO! Policy.
The maximum interest rate on any such loan is 6% annually; the current rate is
5.5% annually. After the tenth Policy Anniversary, you may borrow against a
limited amount of the Net Cash Surrender Value of your BRAVO! Policy at a
maximum annual interest rate of 4%; the current rate for such loans is 3.5%
annually. (See the section on Loan Benefits.)
You may also access the value of your BRAVO! Policy by making a partial
withdrawal. A partial withdrawal is not subject to Surrender Charges, but is
subject to a maximum charge not to exceed the lesser of $50 or 2% of the amount
withdrawn (currently, the partial withdrawal charge is the lesser of $25 or 2%).
(See the section on Partial Withdrawals.)
ARE THERE ANY OTHER CHARGES ASSOCIATED WITH OWNERSHIP OF A BRAVO! POLICY?
Certain states impose premium and other taxes in connection with insurance
policies such as BRAVO! AVLIC may deduct up to 3% of each premium as a Percent
of Premium Charge for Taxes. Currently, 2.25% is deducted for this purpose.
Charges are deducted against the Accumulation Value to cover the Cost of
Insurance under the Policy and to compensate AVLIC for administering each
individual BRAVO! Policy. These charges, which are part of the Monthly
Deduction, are calculated and paid on each Monthly Activity Date. The Cost of
Insurance is calculated based on risk factors relating to the Insureds as
reflected in relevant actuarial tables. The Administrative Expense Charges are
based on your Specified Amount and the Policy duration. Currently, the level per
Policy charge for Specified Amounts between $100,000 and $999,999 is $16 per
month in Policy Years 1-5 and $8 per month thereafter; for Specified Amounts
between $1,000,000 and $4,999,999, the charge is currently $8 per month in
Policy Years 1-5 and $4 per month thereafter; and there is currently no charge
for Specified Amounts $5,000,000 or greater. In addition, for all Specified
Amounts there currently is a charge per month per $1000 of Specified Amount, as
follows: for Issue Ages 20-44, the rate is $.10, for Issue Ages 45-64, the rate
is $.08, and for Issue Ages 65 and over, the rate is $.05. At the current time
we anticipate the charge per $1000 of Specified Amount will reduce to $0 in year
6. The Administrative Expense Charge is levied throughout the life of the Policy
and is guaranteed not to increase above $16 per month plus a charge of up to
$.10 per month per $1000 of Specified Amount that depends on the younger
Insured's Issue Age.
For its services in administering Separate Account V and Subaccounts and as
compensation for bearing certain mortality and expense risks, AVLIC is also
entitled to receive fees. These fees are calculated daily during the first 15
years of each BRAVO! Policy, at a combined annual rate of 0.90% of the value of
the net assets of Separate Account V. After the 15th Policy Anniversary Date,
the combined annual rate will decrease to .45% of the daily net assets of
Separate Account V. These charges will not be deducted from the amounts in the
Fixed Account. (See the section on Daily Charges Against the Separate Account.)
Finally, because AVLIC incurs expenses immediately upon the issuance of a BRAVO!
Policy that are recovered over a period of years, a BRAVO! Policy that is
Surrendered on or before its 14th Policy Anniversary Date is subject to a
Surrender Charge. Additional Surrender Charges may apply if you increase the
Specified Amount of your BRAVO! Policy. Because the Surrender Charge may be
significant upon early Surrender, you should purchase a BRAVO! Policy only if
you intend to maintain your BRAVO! Policy for a substantial period. (See the
section on Surrender Charge.)
Policy Owners who choose to allocate Net Premiums to one or more of the
Subaccounts will also bear a pro rata share of the management fees and expenses
paid by each of the investment portfolios in which the various Subaccounts
invest. No such management fees are assessed against Net Premiums allocated to
the Fixed Account. (See the section on Fund Expense Summary.)
WHEN DOES MY BRAVO! POLICY TERMINATE?
You may terminate your BRAVO! Policy by Surrendering the Policy while at least
one Insured is alive for its Net Cash Surrender Value. As noted above, your
BRAVO! Policy will terminate if you fail to pay required premiums or maintain
sufficient Net Cash Surrender Value to cover Policy charges. (See the sections
on Surrenders and Premiums.)
BRAVO!
10
<PAGE> 14
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 April 15, 2000, AVLIC has experienced no known Y2K problems. All of our
computer application and operating systems had been updated for the year 2000 by
December 31, 1998. Continuous testing and monitoring throughout 1999 helped
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 47 states, and the District of Columbia. AVLIC's
financial statements may be found at page F-II-1.
AVLIC is a wholly owned subsidiary of AMAL Corporation, a Nebraska stock
company. AMAL Corporation is a joint venture of Ameritas Life Insurance Corp.
("Ameritas Life"), which owns a majority interest in AMAL Corporation; and
AmerUs Life Insurance Company ("AmerUs Life"), an Iowa stock life insurance
company, which owns a minority interest in AMAL Corporation. The Home Offices of
both AVLIC and Ameritas Life are at 5900 "O" Street, P.O. Box 82550, Lincoln,
Nebraska 68501 ("Home Office"). AVLIC's telephone number is 800-745-1112 and its
website address is www.overturelife.com.
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, 1999 of over
$4.8 billion. AmerUs Life had total assets as of December 31, 1999 of over $10.7
billion.
AVLIC has a rating of A (Excellent) for financial strength and operating
performance from A.M. Best Company, a firm that analyzes insurance carriers.
This is the third highest of Best's 15 categories. AVLIC is rated AA (Very
Strong) for insurer financial strength from Standard & Poor's. This is the
third-highest of Standard & Poor's 21 ratings. Ameritas Life enjoys a long
standing A+ (Superior) rating from A.M. Best, the second highest of Best's
ratings.
Ameritas Life, AmerUs Life and AMAL Corporation guarantee the obligations of
AVLIC. This guarantee will continue until AVLIC is recognized by a national
rating agency as having a financial rating equal to or greater than Ameritas
Life, or until AVLIC is acquired by another insurance company which has a
financial rating by a national rating agency equal to or greater than Ameritas
Life and which agrees to assume the guarantee. AmerUs Life will be relieved of
its obligations under the guarantee if it sells its
BRAVO!
11
<PAGE> 15
interest in AMAL Corporation to another insurance company which has a financial
rating by a national rating agency equal to or greater than that of AmerUs Life,
and the purchaser assumes the guarantee.
Ameritas Investment Corp. ("AIC"), the principal underwriter of the Policies,
may publish in advertisements and reports to Policy Owners, the ratings and
other information assigned to Ameritas Life and AVLIC by one or more independent
rating services. Published material may also include charts and other
information concerning dollar cost averaging, portfolio rebalancing, earnings
sweep, tax-deference, asset allocation, diversification, long term market
trends, index performance and other investment methods and programs. The purpose
of the ratings is to reflect the financial strength of AVLIC. The ratings do not
relate to the performance of Separate Account V.
THE SEPARATE ACCOUNT
Ameritas Variable Life Insurance Company Separate Account V ("Separate Account
V") was established under Nebraska law on August 28, 1985. The assets of
Separate Account V are held by AVLIC segregated from all of AVLIC's other
assets, are not chargeable with liabilities arising out of any other business
which AVLIC may conduct, and are not affected by income, gains, or losses of
AVLIC. Although the assets maintained in Separate Account V will not be charged
with any liabilities arising out of AVLIC's other business, all obligations
arising under the Policies are liabilities of AVLIC who will maintain assets in
Separate Account V of a total market value at least equal to the reserve and
other contract liabilities of Separate Account V. Separate Account V will at all
times contain assets equal to or greater than Accumulation Values invested in
Separate Account V. Nevertheless, to the extent assets in Separate Account V
exceed AVLIC's liabilities in Separate Account V, the assets are available to
cover the liabilities of AVLIC's General Account. AVLIC may, from time to time,
withdraw assets available to cover the General Account obligations.
Separate Account V is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust, which is a type of investment company. This does not involve
any SEC supervision of the management or investment policies or practices of
Separate Account V. For state law purposes, Separate Account V is treated as a
Division of AVLIC.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of Separate Account V and the Funds
available for investment by Separate Account V may appear in advertisements,
sales literature, or reports to Policy Owners or prospective purchasers. AVLIC
may also provide a hypothetical illustration of Accumulation Value, Net Cash
Surrender Value and Death Benefit based on historical investment returns of the
Funds for a sample Policy based on assumptions as to age, sex, and risk class of
each Insured, and other Policy specific assumptions.
AVLIC may also provide individualized hypothetical illustrations of Accumulation
Value, Net Cash Surrender Value and Death Benefit based on historical investment
returns of the Funds. These illustrations will reflect deductions for Fund
expenses and Policy and Separate Account V charges, including the Monthly
Deduction, Percent of Premium Charge for Taxes, and the Surrender Charge. These
hypothetical illustrations will be based on the actual historical experience of
the Funds as if the Subaccounts had been in existence and a Policy issued for
the same periods as those indicated for the Funds.
THE FUNDS
There are currently 31 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"), Calvert Variable Series, Inc. ("CVS Social Portfolios"); Variable
Insurance Products Fund and Variable Insurance Products Fund II, (respectively,
"VIP" and "VIP II"; collectively "Fidelity Portfolios"); The Alger American Fund
("Alger American Fund"); MFS Variable Insurance Trust ("MFS Trust"); and The
Universal Institutional Funds, Inc. ("Universal Institutional Funds"). 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.
BRAVO!
12
<PAGE> 16
AIC also contracts with subadvisers. The following subadvisers provide
investment subadvisory services to the indicated portfolios:
<TABLE>
<CAPTION>
PORTFOLIO SUBADVISER
--------- ----------
<S> <C>
Ameritas Money Market Calvert Asset Management Company, Inc.
Ameritas Index 500 State Street Global Advisors
Ameritas Growth Fred Alger Management, Inc. ("Alger Management")
Ameritas Income & Growth Alger Management
Ameritas Small Alger Management
Capitalization
Ameritas MidCap Growth Alger Management
Ameritas Emerging Growth Massachusetts Financial Services Company ("MFS")
Ameritas Research MFS
Ameritas Growth With Income MFS
</TABLE>
CVS Social Portfolios, which is managed by Calvert Asset Management Company,
Inc. ("CAMCO"), offers the following portfolios: CVS Social Small Cap Growth
Portfolio, CVS Social Mid Cap Growth Portfolio, CVS Social International Equity
Portfolio, and CVS Social Balanced Portfolio. VIP, which is managed by Fidelity
Management & Research Company ("Fidelity"), offers the following portfolios: VIP
Equity-Income: Service Class, VIP Growth: Service Class, VIP High Income:
Service Class and VIP Overseas: Service Class. VIP II, also managed by Fidelity,
offers the following portfolios: VIP II Asset Manager: Service Class, VIP II
Investment Grade Bond: Initial Class, VIP II Asset Manager: Growth: Service
Class, and VIP II Contrafund: Service Class. The Alger American Fund, which is
managed by Fred Alger Management, Inc. ("Alger Management"), offers the
following portfolios: Alger American Balanced ("Balanced") and Alger American
Leveraged AllCap ("Leveraged AllCap"). The MFS Trust, managed by Massachusetts
Financial Services Company ("MFS"), offers the following portfolios or series in
connection with this Policy: MFS Utilities, MFS Global Governments, and MFS New
Discovery. The Universal Institutional Funds offer the following portfolios in
connection with the Policy, all of which are managed by Morgan Stanley Asset
Management: Emerging Markets Equity, Global Equity, International Magnum, Asian
Equity and U.S. Real Estate. Each Fund is registered with the SEC under the
Investment Company Act of 1940 as an open-end management investment company.
The assets of each portfolio of the Funds are held separately from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this prospectus. All
underlying Fund information, including Fund prospectuses, has been provided to
AVLIC by the underlying Funds. AVLIC has not independently verified this
information. One or more of the portfolios may employ investment techniques that
involve certain risks, including investing in non-investment grade, high risk
debt securities, entering into repurchase agreements and reverse repurchase
agreements, lending portfolio securities, engaging in "short sales against the
box," investing in instruments issued by foreign banks, entering into firm
commitment agreements and investing in warrants and restricted securities. In
addition, certain of the portfolios may invest in securities of foreign issuers.
The Leveraged AllCap portfolio may borrow money to increase its portfolio of
securities, and may purchase or sell options and enter into futures contracts on
securities indexes to increase gain or to hedge the value of the portfolio.
Certain of the portfolios are permitted to invest a portion of their assets in
non-investment grade, high risk debt securities; these portfolios include the
VIP High Income: Service Class, VIP Equity-Income: Service Class, VIP II Asset
Manager: Growth: Service Class, VIP II Asset Manager: Service Class portfolios
of the Fidelity Portfolios, and the Research portfolio of the Ameritas
Portfolios. Certain portfolios are designed to invest a substantial portion of
their assets overseas, such as the VIP Overseas: Service Class portfolio and the
International Magnum portfolio of the Universal Institutional Funds. Other
portfolios invest primarily in the securities markets of emerging nations.
Investments of this type involve different risks than investments in more
established economies, and will be affected by greater
BRAVO!
13
<PAGE> 17
volatility of currency exchange rates and overall economic and political
factors. Such portfolios include the Emerging Markets Equity and Asian Equity
portfolios of the Universal Institutional Funds. The Emerging Markets Equity
portfolio may also invest in non-investment grade, high risk debt securities
(also known as "junk bonds") and securities of Russian companies. Investment in
Russian companies may involve risks associated with that nation's system of
share registration and custody. Securities of non-U.S. issuers (including
issuers in emerging nations) may also be purchased by each of the portfolios of
the MFS Trust, by the Emerging Growth, Research, and Growth With Income
portfolios of the Ameritas Portfolios, and by the Global Equity portfolio of the
Universal Institutional Funds. Investments acquired by the U.S. Real Estate
portfolio of the Universal Institutional Funds may be subject to the risks
associated with the direct ownership of real estate and direct investments in
real estate investment trusts. Further information about the risks associated
with investments in each of the Funds and their respective portfolios is
contained in the prospectus relating to that Fund. These prospectuses, together
with this prospectus, should be read carefully and retained.
The investments in the Funds may be managed by Fund managers which manage one or
more other mutual funds that have similar names, investment objectives, and
investment styles as the Funds. You should be aware that the Funds are likely to
differ from the other mutual funds in size, cash flow pattern, and tax matters.
Thus, the holdings and performance of the Funds can be expected to vary from
those of the other mutual funds.
You should periodically consider the allocation among the Subaccounts in light
of current market conditions and the investment risks attendant to investing in
the Funds' various portfolios.
Separate Account V will purchase and redeem shares from the portfolios at the
net asset value. Shares will be redeemed to the extent necessary for AVLIC to
collect charges, pay the Surrender Values, partial withdrawals, and make Policy
loans or to transfer assets among Investment Options as you requested. Any
dividend or capital gain distribution received is automatically reinvested in
the corresponding Subaccount.
Since each of the Funds is designed to provide investment vehicles for variable
annuity and variable life insurance contracts of various insurance companies and
will be sold to separate accounts of other insurance companies as investment
vehicles for various types of variable life insurance policies and variable
annuity contracts, there is a possibility that a material conflict may arise
between the interests of Separate Account V and one or more of the separate
accounts of another participating insurance company. In the event of a material
conflict, the affected insurance companies agree to take any necessary steps,
including removing their separate accounts from the Funds, to resolve the
matter. The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AMERITAS PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------
Ameritas Money Invests in U.S. dollar-denominated money Seeks as high a level of current income as
Market market securities of domestic and foreign is consistent with preservation of capital
issuers, including U.S. government and liquidity.
securities and repurchase agreements.
Invests more than 25% of total assets in
the financial services industry.
- -------------------------------------------------------------------------------------------------------------------
Ameritas Index 500 Under normal circumstances, seeks to track Seeks investment results that correspond
the Standard & Poor's 500. to the total return of common stocks
publicly traded in the United States, as
represented by the Standard & Poor's 500.
- -------------------------------------------------------------------------------------------------------------------
Ameritas Growth Focuses on growing companies that generally Seeks long-term capital appreciation.
have broad product lines, markets,
financial resources and depth of
management. Under normal circumstances, the
portfolio invests primarily in the equity
securities of large companies. The
portfolio considers a large company to have
market capitalization of $1 billion or
greater.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
BRAVO!
14
<PAGE> 18
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ameritas Income & Invests in dividend paying equity Primarily seeks to provide a high level of
Growth securities, such as common or preferred dividend income. its secondary goal is to
stocks, preferably those which the provide capital appreciation.
subadvisor believes also offer
opportunities for capital appreciation.
- -------------------------------------------------------------------------------------------------------------------
Ameritas Small Focuses on small, fast-growing companies Seeks long-term capital appreciation.
Capitalization that offer innovative products, services or
technologies to a rapidly expanding
marketplace. Under normal circumstances,
the portfolio invests primarily in the
equity securities of small capitalization
companies. A small capitalization company
is one that has a market capitalization
within the range of the Russell 200 Growth
Index or the S&P
SmallCap 600 Index.
- -------------------------------------------------------------------------------------------------------------------
Ameritas MidCap Invests in midsize companies with promising Seeks long-term capital appreciation.
Growth growth potential. Under normal
circumstances, the portfolio invests
primarily in the equity securities of
companies having a market capitalization
within the range of companies in the S&P
MidCap 400 Index.
- -------------------------------------------------------------------------------------------------------------------
Ameritas Emerging Invests, under normal market conditions, at Seeks long-term growth of capital.
Growth least 65% of its total assets in common
stocks and related securities, such as
preferred stocks, convertible securities
and depositary receipts for those
securities, of emerging growth companies.
- -------------------------------------------------------------------------------------------------------------------
Ameritas Research Invests, under normal market conditions, at Seeks long-term growth of capital and
least 80% of its total assets in common future income.
stocks and related securities, such as
preferred stocks, convertible securities
and depositary receipts. The portfolio
focuses on companies that the subadvisor
believes have favorable prospects for
long-term growth, attractive valuations
based on current and expected earnings or
cash flow, dominant or growing market share
and superior management. The fund may
invest in companies of any size. the
portfolio's investments may include
securities traded on securities exchanges
or in the over-the-counter markets.
- -------------------------------------------------------------------------------------------------------------------
Ameritas Growth with Invests, under normal market conditions, at Seeks to provide reasonable current income
Income least 65% of its total assets in common and long-term growth of capital and
stocks and related securities, such as income.
preferred stocks, convertible securities
and depositary receipts for those
securities. These securities may be listed
on a securities exchange or traded in the
over-the-counter markets. While the
portfolio may invest in companies of any
size, it may generally focus on companies
with larger market capitalizations that the
subadvisor believes have sustainable growth
prospects and attractive valuations based
on current and expected earnings or cash
flow.
- -------------------------------------------------------------------------------------------------------------------
CVS SOCIAL PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------
CVS Social Small Cap Invests at least 65% of assets in the Seeks to provide long-term capital
Growth common stocks of small-cap companies. appreciation by investing primarily in
Returns in the portfolio will be mostly equity securities of companies that have
from the changes in the price of the small market capitalizations.
portfolio's holdings (capital
appreciation). The portfolio currently
defines small-cap companies as those with
market capitalization of $1 billion or less
at the time the portfolio initially
invests.*
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
BRAVO!
15
<PAGE> 19
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CVS Mid Cap Growth Invests primarily in the common stocks of Seeks to provide long-term capital
Portfolio mid- size companies. Returns in the appreciation by investing primarily in a
portfolio will be mostly from the changes nondiversified portfolio of the equity
in the price of the portfolio's holdings securities of mid-sized companies that are
(capital appreciation). The portfolio undervalued but demonstrate a potential
currently defines mid-cap companies as for growth.
those within the range of market
capitalizations of the S&P's Mid-Cap 400
Index. Most companies in the Index have a
capitalization of $500 million to $10
billion.*
- -------------------------------------------------------------------------------------------------------------------
CVS Social Invests primarily in the common stocks of Seeks to provide a high total return
International mid- to large-cap companies using a value consistent with reasonable risk by
Equity Portfolio approach. The portfolio identifies those investing primarily in a globally
countries with markets and economies that diversified portfolio for equity
it believes currently provide the most securities.
favorable climate for investing. The
portfolio invests primarily in more
developed economies and markets. No more
than 5% of Portfolio assets are invested in
the U.S.*
- -------------------------------------------------------------------------------------------------------------------
CVS Social Balanced Typically invests about 60% of its assets Seeks to achieve a competitive total
Portfolio in stocks and 40% in bonds or other return through an actively managed
fixed-income investments. Stock investments portfolio of stocks, bonds and money
are primarily common stock in large-cap market instruments which offer income and
companies, while the fixed-income capital growth opportunity and which
investments are primarily a wide variety of satisfy the investment and social
investment grade bonds.* criteria.
- -------------------------------------------------------------------------------------------------------------------
*The portfolio invests with the philosophy
that long-term rewards to investors will
come from those organizations whose
products, services, and methods enhance the
human condition and the traditional
American values of individual initiative,
equality of opportunity and cooperative
effort. Investments are selected on the
basis of their ability to contribute to the
dual objectives of financial soundness and
social criteria.
- -------------------------------------------------------------------------------------------------------------------
FIDELITY PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------
VIP Equity-Income Investing at least 65% in income-producing Seeks reasonable income. Will also
equity securities, which tends to lead to consider the potential for capital
investments in large cap "value" stocks. appreciation. Seeks a 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 in Seeks a high level of current income while
income-producing debt securities, preferred also considering growth of capital.
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.
- -------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager Allocating the Fund's assets among stocks, Seeks high total return with reduced risk
bonds, and short-term and money market over the long term by allocating its
instruments. Maintaining a neutral mix over assets in stocks, bonds, and short-term
time of 50% of assets in stocks, 40% of instruments.
bonds, and 10% of assets in short-term and
money market instruments.
- -------------------------------------------------------------------------------------------------------------------
VIP II Investment Investing in U.S. dollar-denominated Seeks as high a level of current income as
Grade Bond investment- grade bonds. is consistent with the preservation of
capital.
- -------------------------------------------------------------------------------------------------------------------
VIP II Asset Allocating the Fund's assets among stocks, Seeks to maximize total return by
Manager: Growth bonds, and short-term and money market allocating its assets among stocks, bonds,
instruments. Maintaining a neutral mix over short-term instruments and other
time of 70% of assets in stocks, 25% of investments.
assets in bonds, and 5% of assets in
short-term and money market instruments.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 20
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VIP II Contrafund Investing primarily in common stocks. Seeks long-term capital appreciation.
Investing in securities of companies whose
value it believes is not fully recognized
by the public.
- -------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN FUND
- -------------------------------------------------------------------------------------------------------------------
Balanced The portfolio focuses on stocks of Seeks current income and long-term capital
companies with growth potential and fixed appreciation by investment in common
income securities, with emphasis on stocks and fixed income and convertible
income-producing securities which appear to securities, with emphasis on income
have some potential for capital producing securities which appear to have
appreciation. Under normal circumstances, potential for capital appreciation.
it invests in common stocks and fixed
income securities, which include commercial
paper and bonds rated within the four
highest rating categories by an established
rating agency or if not rated, which are
determined by the manager to be of
comparable quality. Ordinarily, at least
25% of the portfolio's net assets are
invested in fixed-income securities.
- -------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Under normal circumstances, the portfolio Seeks long-term capital appreciation.
invests in the equity securities of
companies of any size which demonstrate
promising growth potential. The portfolio
can leverage, that is, borrow money, up to
one-third of its total assets to buy
additional securities. By borrowing money,
the portfolio has the potential to increase
its returns if the increase in the value of
the securities purchased exceeds the cost
of borrowing, including interest paid on
the money borrowed.
- -------------------------------------------------------------------------------------------------------------------
MFS TRUST
- -------------------------------------------------------------------------------------------------------------------
Utilities Series Invests, under normal market conditions, at Will seek capital growth and current
least 65% of its total assets in equity and income (income above that available from a
debt securities of both domestic and portfolio invested entirely in equity
foreign companies in the utilities securities).
industry.
- -------------------------------------------------------------------------------------------------------------------
Global Governments Invests, under normal market conditions, at Will seek to provide income and capital
Series least 65% of its total assets in debt appreciation.
obligations that are issued or guaranteed
as to principal and interest by either (1)
the U.S. Government, its agencies,
authorities or instrumentalities or (2) the
governments of foreign countries (including
emerging markets). May also invest in
corporate bonds (including lower rated
bonds commonly known as junk bonds) and
mortgage-backed and assets-backed
securities.
- -------------------------------------------------------------------------------------------------------------------
New Discovery Series Invests, under normal market conditions, at Will seek capital appreciation.
least 65% of its total assets in common
stocks and related securities, such as
preferred stocks, convertible securities
and depositary receipts for those
securities, of emerging growth companies.
- -------------------------------------------------------------------------------------------------------------------
UNIVERSAL INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------------------------------------------
Emerging Markets Invests primarily in equity securities of Long-term capital appreciation.
Equity emerging market country issuers with a
focus on those issuers with attractive
growth characteristics, reasonable
valuations, and managements with a strong
shareholder value orientation.
- -------------------------------------------------------------------------------------------------------------------
Global Equity Invests primarily in equity securities of Long-term capital appreciation.
issuers throughout the world, including
U.S. issuers and emerging market countries,
using an approach based on individual stock
selection and emphasizing a bottom up
approach to identify stocks that are
undervalued.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
BRAVO!
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<PAGE> 21
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
International Magnum Invests primarily in equity securities of Long-term capital appreciation.
non-U.S. issuers, domiciled in countries
comprising the Morgan Stanley Capital
International Europe, Australasia, Far East
Index commonly known as the "EAFE Index."
- -------------------------------------------------------------------------------------------------------------------
Asian Equity Invests primarily in equity securities of Long-term capital appreciation.
Asian issuers, excluding Japan, using a
disciplined, value-oriented approach to
security selections focusing on larger
companies with strong management teams.
- -------------------------------------------------------------------------------------------------------------------
U.S. Real Estate Invests primarily in equity securities of Above-average current income and long-term
companies in the U.S. real estate industry, capital appreciation.
including real estate investment trusts and
real estate operating companies.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, to add, delete, combine, or
substitute investments in Separate Account V if, in our judgment, marketing
needs, tax considerations, or investment conditions warrant. This may happen due
to a change in law or a change in a Fund's objectives or restrictions, or for
some other reason. AVLIC may operate Separate Account V as a management company
under the 1940 Act, it may be deregistered under that Act if registration is no
longer required, or it may be combined with other AVLIC separate accounts. AVLIC
may also transfer the assets of Separate Account V to another separate account.
If necessary, we will notify the SEC and/or state insurance authorities and will
obtain any required approvals before making these changes.
If any changes are made, AVLIC may, by appropriate endorsement, change the
Policy to reflect the changes. In addition, AVLIC may, when permitted by law,
restrict or eliminate any voting rights of Policy Owners or other persons who
have voting rights as to Separate Account V. AVLIC will determine the basis for
making any new Subaccounts available to existing Policy Owners. You will be
notified of any material change in the investment policy of any Fund in which
you have an interest.
FIXED ACCOUNT
You may elect to allocate all or a portion of your Net Premium payments to the
Fixed Account, and you may also transfer monies between Separate Account V and
the Fixed Account. (See the section on Transfers.)
Payments allocated to the Fixed Account and transferred from Separate Account V
to the Fixed Account are placed in AVLIC's General Account. The General Account
includes all of AVLIC's assets, except those assets segregated in AVLIC's
separate accounts. AVLIC has the sole discretion to invest the assets of the
General Account, subject to applicable law. AVLIC bears an investment risk for
all amounts allocated or transferred to the Fixed Account, plus interest
credited thereto, less any deduction for charges and expenses. The Policy Owner
bears the investment risk that the declared rate, described below, will fall to
a lower rate after the expiration of a declared rate period. Because of
exemptions and exclusionary provisions, interests in the General Account have
not been registered under the Securities Act of 1933 (the "1933 Act"), nor is
the General Account registered as an investment company under the Investment
Company Act of 1940. Accordingly, neither the General Account nor any interest
in it is generally subject to the provisions of the 1933 or 1940 Act. We
understand that the staff of the SEC has not reviewed the disclosures in this
prospectus relating to the Fixed Account portion of the Policy; however, these
disclosures may be subject to generally applicable provisions of the federal
securities laws regarding the accuracy and completeness of statements made in
prospectuses.
AVLIC guarantees that it will credit interest at a declared rate of at least
3.5%. AVLIC may, at its discretion, set a higher declared rate(s). Each month
AVLIC will establish the declared rate for the Policies with a Policy Date or
Policy Anniversary Date in that month. Each month is assumed to have 30 days,
and each year to have 360 days for purposes of crediting interest on the Fixed
Account. The Policy Owner will earn interest on the amounts transferred or
allocated to the Fixed Account at the declared rate effective for the month in
which the Policy was issued, which rate is guaranteed for the
BRAVO!
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<PAGE> 22
remainder of the first Policy Year. During later Policy Years, all amounts in
the Fixed Account will earn interest at the declared rate in effect in the month
of the last Policy Anniversary. Declared interest rates may increase or decrease
from previous periods, but will not fall below 3.5%. AVLIC reserves the right to
change the declaration practice, and the period for which a declared rate will
apply.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus;
however prospectus disclosure regarding the Policy is qualified in its entirety
by the Policy itself, a copy of which is available upon request from AVLIC.
PURPOSES OF THE POLICY
The Policy is designed to provide the Policy Owner with both lifetime insurance
protection and flexibility in the amount and frequency of premium payments and
with the level of life insurance proceeds payable under the Policy.
You are not required to pay scheduled premiums to keep the Policy in force, but
you may, subject to certain limitations, vary the frequency and amount of
premium payments. You also may adjust the level of Death Benefits payable under
the Policy without having to purchase a new Policy by increasing (with evidence
of insurability) or decreasing the Specified Amount. An increase in the
Specified Amount will increase both the Minimum Premium and the Guaranteed Death
Benefit Premium required. If the Specified Amount is decreased, however, the
Minimum Premium and Guaranteed Death Benefit Premium will not decrease. Thus, as
insurance needs or financial conditions change, you have the flexibility to
adjust life insurance benefits and vary premium payments.
The Death Benefit may, and the Accumulation Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account V. Thus the Policy
Owner benefits from any appreciation in value of the underlying assets, but
bears the investment risk of any depreciation in value. As a result, whether or
not a Policy continues in force may depend in part upon the investment
experience of the chosen Subaccounts. The failure to pay a Planned Periodic
Premium will not necessarily cause the Policy to lapse, but the Policy could
lapse even if Planned Periodic Premiums have been paid, depending upon the
investment experience of Separate Account V. If the Minimum Premium or
Guaranteed Death Benefit Premium is satisfied by Net Policy Funding, AVLIC will
keep the Policy in force during the appropriate period and provide a Death
Benefit. In certain instances, this Net Policy Funding will not, after the
payment of Monthly Deductions, generate positive Net Cash Surrender Values.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, AVLIC will pay the Death Benefit
Proceeds of the Policy upon Satisfactory Proof of Death, according to the Death
Benefit option in effect at the time of the Second Death. The amount of the
Death Benefits payable will be determined at the end of the Valuation Period
during which the Second Death occurs. The Death Benefit Proceeds may be paid in
a lump sum or under one or more of the payment options set forth in the Policy.
(See the section on Payment Options.) There is no benefit payable on the death
of the first Insured. Death Benefit Proceeds will be paid to the surviving
Beneficiary or Beneficiaries you specified in the application or as subsequently
changed. If you do not choose a Beneficiary, the proceeds will be paid to you,
as the Policy Owner, or to your estate.
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options. The Policy Owner selects one of
the options in the application. The Death Benefit under either option will never
be less than the current Specified Amount of the Policy as long as the Policy
remains in force. (See the section on Policy Lapse and Reinstatement.) The
minimum initial Specified Amount is $100,000. The Net Amount at Risk for Option
A will generally be less than the Net Amount at Risk for Option B. If you choose
Option A, your Cost of Insurance deduction will generally be lower than if you
choose Option B. (See the section on Charges and Deductions.) The following
graphs illustrate the differences in the two Death Benefit options.
BRAVO!
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<PAGE> 23
OPTION A.
[GRAPH]
(OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION A, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE CASH
VALUE.)
Death Benefit Option A. Pays a Death Benefit equal
to the Specified Amount or the Accumulation Value
multiplied by the Death Benefit percentage (as
illustrated at Point A) whichever is greater.
Under Option A, the Death Benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of Accumulation Value at the Second
Death. The applicable percentage is 250% for Attained Ages 40 or younger on the
Policy Anniversary Date prior to the Second Death. For Attained Ages over 40 on
that Policy Anniversary Date, the percentage declines. For example, the
percentage at Attained Age 40 is 250%, at Attained Age 50 is 185%, at Attained
Age 60 is 130%, at Attained Age 70 is 115%, at Attained Age 80 is 105%, and at
Attained Age 90 is 105%. The applicable percentage will never be less than 101%.
Accordingly, under Option A the Death Benefit will remain level at the Specified
Amount unless the applicable percentage of Accumulation Value exceeds the
current Specified Amount, in which case the amount of the Death Benefit will
vary as the Accumulation Value varies. Policy Owners who prefer to have
favorable investment performance, if any, reflected in higher Accumulation
Value, rather than increased insurance coverage, generally should select Option
A.
OPTION B.
[GRAPH]
(OMITTED GRAPH ILLUSTRATES PAYOUT UNDER DEATH BENEFIT OPTION B, SPECIFICALLY BY
SHOWING THE RELATIONSHIPS OVER TIME, BETWEEN THE SPECIFIED AMOUNT AND THE CASH
VALUE.)
Death Benefit Option B. Pays a Death Benefit equal
to the Specified Amount plus the Policy's
Accumulation Value or the Accumulation Value
multiplied by the Death Benefit percentage,
whichever is greater.
Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Accumulation Value of the Policy or, if greater, the applicable percentage
of the Accumulation Value at the Second Death. The applicable percentage is the
same as under Option A: 250% for Attained Ages 40 or younger on the Policy
Anniversary Date prior to the Second Death. For Attained Ages over 40 on that
Policy Anniversary Date the percentage declines. Accordingly, under Option B the
amount of the Death Benefit will always vary as the Accumulation Value varies
(but will never be less than the Specified Amount). Policy Owners who prefer to
have favorable investment performance, if any, reflected in increased insurance
coverage, rather than higher Accumulation Values, generally should select Option
B.
CHANGE IN DEATH BENEFIT OPTION. The Death Benefit option may be changed once per
year after the first Policy Year by sending AVLIC a written request. The
effective date of such a change will be the Monthly Activity Date on or
following the date the change is approved by AVLIC. A change may have federal
tax consequences. If the Death Benefit option is changed from Option A to Option
B, the Specified Amount after the change will equal the Specified Amount before
the change less the Accumulation Value as of the date of the change. If the
Death Benefit option is changed from Option B to Option A, the Specified
BRAVO!
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<PAGE> 24
Amount under Option A after the change will equal the Death Benefit under Option
B on the effective date of change.
No charges will be imposed upon a change in Death Benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's Accumulation Value. However, a change in the Death Benefit option may
affect the Cost of Insurance because this charge varies depending on the Net
Amount at Risk. Changing from Option B to Option A generally will decrease the
Net Amount at Risk in the future, and will therefore decrease the Cost of
Insurance. Changing from Option A to Option B generally will result in an
increase in the Cost of Insurance over time because the Cost of Insurance rate
will increase with the ages of the Insureds, even though the Net Amount at Risk
will generally remain level. (See the sections on Charges and Deductions and
Federal Tax Matters.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first
Policy Year, a Policy Owner may increase or decrease the Specified Amount of a
Policy. A change in Specified Amount affects the Net Amount at Risk, which
affects the Cost of Insurance and may have federal tax consequences. (See the
sections on Charges and Deductions and Federal Tax Matters.)
Any increase or decrease in the Specified Amount will become effective on the
Monthly Activity Date on or following the date a written request is approved by
AVLIC. The Specified Amount of a Policy may be changed only once per year and
AVLIC may limit the size of a change in a Policy Year. The Specified Amount
remaining in force after any requested decrease may not be less than $100,000.
In addition, if a decrease in the Specified Amount makes the Policy not comply
with the maximum premium limits required by federal tax law, the decrease may be
limited or the Accumulation Value may be returned to you, at your election, to
the extent necessary to meet the requirements. (See the section on Premiums.)
Increases in the Specified Amount will be allowed after the first Policy Year.
For an increase in the Specified Amount, you must submit a written supplemental
application. AVLIC may also require additional evidence of insurability.
Although an increase need not necessarily be accompanied by an additional
premium, in certain cases an additional premium will be required to put the
requested increase in effect. (See the section on Premiums upon Increases in
Specified Amount.) The minimum amount of any increase is $50,000, and an
increase cannot be made if either Insured was over age 85 on the previous Policy
Anniversary Date. An increase in the Specified Amount will also increase
Surrender Charges. An increase in the Specified Amount during the time either
the Minimum Benefit or the Guaranteed Death Benefit provision is in effect will
increase the respective premium requirements. (See the section on Charges and
Deductions.)
METHODS OF AFFECTING INSURANCE PROTECTION
You may increase or decrease the pure insurance protection provided by a
Policy - the difference between the Death Benefit and the Accumulation
Value - in several ways as your insurance needs change. These ways include
increasing or decreasing the Specified Amount of insurance, changing the level
of premium payments, and making a partial withdrawal of the Policy's
Accumulation Value. Certain of these changes may have federal tax consequences.
The consequences of each of these methods will depend upon the individual
circumstances.
DURATION OF THE POLICY
The duration of the Policy generally depends upon the Accumulation Value. The
Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to pay the Monthly Deduction or if the Minimum Benefit or Guaranteed
Death Benefit provision is in effect. (See the section on Charges from
Accumulation Value.) However, when the Net Cash Surrender Value is insufficient
to pay the Monthly Deduction and the Grace Period expires without an adequate
payment by the Policy Owner, the Policy will lapse and terminate without value.
(See the section on Policy Lapse and Reinstatement.)
ACCUMULATION VALUE
The Accumulation Value will reflect the investment performance of the chosen
Investment Options, the Net Premiums paid, any partial withdrawals, and the
charges assessed in connection with the Policy. A Policy Owner may Surrender the
Policy at any time and receive the Policy's Net Cash Surrender Value. (See the
section on Surrenders.) There is no guaranteed minimum Accumulation Value.
BRAVO!
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<PAGE> 25
Accumulation Value is determined on each Valuation Date. On the Issue Date, the
Accumulation Value will equal the portion of any Net Premium allocated to the
Investment Options, reduced by the portion of the first Monthly Deduction
allocated to the Investment Options. (See the section on Allocation of Premiums
and Accumulation Value.) Thereafter, on each Valuation Date, the Accumulation
Value of the Policy will equal:
(1) The aggregate values belonging to the Policy in each of the Subaccounts
on the Valuation Date, determined by multiplying each Subaccount's unit
value by the number of Subaccount units you have allocated to the
Policy; plus
(2) The value of allocations to the Fixed Account; plus
(3) Any Accumulation Value impaired by Outstanding Policy Debt held in the
General Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation Date;
less
(6) Any Monthly Deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Accumulation
Value.
In computing the Policy's Accumulation Value on the Valuation Date, the number
of Subaccount units allocated to the Policy is determined after any transfers
among Investment Options (and deduction of transfer charges), but before any
other Policy transactions, such as receipt of Net Premiums and partial
withdrawals. Because the Accumulation Value depends on a number of variables, a
Policy's Accumulation Value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount is calculated
by:
(1) Multiplying the net asset value per share of each Fund portfolio on the
Valuation Date times the number of shares held by that Subaccount,
before the purchase or redemption of any shares on that Valuation Date;
minus
(2) A charge for mortality and expense risk at an annual rate of .75% in
Policy Years 1-15, decreasing to .30% thereafter; minus
(3) A charge for administrative service expenses at an annual rate of .15%;
and
(4) Dividing the result by the total number of units held in the Subaccount
on the Valuation Date, before the purchase or redemption of any units
on that Valuation Date.
(See the section on Daily Charges Against the Separate Account.)
VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day on which the
New York Stock Exchange ("NYSE") is open for trading. The net asset value for
each Fund portfolio is determined as of the close of regular trading on the
NYSE. The net investment return for each Subaccount and all transactions and
calculations with respect to the Policies as of any Valuation Date are
determined as of that time. A Valuation Period is the period between two
successive Valuation Dates, commencing at the close of the NYSE on each
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after AVLIC receives Satisfactory Proof of Death. Payments may be postponed in
certain circumstances. (See the section on Postponement of Payments.) The Policy
Owner may decide the form in which Death Benefit Proceeds will be paid. While at
least one Insured is alive, the Policy Owner may arrange for the Death Benefit
Proceeds to be paid in a lump sum or under one or more of the optional methods
of payment described below. Changes must be in writing and will revoke all prior
elections. If no election is made, AVLIC will pay Death Benefit Proceeds or
Accumulation Value Benefits in a lump sum. When Death Benefit Proceeds are
BRAVO!
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<PAGE> 26
payable in a lump sum and no election for an optional method of payment is in
force at the Second Death the Beneficiary may select one or more of the optional
methods of payment. Further, if the Policy is assigned, any amounts due to the
assignee will first be paid in one sum. The balance, if any, may be applied
under any payment option. Once payments have begun, the payment option may not
be changed.
PAYMENT OPTIONS FOR DEATH BENEFIT PROCEEDS. The minimum amount of each payment
is $100. If a payment would be less than $100, AVLIC has the right to make
payments less often so that the amount of each payment is at least $100. Once a
payment option is in effect, Death Benefit Proceeds will be transferred to
AVLIC's General Account. AVLIC may make other payment options available in the
future. For additional information concerning these options, see the Policy
itself. The following payment options are currently available:
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.
FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed fixed
amount. Payments continue until the amount AVLIC holds runs out.
FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any period
selected up to 20 years.
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.
JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based on the
lives of two named persons. While both are living, one payment will be made
each month. When one dies, the same payment will continue for the lifetime
of the other.
As an alternative to the above payment options, Death Benefits Proceeds may be
paid in any other manner approved by AVLIC. Further, one of AVLIC's affiliates
may make payments under the above payment options. If an affiliate makes the
payment, it will do so according to the request of the Policy Owner, using the
rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. The Policy Owner may borrow an amount up to the current Net
Cash Surrender Value less twelve times the most recent Monthly Deduction, at
regular or reduced loan rates (described below). Loans usually are funded within
seven days after receipt of a written request. The loan may be repaid at any
time while at least one Insured is living. Policy Owners in certain states may
borrow 100% of the Net Cash Surrender Value after deducting Monthly Deductions
and any interest on Policy loans that will be due for the remainder of the
Policy Year. Loans may have tax consequences. (See the section on Federal Tax
Matters.)
LOAN INTEREST. AVLIC charges interest to Policy Owners at regular and reduced
rates. Regular loans will accrue interest on a daily basis at a rate of up to 6%
per year; currently the interest rate on regular Policy loans is 5.5%. Each year
after the tenth Policy Anniversary Date, the Policy Owner may borrow a limited
amount of the Net Cash Surrender Value at a reduced interest rate. For those
loans, interest will accrue on a daily basis at a rate of up to 4% per year; the
current reduced loan rate is 3.5%. The amount available at the reduced loan rate
is (1) the Accumulation Value , minus (2) total premiums paid minus any partial
withdrawals previously taken, and minus (3) any Outstanding Policy Debt held at
a reduced loan rate. However, this amount may not exceed the maximum loan amount
described above. (See the section on Loan Privileges.) If unpaid when due,
interest will be added to the amount of the loan and bear interest at the same
rate. The Policy Owner earns 3.5% interest on the Accumulation Values held in
the General Account securing the loans.
EFFECT OF POLICY LOANS. When a loan is made, Accumulation Value equal to the
amount of the loan will be transferred from the Investment Options to the
General Account as security for the loan. The Accumulation Value transferred
will be allocated from the Investment Options according to the instructions you
give when you request the loan. The minimum amount which can remain in a
Subaccount
BRAVO!
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<PAGE> 27
or the Fixed Account as a result of a loan is $100. If no instructions are
given, the amounts will be withdrawn in proportion to the various Accumulation
Values in the Investment Options. In any Policy Year that loan interest is not
paid when due, AVLIC will add the interest due to the principal amount of the
Policy loan on the next Policy Anniversary. This loan interest due will be
transferred from the Investment Options as set out above. No charge will be made
for these transfers. A Policy loan will permanently affect the Accumulation
Value and may permanently affect the amount of the Death Benefits, even if the
loan is repaid. Policy loans will also affect Net Policy Funding for determining
whether the Minimum Benefit and Guaranteed Death Benefit provisions are met.
Interest earned on amounts held in the General Account will be allocated to the
Investment Options on each Policy Anniversary in the same proportion that Net
Premiums are being allocated to those Investment Options at the time. Upon
repayment of loan amounts, the portion of the repayment allocated in accordance
with the repayment of loan provision (see below) will be transferred to increase
the Accumulation Value in that Investment Option.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on Policy loans. If the Outstanding Policy
Debt exceeds the Accumulation Value less any Surrender Charge and any Accrued
Expense Charges, the Policy Owner must pay the excess. AVLIC will send a notice
of the amount which must be paid. If you do not make the required payment within
the 61 days after AVLIC sends the notice, the Policy will terminate without
value ("lapse"). Should the Policy lapse while Policy loans are outstanding, the
portion of the loans attributable to earnings will become taxable. You may lower
the risk of a Policy lapsing while loans are outstanding as a result of a
reduction in the market value of investments in the Subaccounts by investing in
a diversified group of lower risk investment portfolios and/or transferring the
funds to the Fixed Account and receiving a guaranteed rate of return. Should you
experience a substantial reduction, you may need to lower anticipated
withdrawals and loans, repay loans, make additional premium payments, or take
other action to avoid Policy lapse. A lapsed Policy may later be reinstated.
(See the section on Policy Lapse and Reinstatement.)
REPAYMENT OF LOAN. Unscheduled premiums paid while a Policy loan is outstanding
are treated as repayment of the debt only if the Policy Owner so requests. As a
loan is repaid, the Accumulation Value in the General Account securing the
repaid loan will be allocated among the Subaccounts and the Fixed Account in the
same proportion that Net Premiums are being allocated at the time of repayment.
SURRENDERS
At any time while at least one Insured is alive, the Policy Owner may withdraw a
portion of the Accumulation Value or Surrender the Policy by sending a written
request to AVLIC. The amount available for Surrender is the Net Cash Surrender
Value at the end of the Valuation Period when the Surrender request is received
at AVLIC's Home Office. Surrenders will generally be paid within seven days of
receipt of the written request. (See the section on Postponement of Payments.)
SURRENDERS MAY HAVE TAX CONSEQUENCES. Surrenders may be subject to Surrender
Charges. (See the section on Surrender Charge.) Once a Policy is Surrendered, it
may not be reinstated. (See the section on Tax Treatment of Policy Proceeds.)
If the Policy is being Surrendered in its entirety, the Policy itself must be
returned to AVLIC along with the request. AVLIC will pay the Net Cash Surrender
Value. Coverage under the Policy will terminate as of the date of a total
Surrender. A Policy Owner may elect to have the amount paid in a lump sum or
under a payment option. (See the section on Payment Options.)
PARTIAL WITHDRAWALS
Partial withdrawals are irrevocable. The amount of a partial withdrawal may not
be less than $500. The Net Cash Surrender Value after a partial withdrawal must
be the greater of $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
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<PAGE> 28
allocation is $100. If no instructions are given, the amounts will be withdrawn
in proportion to the various Accumulation Values in the Investment Options.
The Death Benefit will be reduced by the amount of any partial withdrawal and
may affect the way the Cost of Insurance is calculated and the amount of pure
insurance protection under the Policy. (See the sections on Monthly
Deduction - Cost of Insurance and Death Benefit Options - Methods of Affecting
Insurance Protection.) If Death Benefit option B is in effect, the Specified
Amount will not change, but the Accumulation Value will be reduced.
A fee which does not exceed the lesser of $50 or 2% of the amount withdrawn is
deducted from the Accumulation Value. Currently, the charge is the lesser of $25
or 2% of the amount withdrawn. (See the section on Partial Withdrawal Charge.)
Partial withdrawals will also affect Net Policy Funding for determining whether
the Minimum Benefit and Guaranteed Death Benefit provisions are met.
TRANSFERS
Accumulation Value may be transferred among the Subaccounts of Separate Account
V and to the Fixed Account as often as desired. However, you may make only one
transfer out of the Fixed Account per Policy Year. We may limit the transfer
period to the 30 days following the Policy Anniversary Date. The transfers may
be ordered in person, by mail or by telephone. The total amount transferred each
time must be at least $250, or the balance of the Subaccount, if less. The
minimum amount that may remain in a Subaccount or the Fixed Account after a
transfer is $100. The first 15 transfers per Policy Year will be permitted free
of charge. After that, a transfer charge of $10 may be imposed each additional
time amounts are transferred. Currently, no charge is imposed for additional
transfers. This charge will be deducted pro rata from each Subaccount (and if
applicable, the Fixed Account) in which the Policy Owner is invested.
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 will not be subject to a transfer charge
and will not be counted towards the guaranteed 15 free transfers per Policy
Year. AVLIC may at any time revoke or modify the transfer privilege, including
the minimum amount transferable.
Transfers out of the Fixed Account, unless part of the dollar cost averaging
systematic program described below, are limited to one per Policy Year.
Transfers out of the Fixed Account are limited to the greater of (1) 25% of the
Fixed Account attributable to the Policy; (2) the largest transfer made by the
Policy Owner out of the Fixed Account during the last 13 months; or (3) $1,000.
This provision is not available while dollar cost averaging from the Fixed
Account.
The privilege to initiate transactions by telephone will be made available to
Policy Owners automatically. The registered representative designated on the
application will have the authority to initiate telephone transfers. Policy
Owners who do not wish to authorize AVLIC to accept telephone transactions from
their registered representative must so specify on the application. AVLIC will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if it does not, AVLIC may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures AVLIC follows for
transactions initiated by telephone include, but are not limited to, requiring
the Policy Owner to provide the Policy number at the time of giving transfer
instructions; AVLIC's tape recording of all telephone transfer instructions; and
AVLIC providing written confirmation of telephone transactions.
SYSTEMATIC PROGRAMS
AVLIC may offer systematic programs as discussed below. These programs will be
subject to administrative guidelines AVLIC may establish from time to time.
Transfers of Accumulation Value made pursuant to these programs will be counted
in determining whether any transfer fee may apply. Lower minimum amounts may be
allowed to transfer as part of a systematic program. No other separate fee is
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<PAGE> 29
assessed when one of these options is chosen. All other normal transfer
restrictions, as described above, also apply.
You can request participation in the available programs when purchasing the
Policy or at a later date. You can change the allocation percentage or
discontinue any program by sending written notice or calling the Home Office.
Other scheduled programs may be made available. AVLIC reserves the right to
modify, suspend or terminate such programs at any time. Use of systematic
programs may not be advantageous, and does not guarantee success.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
AVLIC to reallocate the Accumulation Value among the Subaccounts (but not the
Fixed Account) on a systematic basis according to your specified allocation
instructions.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, you can instruct
AVLIC to automatically transfer, on a systematic basis, a predetermined amount
or specified percentage from the Fixed Account or the Money Market Subaccount to
any other Subaccount(s). Dollar cost averaging is permitted from the Fixed
Account if each monthly transfer is no more than 1/36th of the value of the
Fixed Account at the time dollar cost averaging is established.
EARNINGS SWEEP. This program permits systematic redistribution of earnings among
Investment Options.
FREE-LOOK PRIVILEGE
You may cancel the Policy within 10 days after you receive it, within 10 days
after AVLIC delivers a notice of your right of cancellation, or within 45 days
of completing Part I of the application, whichever is later. When allowed by
state law, the amount of the refund is the net premiums allocated to the
Investment Options, adjusted by investment gains and losses, plus the sum of all
charges deducted from premiums paid. Otherwise, the amount of the refund will
equal the gross premiums paid. To cancel the Policy, you should mail or deliver
it to the selling agent, or to AVLIC at the Home Office. A refund of premiums
paid by check may be delayed until the check has cleared your bank. (See the
section on Postponement of Payments.)
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office (5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska
68501). A Policy will generally be issued only to individuals between the ages
of 20 and 90 at the time of purchase, although at least one of the individuals
must be no older than 85, and both of whom supply satisfactory evidence of
insurability to AVLIC. Acceptance is subject to AVLIC's underwriting rules, and
AVLIC reserves the right to reject an application for any reason.
The Policy Date is the effective date for all coverage in the original
application. The Policy Date is used to determine Policy Anniversary Dates,
Policy Years and Policy Months. The Issue Date is the date that all financial,
contractual and administrative requirements have been met and processed for the
Policy. The Policy Date and the Issue Date will be the same unless: (1) an
earlier Policy Date is specifically requested, or (2) additional premiums or
application amendments are needed. When there are additional requirements before
issue (see below) the Policy Date will be the date the Policy is sent for
delivery and the Issue Date will be the date the requirements are met.
When all required premiums and application amendments have been received by
AVLIC in its Home Office, the Issue Date will be the date the Policy is mailed
to you or sent to the agent for delivery to you. When application amendments or
additional premiums need to be obtained upon delivery of the Policy, the Issue
Date will be when the Policy receipt and federal funds (monies of member banks
within the Federal Reserve System which are held on deposit at a Federal Reserve
Bank) are received and available to AVLIC, and the application amendments are
received and reviewed in AVLIC's Home Office. Your initial Net Premium will be
allocated on the Issue Date to the Subaccounts and/or the Fixed Account
according to the selections you made in your application. When state or other
applicable law or regulation requires return of at least your premium payments
if you return the Policy under the free-look privilege,
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<PAGE> 30
your initial Net Premium will be allocated to the Money Market Subaccount. Then,
thirteen days after the Issue Date, the Accumulation Value of the Policy will be
allocated among the Subaccounts and/or Fixed Account according to the
instructions in your application.
Subject to approval, a Policy may be backdated, but the Policy Date may not be
more than six months prior to the date of the application. Backdating can be
advantageous if a lower Issue Age for either Insured results in lower Cost of
Insurance Rates. If a Policy is backdated, the minimum initial premium required
will include sufficient premium to cover the backdating period. Monthly
deductions will be made for the period the Policy Date is backdated.
Interim conditional insurance coverage may be issued prior to the Policy Date,
provided that certain conditions are met, upon the completion of an application
and the payment of the required premium at the time of the application. The
amount of the interim coverage is limited to $100,000. Premium will not be
accepted with applications for coverage in amounts of $1,000,000 or more.
PREMIUMS
No insurance will take effect before the initial premium payment is received by
AVLIC in federal funds. The initial premium payment must be at least equal to
the monthly Minimum Premium times one more than the number of months between the
Policy Date and the Issue Date. Subsequent premiums are payable at AVLIC's Home
Office. A Policy Owner has flexibility in determining the frequency and amount
of premiums. However, unless you have paid sufficient premiums to pay the
Monthly Deduction and Percent of Premium Charge for Taxes, the Policy may have a
zero Net Cash Surrender Value and lapse. Net Policy Funding, if adequate, may
satisfy Minimum Premium and/or Guaranteed Death Benefit Premium requirements.
(See the section on Policy Benefits, Purposes of the Policy.)
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued you may determine a
Planned Periodic Premium schedule that provides for the payment of level
premiums at selected intervals. You may want to consider setting the Planned
Periodic Premium no lower than the Guaranteed Death Benefit Premium to assure
proper funding of the Guaranteed Death Benefit. You are not required to pay
premiums according to this schedule. You have considerable flexibility to alter
the amount and frequency of premiums paid. AVLIC reserves the right to limit the
number and amount of additional or unscheduled premium payments.
You may also change the frequency and amount of Planned Periodic Premiums by
sending a written request to the Home Office, although AVLIC reserves the right
to limit any increase. Premium payment notices will be sent annually,
semi-annually or quarterly, depending upon the frequency of the Planned Periodic
Premiums. Payment of the Planned Periodic Premiums does not guarantee that the
Policy remains in force unless the Minimum Benefit or Guaranteed Death Benefit
provision is in effect. Instead, the duration of the Policy depends upon the
Policy's Net Cash Surrender Value. (See the section on Duration of the Policy.)
Unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect,
even if Planned Periodic Premiums are paid, the Policy will lapse any time the
Net Cash Surrender Value is insufficient to pay the Monthly Deduction, and the
Grace Period expires without a sufficient payment. (See the section on Policy
Lapse and Reinstatement.)
PREMIUM LIMITS. AVLIC's current minimum premium limit is $45, $15 if paid by
automatic bank draft. AVLIC currently has no maximum premium limit, other than
the current maximum premium limits established by federal tax laws. AVLIC
reserves the right to change any premium limit. In no event may the total of all
premiums paid, both planned and unscheduled, exceed the current maximum premium
limits established by federal tax laws. (See the section on Tax Status of the
Policy.)
If at any time a premium is paid which would result in total premiums exceeding
the current maximum premium limits, AVLIC will only accept that portion of the
premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned or applied as otherwise agreed
and no further premiums will be accepted until allowed by the current maximum
premium limits allowed by law. AVLIC may require additional evidence of
insurability if any premium payment would result in an increase in the Policy's
Net Amount at Risk on the date the premium is received.
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PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the Accumulation
Value of the Policy at the time of an increase in the Specified Amount of the
Policy and the amount of the increase requested by the Policy Owner, an
additional premium payment may be required. AVLIC will notify you of any premium
required to fund the increase, which premium must be made in a single payment.
The Accumulation Value of the Policy will be immediately increased by the amount
of the payment, less the applicable Percent of Premium Charge for Taxes.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policy Owner
allocates Net Premiums to one or more Subaccounts and/or to the Fixed Account.
Allocations must be whole number percentages and must total 100%. The allocation
of future Net Premiums may be changed without charge by providing proper
notification to the Home Office in writing or by telephone. If there is any
Outstanding Policy Debt at the time of a payment, AVLIC will treat the payment
as a premium payment unless you instruct otherwise by proper written notice.
On the Issue Date, the initial Net Premium will be allocated to the Investment
Options you selected. When state or other applicable law or regulation requires
return of at least your premium payments if you return the Policy under the
free-look privilege, the initial Net Premium will be allocated to the Money
Market Subaccount for 13 days. Thereafter, the Accumulation Value will be
reallocated to the Investment Options you selected. Premium payments received by
AVLIC prior to the Issue Date are held in the General Account until the Issue
Date and are credited with interest at a rate determined by AVLIC for the period
from the date the payment has been converted into federal funds and is available
to AVLIC. In no event will interest be credited prior to the Policy Date.
The Accumulation Value of the Subaccounts will vary with the investment
performance of these Subaccounts and you, as the Policy Owner, will bear the
entire investment risk. This will affect the Policy's Accumulation Value, and
may affect the Death Benefit as well. You should periodically review your
allocations of premiums and values in light of market conditions and overall
financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Lapse will occur when the Net Cash Surrender Value is insufficient to cover the
Monthly Deduction and a Grace Period expires without a sufficient payment,
unless the Minimum Benefit or Guaranteed Death Benefit provision is in effect.
The Grace Period is 61 days from the date AVLIC mails a notice that the Grace
Period has begun. AVLIC will notify you at the beginning of the Grace Period by
mail addressed to your last known address on file with AVLIC.
The notice will specify the premium required to keep the Policy in force. The
required premium will equal the lesser of (1) Monthly Deductions plus Percent of
Premium charges for the three Policy Months after commencement of the Grace
Period, plus projected loan interest that would accrue over that period, or (2)
the premium required under the Minimum Benefit or Guaranteed Death Benefit
provisions, if applicable, to keep the Policy in effect for three months from
the commencement of the Grace Period. Failure to pay the required premium within
the Grace Period will result in lapse of the Policy. If the Second Death occurs
during the Grace Period, any overdue Monthly Deductions and Outstanding Policy
Debt will be deducted from the Death Benefit Proceeds. (See the section on
Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within three years
(five years in Missouri) after the beginning of the Grace Period provided both
Insureds are living. We will reinstate your Policy based on the rating classes
of the Insureds at the time of the reinstatement.
Reinstatement is subject to the following:
(1) Evidence of insurability of both Insureds satisfactory to AVLIC
(including evidence of insurability of any person covered by a rider
to reinstate the rider);
(2) Any Outstanding Policy Debt on the date of lapse will be reinstated
with interest due and accrued;
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(3) The Policy cannot be reinstated if it has been Surrendered for its
full Net Cash Surrender Value;
(4) The minimum premium required at reinstatement is the greater of:
(a) the amount necessary to raise the Net Cash Surrender Value as of
the date of reinstatement to equal to or greater than zero; or
(b) three times the current Monthly Deduction.
The amount of Accumulation Value on the date of reinstatement will equal:
(1) The amount of the Net Cash Surrender Value on the date of lapse,
increased by
(2) The premium paid at reinstatement, less
(3) The Percent of Premium Charge for Taxes, plus
(4) That part of the Surrender Charge that would apply if the Policy
were Surrendered on the date of reinstatement.
The last addition to the Accumulation Value is designed to avoid duplicate
Surrender Charges. The original Policy Date, and the dates of increases in the
Specified Amount (if applicable), will be used for purposes of calculating the
Surrender Charge. If any Outstanding Policy Debt is reinstated, that debt will
be held in AVLIC's General Account. Accumulation Value calculations will then
proceed as described under the section on Accumulation Value.
The effective date of reinstatement will be the first Monthly Activity Date on
or next following the date of approval by AVLIC of the application for
reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate AVLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy and payment of
applicable taxes; (3) assuming certain risks in connection with the Policy; and
(4) incurring expenses in distributing the Policy. The nature and amount of
these charges are described more fully below.
DEDUCTIONS FROM PREMIUM PAYMENTS
PERCENT OF PREMIUM CHARGE FOR TAXES. A deduction of up to 3% of the premium is
made from each premium payment; currently the charge is 2.25%. The deduction is
intended to partially offset the premium taxes imposed by the states and their
subdivisions, and to help defray the tax cost due to capitalizing certain policy
acquisition expenses as required under applicable federal tax laws. (See the
section on Federal Tax Matters.) AVLIC does not expect to derive a profit from
the Percent of Premium Charge for Taxes.
CHARGES FROM ACCUMULATION VALUE
MONTHLY DEDUCTIONS. Charges will be deducted as of the Policy Date and on each
Monthly Activity Date thereafter from the Accumulation Value of the Policy to
compensate AVLIC for administrative expenses and insurance provided. These
charges will be allocated from the Investment Options in accordance with your
instructions. If no instructions are given the charges will be allocated pro
rata among the Investment Options. Each of these charges is described in more
detail below.
ADMINISTRATIVE EXPENSE CHARGE. To compensate AVLIC for the ordinary
administrative expenses expected to be incurred in connection with a Policy, the
Monthly Deduction includes a level per policy charge plus a charge per $1000 of
Specified Amount. For Specified Amounts between $100,000 and $999,999, the
charge is currently $16 per month in Policy Years 1-5 and $8 per month
thereafter; for Specified Amounts between $1,000,000 and $4,999,999, the charge
is currently $8 per month in Policy Years 1-5 and $4 per month thereafter;
currently there is no charge for Specified Amounts $5,000,000 or greater. In
addition, for all Specified Amounts there currently is a charge of up to $.10
per month per $1000 of Specified Amount, depending on the younger Insured's
Issue Age. For Issue Ages 20-44, the rate is $.10, for Issue
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Ages 45-64, the rate is $.08, and for Issue Ages 65 and over, the rate is $.05.
At the current time we anticipate that the charge per $1000 of Specified Amount
will reduce to $0 in year 6. The Administrative Expense Charge is levied
throughout the life of the Policy and is guaranteed not to increase above $16
per month plus $.10 per month per $1000 of Specified Amount. AVLIC does not
expect to make any profit from the Administrative Expense Charge.
COST OF INSURANCE. Because the Cost of Insurance depends upon several variables,
the cost for each Policy Month can vary from month to month. AVLIC will
determine the monthly Cost of Insurance by multiplying the applicable Cost of
Insurance Rate by the Net Amount at Risk for each Policy Month.
COST OF INSURANCE RATE. The Annual Cost of Insurance Rates are based on the
Issue Age, sex and risk class of each Insured and the Policy duration. The rates
will vary depending upon tobacco use and other risk factors. The rates will be
based on AVLIC's expectations of future experience with regard to mortality,
interest, persistency, and expenses, but will not exceed the Schedule of
Guaranteed Annual Cost of Insurance Rates shown in the Policy. The guaranteed
rates for standard rating classes are calculated from the 1980 Commissioners
Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. The
guaranteed rates for the table-rated substandard Insureds are based on a
multiple (shown in the schedule pages of the Policy) of the above rates. We may
add flat extra ratings to one or both Insureds to reflect higher mortality risk.
Because the Death Benefit is payable at the Second Death only, one-half of each
applicable flat extra rating will be added to adjust the Cost of Insurance Rate.
Any change in the Cost of Insurance Rates will apply to all Insureds of the same
age, sex, risk class and whose Policies have been in effect for the same length
of time.
The Cost of Insurance Rates, Surrender Charges, and payment options for Policies
issued in Montana, and perhaps other states or in connection with certain
employee benefit arrangements, are issued on a sex-neutral (unisex) basis. The
unisex rates will be higher than those applicable to females and lower than
those applicable to males.
The actual charges made during the Policy Year will be shown in the annual
report delivered to Policy Owners.
RATING CLASS. The rating class of each Insured will affect the Cost of Insurance
Rate. AVLIC currently places Insureds into both standard rating classes and
substandard rating classes that involve a higher mortality risk. In an otherwise
identical Policy, Insureds in the standard rating class will have a lower Cost
of Insurance Rate than when either or both Insureds are in a rating class with
higher mortality risks.
SURRENDER CHARGE
If a Policy is Surrendered on or before the 14th Policy Anniversary Date, AVLIC
will assess a Surrender Charge as shown in the schedule pages of the Policy. The
initial Surrender Charge is calculated based on the Issue Age, sex and risk
class of each Insured, and the Specified Amount of the Policy. The Surrender
Charge, if applicable, will be applied according to the following schedule.
Because the Surrender Charge may be significant upon early Surrender,
prospective Policy Owners should purchase a Policy only if they do not intend to
Surrender the Policy for a substantial period.
The maximum Surrender Charge on a Policy we issue is $60 per $1,000 of Specified
Amount.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Percent of Initial Percent of Initial
Surrender Charge that will Surrender Charge that will
Policy Year apply during Policy Year Policy Year apply during Policy Year
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1-5 100% 11 40%
- ---------------------
6 90% 12 30%
- ---------------------
7 80% 13 20%
- ---------------------
8 70% 14 10%
- ---------------------
9 60% 15+ 0%
- ---------------------
10 50%
- ---------------------
</TABLE>
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No Surrender Charge will be assessed on decreases in the Specified Amount of the
Policy or partial withdrawals of Accumulation Value. AVLIC will, however,
require additional Surrender Charges due to increases in the Specified Amount.
The initial Surrender Charge applicable to the increase in Specified Amount will
equal the initial Surrender Charge for the original Specified Amount, multiplied
by the ratio of the increase in Specified Amount to the original Specified
Amount. Surrender Charges on increases in Specified Amount will be applied with
respect to Surrenders within 14 years of the date of the increase according to
the same grading schedule as for the original Specified Amount.
TRANSFER CHARGE. Currently there is no charge for transfers among the investment
options in excess of 15 per Policy Year. A charge of $10 (guaranteed not to
increase) for each transfer in excess of 15 may be imposed to compensate AVLIC
for the costs of processing the transfer. Since the charge reimburses AVLIC only
for the cost of processing the transfer, AVLIC does not expect to make any
profit from the transfer charge. This charge will be deducted pro rata from each
Subaccount (and, if applicable, the Fixed Account) in which the Policy Owner is
invested. The transfer charge will not be imposed on transfers that occur as a
result of Policy loans or the exercise of exchange rights.
PARTIAL WITHDRAWAL CHARGE. A charge will be imposed for each partial withdrawal.
This charge will compensate AVLIC for the administrative costs of processing the
requested payment and in making necessary calculations for any reductions in
Specified Amount which may be required because of the partial withdrawal. This
charge is currently the lesser of $25 or 2% of the amount withdrawn (guaranteed
not to be greater than the lesser of $50 or 2% of the amount withdrawn). No
Surrender Charge is assessed on a partial withdrawal and a partial withdrawal
charge is not assessed when a Policy is Surrendered.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A daily Mortality and Expense Risk Charge will be deducted from the value of the
net assets of Separate Account V to compensate AVLIC for mortality and expense
risks assumed in connection with the Policy. This daily charge from Separate
Account V is at the rate of 0.002050% (equivalent to an annual rate of .75%) for
Policy Years 1-15 and 0.000820% (equivalent to an annual rate of .30%)
thereafter. The daily charge will be deducted from the net asset value of
Separate Account V, and therefore the Subaccounts, on each Valuation Date. Where
the previous day or days was not a Valuation Date, the deduction on the
Valuation Date will be the applicable daily rate multiplied by the number of
days since the last Valuation Date. No Mortality and Expense Risk Charges will
be deducted from the amounts in the Fixed Account.
AVLIC believes that this level of charge is within the range of industry
practice for comparable survivorship flexible premium variable universal life
policies. The mortality risk assumed by AVLIC is that Insureds may live for a
shorter time than calculated, and that the aggregate amount of Death Benefits
paid will be greater than initially estimated. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
administrative charges provided in the Policies.
An Asset-Based Administrative Expense Charge will also be deducted from the
value of the net assets of Separate Account V on a daily basis. This charge is
applied at a rate of 0.000409% (equivalent to .15% annually). No Asset-Based
Administrative Expense Charge will be deducted from the amounts in the Fixed
Account.
FUND EXPENSE SUMMARY
In addition to the charges against Separate Account V described just above,
management fees and expenses will be assessed by AIC, CAMCO, Fidelity, Alger
Management, MFS and Morgan Stanley Asset Management against the amounts invested
in the various portfolios. No portfolio fees will be assessed against amounts
placed in the Fixed Account.
The information shown below relating to the Funds was provided to AVLIC by the
Funds and AVLIC has not independently verified such information. Each of the
Funds, other than the Ameritas Portfolios, is managed by an investment advisory
organization that is not affiliated with AVLIC. Each such organization is
entitled to receive a fee for its services based on the value of the relevant
portfolio's net assets. The Ameritas Portfolios are managed by AIC, an AVLIC
affiliate. CVS Social Portfolios are managed by CAMCO, also an AVLIC affiliate.
Other Calvert companies provide administrative services to certain of
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the portfolios. 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, 1999, was as follows:
<TABLE>
<CAPTION>
TOTAL
(Reflecting
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & 12B-1 OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSE EXPENSES TOTAL REIMBURSEMENTS IF ANY)
--------- ---------- -------- -------- ----- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
AMERITAS PORTFOLIOS(1)
Ameritas Money Market 0.25% -- 0.08% 0.33% 0.05% 0.28%
Ameritas Index 500 0.29% -- 0.11% 0.40% 0.10% 0.30%
Ameritas Growth 0.80% -- 0.10% 0.90% 0.09% 0.81%
Ameritas Income & Growth 0.675% -- 0.115% 0.79% 0.09% 0.70%
Ameritas Small Capitalization 0.90% -- 0.10% 1.00% 0.08% 0.92%
Ameritas MidCap Growth 0.85% -- 0.12% 0.97% 0.11% 0.86%
Ameritas Emerging Growth 0.80% -- 0.18% 0.98% 0.11% 0.87%
Ameritas Research 0.80% -- 0.62% 1.42% 0.54% 0.88%
Ameritas Growth With Income 0.80% -- 0.46% 1.26% 0.36% 0.90%
CVS SOCIAL PORTFOLIOS
CVS Social Small Cap Growth 1.00% -- 0.58%(2) 1.58% -- 1.58%
CVS Social Mid Cap Growth 0.90% -- 0.21%(2) 1.11% -- 1.11%
CVS Social International
Equity 1.10% -- 0.50%(2) 1.60%(3) -- 1.60%
CVS Social Balanced Portfolio 0.70% -- 0.19%(2) 0.89% -- 0.89%
FIDELITY PORTFOLIOS
VIP Equity-Income: Service
Class 0.48% 0.10% 0.09% 0.67% 0.01% 0.66%(4)
VIP Growth: Service Class 0.58% 0.10% 0.09% 0.77% 0.02% 0.75%(4)
VIP High Income: Service
Class 0.58% 0.10% 0.11% 0.79% -- 0.79%
VIP Overseas: Service Class 0.73% 0.10% 0.18% 1.01% 0.03% 0.98%(4)
VIP II Asset Manager: Service
Class 0.53% 0.10% 0.11% 0.74% 0.01% 0.73%(4)
VIP II Investment Grade Bond:
Initial Class 0.43% -- 0.11% 0.54% -- 0.54%
VIP II Asset Manager: Growth:
Service Class 0.58% 0.10% 0.14% 0.82% 0.01% 0.81%(4)
VIP II Contrafund: Service
Class 0.58% 0.10% 0.10% 0.78% 0.03% 0.75%(4)
ALGER AMERICAN FUND(5)
Balanced 0.75% -- 0.18% 0.93% -- 0.93%
Leveraged AllCap 0.85% -- 0.08% 0.93% -- 0.93%
MFS TRUST
Utilities 0.75% -- 0.16%(6) 0.91% -- 0.91%
Global Governments 0.75% -- 0.30%(6) 1.05% 0.14% 0.91%(7)
New Discovery 0.90% -- 1.59%(6) 2.49% 1.42% 1.07%(7)
UNIVERSAL INSTITUTIONAL FUNDS
Emerging Markets Equity 1.25% -- 1.37% 2.62% 0.83% 1.79%(8)
Global Equity 0.80% -- 0.68% 1.48% 0.33% 1.15%(8)
International Magnum 0.80% -- 0.87% 1.67% 0.51% 1.16%(8)
Asian Equity 0.80% -- 2.23% 3.03% 1.76% 1.27%(8)
U.S. Real Estate 0.80% -- 1.10% 1.90% 0.80% 1.10%(8)
</TABLE>
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(1) The Portfolio's aggregate expenses are limited for a period of one year
following November 1, 1999 (October 29, 1999 for Ameritas Money Market).
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. Total expenses have been restated to reflect the above.
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(2) "Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be as follows:
<TABLE>
<S> <C>
CVS Social Small Cap Growth 1.15%
CVS Social Mid Cap Growth 1.02%
CVS Social International Equity 1.50%
CVS Social Balanced Portfolio 0.86%
</TABLE>
(3) Total expenses have been restated to reflect expenses expected to be
incurred in 2000.
(4) A portion of the brokerage commissions that certain Funds pay was used to
reduce Fund expenses. In addition, through arrangements with certain Funds
custodian, credits realized as a result of uninvested cash balances were
used to reduce a portion of each applicable Fund's expenses. Including these
reductions, the total operating expenses presented in the table would have
been:
<TABLE>
<S> <C>
VIP Equity-Income: Service Class 0.67%
VIP Growth: Service Class 0.77%
VIP Overseas: Service Class 1.01%
VIP II Asset Manager: Service Class 0.74%
VIP II Asset Manager: Growth: Service Class 0.82%
VIP II Contrafund: Service Class 0.78%
</TABLE>
(5) Fred Alger Management, Inc. ("Alger Management") has agreed to reimburse the
portfolios to the extent that the aggregate annual expenses (excluding
interest, taxes, fees for brokerage services and extraordinary expenses)
exceed respectively: Alger American Balanced, 1.25%, and Alger American
Leveraged AllCap, 1.50%. Included in "Other Expenses" of Leveraged AllCap is
0.01% of interest expense.
(6) Each MFS Trust series has an expense offset arrangement which reduces the
series' custodian fee based upon the amount of cash maintained by the series
with its custodian and dividend disbursing agent. Each series may enter into
other such arrangements and directed brokerage arrangements (which would
also have the effect of reducing the series' expenses). "Other Expenses" do
not take into account these expense reductions and are therefore higher than
the actual expenses of the series. Had these reductions been taken into
account, "Total (reflecting waivers and/or reimbursements, if any)" would be
lower and would equal 0.90% for Utilities Series and Global Governments
Series and 1.05% for New Discovery Series.
(7) MFS has contractually agreed, subject to reimbursement, to bear expenses for
the Global Governments Series and New Discovery Series such that the each
series "Other Expenses" (after taking into account the expense offset
arrangement described at (4), above) do not exceed 0.15% of the average
daily net assets of the series during the current fiscal year. Utilities
Series has no such limitation. These contracted fee arrangements will
continue until at least May 1, 2001, unless changed with the consent of the
board of trustees which oversees the series.
(8) The Portfolios' investment adviser has voluntarily agreed to reduce its
management fee and/or reimburse each Portfolio so that total annual
operating expenses for each Universal Institutional Funds ("UIF") Portfolio
will not exceed:
<TABLE>
<S> <C>
UIF Emerging Markets Equity Portfolio 1.75%
UIF Global Equity Portfolio 1.15%
UIF International Magnum Portfolio 1.15%
UIF Asian Equity Portfolio 1.20%
UIF U.S. Real Estate Portfolio 1.10%
</TABLE>
The investment adviser reserves the right to terminate any waiver and/or
reimbursement at any time and without notice.
In determining the actual amount of voluntary management fee waiver and/or
expense reimbursement for a Portfolio, if any, certain investment related
expenses, such as foreign country tax expense and interest expense on
borrowing are excluded from annual operating expenses. If these expenses
were incurred, the Portfolios' total expenses after voluntary fee waivers
and/or expense reimbursements could exceed the expense ratios shown above.
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For the year ended December 31, 1999, after giving effect to the above
voluntary management fee waiver and/or expense reimbursement, the total
expenses for each Portfolio, including certain investment related expenses,
were as stated in the table.
Expense reimbursement agreements are expected to continue in future years but
may be terminated at any time. As long as the expense limitations continue for a
portfolio, if a reimbursement occurs, it has the effect of lowering the
portfolio's expense ratio and increasing its total return.
AVLIC may receive administrative fees from the investment advisers of certain
Funds. AVLIC currently does not assess a separate charge against Separate
Account V or the Fixed Account for any federal, state or local income taxes.
AVLIC may, however, make such a charge in the future if income or gains within
Separate Account V will incur any federal, or any significant state or local
income tax liability, or if the federal, state or local tax treatment of AVLIC
changes.
GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any riders, amendments or endorsements make up the entire contract. Only the
President, Vice President, Secretary or Assistant Secretary can modify the
Policy. Any changes must be made in writing, and approved by AVLIC. No agent has
the authority to alter or modify any of the terms, conditions or agreements of
the Policy or to waive any of its provisions. The rights and benefits under the
Policy are summarized in this prospectus; however prospectus disclosure
regarding the Policy is qualified in its entirety by the Policy itself, a copy
of which is available upon request from AVLIC.
CONTROL OF POLICY. The Policy Owner is as shown in the application or subsequent
written endorsement. Subject to the rights of any irrevocable Beneficiary and
any assignee of record, all rights, options, and privileges belong to the Policy
Owner, if living; otherwise to any successor-owner or owners, if living;
otherwise to the estate of the last Policy Owner to die.
BENEFICIARY. Policy Owners may name both primary and contingent Beneficiaries in
the application. Payments will be shared equally among Beneficiaries of the same
class unless otherwise stated. If a Beneficiary dies before the Second Death,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiary(ies) of the next class; otherwise to the Policy
Owner; otherwise to the estate of the Policy Owner.
CHANGE OF BENEFICIARY. The Policy Owner may change the Beneficiary by written
request at any time while at least one Insured is alive unless otherwise
provided in the previous designation of Beneficiary. The change will take effect
as of the date the change is recorded at the Home Office. AVLIC will not be
liable for any payment made or action taken before the change is recorded.
CHANGE OF POLICY OWNER OR ASSIGNMENT. In order to change the Policy Owner of the
Policy or assign Policy rights, an assignment of the Policy must be made in
writing and filed with AVLIC at its Home Office. Any such assignment is subject
to Outstanding Policy Debt. The change will take effect as of the date the
change is recorded at the Home Office, and AVLIC will not be liable for any
payment made or action taken before the change is recorded. Payment of Death
Benefit Proceeds is subject to the rights of any assignee of record. A
collateral assignment is not a change of ownership.
PAYMENT OF PROCEEDS. The Death Benefit Proceeds are subject first to any debt to
AVLIC and then to the interest of any assignee of record. The balance of any
Death Benefit Proceeds shall be paid in one sum to the designated Beneficiary
unless an Optional Method of Payment is selected. If no Beneficiary survives at
the time of the Second Death, the Death Benefit Proceeds shall be paid in one
sum to the Policy Owner, if living; otherwise to any successor-owner, if living;
otherwise to the Policy Owner's estate. Any proceeds payable upon Surrender
shall be paid in one sum unless an Optional Method of Payment is elected.
INCONTESTABILITY AVLIC cannot contest the Policy or reinstated Policy while at
least one Insured is alive after it has been in force for two years from the
Policy Date (or reinstatement effective date). After the Policy Date, AVLIC
cannot contest an increase in the Specified Amount or addition of a rider while
at least one Insured is alive, after such increase or addition has been in force
for two years from its effective
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date. However, this two year provision shall not apply to riders with their own
contestability provision. We may require proof prior to the end of the
appropriate contestability period that both Insureds are living.
MISSTATEMENT OF AGE AND SEX. If the age or sex of either Insured or any person
insured by rider has been misstated, the amount of the Death Benefit and any
added riders provided will be those that would be purchased by the most recent
deduction for the Cost of Insurance and the cost of any additional riders at the
correct age and sex of the Insureds. The Death Benefit Proceeds will be adjusted
correspondingly.
SUICIDE. The Policy does not cover suicide within two years of the Policy Date
unless otherwise provided by a state's Insurance law. If either Insured, while
sane or insane, commits suicide within two years after the Policy Date, AVLIC
will pay only the premiums received less any partial withdrawals, the cost for
riders and any outstanding Policy debt. If either Insured, while sane or insane,
commits suicide within two years after the effective date of any increase in the
Specified Amount, AVLIC's liability with respect to such increase will only be
its total cost of insurance applicable to the increase. The laws of Missouri
provide that death by suicide at any time is covered by the Policy, and further
that suicide by an insane person may be considered an accidental death.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, partial
withdrawal, Policy loans, benefits payable at the Second Death, and transfers
may be postponed whenever: (1) the New York Stock Exchange ("NYSE") is closed
other than customary weekend and holiday closings, or trading on the NYSE is
restricted as determined by the SEC; (2) the SEC by order permits postponement
for the protection of Policy Owners; (3) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of
Separate Account V's net assets; or (4) Surrenders, loans or partial withdrawals
from the Fixed Account may be deferred for up to 6 months from the date of
written request. Payments under the Policy of any amounts derived from premiums
paid by check may be delayed until such time as the check has cleared the Policy
Owner's bank.
REPORTS AND RECORDS. AVLIC will maintain all records relating to Separate
Account V and will mail to the Policy Owner, at the last known address of
record, within 30 days after each Policy Anniversary, an annual report which
shows the current Accumulation Value, Net Cash Surrender Value, Death Benefit,
premiums paid, Outstanding Policy Debt and other information. Quarterly
statements are also mailed detailing Policy activity during the calendar
quarter. Instead of receiving an immediate confirmation of transactions made
pursuant to some types of periodic payment plan (such as a dollar cost averaging
program, or payment made by automatic bank draft or salary reduction
arrangement), the Policy Owner may receive confirmation of such transactions in
their quarterly statements. The Policy Owner should review the information in
these statements carefully. All errors or corrections must be reported to AVLIC
immediately to assure proper crediting to the Policy. AVLIC will assume all
transactions are accurately reported on quarterly statements unless AVLIC is
notified otherwise within 30 days after receipt of the statement. The Policy
Owner will also be sent a periodic report for the Funds and a list of the
portfolio securities held in each portfolio of the Funds.
ADDITIONAL INSURANCE BENEFITS (RIDERS). Subject to certain requirements, one or
more of the following additional insurance benefits may be added to a Policy by
rider. All riders are not available in all states. The cost, if any, of
additional insurance benefits will be deducted as part of the Monthly Deduction.
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER). Upon
Satisfactory Proof of Death of one Insured, and satisfactory proof of
terminal illness of the surviving Insured after the two-year contestable
period (no waiting period in certain states), AVLIC will accelerate the
payment of up to 50% of the lowest scheduled Death Benefit as provided by
eligible coverages, less an amount up to two guideline level premiums.
Future premium allocations after the payment of the benefit must be
allocated to the Fixed Account. Payment will not be made for amounts less
than $4,000 or more than $250,000 on all policies issued by AVLIC or its
affiliates that provide coverage on the surviving Insured. AVLIC may charge
the lesser of 2% of the benefit or $50 as an expense charge to cover the
costs of administration.
Satisfactory proof of terminal illness of the last surviving Insured must
include a written statement from a licensed physician who is not related to
the Insured or the Policy Owner stating that the Insured has a
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<PAGE> 39
non-correctable medical condition that, with a reasonable degree of medical
certainty, will result in the death of the Insured in less than 12 months
(6 months in certain states) from the date of the physician's statement.
Further, the condition must first be diagnosed while the Policy is in
force.
The accelerated benefit first will be used to repay any Outstanding Policy
Debt, and will also affect future loans, partial withdrawals, and
Surrenders. The accelerated benefit will be treated as a lien against the
Policy Death Benefit and will thus reduce the Death Benefit Proceeds.
Interest on the lien will be charged at the Policy loan interest rate.
There is no extra premium for this rider.
ESTATE PROTECTION RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
both Insureds during the first four Policy Years.
FIRST-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
either of the two Insureds.
SECOND-TO-DIE TERM RIDER. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
both Insureds.
TERM RIDER FOR COVERED INSURED. This rider provides a specified amount of
insurance to the Beneficiary upon receipt of Satisfactory Proof of Death of
the rider Insured, as identified. The rider may be purchased on either
Insured or on an individual other than the Insureds.
TOTAL DISABILITY RIDER. This rider provides for the payment by AVLIC of a
disability benefit in the form of premiums while the Insured is disabled.
The benefit amount may be chosen by the Policy Owner at the issue of the
rider. In addition, while the Insured is totally disabled, the Cost of
Insurance for the rider will not be deducted from Accumulation Value. The
rider may be purchased on either or both Insureds.
POLICY SPLIT OPTION. This rider allows the Policy to be split into two
individual policies, subject to evidence of insurability on both Insureds.
DISTRIBUTION OF THE POLICIES
The principal underwriter for the Policies is AIC, a wholly owned subsidiary of
AMAL Corporation and an affiliate of AVLIC. AIC was organized under Nebraska law
on December 29, 1983, and is registered as a broker-dealer with the SEC and is a
member of the National Association of Securities Dealers ("NASD"). AVLIC pays
AIC for acting as the principal underwriter under an Underwriting Agreement. In
1999, AIC received gross variable universal life compensation of $12,586,675,
and retained $352,850 in underwriting fees, and $2,535 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
95% of the first year target premium paid plus the first year cost of any riders
and 2% for premiums paid in excess of the first year target premium. For Policy
Years two through four, the commission may equal an amount up to 2% of premiums
paid. Broker-dealers may also receive a service fee up to an annualized rate of
.25% of the Accumulation Value beginning in the fifth Policy Year. Compensation
arrangements may vary among broker-dealers. In addition, AVLIC may also pay
override payments, expense allowances, bonuses, wholesaler fees, and training
allowances. Registered representatives who meet certain production standards may
receive additional compensation. AVLIC may
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<PAGE> 40
reduce or waive the sales charge and/or other charges on any Policy sold to
directors, officers or employees of AVLIC or any of its affiliates, employees
and registered representatives of any broker-dealer that has entered into a
sales agreement with AVLIC or AIC and the spouses or children of the above
persons. In no event will any such reduction or waiver be permitted where it
would be unfairly discriminatory to any person.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy and does not purport to be
complete or cover all situations. This discussion is not intended as tax advice.
No attempt has been made to consider in detail any applicable state or other tax
laws except premium taxes. (See discussion in the section on Deductions from
Premium Payments - Percent of Premium Charge for Taxes.) This discussion is
based upon AVLIC's understanding of the relevant laws at the time of filing.
Counsel and other competent tax advisors should be consulted for more complete
information before a Policy is purchased. AVLIC makes no representation as to
the likelihood of the continuation of present federal income tax laws nor of the
interpretations by the Internal Revenue Service. Federal tax laws are subject to
change and thus tax consequences to the Insureds, Policy Owner or Beneficiary
may be altered.
(1) TAXATION OF AVLIC. AVLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, (the "Code"). At
this time, since Separate Account V is not a separate entity from AVLIC,
and its operations form a part of AVLIC, it will not be taxed separately
as a "regulated investment company" under Subchapter M of the Code. Net
investment income and realized net capital gains on the assets of Separate
Account V are reinvested and automatically retained as a part of the
reserves of the Policy and are taken into account in determining the Death
Benefit and Accumulation Value of the Policy. AVLIC believes that Separate
Account V net investment income and realized net capital gains will not be
taxable to the extent that such income and gains are retained as reserves
under the Policy.
AVLIC does not currently expect to incur any federal income tax liability
attributable to Separate Account V with respect to the sale of the
Policies. Accordingly, no charge is being made currently to Separate
Account V for federal income taxes. If, however, AVLIC determines that it
may incur such taxes attributable to Separate Account V, it may assess a
charge for such taxes against Separate Account V.
AVLIC may also incur state and local taxes (in addition to premium taxes
for which a deduction from premiums is currently made). At present, they
are not charges against Separate Account V. If there is a material change
in state or local tax laws, charges for such taxes attributable to
Separate Account V, if any, may be assessed against Separate Account V.
(2) TAX STATUS OF THE POLICY. The Code (Section 7702) includes a definition of
a life insurance contract for federal tax purposes which places
limitations on the amount of premiums that may be paid for the Policy and
the relationship of the Accumulation Value to the Death Benefit. While
AVLIC believes that the Policy meets the statutory definition of a life
insurance contract under Internal Revenue Code Section 7702 and should
receive federal income tax treatment consistent with that of a
fixed-benefit life insurance policy, the area of tax law relating to the
definition of life insurance does not explicitly address all relevant
issues (including, for example, certain tax requirements relating to
survivorship variable universal life policies). AVLIC reserves the right
to make changes to the Policy if deemed appropriate by AVLIC to attempt to
assure qualification of the Policy as a life insurance contract. If the
Policy were determined not to qualify as life insurance under Code Section
7702, the Policy would not provide the tax advantages normally provided by
life insurance. If the Death Benefit of a Policy is changed, the
applicable defined limits may change.
The Code (Section 7702A) also defines a "modified endowment contract" for
federal tax purposes. If a life insurance policy is classified as a
modified endowment contract, distributions from it (including loans) are
taxed as ordinary income to the extent of any gain. This Policy will
become a
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<PAGE> 41
"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 Policy Owner may elect under this Policy may be
material changes affecting the 7-pay premium test. These include, but are
not limited to, changes in Death Benefits and changes in the Specified
Amount. One may avoid a Policy becoming a modified endowment contract by,
among other things, not making excessive payments or reducing benefits.
Should you deposit excessive premiums during a Policy Year, that portion
that is returned by AVLIC within 60 days after the Policy Anniversary Date
will reduce the premiums paid to prevent the Policy from becoming a
modified endowment contract. All modified endowment policies issued by
AVLIC to the same Policy Owner in any 12 month period are treated as one
modified endowment contract for purposes of determining taxable gain under
Section 72(e) of the Internal Revenue Code. Any life insurance policy
received in exchange for a modified endowment contract will also be
treated as a modified endowment contract. You should contact a competent
tax professional before paying additional premiums or making other changes
to the Policy to determine whether such payments or changes would cause
the Policy to become a modified endowment contract.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury
(the "Treasury") to set standards by regulation or otherwise for the
investments of the separate account to be "adequately diversified" in
order for the Policy to be treated as a life insurance contract for
federal tax purposes. If the Policy is not treated as life insurance
because it fails the diversification requirements, the Policy Owner is
then subject to federal income tax on gain in the Policy as it is earned.
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 and CAMCO, AVLIC affiliates, are the advisers 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 will generally be excludable from the gross income of the
Beneficiary under Section 101(a)(1) of the Code and the Policy Owner will
not be deemed to be in constructive receipt of the Accumulation Value
under the Policy until its actual Surrender. However, there are certain
exceptions to the general rule that death benefit proceeds are
non-taxable. Federal, state and local tax consequences of ownership of or
receipt of proceeds under a Policy depends on the circumstances of each
Policy Owner and Beneficiary.
Distributions From Policies That Are Not "Modified Endowment Contracts."
Distributions (while one or both Insureds are still alive) from a Policy
that is not a modified endowment contract are generally treated as first a
recovery of the investment in the Policy and then only after the return of
all such investment, as disbursing taxable income. However, in the case of
a decrease in the Death
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Benefit, a partial withdrawal, a change in Death Benefit option, or any
other such change that reduces future benefits under the Policy during the
first 15 years after a Policy is issued and that results in a cash
distribution to the Policy Owner in order for the Policy to continue
complying with the Section 7702 defined limits on premiums and
Accumulation Values, such distributions may be taxable in whole or in part
as ordinary income to the Policy Owner (to the extent of any gain in the
Policy) as prescribed in Section 7702. In addition, upon a complete
Surrender or lapse of a Policy that is not a "modified endowment
contract," if the amount received plus the amount of any outstanding
Policy debt exceeds the total investment in the Policy, the excess will
generally be treated as ordinary income for tax purposes. Investment in
the Policy means (1) the total amount of any premiums paid for the Policy
plus the amount of any loan received under the Policy to the extent the
loan is included in gross income of the Policy Owner minus (2) the total
amount received under the Policy by the Policy Owner that was excludable
from gross income, excluding any non-taxable loan received under the
Policy.
AVLIC also believes that loans received under a Policy that is not a
"modified endowment contract" will be treated as debt of the Policy Owner
and that no part of any loan under a Policy will constitute income to the
Policy Owner so long as the Policy remains in force. Should the Policy
lapse while Policy loans are outstanding the portion of the loans
attributable to earnings will become taxable. Generally, interest paid on
any loan under a Policy owned by an individual will not be tax-deductible.
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 repealed the deduction for interest paid or accrued after
October 13, 1995 on loans from corporate owned life insurance policies on
the lives of officers, employees or persons financially interested in the
taxpayer's trade or business. Certain transitional rules for existing debt
are included in the Health Insurance Act. The transitional rules included
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 occurred over a transition
period between October 13, 1995 and January 1, 1999. There is also a
special rule for pre-June 21, 1986 policies. Any material change in a
policy (including a material increase in the death benefit) may cause the
policy to be treated as a new policy for purposes of the rule. The
Taxpayer Relief Act of 1997 ("TRA '97"), further expanded the interest
deduction disallowance for businesses by providing, with respect to
policies issued after June 8, 1997, that no deduction is allowed for
interest paid or accrued on any debt with respect to life insurance
covering the life of any individual (except as noted above under pre-'97
law with respect to key persons and pre-June 21, 1986 policies). TRA '97
also provides that no deduction is permissible for premiums paid on a life
insurance policy if the taxpayer is directly or indirectly a beneficiary
under the policy. Also under TRA '97 and subject to certain exceptions,
for policies issued after June 8, 1997, no deduction is allowed for that
portion of a taxpayer's interest expense that is allocable to unborrowed
policy cash values. This disallowance generally does not apply to policies
owned by natural persons. Policy Owners should consult a competent tax
advisor concerning the tax implications of these changes for their
Policies.
Distributions From Policies That Are "Modified Endowment Contracts."
Should the Policy become a "modified endowment contract" partial
withdrawals, full Surrenders, assignments, pledges, and loans (including
loans to pay loan interest) under the Policy will be taxable to the extent
of any gain under the Policy. A 10% penalty tax also applies to the
taxable portion of any distribution made prior to the taxpayer's age
59 1/2. The 10% penalty tax does not apply if the distribution is made
because the taxpayer is disabled as defined under the Code or if the
distribution is paid out in the form of a life annuity on the life of the
taxpayer or the joint lives of the taxpayer and Beneficiary.
The right to exchange the Policy for a survivorship flexible premium
adjustable life insurance policy (See the section on Exchange Privilege.),
the right to change Policy Owners (See the section on General
Provisions.), and the provision for partial withdrawals (See the section
on Surrenders.)
BRAVO!
39
<PAGE> 43
may have tax consequences depending on the circumstances of such exchange,
change, or withdrawal. Upon complete Surrender, if the amount received
plus any Outstanding Policy Debt exceeds the total premiums paid (the
"basis"), that are not treated as previously withdrawn by the Policy
Owner, the excess generally will be taxed as ordinary income.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Death Benefit Proceeds depend on
applicable law and the circumstances of each Policy Owner or Beneficiary.
In addition, if the Policy is used in connection with tax-qualified
retirement plans, certain limitations prescribed by the Internal Revenue
Service on, and rules with respect to the taxation of, life insurance
protection provided through such plans may apply. Further, the tax
consequences of using the Policy in nonqualified plan arrangements may
vary depending on the particular facts and circumstances of the
arrangement. The advice of competent counsel should be sought in
connection with use of life insurance in a qualified or nonqualified plan.
YOU SHOULD CONSULT QUALIFIED TAX AND/OR LEGAL ADVISORS TO OBTAIN COMPLETE
INFORMATION ON FEDERAL, STATE AND LOCAL TAX CONSIDERATIONS APPLICABLE TO YOUR
PARTICULAR SITUATION.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
AVLIC holds the assets of Separate Account V. The assets are kept physically
segregated and held separately and apart from the General Account assets, except
for the Fixed Account. AVLIC maintains records of all purchases and redemptions
of Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
AVLIC is aware that certain third parties are offering investment advisory,
asset allocation, money management and timing services in connection with the
Policies. AVLIC does not engage any such third parties to offer such services of
any type. In certain cases, AVLIC has agreed to honor transfer instructions from
such services where it has received powers of attorney, in a form acceptable to
it, from the Policy Owners participating in the service. Firms or persons
offering such services do so independently from any agency relationship they may
have with AVLIC for the sale of Policies. AVLIC takes no responsibility for the
investment allocations and transfers transacted on a Policy Owner's behalf by
such third parties or any investment allocation recommendations made by such
parties. Policy Owners should be aware that fees paid for such services are
separate and in addition to fees paid under the Policies.
VOTING RIGHTS
AVLIC is the legal holder of the shares held in the Subaccounts of Separate
Account V and as such has the right to vote the shares, to elect Directors of
the Funds, and to vote on matters that are required by the Investment Company
Act of 1940 and upon any other matter that may be voted upon at a shareholder
meeting. To the extent required by law, AVLIC will vote all shares of each of
the Funds held in Separate Account V at regular and special shareholder meetings
of the Funds according to instructions received from Policy Owners based on the
number of shares held as of the record date for such meeting.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy Owner is determined by dividing the Accumulation Value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from Policy Owners are received and Fund shares
held in each Subaccount which do not support Policy Owner interests will be
voted by AVLIC in the same proportion as those shares in that Subaccount for
which timely instructions are received. Voting instructions to abstain on any
item to be voted will be applied on a pro rata basis to reduce the votes
eligible to be cast. Should applicable federal securities laws or regulations
permit, AVLIC may elect to vote shares of the Fund in its own right.
DISREGARD OF VOTING INSTRUCTION. AVLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, AVLIC itself may disregard voting
BRAVO!
40
<PAGE> 44
instructions that would require changes in the investment objectives or policies
of any portfolio or in an investment adviser or principal underwriter for the
Funds, if AVLIC reasonably disapproves those changes in accordance with
applicable federal regulations. If AVLIC does disregard voting instructions, it
will advise Policy Owners of that action and its reasons for the action in the
next annual report or proxy statement to Policy Owners.
STATE REGULATION OF AVLIC
AVLIC, a stock life insurance company organized under the laws of Nebraska, is
subject to regulation by the Nebraska Department of Insurance. On or before
March 1 of each year an NAIC convention blank covering the operations and
reporting on the financial condition of AVLIC and Separate Account V as of
December 31 of the preceding year must be filed with the Nebraska Department of
Insurance. Periodically, the Nebraska Department of Insurance examines the
liabilities and reserves of AVLIC and Separate Account V.
In addition, AVLIC is subject to the insurance laws and regulations of other
states within which it is licensed or may become licensed to operate. The
Policies offered by the prospectus are available in the various states as
approved. Generally, the Insurance Department of any other state applies the
laws of the state of domicile in determining permissible investments.
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC
This list shows name and position(s) with AVLIC followed by the principal
occupations for the last five years. Where an individual has held more than one
position with an organization during the last 5-year period, the last position
held has been given.
LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD, AND CHIEF EXECUTIVE OFFICER*
Director, Chairman of the Board, and Chief Executive Officer: Ameritas Life;
also serves as officer and/or director of other subsidiaries and/or affiliates
of Ameritas Life.
WILLIAM J. ATHERTON, DIRECTOR, PRESIDENT, AND CHIEF OPERATING OFFICER*
Director: AMAL Corporation; President: North American Security Life Insurance
Company; also served as officer and/or director of other subsidiaries and/or
affiliates of North American.
KENNETH C. LOUIS, DIRECTOR, EXECUTIVE VICE PRESIDENT*
Director, President and Chief Operating Officer: Ameritas Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life.
GARY R. McPHAIL, DIRECTOR, EXECUTIVE VICE PRESIDENT**
Director, President, and Chief Executive Officer: AmerUs Life***; also serves as
officer and/or director of other subsidiaries and/or affiliates of AmerUs Life;
Executive Vice President -- Marketing and Individual Operations: New York Life
Insurance Company; President: Lincoln National Sales Corporation.
ROBERT C. BARTH, CONTROLLER*
Vice President and Controller: Ameritas Life.
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.
BRAVO!
41
<PAGE> 45
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***;
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***; 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.***
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.
ROBERT G. LANGE, ASSISTANT SECRETARY*
Vice President and General Counsel-Insurance and Assistant Secretary: Ameritas
Life; also serves as officer of other subsidiaries and/or affiliates of Ameritas
Life; Director: Nebraska Department of Insurance.
CYNTHIA J. LAVELLE, VICE PRESIDENT -- PRODUCT, OPERATIONS AND SUPPORT*
Assistant Vice President -- Variable Operations: Ameritas Life.
WILLIAM W. LESTER, TREASURER*
Senior Vice President -- Investments and Treasurer: Ameritas Life; also serves
as officer of affiliates of Ameritas Life.
JOANN M. MARTIN, DIRECTOR, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Senior Vice President and Chief Financial Officer: Ameritas Life; also serves as
officer and/or director of other subsidiaries and/or affiliates of Ameritas
Life.
SHEILA SANDY, ASSISTANT SECRETARY**
Manager Annuity Services: AmerUs Life.***
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***; Senior Financial Analyst: Target
Stores.
- ---------------
* Principal business address: Ameritas Variable Life Insurance Company
5900 "O" Street, P.O. Box 82550
Lincoln, Nebraska 68501
BRAVO!
42
<PAGE> 46
** 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, 1999 and 1998, and for each
of the three years in the period ended December 31, 1999, and the financial
statements of the subaccounts of Separate Account V as of December 31, 1999, and
for each of the three years in the period then ended, included in this
prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
Actuarial matters included in this prospectus have been examined by Russell J.
Wiltgen, Vice President Individual Product Management of Ameritas Life Insurance
Corp., as stated in the opinion filed as an exhibit to the registration
statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning Separate Account V, AVLIC and the Policy offered hereby.
Statements contained in this prospectus as to the contents of the Policy and
other legal instruments are summaries. For a complete statement of the terms
thereof reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of AVLIC which are included in this prospectus should
be considered only as bearing on the ability of AVLIC to meet its obligations
under the Policies. They should not be considered as bearing on the investment
performance of the assets held in Separate Account V.
BRAVO!
43
<PAGE> 47
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ameritas Variable Life Insurance Company
Lincoln, Nebraska
We have audited the accompanying statement of net assets of each of the
subaccounts of Ameritas Variable Life Insurance Company Separate Account V,
(comprising, respectively, the Money Market Portfolio Initial Class,
Equity-Income Portfolio Initial Class, Equity- Income Portfolio Service Class
(commenced November 2, 1999), Growth Portfolio Initial Class, Growth Portfolio
Service Class (commenced November 2, 1999), High Income Portfolio Initial Class,
Overseas Portfolio Initial Class, and Overseas Portfolio Service Class
(commenced December 7, 1999) of the Variable Insurance Products Fund; the Asset
Manager Portfolio Initial Class, Asset Manager Portfolio Service Class
(commenced November 29, 1999), Investment Grade Bond Portfolio Initial Class,
Contrafund Portfolio Initial Class, Contrafund Portfolio Service Class
(commenced November 29, 1999), Index 500 Portfolio Initial Class and Asset
Manager Growth Portfolio Initial Class of the Variable Insurance Products Fund
II; the Small Capitalization Portfolio, Growth Portfolio, Income and Growth
Portfolio, Midcap Growth Portfolio, Balanced Portfolio, and Leveraged Allcap
Portfolio of the Alger American Fund; the Emerging Growth Series Portfolio,
World Governments Series Portfolio, Utilities Series Portfolio, Research Series
Portfolio (commenced April 8, 1997), Growth with Income Series Portfolio
(commenced April 3, 1997), and New Discovery Series Portfolio (commenced
November 12, 1999) of the MFS Variable Insurance Trust; the Asian Equity
Portfolio (commenced April 22, 1997), Emerging Markets Equity Portfolio, Global
Equity Portfolio (commenced April 17, 1997), International Magnum Portfolio
(commenced April 7, 1997), and U.S. Real Estate Portfolio (commenced April 28,
1997) of the Morgan Stanley Dean Witter Universal Funds, Inc.; the Ameritas
Emerging Growth Portfolio (commenced October 29, 1999), Ameritas Growth
Portfolio (commenced October 29, 1999), Ameritas Growth with Income Portfolio
(commenced October 29, 1999), Ameritas Income and Growth Portfolio (commenced
October 29, 1999), Ameritas Index 500 Portfolio (commenced October 29, 1999),
Ameritas Midcap Growth Portfolio (commenced October 29, 1999), Ameritas Money
Market Portfolio (commenced October 28, 1999), Ameritas Research Portfolio
(commenced October 29, 1999), Ameritas Small Capitalization Portfolio (commenced
October 29, 1999) of the Calvert Variable Series, Inc., Ameritas Portfolios; and
the Stock Index Fund Portfolio of the Dreyfus Stock Index Fund) as of December
31, 1999, and the related statements of operations and changes in net assets for
each of the three years in the period then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1999. 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 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 each of the subaccounts constituting
Ameritas Variable Life Insurance Company Separate Account V as of December 31,
1999, and the results of its operations and changes in 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, 2000
F-I- 1
<PAGE> 48
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
INVESTMENTS AT NET ASSET VALUE:
VARIABLE INSURANCE PRODUCTS FUND:
Equity-Income Portfolio Initial Class (Equity Income
I-Class) -- 1,200,052.051 shares at $25.71 per share
(cost $21,449,489).................................... $ 30,853,338
Equity-Income Portfolio Service Class (Equity Income
S-Class) -- 23.348 shares at $25.66 per share (cost
$594)................................................. 599
Growth Portfolio Initial Class (Growth
I-Class) -- 1,206,269.664 shares at $54.93 per share
(cost $32,300,729).................................... 66,260,394
Growth Portfolio Service Class (Growth
S-Class) -- 361.373 shares at $54.80 per share (cost
$19,113).............................................. 19,803
High Income Portfolio Initial Class (High Income
I-Class) -- 643,493.640 shares at $11.31 per share
(cost $6,964,598)..................................... 7,277,912
Overseas Portfolio Initial Class (Overseas
I-Class) -- 660,786.721 shares at $27.44 per share
(cost $9,282,319)..................................... 18,131,989
Overseas Portfolio Service Class (Overseas
S-Class) -- 1.414 shares at $27.38 per share (cost
$36).................................................. 39
VARIABLE INSURANCE PRODUCTS FUND II:
Asset Manager Portfolio Initial Class (Asset Manager
I-Class) -- 1,769,690.988 shares at $18.67 per share
(cost $25,080,444).................................... 33,040,130
Asset Manager Portfolio Service Class (Asset Manager
S-Class) -- 21.069 shares at $18.59 per share (cost
$384)................................................. 392
Investment Grade Bond Portfolio Initial Class
(Investment Grade Bond I-Class) -- 310,807.857 shares
at $12.16 per share (cost $3,717,866)................. 3,779,423
Contrafund Portfolio Initial Class (Contrafund
I-Class) -- 714,800.541 shares at $29.15 per share
(cost $13,879,737).................................... 20,836,438
Contrafund Portfolio Service Class (Contrafund
S-Class) -- 299.329 shares at $29.10 per share (cost
$8,528)............................................... 8,710
Asset Manager Growth Portfolio Initial Class (Asset
Manager Growth I-Class) -- 236,100.860 shares at
$18.38 per share (cost $3,489,495).................... 4,339,535
ALGER AMERICAN FUND:
Balanced Portfolio (Balanced) -- 326,807.439 shares at
$15.57 per share (cost $3,861,056).................... 5,088,391
Leveraged Allcap Portfolio (Leveraged
Allcap) -- 367,145.479 shares at $57.97 per share
(cost $12,666,837).................................... 21,283,423
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 2
<PAGE> 49
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
ASSETS, CONTINUED
<TABLE>
<S> <C>
MFS VARIABLE INSURANCE TRUST:
World Governments Series Portfolio (World Governments
Series) -- 40,718.448 shares at $10.03 per share (cost
$411,142)............................................. $ 408,406
Utilities Series Portfolio (Utilities
Series) -- 232,575.290 shares at $24.16 per share
(cost $4,106,211)..................................... 5,619,019
New Discovery Series Portfolio (New Discovery
Series) -- 8,750.402 shares at $17.27 per share (cost
$143,173)............................................. 151,120
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
Asian Equity Portfolio (Asian Equity) -- 116,856.034
shares at $9.34 per share (cost $757,264)............. 1,091,435
Emerging Markets Equity Portfolio (Emerging Markets
Equity) -- 157,426.804 shares at $13.84 per share
(cost $1,624,721)..................................... 2,178,789
Global Equity Portfolio (Global Equity) -- 207,539.068
shares at $12.88 per share (cost $2,574,700).......... 2,673,103
International Magnum Portfolio (International
Magnum) -- 126,932.562 shares at $13.89 per share
(cost $1,460,963)..................................... 1,763,093
U.S. Real Estate Portfolio (U.S. Real
Estate) -- 96,540.525 shares at $9.11 per share (cost
$1,036,611)........................................... 879,484
CALVERT VARIABLE SERIES, INC., AMERITAS PORTFOLIOS:
Ameritas Emerging Growth Portfolio (Emerging
Growth) -- 623,113.360 shares at $37.86 per share
(cost $16,161,699).................................... 23,591,072
Ameritas Growth Portfolio (Growth) -- 564,421.258
shares at $64.83 per share (cost $31,702,408)......... 36,591,430
Ameritas Growth with Income Portfolio (Growth with
Income) -- 181,873.924 shares at $21.17 per share
(cost $3,680,933)..................................... 3,850,270
Ameritas Income and Growth Portfolio (Income and
Growth) -- 668,452.484 shares at $17.35 per share
(cost $9,316,921)..................................... 11,597,650
Ameritas Index 500 Portfolio (Index 500) -- 181,738.510
shares at $167.30 per share (cost $28,210,421)........ 30,404,852
Ameritas Midcap Growth Portfolio (Midcap
Growth) -- 505,493.406 shares at $31.50 per share
(cost $13,387,683).................................... 15,923,042
Ameritas Money Market Portfolio (Money
Market) -- 18,688,200.480 shares at $1.00 per share
(cost $18,688,200).................................... 18,688,200
Ameritas Research Portfolio (Research) -- 187,533.532
shares at $22.99 per share (cost $3,784,743).......... 4,311,395
Ameritas Small Capitalization Portfolio (Small
Cap) -- 568,578.051 shares at $56.42 per share (cost
$25,098,528).......................................... 32,079,174
------------
NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS......... $402,722,050
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-I- 3
<PAGE> 50
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
----------------------
MONEY EQUITY
MARKET INCOME
TOTAL I-CLASS I-CLASS
----------- --------- ----------
<S> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.......................... $ 4,242,954 $ 624,763 $ 438,682
Mortality and expense risk charge........................ (2,932,292) (103,738) (285,410)
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............................... 1,310,662 521,025 153,272
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... 18,596,394 -- 969,719
Net change in unrealized appreciation (depreciation)..... 65,629,180 -- 411,890
----------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS............................. 84,225,574 -- 1,381,609
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $85,536,236 $ 521,025 $1,534,881
=========== ========= ==========
1998
INVESTMENT INCOME:
Dividend distributions received.......................... $ 3,349,781 $ 571,068 $ 350,608
Mortality and expense risk charge........................ (2,163,874) (100,578) (257,976)
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............................... 1,185,907 470,490 92,632
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... 17,147,973 -- 1,247,753
Net change in unrealized appreciation (depreciation)..... 30,032,940 -- 1,327,445
----------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS............................. 47,180,913 -- 2,575,198
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $48,366,820 $ 470,490 $2,667,830
=========== ========= ==========
1997
INVESTMENT INCOME:
Dividend distributions received.......................... $ 2,670,710 $ 463,675 $ 290,414
Mortality and expense risk charge........................ (1,574,558) (84,611) (201,066)
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............................... 1,096,152 379,064 89,348
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain distributions.......................... 6,045,040 -- 1,460,138
Net change in unrealized appreciation (depreciation)..... 21,418,187 -- 3,371,385
----------- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS............................. 27,463,227 -- 4,831,523
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $28,559,379 $ 379,064 $4,920,871
=========== ========= ==========
</TABLE>
- ---------------
(1) Commenced business 11/02/99
(2) Commenced business 11/02/99
(3) Commenced business 12/07/99
The accompanying notes are an integral part of these financial statements.
F-I- 4
<PAGE> 51
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
----------------------------------------------------------------
EQUITY
INCOME GROWTH GROWTH HIGH INCOME OVERSEAS OVERSEAS
S-CLASS(1) I-CLASS S-CLASS(2) I-CLASS I-CLASS S-CLASS(3)
---------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ -- $ 82,737 $ -- $ 792,857 $ 226,340 $ --
-- (489,259) (5) (69,467) (138,144) --
---- ----------- ---- ----------- ---------- ----
-- (406,522) (5) 723,390 88,196 --
---- ----------- ---- ----------- ---------- ----
-- 5,202,111 -- 29,639 365,064 --
5 12,361,324 690 (141,192) 5,444,790 3
---- ----------- ---- ----------- ---------- ----
5 17,563,435 690 (111,553) 5,809,854 3
---- ----------- ---- ----------- ---------- ----
$ 5 $17,156,913 $685 $ 611,837 $5,898,050 $ 3
==== =========== ==== =========== ========== ====
$ -- $ 167,972 $ -- $ 558,849 $ 271,677 $ --
-- (354,109) -- (73,002) (128,820) --
---- ----------- ---- ----------- ---------- ----
-- (186,137) -- 485,847 142,857 --
---- ----------- ---- ----------- ---------- ----
-- 4,393,780 -- 355,102 800,734 --
-- 8,556,162 -- (1,057,850) 959,668 --
---- ----------- ---- ----------- ---------- ----
-- 12,949,942 -- (702,748) 1,760,402 --
---- ----------- ---- ----------- ---------- ----
$ -- $12,763,805 $ -- $ (216,901) $1,903,259 $ --
==== =========== ==== =========== ========== ====
$ -- $ 177,070 $ -- $ 456,382 $ 183,138 $ --
-- (278,073) -- (65,009) (115,217) --
---- ----------- ---- ----------- ---------- ----
-- (101,003) -- 391,373 67,921 --
---- ----------- ---- ----------- ---------- ----
-- 792,600 -- 56,407 727,004 --
-- 5,089,744 -- 585,776 646,688 --
---- ----------- ---- ----------- ---------- ----
-- 5,882,344 -- 642,183 1,373,692 --
---- ----------- ---- ----------- ---------- ----
$ -- $ 5,781,341 $ -- $ 1,033,556 $1,441,613 $ --
==== =========== ==== =========== ========== ====
</TABLE>
F-I- 5
<PAGE> 52
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
-----------------------------------------------------
INVESTMENT
ASSET ASSET GRADE
MANAGER MANAGER BOND CONTRAFUND
I-CLASS S-CLASS (1) I-CLASS I-CLASS
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.............. $1,054,568 $-- $ 178,023 $ 68,862
Mortality and expense risk charge............ (290,374) -- (39,812) (148,735)
---------- -- --------- ----------
NET INVESTMENT INCOME (LOSS)................... 764,194 -- 138,211 (79,873)
---------- -- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 1,335,786 -- 55,850 504,989
Net change in unrealized appreciation
(depreciation)............................ 995,823 8 (290,852) 3,286,645
---------- -- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 2,331,609 8 (235,002) 3,791,634
---------- -- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $3,095,803 $8 $ (96,791) $3,711,761
========== == ========= ==========
1998
INVESTMENT INCOME:
Dividend distributions received.............. $ 882,316 $-- $ 146,622 $ 56,896
Mortality and expense risk charge............ (271,404) -- (39,733) (93,506)
---------- -- --------- ----------
NET INVESTMENT INCOME (LOSS)................... 610,912 -- 106,889 (36,610)
---------- -- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 2,646,949 -- 17,396 418,590
Net change in unrealized appreciation
(depreciation)............................ 637,938 -- 179,497 2,407,939
---------- -- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 3,284,887 -- 196,893 2,826,529
---------- -- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $3,895,799 $-- $ 303,782 $2,789,919
========== == ========= ==========
1997
INVESTMENT INCOME:
Dividend distributions received.............. $ 782,791 $-- $ 138,030 $ 28,971
Mortality and expense risk charge............ (232,839) -- (25,608) (50,896)
---------- -- --------- ----------
NET INVESTMENT INCOME (LOSS)................... 549,952 -- 112,422 (21,925)
---------- -- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 1,963,611 -- -- 76,565
Net change in unrealized appreciation
(depreciation)............................ 1,992,988 -- 89,590 991,738
---------- -- --------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 3,956,599 -- 89,590 1,068,303
---------- -- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $4,506,551 $-- $ 202,012 $1,046,378
========== == ========= ==========
</TABLE>
- ---------------
(1) Commenced business 11/29/99
(2) Commenced business 11/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 6
<PAGE> 53
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
- --------------------------------------------- --------------------------------------------------------
ASSET
MANAGER
CONTRAFUND INDEX 500 GROWTH SMALL INCOME AND MIDCAP
S-CLASS(2) I-CLASS I-CLASS CAPITALIZATION GROWTH GROWTH GROWTH
----------- ---------- -------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ 201,036 $ 80,579 $ -- $ 37,125 $ 14,347 $ --
-- (174,834) (32,359) (167,614) (201,618) (57,170) (91,219)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 26,202 48,220 (167,614) (164,493) (42,823) (91,219)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 136,418 133,643 2,786,842 2,534,821 426,544 1,862,002
182 2,171,872 333,686 352,557 1,454,079 490,297 (948,010)
----------- ---------- -------- ---------- ---------- ---------- ----------
182 2,308,290 467,329 3,139,399 3,988,900 916,841 913,992
----------- ---------- -------- ---------- ---------- ---------- ----------
$ 182 $2,334,492 $515,549 $2,971,785 $3,824,407 $ 874,018 $ 822,773
=========== ========== ======== ========== ========== ========== ==========
$ -- $ 131,792 $ 49,741 $ -- $ 41,754 $ 17,735 $ --
-- (135,441) (25,300) (169,257) (155,688) (49,041) (81,791)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- (3,649) 24,441 (169,257) (113,934) (31,306) (81,791)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 305,253 232,615 2,446,741 2,551,580 490,671 742,049
-- 3,342,102 175,258 623,620 4,267,982 1,071,043 1,766,399
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 3,647,355 407,873 3,070,361 6,819,562 1,561,714 2,508,448
----------- ---------- -------- ---------- ---------- ---------- ----------
$ -- $3,643,706 $432,314 $2,901,104 $6,705,628 $1,530,408 $2,426,657
=========== ========== ======== ========== ========== ========== ==========
$ -- $ 32,977 $ -- $ -- $ 32,883 $ 12,791 $ 3,623
-- (71,508) (14,685) (142,416) (98,937) (28,862) (62,763)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- (38,531) (14,685) (142,416) (66,054) (16,071) (59,140)
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 66,916 1,179 550,941 59,552 105,818 88,340
-- 1,946,609 322,064 1,210,960 2,142,136 755,171 768,190
----------- ---------- -------- ---------- ---------- ---------- ----------
-- 2,013,525 323,243 1,761,901 2,201,688 860,989 856,530
----------- ---------- -------- ---------- ---------- ---------- ----------
$ -- $1,974,994 $308,558 $1,619,485 $2,135,634 $ 844,918 $ 797,390
=========== ========== ======== ========== ========== ========== ==========
</TABLE>
F-I- 7
<PAGE> 54
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
MFS VARIABLE INSURANCE
ALGER AMERICAN FUND TRUST
---------------------- -------------------------
EMERGING WORLD
LEVERAGED GROWTH GOVERNMENTS
BALANCED ALLCAP SERIES SERIES
-------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received............... $ 39,415 $ -- $ -- $ 21,210
Mortality and expense risk charge............. (33,636) (99,090) (100,195) (3,721)
-------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS).................... 5,779 (99,090) (100,195) 17,489
-------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions............... 199,925 658,702 -- --
Net change in unrealized appreciation
(depreciation)............................. 769,554 6,672,254 2,583,588 (32,288)
-------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS.................. 969,479 7,330,956 2,583,588 (32,288)
-------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $975,258 $7,231,866 $2,483,393 $(14,799)
======== ========== ========== ========
1998
INVESTMENT INCOME:
Dividend distributions received............... $ 24,247 $ -- $ -- $ 3,936
Mortality and expense risk charge............. (16,462) (31,317) (83,222) (3,503)
-------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS).................... 7,785 (31,317) (83,222) 433
-------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions............... 107,704 147,338 76,320 --
Net change in unrealized appreciation
(depreciation)............................. 417,950 1,626,709 2,714,274 29,642
-------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS.................. 525,654 1,774,047 2,790,594 29,642
-------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $533,439 $1,742,730 $2,707,372 $ 30,075
======== ========== ========== ========
1997
INVESTMENT INCOME:
Dividend distributions received............... $ 12,338 $ -- $ -- $ 3,537
Mortality and expense risk charge............. (10,092) (17,451) (44,359) (1,978)
-------- ---------- ---------- --------
NET INVESTMENT INCOME (LOSS).................... 2,246 (17,451) (44,359) 1,559
-------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions............... 16,729 -- -- 1,603
Net change in unrealized appreciation
(depreciation)............................. 162,920 298,847 937,800 (6,568)
-------- ---------- ---------- --------
NET GAIN (LOSS) ON INVESTMENTS.................. 179,649 298,847 937,800 (4,965)
-------- ---------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................... $181,895 $ 281,396 $ 893,441 $ (3,406)
======== ========== ========== ========
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 11/12/99
(4) Commenced business 04/22/97
(5) Commenced business 04/08/97
(6) Commenced business 04/17/97
The accompanying notes are an integral part of these financial statements.
F-I- 8
<PAGE> 55
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER
MFS VARIABLE INSURANCE TRUST UNIVERSAL FUNDS, INC.
------------------------------------------------ ---------------------------------
GROWTH WITH NEW EMERGING
UTILITIES RESEARCH INCOME DISCOVERY ASIAN MARKETS GLOBAL
SERIES SERIES(1) SERIES(2) SERIES(3) EQUITY(4) EQUITY(5) EQUITY(6)
---------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 45,844 $ 6,589 $ 12,252 $ -- $ 5,861 $ 320 $ 30,920
(35,886) (23,950) (25,262) (37) (5,901) (10,340) (20,462)
---------- -------- -------- ------ -------- --------- --------
9,958 (17,361) (13,010) (37) (40) (10,020) 10,458
---------- -------- -------- ------ -------- --------- --------
230,507 34,817 14,706 1,661 -- -- 119,961
986,318 222,022 (9,958) 7,946 388,267 917,707 (47,308)
---------- -------- -------- ------ -------- --------- --------
1,216,825 256,839 4,748 9,607 388,267 917,707 72,653
---------- -------- -------- ------ -------- --------- --------
$1,226,783 $239,478 $ (8,262) $9,570 $388,227 $ 907,687 $ 83,111
========== ======== ======== ====== ======== ========= ========
$ 24,469 $ 2,571 $ -- $ -- $ 2,129 $ 4,381 $ 14,013
(20,971) (17,327) (19,348) -- (2,084) (7,282) (13,265)
---------- -------- -------- ------ -------- --------- --------
3,498 (14,756) (19,348) -- 45 (2,901) 748
---------- -------- -------- ------ -------- --------- --------
111,249 33,714 -- -- -- -- 12,591
262,317 383,697 490,661 -- (2,798) (219,226) 143,561
---------- -------- -------- ------ -------- --------- --------
373,566 417,411 490,661 -- (2,798) (219,226) 156,152
---------- -------- -------- ------ -------- --------- --------
$ 377,064 $402,655 $471,313 $ -- $ (2,753) $(222,127) $156,900
========== ======== ======== ====== ======== ========= ========
$ -- $ -- $ 6,744 $ -- $ 232 $ 4,896 $ 5,533
(7,542) (2,824) (2,761) -- (495) (3,435) (2,294)
---------- -------- -------- ------ -------- --------- --------
(7,542) (2,824) 3,983 -- (263) 1,461 3,239
---------- -------- -------- ------ -------- --------- --------
-- -- 31,548 -- -- 21,661 11,816
255,610 18,241 3,513 -- (51,298) (144,415) 2,150
---------- -------- -------- ------ -------- --------- --------
255,610 18,241 35,061 -- (51,298) (122,754) 13,966
---------- -------- -------- ------ -------- --------- --------
$ 248,068 $ 15,417 $ 39,044 $ -- $(51,561) $(121,293) $ 17,205
========== ======== ======== ====== ======== ========= ========
</TABLE>
F-I- 9
<PAGE> 56
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER CALVERT VARIABLE SERIES, INC.,
UNIVERSAL FUNDS, INC. AMERITAS PORTFOLIOS
--------------------------- ------------------------------
INTERNATIONAL U.S. REAL EMERGING
MAGNUM(1) ESTATE(2) GROWTH(3) GROWTH(4)
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
1999
INVESTMENT INCOME:
Dividend distributions received.............. $ 13,210 $ 48,301 $ -- $ 4,570
Mortality and expense risk charge............ (11,040) (7,470) (29,906) (53,250)
-------- --------- ---------- ----------
Net investment income (loss)................... 2,170 40,831 (29,906) (48,680)
-------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 5,512 -- -- --
Net change in unrealized appreciation
(depreciation)............................ 307,353 (65,623) 7,429,373 4,889,022
-------- --------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 312,865 (65,623) 7,429,373 4,889,022
-------- --------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $315,035 $ (24,792) $7,399,467 $4,840,342
======== ========= ========== ==========
1998
INVESTMENT INCOME:
Dividend distributions received.............. $ 2,795 $ 24,210 $ -- $ --
Mortality and expense risk charge............ (6,689) (6,758) -- --
-------- --------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................... (3,894) 17,452 -- --
-------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 3,255 6,589 -- --
Net change in unrealized appreciation
(depreciation)............................ 39,545 (110,595) -- --
-------- --------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. 42,800 (104,006) -- --
-------- --------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $ 38,906 $ (86,554) $ -- $ --
======== ========= ========== ==========
1997
INVESTMENT INCOME:
Dividend distributions received.............. $ 15,852 $ 9,641 $ -- $ --
Mortality and expense risk charge............ (1,903) (1,584) -- --
-------- --------- ---------- ----------
NET INVESTMENT INCOME (LOSS)................... 13,949 8,057 -- --
-------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain distributions.............. 1,056 11,556 -- --
Net change in unrealized appreciation
(depreciation)............................ (44,768) 19,091 -- --
-------- --------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS................. (43,712) 30,647 -- --
-------- --------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $(29,763) $ 38,704 $ -- $ --
======== ========= ========== ==========
</TABLE>
- ---------------
(1) Commenced business 04/07/97
(2) Commenced business 04/28/97
(3) Commenced business 10/29/99
(4) Commenced business 10/29/99
(5) Commenced business 10/29/99
(6) Commenced business 10/29/99
(7) Commenced business 10/29/99
(8) Commenced business 10/29/99
(9) Commenced business 10/28/99
(10) Commenced business 10/29/99
(11) Commenced business 10/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 10
<PAGE> 57
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.,
AMERITAS PORTFOLIOS DREYFUS
------------------------------------------------------------------------------------------- --------
GROWTH WITH INCOME AND INDEX MIDCAP MONEY SMALL STOCK
INCOME(5) GROWTH(6) 500(7) GROWTH(8) MARKET(9) RESEARCH(10) CAP(11) INDEX
----------- ---------- ---------- ---------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,856 $ -- $ 45,131 $ -- $167,556 $ -- $ -- $ --
(5,394) (16,266) (44,210) (23,079) (42,280) (6,148) (45,011) --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
(3,538) (16,266) 921 (23,079) 125,276 (6,148) (45,011) --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- 330,344 -- 358,344 -- 48,862 249,625 --
169,338 2,280,729 2,194,432 2,535,359 -- 526,653 6,980,645 --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
169,338 2,611,073 2,194,432 2,893,703 -- 575,515 7,230,270 --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
$165,800 $2,594,807 $2,195,353 $2,870,624 $125,276 $569,367 $7,185,259 $
======== ========== ========== ========== ======== ======== ========== ========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- -------- ---------- --------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
======== ========== ========== ========== ======== ======== ========== ========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 9,192
-- -- -- -- -- -- -- (5,350)
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- 3,842
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- 54,025
-------- ---------- ---------- ---------- -------- -------- ---------- --------
-- -- -- -- -- -- -- 54,025
-------- ---------- ---------- ---------- -------- -------- ---------- --------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 57,867
======== ========== ========== ========== ======== ======== ========== ========
</TABLE>
F-I- 11
<PAGE> 58
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
---------------------------
MONEY EQUITY
MARKET INCOME
TOTAL I-CLASS I-CLASS
------------ ------------ -----------
<S> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)...................... $ 1,310,662 $ 521,025 $ 153,272
Net realized gain distributions................... 18,596,394 -- 969,719
Net change in unrealized appreciation
(depreciation)................................. 65,629,180 -- 411,890
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 85,536,236 521,025 1,534,881
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS...................................... 34,532,740 (11,626,149) (173,132)
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............. 120,068,976 (11,105,124) 1,361,749
NET ASSETS AT JANUARY 1, 1999....................... 282,653,074 11,105,124 29,491,589
------------ ------------ -----------
NET ASSETS AT DECEMBER 31, 1999..................... $402,722,050 $ -- $30,853,338
============ ============ ===========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)...................... $ 1,185,907 $ 470,490 $ 92,632
Net realized gain distributions................... 17,147,973 -- 1,247,753
Net change in unrealized appreciation
(depreciation)................................. 30,032,940 -- 1,327,445
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 48,366,820 470,490 2,667,830
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS...................................... 36,557,125 3,082,148 2,101,252
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............. 84,923,945 3,552,638 4,769,082
NET ASSETS AT JANUARY 1, 1998....................... 197,729,129 7,552,486 24,722,507
------------ ------------ -----------
NET ASSETS AT DECEMBER 31, 1998..................... $282,653,074 $ 11,105,124 $29,491,589
============ ============ ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)...................... $ 1,096,152 $ 379,064 $ 89,348
Net realized gain distributions................... 6,045,040 -- 1,460,138
Net change in unrealized appreciation
(depreciation)................................. 21,418,187 -- 3,371,385
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 28,559,379 379,064 4,920,871
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS...................................... 33,090,017 (464,346) 2,617,832
------------ ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS............. 61,649,396 (85,282) 7,538,703
NET ASSETS AT JANUARY 1, 1997....................... 136,079,733 7,637,768 17,183,804
------------ ------------ -----------
NET ASSETS AT DECEMBER 31, 1997..................... $197,729,129 $ 7,552,486 $24,722,507
============ ============ ===========
</TABLE>
- ---------------
(1) Commenced business 11/02/99
(2) Commenced business 11/02/99
(3) Commenced business 12/07/99
The accompanying notes are an integral part of these financial statements.
F-I- 12
<PAGE> 59
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-------------------------------------------------------------------------------
EQUITY
INCOME GROWTH GROWTH HIGH INCOME OVERSEAS OVERSEAS
S-CLASS(1) I-CLASS S-CLASS(2) I-CLASS I-CLASS S-CLASS(3)
---------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ -- $ (406,522) $ (5) $ 723,390 $ 88,196 $--
-- 5,202,111 -- 29,639 365,064 --
5 12,361,324 690 (141,192) 5,444,790 3
---- ----------- ------- ----------- ----------- ---
5 17,156,913 685 611,837 5,898,050 3
594 2,880,969 19,118 (1,595,898) (2,386,280) 36
---- ----------- ------- ----------- ----------- ---
599 20,037,882 19,803 (984,061) 3,511,770 39
-- 46,222,512 -- 8,261,973 14,620,219 --
---- ----------- ------- ----------- ----------- ---
$599 $66,260,394 $19,803 $ 7,277,912 $18,131,989 $39
==== =========== ======= =========== =========== ===
$ -- $ (186,137) $ -- $ 485,847 $ 142,857 $--
-- 4,393,780 -- 355,102 800,734 --
-- 8,556,162 -- (1,057,850) 959,668 --
---- ----------- ------- ----------- ----------- ---
-- 12,763,805 -- (216,901) 1,903,259 --
-- 1,105,036 -- 353,039 (628,523) --
---- ----------- ------- ----------- ----------- ---
-- 13,868,841 -- 136,138 1,274,736 --
-- 32,353,671 -- 8,125,835 13,345,483 --
---- ----------- ------- ----------- ----------- ---
$ -- $46,222,512 $ -- $ 8,261,973 $14,620,219 $--
==== =========== ======= =========== =========== ===
$ -- $ (101,003) $ -- $ 391,373 $ 67,921 $--
-- 792,600 -- 56,407 727,004 --
-- 5,089,744 -- 585,776 646,688 --
---- ----------- ------- ----------- ----------- ---
-- 5,781,341 -- 1,033,556 1,441,613 --
-- 382,227 -- 104,745 1,242,175 --
---- ----------- ------- ----------- ----------- ---
-- 6,163,568 -- 1,138,301 2,683,788 --
-- 26,190,103 -- 6,987,534 10,661,695 --
---- ----------- ------- ----------- ----------- ---
$ -- $32,353,671 $ -- $ 8,125,835 $13,345,483 $--
==== =========== ======= =========== =========== ===
</TABLE>
F-I- 13
<PAGE> 60
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
---------------------------------------------------
ASSET ASSET INVESTMENT
MANAGER MANAGER GRADE BOND CONTRAFUND
I-CLASS S-CLASS(1) I-CLASS I-CLASS
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).................... $ 764,194 $ -- $ 138,211 $ (79,873)
Net realized gain distributions................. 1,335,786 -- 55,850 504,989
Net change in unrealized appreciation
(depreciation)............................... 995,823 8 (290,852) 3,286,645
----------- ---- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 3,095,803 8 (96,791) 3,711,761
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................... (1,888,691) 384 (571,758) 3,385,621
----------- ---- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 1,207,112 392 (668,549) 7,097,382
NET ASSETS AT JANUARY 1, 1999..................... 31,833,018 -- 4,447,972 13,739,056
----------- ---- ---------- -----------
NET ASSETS AT DECEMBER 31, 1999................... $33,040,130 $392 $3,779,423 $20,836,438
=========== ==== ========== ===========
1998
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).................... $ 610,912 $ -- $ 106,889 $ (36,610)
Net realized gain distributions................. 2,646,949 -- 17,396 418,590
Net change in unrealized appreciation
(depreciation)............................... 637,938 -- 179,497 2,407,939
----------- ---- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 3,895,799 -- 303,782 2,789,919
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................... 353,744 -- 1,166,836 3,190,211
----------- ---- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 4,249,543 -- 1,470,618 5,980,130
NET ASSETS AT JANUARY 1, 1998..................... 27,583,475 -- 2,977,354 7,758,926
----------- ---- ---------- -----------
NET ASSETS AT DECEMBER 31, 1998................... $31,833,018 $ -- $4,447,972 $13,739,056
=========== ==== ========== ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).................... $ 549,952 $ -- $ 112,422 $ (21,925)
Net realized gain distributions................. 1,963,611 -- -- 76,565
Net change in unrealized appreciation
(depreciation)............................... 1,992,988 -- 89,590 991,738
----------- ---- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 4,506,551 -- 202,012 1,046,378
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS.................................... 614,816 -- 422,976 3,787,942
----------- ---- ---------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 5,121,367 -- 624,988 4,834,320
NET ASSETS AT JANUARY 1, 1997..................... 22,462,108 -- 2,352,366 2,924,606
----------- ---- ---------- -----------
NET ASSETS AT DECEMBER 31, 1997................... $27,583,475 $ -- $2,977,354 $ 7,758,926
=========== ==== ========== ===========
</TABLE>
- ---------------
(1) Commenced business 11/29/99
(2) Commenced business 11/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 14
<PAGE> 61
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
----------------------------------------- ------------------------------------------------------------
ASSET MANAGER
CONTRAFUND INDEX 500 GROWTH SMALL INCOME AND
S-CLASS(2) I-CLASS I-CLASS CAPITALIZATION GROWTH GROWTH MIDCAP GROWTH
---------- ------------ ------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ 26,202 $ 48,220 $ (167,614) $ (164,493) $ (42,823) $ (91,219)
-- 136,418 133,643 2,786,842 2,534,821 426,544 1,862,002
182 2,171,872 333,686 352,557 1,454,079 490,297 (948,010)
------ ------------ ---------- ------------ ------------ ------------ ------------
182 2,334,492 515,549 2,971,785 3,824,407 874,018 822,773
8,528 (22,163,611) 518,100 (25,232,993) (27,172,870) (7,875,584) (12,108,131)
------ ------------ ---------- ------------ ------------ ------------ ------------
8,710 (19,829,119) 1,033,649 (22,261,208) (23,348,463) (7,001,566) (11,285,358)
-- 19,829,119 3,305,886 22,261,208 23,348,463 7,001,566 11,285,358
------ ------------ ---------- ------------ ------------ ------------ ------------
$8,710 $ -- $4,339,535 $ -- $ -- $ -- $ --
====== ============ ========== ============ ============ ============ ============
$ -- $ (3,649) $ 24,441 $ (169,257) $ (113,934) $ (31,306) $ (81,791)
-- 305,253 232,615 2,446,741 2,551,580 490,671 742,049
-- 3,342,102 175,258 623,620 4,267,982 1,071,043 1,766,399
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 3,643,706 432,314 2,901,104 6,705,628 1,530,408 2,426,657
-- 5,349,378 582,288 1,708,481 3,802,750 1,281,319 1,308,265
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 8,993,084 1,014,602 4,609,585 10,508,378 2,811,727 3,734,922
-- 10,836,035 2,291,284 17,651,623 12,840,085 4,189,839 7,550,436
------ ------------ ---------- ------------ ------------ ------------ ------------
$ -- $ 19,829,119 $3,305,886 $ 22,261,208 $ 23,348,463 $ 7,001,566 $ 11,285,358
====== ============ ========== ============ ============ ============ ============
$ -- $ (38,531) $ (14,685) $ (142,416) $ (66,054) $ (16,071) $ (59,140)
-- 66,916 1,179 550,941 59,552 105,818 88,340
-- 1,946,609 322,064 1,210,960 2,142,136 755,171 768,190
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 1,974,994 308,558 1,619,485 2,135,634 844,918 797,390
-- 6,930,829 1,426,686 1,904,475 2,704,106 1,369,132 1,117,517
------ ------------ ---------- ------------ ------------ ------------ ------------
-- 8,905,823 1,735,244 3,523,960 4,839,740 2,214,050 1,914,907
-- 1,930,212 556,040 14,127,663 8,000,345 1,975,789 5,635,529
------ ------------ ---------- ------------ ------------ ------------ ------------
$ -- $ 10,836,035 $2,291,284 $ 17,651,623 $ 12,840,085 $ 4,189,839 $ 7,550,436
====== ============ ========== ============ ============ ============ ============
</TABLE>
F-I- 15
<PAGE> 62
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
------------------------- ----------------------------
WORLD
LEVERAGED EMERGING GOVERNMENTS
BALANCED ALLCAP GROWTH SERIES SERIES
---------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............. $ 5,779 $ (99,090) $ (100,195) $ 17,489
Net realized gain distributions.......... 199,925 658,702 -- --
Net change in unrealized appreciation
(depreciation)........................ 769,554 6,672,254 2,583,588 (32,288)
---------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 975,258 7,231,866 2,483,393 (14,799)
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS............................. 1,387,144 8,506,289 (14,698,847) (138,861)
---------- ----------- ------------ ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 2,362,402 15,738,155 (12,215,454) (153,660)
NET ASSETS AT JANUARY 1, 1999.............. 2,725,989 5,545,268 12,215,454 562,066
---------- ----------- ------------ ---------
NET ASSETS AT DECEMBER 31, 1999............ $5,088,391 $21,283,423 $ -- $ 408,406
========== =========== ============ =========
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............. $ 7,785 $ (31,317) $ (83,222) $ 433
Net realized gain distributions.......... 107,704 147,338 76,320 --
Net change in unrealized appreciation
(depreciation)........................ 417,950 1,626,709 2,714,274 29,642
---------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 533,439 1,742,730 2,707,372 30,075
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS............................. 844,417 1,370,291 2,799,432 310,132
---------- ----------- ------------ ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 1,377,856 3,113,021 5,506,804 340,207
NET ASSETS AT JANUARY 1, 1998.............. 1,348,133 2,432,247 6,708,650 221,859
---------- ----------- ------------ ---------
NET ASSETS AT DECEMBER 31, 1998............ $2,725,989 $ 5,545,268 $ 12,215,454 $ 562,066
========== =========== ============ =========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)............. $ 2,246 $ (17,451) $ (44,359) $ 1,559
Net realized gain distributions.......... 16,729 -- -- 1,603
Net change in unrealized appreciation
(depreciation)........................ 162,920 298,847 937,800 (6,568)
---------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ 181,895 281,396 893,441 (3,406)
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS............................. 253,322 962,301 3,250,610 41,843
---------- ----------- ------------ ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 435,217 1,243,697 4,144,051 38,437
NET ASSETS AT JANUARY 1, 1997.............. 912,916 1,188,550 2,564,599 183,422
---------- ----------- ------------ ---------
NET ASSETS AT DECEMBER 31, 1997............ $1,348,133 $ 2,432,247 $ 6,708,650 $ 221,859
========== =========== ============ =========
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 11/12/99
(4) Commenced business 04/22/97
(5) Commenced business 04/08/97
(6) Commenced business 04/17/97
The accompanying notes are an integral part of these financial statements.
F-I- 16
<PAGE> 63
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER
MFS VARIABLE INSURANCE TRUST UNIVERSAL FUNDS, INC.
----------------------------------------------------- ------------------------------------
GROWTH WITH EMERGING
UTILITIES RESEARCH INCOME NEW DISCOVERY ASIAN MARKETS GLOBAL
SERIES SERIES(1) SERIES(2) SERIES(3) EQUITY(4) EQUITY(5) EQUITY(6)
---------- ---------- ----------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9,958 $ (17,361) $ (13,010) $ (37) $ (40) $ (10,020) $ 10,458
230,507 34,817 14,706 1,661 -- -- 119,961
986,318 222,022 (9,958) 7,946 388,267 917,707 (47,308)
---------- ---------- ----------- -------- ---------- ---------- ----------
1,226,783 239,478 (8,262) 9,570 388,227 907,687 83,111
1,095,173 (3,213,305) (3,524,676) 141,550 369,208 447,470 493,021
---------- ---------- ----------- -------- ---------- ---------- ----------
2,321,956 (2,973,827) (3,532,938) 151,120 757,435 1,355,157 576,132
3,297,063 2,973,827 3,532,938 -- 334,000 823,632 2,096,971
---------- ---------- ----------- -------- ---------- ---------- ----------
$5,619,019 $ -- $ -- $151,120 $1,091,435 $2,178,789 $2,673,103
========== ========== =========== ======== ========== ========== ==========
$ 3,498 $ (14,756) $ (19,348) $ -- $ 45 $ (2,901) $ 748
111,249 33,714 -- -- -- -- 12,591
262,317 383,697 490,661 -- (2,798) (219,226) 143,561
---------- ---------- ----------- -------- ---------- ---------- ----------
377,064 402,655 471,313 -- (2,753) (222,127) 156,900
1,222,669 1,600,841 1,428,853 -- 149,362 308,380 1,088,835
---------- ---------- ----------- -------- ---------- ---------- ----------
1,599,733 2,003,496 1,900,166 -- 146,609 86,253 1,245,735
1,697,330 970,331 1,632,772 -- 187,391 737,379 851,236
---------- ---------- ----------- -------- ---------- ---------- ----------
$3,297,063 $2,973,827 $ 3,532,938 $ -- $ 334,000 $ 823,632 $2,096,971
========== ========== =========== ======== ========== ========== ==========
$ (7,542) $ (2,824) $ 3,983 $ -- $ (263) $ 1,461 $ 3,239
-- -- 31,548 -- -- 21,661 11,816
255,610 18,241 3,513 -- (51,298) (144,415) 2,150
---------- ---------- ----------- -------- ---------- ---------- ----------
248,068 15,417 39,044 -- (51,561) (121,293) 17,205
1,057,600 954,914 1,593,728 -- 238,952 858,672 834,031
---------- ---------- ----------- -------- ---------- ---------- ----------
1,305,668 970,331 1,632,772 -- 187,391 737,379 851,236
391,662 -- -- -- -- -- --
---------- ---------- ----------- -------- ---------- ---------- ----------
$1,697,330 $ 970,331 $ 1,632,772 $ -- $ 187,391 $ 737,379 $ 851,236
========== ========== =========== ======== ========== ========== ==========
</TABLE>
F-I- 17
<PAGE> 64
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
MORGAN STANLEY
DEAN WITTER CALVERT VARIABLE SERIES, INC.,
UNIVERSAL FUNDS, INC. AMERITAS PORTFOLIOS
------------------------- -------------------------------
INTERNATIONAL U.S. REAL EMERGING
MAGNUM(1) ESTATE(2) GROWTH(3) GROWTH(4)
------------- --------- -------------- --------------
<S> <C> <C> <C> <C>
1999
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................... $ 2,170 $ 40,831 $ (29,906) $ (48,680)
Net realized gain distributions................ 5,512 -- -- --
Net change in unrealized appreciation
(depreciation)............................... 307,353 (65,623) 7,429,373 4,889,022
---------- -------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ 315,035 (24,792) 7,399,467 4,840,342
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 514,795 44,736 16,191,605 31,751,088
---------- -------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 829,830 19,944 23,591,072 36,591,430
NET ASSETS AT JANUARY 1, 1999.................... 933,263 859,540 -- --
---------- -------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1999.................. $1,763,093 $879,484 $23,591,072 $36,591,430
========== ======== =========== ===========
1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................... $ (3,894) $ 17,452 $ -- $ --
Net realized gain distributions................ 3,255 6,589 -- --
Net change in unrealized appreciation
(depreciation)............................... 39,545 (110,595) -- --
---------- -------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ 38,906 (86,554) -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 363,729 313,960 -- --
---------- -------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 402,635 227,406 -- --
NET ASSETS AT JANUARY 1, 1998.................... 530,628 632,134 -- --
---------- -------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1998.................. $ 933,263 $859,540 $ -- $ --
========== ======== =========== ===========
1997
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss)................... $ 13,949 $ 8,057 $ -- $ --
Net realized gain distributions................ 1,056 11,556 -- --
Net change in unrealized appreciation
(depreciation)............................... (44,768) 19,091 -- --
---------- -------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ (29,763) 38,704 -- --
NET INCREASE (DECREASE) FROM POLICYOWNER
TRANSACTIONS................................... 560,391 593,430 -- --
---------- -------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 530,628 632,134 -- --
NET ASSETS AT JANUARY 1, 1997.................... -- -- -- --
---------- -------- ----------- -----------
NET ASSETS AT DECEMBER 31, 1997.................. $ 530,628 $632,134 $ -- $ --
========== ======== =========== ===========
</TABLE>
- ---------------
(1) Commenced business 04/07/97
(2) Commenced business 04/28/97
(3) Commenced business 10/29/99
(4) Commenced business 10/29/99
(5) Commenced business 10/29/99
(6) Commenced business 10/29/99
(7) Commenced business 10/29/99
(8) Commenced business 10/29/99
(9) Commenced business 10/28/99
(10) Commenced business 10/29/99
(11) Commenced business 10/29/99
The accompanying notes are an integral part of these financial statements.
F-I- 18
<PAGE> 65
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC., AMERITAS PORTFOLIOS DREYFUS
------------------------------------------------------------------------------------------------- -----------
GROWTH WITH INCOME AND MIDCAP MONEY SMALL
INCOME(5) GROWTH(6) INDEX 500(7) GROWTH(8) MARKET(9) RESEARCH(10) CAP(11) STOCK INDEX
----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (3,538) $ (16,266) $ 921 $ (23,079) $ 125,276 $ (6,148) $ (45,011) $ --
-- 330,344 -- 358,344 -- 48,862 249,625 --
169,338 2,280,729 2,194,432 2,535,359 -- 526,653 6,980,645 --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
165,800 2,594,807 2,195,353 2,870,624 125,276 569,367 7,185,259 --
3,684,470 9,002,843 28,209,499 13,052,418 18,562,924 3,742,028 24,893,915 --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
3,850,270 11,597,650 30,404,852 15,923,042 18,688,200 4,311,395 32,079,174 --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
$3,850,270 $11,597,650 $30,404,852 $15,923,042 $18,688,200 $4,311,395 $32,079,174 $ --
========== =========== =========== =========== =========== ========== =========== ===========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
========== =========== =========== =========== =========== ========== =========== ===========
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 3,842
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- 54,025
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- 57,867
-- -- -- -- -- -- -- (2,270,889)
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
-- -- -- -- -- -- -- (2,213,022)
-- -- -- -- -- -- -- 2,213,022
---------- ----------- ----------- ----------- ----------- ---------- ----------- -----------
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
========== =========== =========== =========== =========== ========== =========== ===========
</TABLE>
F-I- 19
<PAGE> 66
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, 1999, there are thirty-two
subaccounts within the Account. Seven of the subaccounts invest only in a
corresponding Portfolio of Variable Insurance Products Fund and six 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 (Fidelity). Two 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. (Alger Management). Three 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 (MFS Co.). Five of the subaccounts invest only in a
corresponding Portfolio of Morgan Stanley Dean Witter Universal Funds, Inc.
which is a diversified open-end management investment company managed by Morgan
Stanley Dean Witter Investment Management Inc. Nine of the subaccounts invest
only in a corresponding Portfolio of Calvert Variable Series, Inc. Ameritas
Portfolios (Ameritas Portfolio) which is a diversified open-end management
investment company managed by Ameritas Investment Corp. (see Note 3). 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 fund.
Pursuant to an order of the SEC allowing for the substitution, all policyowner
funds invested in a Portfolio of Fidelity Money Market were transferred to the
Money Market subaccount of the Ameritas Portfolio as of October 28, 1999. Also,
as of October 29, 1999 pursuant to an order of the SEC allowing for the
substitution, all policyowner funds invested in a Portfolio of Fidelity Index
500 I-Class were transferred to the Index 500 subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of Alger Management
Growth were transferred to the Growth subaccount of the Ameritas Portfolio; all
policyowner funds invested in a Portfolio of Alger Management Income and Growth
were transferred to the Income and Growth subaccount of the Ameritas Portfolio;
all policyowner funds invested in a Portfolio of Alger Management Small
Capitalization Fund were transferred to the Small Cap subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of Alger Management
MidCap Growth were transferred to the MidCap Growth subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of MFS Co. Emerging
Growth Series were transferred to the Emerging Growth subaccount of the Ameritas
Portfolio; all policyowner funds invested in a Portfolio of MFS Co. Research
Series was transferred to the Research subaccount of the Ameritas Portfolio; and
all policyowner funds invested in a Portfolio of MFS Co. Growth with Income
Series were transferred to the Growth with Income subaccount of the Ameritas
Portfolio.
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.
F-I- 20
<PAGE> 67
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. ORGANIZATION AND ACCOUNTING POLICIES -- (CONTINUED)
VALUATION OF INVESTMENTS
The assets of the Account are carried at the net asset value of the underlying
Portfolios. 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.
3. RELATED PARTIES
During October 1999, AVLIC established a variable insurance trust (VIT) which
contains the Ameritas Portfolios. The Ameritas Portfolios are managed by
Ameritas Investment Corp., an affiliate of AVLIC. During the year ended December
31, 1999, the Account incurred advisory fees of approximately $119,000, payable
to Ameritas Investment Corp. Other affiliates of AVLIC also provided
sub-advisory and administrative services to the Ameritas Portfolios during 1999
of approximately $25,000.
F-I- 21
<PAGE> 68
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. 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 EQUITY EQUITY
MARKET INCOME INCOME GROWTH GROWTH
I-CLASS I-CLASS S-CLASS(1) I-CLASS S-CLASS(2)
---------------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Shares owned at
January 1, 1999.......... 11,105,124.310 1,160,172.618 -- 1,030,142.884 --
Shares acquired............ 99,920,927.670 476,446.645 23.847 680,116.041 362.428
Shares disposed of......... (111,026,051.980) (436,567.212) (0.499) (503,989.261) (1.055)
---------------- ------------- ------ ------------- -------
Shares owned at
December 31, 1999........ -- 1,200,052.051 23.348 1,206,269.664 361.373
================ ============= ====== ============= =======
Shares owned at
January 1, 1998.......... 7,552,485.910 1,018,225.148 -- 872,066.612 --
Shares acquired............ 96,112,872.130 590,346.286 -- 801,025.403 --
Shares disposed of......... (92,560,233.730) (448,398.816) -- (642,949.131) --
---------------- ------------- ------ ------------- -------
Shares owned at
December 31, 1998........ 11,105,124.310 1,160,172.618 -- 1,030,142.884 --
================ ============= ====== ============= =======
Shares owned at
January 1, 1997.......... 7,637,767.850 817,109.096 -- 841,043.772 --
Shares acquired............ 57,423,437.350 511,389.228 -- 339,254.481 --
Shares disposed of......... (57,508,719.290) (310,273.176) -- (308,231.641) --
---------------- ------------- ------ ------------- -------
Shares owned at
December 31, 1997........ 7,552,485.910 1,018,225.148 -- 872,066.612 --
================ ============= ====== ============= =======
</TABLE>
- ---------------
(1) Commenced business 11/02/99
(2) Commenced business 11/02/99
(3) Commenced business 12/07/99
(4) Commenced business 11/29/99
F-I- 22
<PAGE> 69
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND VARIABLE INSURANCE PRODUCTS FUND II
-------------------------------------------- --------------------------------------------------------
ASSET ASSET INVESTMENT
HIGH INCOME OVERSEAS OVERSEAS MANAGER MANAGER GRADE BOND CONTRAFUND
I-CLASS I-CLASS S-CLASS(3) I-CLASS S-CLASS(4) I-CLASS I-CLASS
-------------- -------------- ---------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
716,563.299 729,187.972 -- 1,752,919.543 -- 343,207.716 562,154.419
2,358,341.689 2,163,832.620 1.699 488,206.777 22.633 352,083.082 441,475.107
(2,431,411.348) (2,232,233.871) (0.285) (471,435.332) (1.564) (384,482.941) (288,828.985)
-------------- -------------- ------ ------------- ------ ------------ ------------
643,493.640 660,786.721 1.414 1,769,690.988 21.069 310,807.857 714,800.541
============== ============== ====== ============= ====== ============ ============
598,367.840 695,077.235 -- 1,531,564.418 -- 237,050.443 389,113.666
2,095,006.665 2,333,977.875 -- 678,058.443 -- 639,413.242 496,047.058
(1,976,811.206) (2,299,867.138) -- (456,703.318) -- (533,255.969) (323,006.305)
-------------- -------------- ------ ------------- ------ ------------ ------------
716,563.299 729,187.972 -- 1,752,919.543 -- 343,207.716 562,154.419
============== ============== ====== ============= ====== ============ ============
558,109.727 565,907.403 -- 1,326,763.623 -- 192,186.776 176,606.628
1,118,068.428 1,175,596.501 -- 598,138.814 -- 120,594.995 358,431.197
(1,077,810.315) (1,046,426.669) -- (393,338.019) -- (75,731.328) (145,924.159)
-------------- -------------- ------ ------------- ------ ------------ ------------
598,367.840 695,077.235 -- 1,531,564.418 -- 237,050.443 389,113.666
============== ============== ====== ============= ====== ============ ============
</TABLE>
F-I- 23
<PAGE> 70
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
4. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II ALGER AMERICAN FUND
------------------------------------------ -----------------------------
ASSET MANAGER
CONTRAFUND INDEX 500 GROWTH SMALL
S-CLASS (1) I-CLASS I-CLASS CAPITALIZATION GROWTH
----------- ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1999.......................... 140,383.148 194,121.333 506,281.724 438,715.956
Shares acquired................. 300.373 106,248.904 130,128.414 484,219.127 314,912.653
Shares disposed of.............. (1.044) (246,632.052) (88,148.887) (990,500.851) (753,628.609)
------- ------------ ----------- ------------ ------------
Shares owned at December 31,
1999.......................... 299.329 -- 236,100.860 -- --
======= ============ =========== ============ ============
Shares owned at January 1,
1998.......................... -- 94,728.864 140,054.018 403,465.664 300,282.630
Shares acquired................. -- 128,107.356 152,783.138 441,926.395 397,157.183
Shares disposed of.............. -- (82,453.072) (98,715.823) (339,110.335) (258,723.857)
------- ------------ ----------- ------------ ------------
Shares owned at December 31,
1998.......................... -- 140,383.148 194,121.333 506,281.724 438,715.956
======= ============ =========== ============ ============
Shares owned at January 1,
1997.......................... -- 21,656.138 42,445.800 345,335.196 233,042.387
Shares acquired................. -- 129,171.432 137,282.584 311,521.638 204,589.158
Shares disposed of.............. -- (56,098.706) (39,674.366) (253,391.170) (137,348.915)
------- ------------ ----------- ------------ ------------
Shares owned at December 31,
1997.......................... -- 94,728.864 140,054.018 403,465.664 300,282.630
======= ============ =========== ============ ============
</TABLE>
- ---------------
(1) Commenced business 11/29/99
F-I- 24
<PAGE> 71
<TABLE>
<CAPTION>
ALGER AMERICAN FUND MFS VARIABLE INSURANCE TRUST
--------------------------------------------------------- ----------------------------------------------
WORLD
INCOME AND MIDCAP LEVERAGED EMERGING GOVERNMENTS
GROWTH GROWTH BALANCED ALLCAP GROWTH SERIES SERIES UTILITIES SERIES
------------ ------------ ------------ ------------ ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
533,655.926 390,902.572 210,014.615 158,890.232 568,954.541 51,660.465 166,350.240
399,442.614 295,894.469 243,382.099 408,802.915 361,380.381 81,155.171 187,829.047
(933,098.540) (686,797.041) (126,589.275) (200,547.668) (930,334.922) (92,097.188) (121,603.997)
------------ ------------ ------------ ------------ ------------ ----------- ------------
-- -- 326,807.439 367,145.479 -- 40,718.448 232,575.290
============ ============ ============ ============ ============ =========== ============
381,241.041 312,259.570 125,291.131 104,973.976 415,653.648 21,729.618 94,348.503
471,468.634 272,665.784 179,874.177 159,683.710 513,918.012 88,429.719 186,751.323
(319,053.749) (194,022.782) (95,150.693) (105,767.454) (360,617.119) (58,498.872) (114,749.586)
------------ ------------ ------------ ------------ ------------ ----------- ------------
533,655.926 390,902.572 210,014.615 158,890.232 568,954.541 51,660.465 166,350.240
============ ============ ============ ============ ============ =========== ============
234,654.249 263,959.188 98,800.487 61,392.043 193,700.823 17,336.705 28,672.191
389,297.914 245,052.311 64,650.229 108,499.936 457,734.629 37,542.368 107,581.620
(242,711.122) (196,751.929) (38,159.585) (64,918.003) (235,781.804) (33,149.455) (41,905.308)
------------ ------------ ------------ ------------ ------------ ----------- ------------
381,241.041 312,259.570 125,291.131 104,973.976 415,653.648 21,729.618 94,348.503
============ ============ ============ ============ ============ =========== ============
</TABLE>
F-I- 25
<PAGE> 72
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
4. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER
MFS VARIABLE INSURANCE TRUST UNIVERSAL FUNDS, INC.
------------------------------------------- ---------------------------
GROWTH WITH EMERGING
RESEARCH INCOME NEW DISCOVERY ASIAN MARKETS
SERIES(1) SERIES(2) SERIES(3) EQUITY(4) EQUITY(5)
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Shares owned at January 1,
1999....................... 156,106.437 175,680.697 -- 63,862.444 115,841.118
Shares acquired.............. 142,872.200 196,382.213 8,892.132 254,668.590 271,873.580
Shares disposed of........... (298,978.637) (372,062.910) (141.730) (201,675.000) (230,287.894)
------------ ------------ --------- ------------ ------------
Shares owned at December 31,
1999....................... -- -- 8,750.402 116,856.034 157,426.804
============ ============ ========= ============ ============
Shares owned at January 1,
1998....................... 61,452.261 99,317.062 -- 33,225.337 78,194.995
Shares acquired.............. 173,038.858 226,820.471 -- 99,976.563 334,441.671
Shares disposed of........... (78,384.682) (150,456.836) -- (69,339.456) (296,795.548)
------------ ------------ --------- ------------ ------------
Shares owned at December 31,
1998....................... 156,106.437 175,680.697 -- 63,862.444 115,841.118
============ ============ ========= ============ ============
Shares owned at January 1,
1997....................... -- -- -- -- --
Shares acquired.............. 72,826.540 110,180.302 -- 51,430.390 140,386.479
Shares disposed of........... (11,374.279) (10,863.240) -- (18,205.053) (62,191.484)
------------ ------------ --------- ------------ ------------
Shares owned at December 31,
1997....................... 61,452.261 99,317.062 -- 33,225.337 78,194.995
============ ============ ========= ============ ============
</TABLE>
- ---------------
(1) Commenced business 04/08/97
(2) Commenced business 04/03/97
(3) Commenced business 11/12/99
(4) Commenced business 04/22/97
(5) Commenced business 04/08/97
(6) Commenced business 04/17/97
(7) Commenced business 04/07/97
(8) Commenced business 04/28/97
(9) Commenced business 10/29/99
(10) Commenced business 10/29/99
(11) Commenced business 10/29/99
F-I- 26
<PAGE> 73
<TABLE>
<CAPTION>
MORGAN STANLEY DEAN WITTER CALVERT VARIABLE SERIES, INC.,
UNIVERSAL FUNDS, INC. AMERITAS PORTFOLIOS
------------------------------------------- ---------------------------------------
GLOBAL INTERNATIONAL U.S. REAL EMERGING GROWTH WITH
EQUITY(6) MAGNUM(7) ESTATE(8) GROWTH(9) GROWTH(10) INCOME(11)
------------ ------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
159,586.755 83,104.465 87,708.290 -- -- --
180,054.175 156,678.468 86,347.339 681,160.044 618,142.153 201,328.796
(132,101.862) (112,850.371) (77,515.104) (58,046.684) (53,720.895) (19,454.872)
------------ ------------ ------------ ----------- ----------- -----------
207,539.068 126,932.562 96,540.525 623,113.360 564,421.258 181,873.924
============ ============ ============ =========== =========== ===========
72,507.289 51,120.253 55,401.749 -- -- --
172,405.252 120,740.453 136,182.392 -- -- --
(85,325.786) (88,756.241) (103,875.851) -- -- --
------------ ------------ ------------ ----------- ----------- -----------
159,586.755 83,104.465 87,708.290 -- -- --
============ ============ ============ =========== =========== ===========
-- -- -- -- -- --
93,896.403 77,530.448 97,640.967 -- -- --
(21,389.114) (26,410.195) (42,239.218) -- -- --
------------ ------------ ------------ ----------- ----------- -----------
72,507.289 51,120.253 55,401.749 -- -- --
============ ============ ============ =========== =========== ===========
</TABLE>
F-I- 27
<PAGE> 74
AMERITAS VARIABLE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
4. SHARES OWNED -- (CONTINUED)
The Account invests in shares of mutual funds. Share activity and total shares
were as follows:
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.,
AMERITAS PORTFOLIOS
-------------------------------------------------------------
INCOME AND MIDCAP
GROWTH(1) INDEX 500(2) GROWTH(3) MONEY MARKET(4)
----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Shares owned at January 1, 1999........ -- -- -- --
Shares acquired........................ 739,847.832 199,984.145 547,305.396 38,484,753.390
Shares disposed of..................... (71,395.348) (18,245.635) (41,811.990) (19,796,552.910)
----------- ----------- ----------- ---------------
Shares owned at December 31, 1999...... 668,452.484 181,738.510 505,493.406 18,688,200.480
=========== =========== =========== ===============
Shares owned at January 1, 1998........ -- -- -- --
Shares acquired........................ -- -- -- --
Shares disposed of..................... -- -- -- --
----------- ----------- ----------- ---------------
Shares owned at December 31, 1998...... -- -- -- --
=========== =========== =========== ===============
Shares owned at January 1, 1997........ -- -- -- --
Shares acquired........................ -- -- -- --
Shares disposed of..................... -- -- -- --
----------- ----------- ----------- ---------------
Shares owned at December 31, 1997...... -- -- -- --
=========== =========== =========== ===============
</TABLE>
- ---------------
(1) Commenced business 10/29/99
(2) Commenced business 10/29/99
(3) Commenced business 10/29/99
(4) Commenced business 10/28/99
(5) Commenced business 10/29/99
(6) Commenced business 10/29/99
F-I- 28
<PAGE> 75
<TABLE>
<CAPTION>
CALVERT VARIABLE SERIES, INC.,
AMERITAS PORTFOLIOS DREYFUS
------------------------------ ------------
RESEARCH(5) SMALL CAP(6) STOCK INDEX
------------ ------------ ------------
<S> <C> <C> <C>
-- -- --
214,317.878 633,188.695 --
(26,784.346) (64,610.644) --
----------- ----------- ------------
187,533.532 568,578.051 --
=========== =========== ============
-- -- --
-- -- --
-- -- --
----------- ----------- ------------
-- -- --
=========== =========== ============
-- -- 109,123.387
-- -- 2,530.208
-- -- (111,653.595)
----------- ----------- ------------
-- -- --
=========== =========== ============
</TABLE>
F-I- 29
<PAGE> 76
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 (a wholly owned subsidiary of AMAL Corporation) as of December
31, 1999 and 1998, 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, 1999. 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, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 5, 2000
F-II- 1
<PAGE> 77
AMERITAS VARIABLE LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturity securities, available for sale (amortized
cost $129,567 -- 12/99 and $146,650 -- 12/98).......... $ 124,734 $ 150,462
Equity securities, available for sale (amortized cost
$2,031 -- 12/99 and $2,031 -- 12/98)................... 1,705 2,020
Mortgage loans on real estate............................. 1,392 --
Loans on insurance policies............................... 16,499 10,949
Other invested assets..................................... -- 10,020
---------- ----------
Total investments................................. 144,330 173,451
Cash and cash equivalents................................... 11,970 12,011
Accrued investment income................................... 2,442 2,425
Reinsurance receivable-affiliate............................ 35,921 --
Reinsurance recoverable-affiliates.......................... 153 455
Prepaid reinsurance premium-affiliates...................... 2,537 2,380
Deferred policy acquisition costs........................... 152,297 121,236
Other....................................................... 2,840 1,695
Separate Accounts........................................... 2,394,445 1,709,448
---------- ----------
$2,746,935 $2,023,101
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Policy and contract reserves.............................. $ 2,185 $ 1,681
Policy and contract claims................................ 755 625
Accumulated contract values............................... 240,050 213,874
Unearned policy charges................................... 2,030 1,814
Unearned reinsurance ceded allowance...................... 3,942 3,596
Federal income taxes--
Current................................................ 2,922 2,941
Deferred............................................... 6,725 8,348
Accounts payable -- affiliates............................ 7,285 3,364
Other..................................................... 6,639 4,722
Separate Accounts......................................... 2,394,445 1,709,448
---------- ----------
Total Liabilities................................. 2,666,978 1,950,413
---------- ----------
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................................ 42,870 40,370
Retained earnings......................................... 34,032 27,434
Accumulated other comprehensive income.................... (945) 884
---------- ----------
Total Stockholder's Equity........................ 79,957 72,688
---------- ----------
$2,746,935 $2,023,101
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 2
<PAGE> 78
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
INCOME:
Insurance revenues:
Contract charges.......................................... $51,794 $42,775 $33,717
Premium-reinsurance ceded................................. (8,683) (7,836) (6,840)
Reinsurance ceded allowance............................... 3,594 3,169 2,752
Investment revenues:
Investment income, net.................................... 13,970 14,052 8,277
Realized gains (losses), net.............................. (1,786) 79 368
Other....................................................... 3,016 2,269 980
------- ------- -------
61,905 54,508 39,254
------- ------- -------
BENEFITS AND EXPENSES:
Policy benefits:
Death benefits............................................ 2,805 2,200 1,356
Interest credited......................................... 12,512 13,400 7,258
Increase in policy and contract reserves.................. 504 740 192
Other..................................................... 190 222 92
Sales and operating expenses................................ 22,277 15,980 11,641
Amortization of deferred policy acquisition costs........... 12,760 11,847 9,584
------- ------- -------
51,048 44,389 30,123
------- ------- -------
INCOME BEFORE FEDERAL INCOME TAXES.......................... 10,857 10,119 9,131
------- ------- -------
Income taxes -- current..................................... 4,898 4,000 4,305
Income taxes -- deferred.................................... (639) (1,135) (844)
------- ------- -------
Total income taxes................................... 4,259 2,865 3,461
------- ------- -------
NET INCOME.................................................. $ 6,598 $ 7,254 $ 5,670
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 3
<PAGE> 79
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Net income.................................................. $6,598 $7,254 $5,670
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period
(net of deferred tax of ($1,610), $185 and $378 for
1999, 1998 and 1997 respectively)..................... (2,990) 343 702
Reclassification adjustment for (gains) losses included
in net income (net of deferred tax of $625, ($28) and
($129) for 1999, 1998 and 1997 respectively).......... 1,161 (51) (239)
------ ------ ------
Other comprehensive income (loss)......................... (1,829) 292 463
------ ------ ------
Comprehensive income........................................ $4,769 $7,546 $6,133
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 4
<PAGE> 80
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(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, 1997................. 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
Net unrealized investment loss, net.... -- -- -- -- (1,829) (1,829)
Capital contribution................... -- -- 2,500 -- -- 2,500
Net income............................. -- -- -- 6,598 -- 6,598
------ ------ ------- ------- ------- -------
BALANCE, December 31, 1999............... 40,000 $4,000 $42,870 $34,032 $ (945) $79,957
====== ====== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 5
<PAGE> 81
AMERITAS VARIABLE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income.................................................. $ 6,598 $ 7,254 $ 5,670
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of deferred policy acquisition costs......... 12,760 11,847 9,584
Policy acquisition costs deferred......................... (39,491) (34,820) (30,642)
Interest credited to contract values...................... 12,512 13,400 7,258
Amortization of discounts or premiums..................... 67 (28) (40)
Net gains on other invested assets........................ (2,830) (3,732) (631)
Net realized (gains) losses on investment transactions.... 1,786 (79) (368)
Deferred income taxes..................................... (639) (1,135) (844)
Change in assets and liabilities:
Accrued investment income.............................. (17) (624) (705)
Reinsurance recoverable-affiliates..................... 302 59 (505)
Prepaid reinsurance premium-affiliates................. (157) (82) (142)
Other assets........................................... (1,145) (1,496) 284
Policy and contract reserves........................... 504 740 192
Policy and contract claims............................. 130 (300) 819
Unearned policy charges................................ 216 316 255
Federal income tax payable-current..................... (19) 1,475 591
Unearned reinsurance ceded allowance................... 346 328 129
Other liabilities...................................... 5,838 (2,114) 2,172
-------- -------- --------
Net cash from operating activities........................ (3,239) (8,991) (6,923)
-------- -------- --------
INVESTING ACTIVITIES
Purchase of fixed maturity securities available for sale.... (48,474) (70,904) (92,291)
Purchase of equity securities available for sale............ -- -- (4,311)
Purchase of mortgage loans on real estate................... (1,400) --
Purchase of other invested assets........................... (1,252) (7,760) (1,611)
Proceeds from maturities or repayment of fixed maturity
securities available for sale............................. 11,242 15,289 25,168
Proceeds from sales of fixed maturity securities available
for sale.................................................. 7,762 22,282 16,419
Proceeds from the sale of equity securities available for
sale...................................................... -- 1,979 252
Proceeds from the sale of other invested assets............. 1,162 3,678 35
Net change in loans on insurance policies................... (5,550) (3,467) (3,173)
-------- -------- --------
Net cash from investing activities........................ (36,510) (38,903) (59,512)
-------- -------- --------
FINANCING ACTIVITIES
Capital contribution........................................ 2,500 -- --
Net change in accumulated contract values................... 37,208 46,194 69,462
-------- -------- --------
Net cash from financing activities........................ 39,708 46,194 69,462
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (41) (1,700) 3,027
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 12,011 13,711 10,684
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 11,970 $ 12,011 $ 13,711
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes.................................. $ 4,917 $ 2,525 $ 3,714
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-II- 6
<PAGE> 82
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(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, is 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 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 an
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, 1999, 1998 and 1997.
CASH EQUIVALENTS
The Company considers all highly liquid debt securities purchased with remaining
maturity of less than three months to be cash equivalents.
F-II- 7
<PAGE> 83
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES -- (CONTINUED)
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.
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> 84
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (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
-------------------------------
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Beginning balance........................................... $121,236 $ 98,746 $79,272
Acquisition costs deferred.................................. 39,491 34,820 30,642
Amortization of deferred policy acquisition costs........... (12,760) (11,847) (9,584)
Adjustment for unrealized investment (gain)/loss............ 6,145 (483) (1,584)
Balance released under co-insurance agreement (note 4)...... (1,815) -- --
-------- -------- -------
Ending balance.............................................. $152,297 $121,236 $98,746
======== ======== =======
</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, 2000, 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 reclassified to
conform to current year presentation.
F-II- 9
<PAGE> 85
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
2. INVESTMENTS
Investment income summarized by type of investment was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1999 1998 1997
------- ------- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $ 9,644 $ 9,099 $6,622
Equity Securities available for sale........................ 159 179 156
Mortgage loans on real estate............................... 34 -- --
Loans on insurance policies................................. 845 590 370
Cash equivalents............................................ 681 659 642
Other invested assets....................................... 2,830 3,732 631
------- ------- ------
Gross investment income................................... 14,193 14,259 8,421
Investment expenses......................................... 223 207 144
------- ------- ------
Net investment income..................................... $13,970 $14,052 $8,277
======= ======= ======
</TABLE>
Net pretax realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1999 1998 1997
------- ---- ----
<S> <C> <C> <C>
Net gains (losses) on disposals of fixed maturity securities
available for sale (note 4)............................... $(1,786) $131 $365
Net gains (losses) on disposal of equity securities
available for sale........................................ -- (52) $ 3
------- ---- ----
Net gains (losses) on disposal of securities available for
sale...................................................... $(1,786) $ 79 $368
======= ==== ====
</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, 1999
----------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $7,762 $6 $80
====== == ===
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------
PROCEEDS GAINS LOSSES
-------- ----- ------
<S> <C> <C> <C>
Fixed maturity securities available for sale................ $22,282 $242 $301
Equity securities available for sale........................ 1,979 -- 52
------- ---- ----
Total securities available for sale....................... $24,261 $242 $353
======= ==== ====
</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>
F-II- 10
<PAGE> 86
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (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, 1999
-------------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------ FAIR
COST GAINS LOSSES VALUE
--------- ----- ------ --------
<S> <C> <C> <C> <C>
U.S. Corporate.................................... $ 85,653 $35 $3,388 $ 82,300
Mortgage-backed................................... 34,929 12 1,422 33,519
U.S. Treasury securities and obligations of U.S.
government agencies............................. 8,985 40 110 8,915
-------- --- ------ --------
Total fixed maturity securities available for
sale......................................... 129,567 87 4,920 124,734
-------- --- ------ --------
Equity securities available for sale.............. 2,031 -- 326 1,705
-------- --- ------ --------
Total securities available for sale............. $131,598 $87 $5,246 $126,439
======== === ====== ========
</TABLE>
<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>
The amortized cost and fair value of fixed maturity securities available for
sale by contractual maturity at December 31, 1999 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..................................... $ 3,448 $ 3,453
Due after one year through five years....................... 43,868 42,513
Due after five years through ten years...................... 32,139 31,066
Due after ten years......................................... 15,183 14,183
Mortgage-backed securities.................................. 34,929 33,519
-------- --------
Total..................................................... $129,567 $124,734
======== ========
</TABLE>
The Company purchased exchange and privately traded options to support certain
equity index annuity policyowner liabilities. These derivatives, reflected as
other invested assets, were used to manage fluctuations in the equity market
risk granted to the policyowners of the equity index annuities. These
derivatives involved, to varying degrees, elements of credit risk and market
risk. The options value on the balance sheet reflected the risk of potential
loss to the entity. At December 31, 1998 the Company held options with terms
ranging from 1 to 7 years with a notional amount of $18,655, a cost of $7,096
and a fair value of $10,020. Due to the transfer of these assets as part of the
co-insurance agreement outlined in note 4, there were no options outstanding at
December 31, 1999.
F-II- 11
<PAGE> 87
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
3. INCOME TAXES
The items that give rise to deferred tax assets and liabilities relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31
-----------------
1999 1998
---- ----
<S> <C> <C>
Net unrealized investment gains on securities available for
sale...................................................... $ -- $ 1,365
Deferred policy acquisition costs........................... 45,802 36,031
Prepaid expenses............................................ 888 833
------- -------
Gross deferred tax liability................................ 46,690 38,229
------- -------
Future policy and contract benefits......................... 35,650 27,810
Net unrealized investment losses............................ 1,768 --
Capital loss carryforward................................... 515 --
Deferred future revenues.................................... 2,090 1,894
Other....................................................... 457 177
------- -------
Gross deferred tax asset.................................... 40,480 29,881
Less valuation allowance.................................... 515 --
------- -------
Total deferred tax asset after valuation allowance.......... 39,965 29,881
------- -------
Net deferred tax liability................................ $ 6,725 $ 8,348
======= =======
</TABLE>
The difference between the U.S. federal income tax rate and the tax provision
rate is summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate.................................. 35.0% 35.0% 35.0%
Other....................................................... 4.2 (6.7) 2.9
---- ---- ----
Effective tax rate........................................ 39.2% 28.3% 37.9%
==== ==== ====
</TABLE>
The Company has approximately $1.5 million of capital loss carryforward
available as of December 31, 1999. At December 31, 1999 the Company provided for
a valuation allowance against the deferred tax asset related to the capital loss
carryforward.
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. The IRS is
currently examining the Company's return for the tax period ending March 31,
1996. Management believes adequate provisions have been made for any additional
taxes which may become due with respect to the adjustments proposed by the IRS.
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, 1999, 1998
and 1997 was $12,265, $11,737 and $12,082, 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
$4,419, $4,104 and $3,810 of reinsurance premiums, net of ceded allowances, to
affiliates for the years
F-II- 12
<PAGE> 88
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
4. RELATED PARTY TRANSACTIONS -- (CONTINUED)
ended December 31, 1999, 1998 and 1997, respectively. The Company has received
reinsurance recoveries from affiliates of $7,268, $3,310 and $2,260 for the
years ended December 31, 1999, 1998 and 1997, respectively.
Effective June 30, 1999 the Company agreed to 100% co-insure its equity index
annuity business to AmerUs in a non-cash transaction. Under the terms of the
agreement investments with a fair value of $57,648 and amortized cost of $59,390
were transferred to AmerUs. In return AmerUs co-insured the full liability for
this business resulting in a $59,561 reinsurance receivable from affiliate being
recorded. The Company also released the $1,815 of deferred policy acquisition
costs which it was carrying on this block. In December 1999, AmerUs through
assumption reinsurance assumed approximately 40% of this block, reducing the
reinsurance receivable -- affiliate to $35,921. This amount is secured by a
letter of credit.
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. (AIC), a wholly-owned subsidiary of AMAL Corporation.
The Company received $93 for the year ended December 31, 1997 from this
affiliate to partially defray the costs of materials and prospectuses. The
Company received no recovery to defray these cost for the years ended December
31, 1999 and 1998. Policies placed by this affiliate generated commission
expense of $35,736, $28,621 and $23,232 for the years ended December 31, 1999,
1998 and 1997, 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, 1999, 1998 and 1997 were $159,
$163 and $29, respectively.
The Company's employees also participate in a defined contribution thrift plan
that covers substantially all full time employees of Ameritas Life Insurance
Corp. and its subsidiaries. Company matching contributions under the plan range
from 1% to 3% of the participant's compensation. Total Company contributions for
the years ended December 31, 1999, 1998 and 1997 were $47, $47 and $24,
respectively.
The Company is also included in the postretirement benefit plan providing group
medical coverage to retired employees of AMAL Corporation and it's 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
F-II- 13
<PAGE> 89
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
5. BENEFIT PLANS -- (CONTINUED)
preceding 5 years. Benefit costs include the expected cost of postretirement
benefits for newly eligible employees, interest cost, and gains and losses
arising from differences between actuarial assumptions and actual experience.
Total Company contributions for the years ended December 31, 1999, 1998 and 1997
were $12, $12 and $5, respectively.
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 ($4,513), $319, and $2,048 for 1999, 1998 and 1997, respectively.
The Company's statutory surplus was $41,637, $44,589 and $45,265 at December 31,
1999, 1998 and 1997, respectively. 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.
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, 1999 and 1998. 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.
MORTGAGE LOANS ON REAL ESTATE -- Mortgage loans in good standing are
valued on the basis of discounted cash flow. The interest rate that is
assumed is based upon the weighted average term of the mortgage and
appropriate spread over Treasuries. There were no mortgage loans in default
at December 31, 1999.
F-II- 14
<PAGE> 90
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
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 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
--------------------------------------------
1999 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Fixed maturity securities, available for sale..... $124,734 $124,734 $150,462 $150,462
Equity securities, available for sale............. 1,705 1,705 2,020 2,020
Mortgage loans on real estate..................... 1,392 1,369 -- --
Loans on insurance policies....................... 16,499 14,557 10,949 10,286
Other invested assets............................. -- -- 10,020 10,020
Cash and cash equivalents......................... 11,970 11,970 12,011 12,011
Accrued investment income......................... 2,442 2,442 2,425 2,425
Reinsurance receivable -- affiliate............... 35,921 35,921 -- --
Reinsurance recoverable -- affiliates............. 153 153 455 455
Financial liabilities:
Accumulated contract values excluding amounts held
under insurance contracts...................... 184,376 184,376 199,585 199,585
</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
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Separate Account V.......................................... $ 402,722 $ 282,653
Separate Account VA-2....................................... 1,991,723 1,426,795
---------- ----------
$2,394,445 $1,709,448
========== ==========
</TABLE>
F-II- 15
<PAGE> 91
AMERITAS VARIABLE LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 -- (CONTINUED)
(IN THOUSANDS)
8. SEPARATE ACCOUNTS -- (CONTINUED)
During 1999 the Company formed a variable insurance trust (VIT). AIC serves as
the investment advisor and another affiliate provides administrative services to
the VIT. AIC received advisory fees of $702 for the year ended December 31,
1999. At December 31, 1999 separate account assets under the VIT totaled
$1,066,249.
F-II- 16
<PAGE> 92
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND ACCUMULATION VALUES
The following tables illustrate how the Accumulation Values and Death Benefits
of a Policy may change with the investment experience of the Fund. The tables
show how the Accumulation Values and Death Benefits of a Policy issued to two
Insureds of given ages and specified underwriting risk classifications who pay
the given premium at issue would vary over time if the investment return on the
assets held in each portfolio of the Funds were a uniform, gross, after-tax
annual rate of 0%, 6%, or 12%. The tables on pages A-3 through A-6 illustrate a
Policy issued to a male, age 55, under a Preferred rate non-tobacco underwriting
risk classification and a female age 55, also under a Preferred nontobacco
underwriting risk classification. This Policy provides for a standard tobacco
use and non-tobacco use, and preferred non-tobacco classification. The
Accumulation Values and Death Benefits would be different from those shown if
the gross annual investment rates of return averaged 0%, 6%, and 12% over a
period of years, but fluctuated above and below those averages for individual
Policy Years, or if the Insureds were assigned to a different underwriting risk
classification.
The second column of the tables shows the accumulated value of the premiums paid
at 5%. The following columns show the Death Benefits and the Accumulation Values
for uniform hypothetical rates of return shown in these tables. The tables on
pages A-3 and A-5 are based on the current Cost of Insurance Rates, current
expense deductions and the current percent of premium loads. These reflect the
basis on which AVLIC currently sells its Policies. The maximum allowable Cost of
Insurance Rates under the Policy are based upon the 1980 Commissioner's Standard
Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables (Smoker is
referenced for tobacco use rates; Non-Smoker is referenced for non-tobacco use
rates). Since these are recent tables and are split to reflect tobacco use and
sex, the current Cost of Insurance Rates used by AVLIC are at this time equal to
the maximum Cost of Insurance Rates for many ages. AVLIC anticipates reflecting
future improvements in actual mortality experience through adjustments in the
current Cost of Insurance Rates actually applied. AVLIC also anticipates
reflecting any future improvements in expenses incurred by applying lower
percent of premiums of loads and other expense deductions. The Death Benefits
and Accumulation Values shown in the tables on pages A-4 and A-6 are based on
the assumption that the maximum allowable Cost of Insurance Rates as described
above and maximum allowable expense deductions are made throughout the life of
the Policy.
The amounts shown for the Death Benefits, Surrender values and Accumulation
Values reflect the fact that the net investment return of the Subaccounts is
lower than the gross, after-tax return of the assets held in the Funds as a
result of expenses paid by the Fund and charges levied against the Subaccounts.
The values shown take into account an average of the expenses paid by each
portfolio available for investment at an equivalent annual rate of 0.95% (which
is in excess of the current equivalent annual rate of 0.91% of the aggregate
average daily net assets of the Funds), and the daily charge by AVLIC to each
Subaccount for assuming mortality and expense risks and administrative expenses
(which is equivalent to a charge at an annual rate of 0.90% for Policy Years
1-15 and 0.45% thereafter of the average net assets of the Subaccounts). A
portion of the brokerage commissions that certain Fidelity Portfolios pay was
used to reduce Portfolio expenses. In addition, certain Fidelity Portfolios have
entered into arrangements with their custodian whereby interest earned on
uninvested cash balances was used to reduce custodian expenses. Without these
reductions, expenses would have been higher. The Investment Advisor or other
affiliates of the various Funds have agreed to reimburse the portfolios to the
extent that the aggregate operating expenses (certain portfolios may exclude
certain items and the Ameritas Portfolios rates after reimbursement may be
increased after November 1, 2000) were in excess of an annual rate of .30% for
the Ameritas Money Market portfolio, .28% for the Ameritas Index 500 Portfolio,
.79% for the Ameritas Growth portfolio; .70% for the Ameritas Income & Growth
portfolio, .89% for the Ameritas Small Capitalization portfolio, .84% for the
Ameritas MidCap Growth portfolio, .85% for the Ameritas Emerging Growth
portfolio, .86% for the Ameritas Research portfolio, .88% for the Ameritas
Growth With Income portfolio, 1.25% for the Alger American Balanced portfolio;
1.50% for the Alger American Leveraged AllCap portfolio, 1.20% for the UIF Asian
Equity, 1.15% for the UIF Global Equity and UIF International Magnum, 1.10% for
the UIF U.S. Real Estate Portfolios of daily net assets. UIF has agreed to bear
expenses for the Global Governments Series and New Discovery Series, subject to
reimbursement by the series, such that each series "Other Expenses" shall not
exceed .25% of the average daily net assets
BRAVO!
A- 1
<PAGE> 93
of the series during the current fiscal year. These agreements are expected to
continue in future years but may be terminated at any time. As long as the
expense limitations continue for a portfolio, if a reimbursement occurs, it has
the effect of lowering the portfolio's expense ratio and increasing its total
return. The illustrated gross annual investment rates of return of 0%, 6%, and
12% were computed after deducting Fund expenses and correspond to approximate
net annual rates of -1.85%, 4.15%, and 10.15%, respectively, for Policy Years
1-15 and -1.40%, 4.60%, and 10.60% for the Policy Years thereafter.
The hypothetical values shown in the tables do not reflect any charges for
federal income tax burden attributable to Separate Account V, since AVLIC is not
currently making such charges. However, such charges may be made in the future
and, in that event, the gross annual investment rate of return would have to
exceed 0 percent, 6 percent, or 12 percent by an amount sufficient to cover the
tax charges in order to produce the Death Benefits and values illustrated. (See
the section on Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid as indicated, if
all Net Premiums are allocated to Separate Account V, and if no Policy loans
have been made. The tables are also based on the assumptions that the Policy
Owner has not requested an increase or decrease in the initial Specified Amount,
that no partial withdrawals have been made, and that no more than 15 transfers
have been made in any Policy Year so that no transfer charges have been
incurred. Illustrated values would be different if the proposed Insureds were
tobacco users, in substandard risk classifications, or were other ages, or if a
higher or lower premium was illustrated.
Upon request, AVLIC will provide comparable illustration based upon the proposed
Insureds' ages, sexes and underwriting classifications, the Specified Amount,
the Death Benefit option, and planned periodic premium schedule requested, and
any available riders requested. In addition, upon client request, illustrations
may be furnished reflecting allocation of premiums to specified Subaccounts.
Such illustrations will reflect the expenses of the portfolio in which the
Subaccount invests.
BRAVO!
A- 2
<PAGE> 94
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $10,820
INITIAL SPECIFIED AMOUNT: $1,000,000
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.85% NET) (4.15% NET) (10.15% NET)
ACCUMULATED ------------------------------- ------------------------------- ---------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ------------ ------- --------- --------- ------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 11,361 9,304 0 1,000,000 9,903 0 1,000,000 10,503 0 1,000,000
2 23,290 18,362 7,552 1,000,000 20,142 9,332 1,000,000 21,994 11,184 1,000,000
3 35,816 27,161 16,351 1,000,000 30,710 19,900 1,000,000 34,555 23,745 1,000,000
4 48,967 35,689 24,879 1,000,000 41,607 30,797 1,000,000 48,278 37,468 1,000,000
5 62,777 43,938 33,128 1,000,000 52,833 42,023 1,000,000 63,268 52,458 1,000,000
6 77,277 52,892 43,172 1,000,000 65,413 55,693 1,000,000 80,701 70,981 1,000,000
7 92,501 61,529 52,889 1,000,000 78,365 69,725 1,000,000 99,754 91,114 1,000,000
8 108,487 69,833 62,273 1,000,000 91,683 84,123 1,000,000 120,575 113,015 1,000,000
9 125,273 77,792 71,312 1,000,000 105,365 98,885 1,000,000 143,332 136,852 1,000,000
10 142,897 85,405 80,005 1,000,000 119,426 114,026 1,000,000 168,225 162,825 1,000,000
11 161,403 92,653 88,333 1,000,000 133,857 129,537 1,000,000 195,459 191,139 1,000,000
12 180,834 99,533 96,293 1,000,000 148,673 145,433 1,000,000 225,279 222,039 1,000,000
13 201,237 106,016 103,856 1,000,000 163,859 161,699 1,000,000 257,936 255,776 1,000,000
14 222,660 112,106 111,026 1,000,000 179,434 178,354 1,000,000 293,740 292,660 1,000,000
15 245,154 117,752 117,752 1,000,000 195,370 195,370 1,000,000 332,995 332,995 1,000,000
16 268,773 123,430 123,430 1,000,000 212,517 212,517 1,000,000 377,556 377,556 1,000,000
17 293,572 128,513 128,513 1,000,000 230,024 230,024 1,000,000 426,625 426,625 1,000,000
18 319,612 132,900 132,900 1,000,000 247,829 247,829 1,000,000 480,689 480,689 1,000,000
19 346,954 136,546 136,546 1,000,000 265,923 265,923 1,000,000 540,357 540,357 1,000,000
20 375,662 139,176 139,176 1,000,000 284,104 284,104 1,000,000 606,210 606,210 1,000,000
25 542,228 130,168 130,168 1,000,000 372,119 372,119 1,000,000 1,061,392 1,061,392 1,114,462
30 754,812 43,874 43,874 1,000,000 431,969 431,969 1,000,000 1,816,073 1,816,073 1,906,877
35 1,026,129 * * 1,000,000 393,850 393,850 1,000,000 3,030,359 3,030,359 3,181,877
</TABLE>
- ---------------
* In the absence of an additional premium, the Policy would lapse.
1) Assumes an annual $10,820 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
BRAVO!
A- 3
<PAGE> 95
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $10,820
INITIAL SPECIFIED AMOUNT: $1,000,000
DEATH BENEFIT OPTION: A
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.85% NET) (4.15% NET) (10.15% NET)
ACCUMULATED ------------------------------- ------------------------------- ---------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ----------- ------- --------- --------- ------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 11,361 9,304 0 1,000,000 9,903 0 1,000,000 10,503 0 1,000,000
2 23,290 18,148 7,338 1,000,000 19,918 9,108 1,000,000 21,762 10,952 1,000,000
3 35,816 26,688 15,878 1,000,000 30,205 19,395 1,000,000 34,015 23,205 1,000,000
4 48,967 34,904 24,094 1,000,000 40,748 29,938 1,000,000 47,338 36,528 1,000,000
5 62,777 42,769 31,959 1,000,000 51,525 40,715 1,000,000 61,808 50,998 1,000,000
6 77,277 50,248 40,528 1,000,000 62,507 52,787 1,000,000 77,503 67,783 1,000,000
7 92,501 57,296 48,656 1,000,000 73,651 65,011 1,000,000 94,498 85,858 1,000,000
8 108,487 63,851 56,291 1,000,000 84,896 77,336 1,000,000 112,865 105,305 1,000,000
9 125,273 69,831 63,351 1,000,000 96,160 89,680 1,000,000 132,665 126,185 1,000,000
10 142,897 75,146 69,746 1,000,000 107,349 101,949 1,000,000 153,964 148,564 1,000,000
11 161,403 79,695 75,375 1,000,000 118,359 114,039 1,000,000 176,834 172,514 1,000,000
12 180,834 83,372 80,132 1,000,000 129,074 125,834 1,000,000 201,358 198,118 1,000,000
13 201,237 86,063 83,903 1,000,000 139,372 137,212 1,000,000 227,640 225,480 1,000,000
14 222,660 87,641 86,561 1,000,000 149,112 148,032 1,000,000 255,794 254,714 1,000,000
15 245,154 87,930 87,930 1,000,000 158,109 158,109 1,000,000 285,934 285,934 1,000,000
16 268,773 87,116 87,116 1,000,000 166,853 166,853 1,000,000 319,486 319,486 1,000,000
17 293,572 84,447 84,447 1,000,000 174,350 174,350 1,000,000 355,526 355,526 1,000,000
18 319,612 79,488 79,488 1,000,000 180,162 180,162 1,000,000 394,198 394,198 1,000,000
19 346,954 71,709 71,709 1,000,000 183,755 183,755 1,000,000 435,691 435,691 1,000,000
20 375,662 60,506 60,506 1,000,000 184,516 184,516 1,000,000 480,293 480,293 1,000,000
25 542,228 * * 1,000,000 117,235 117,235 1,000,000 773,305 773,305 1,000,000
30 754,812 * * 1,000,000 * * 1,000,000 1,302,478 1,302,478 1,367,602
35 1,026,129 * * 1,000,000 * * 1,000,000 2,144,997 2,144,997 2,252,247
</TABLE>
- ---------------
* In the absence of an additional premium, the Policy would lapse.
1) Assumes an annual $10,820 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
BRAVO!
A- 4
<PAGE> 96
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $72,740
INITIAL SPECIFIED AMOUNT: $1,077,173
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.85% NET) (4.15% NET) (10.15% NET)
ACCUMULATED --------------------------------- --------------------------------- ------------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ----------- --------- --------- --------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 76,377 68,711 57,901 1,068,711 72,942 62,132 1,072,942 77,173 66,363 1,077,173
2 156,573 136,075 125,265 1,136,075 148,833 138,023 1,148,833 162,099 151,289 1,162,099
3 240,778 202,097 191,287 1,202,097 227,774 216,964 1,227,774 255,544 244,734 1,255,544
4 329,194 266,785 255,975 1,266,785 309,875 299,065 1,309,875 358,352 347,542 1,358,352
5 422,031 330,146 319,336 1,330,146 395,249 384,439 1,395,249 471,457 460,647 1,471,457
6 519,510 393,180 383,460 1,393,180 485,039 475,319 1,485,039 596,942 587,222 1,596,942
7 621,862 454,882 446,242 1,454,882 578,384 569,744 1,578,384 734,989 726,349 1,734,989
8 729,332 515,250 507,690 1,515,250 675,403 667,843 1,675,403 886,841 879,281 1,886,841
9 842,176 574,284 567,804 1,574,284 776,225 769,745 1,776,225 1,053,876 1,047,396 2,053,876
10 960,662 631,999 626,599 1,631,999 880,998 875,598 1,880,998 1,237,624 1,232,224 2,237,624
11 1,085,072 688,387 684,067 1,688,387 989,851 985,531 1,989,851 1,439,748 1,435,428 2,439,748
12 1,215,702 743,460 740,220 1,743,460 1,102,941 1,099,701 2,102,941 1,662,100 1,658,860 2,662,100
13 1,352,864 797,199 795,039 1,797,199 1,220,400 1,218,240 2,220,400 1,906,686 1,904,526 2,906,686
14 1,496,885 849,618 848,538 1,849,618 1,342,398 1,341,318 2,342,398 2,175,755 2,174,675 3,175,755
15 1,648,106 900,677 900,677 1,900,677 1,469,056 1,469,056 2,469,056 2,471,720 2,471,720 3,471,720
16 1,806,888 954,641 954,641 1,954,641 1,607,364 1,607,364 2,607,364 2,808,618 2,808,618 3,808,618
17 1,973,610 1,007,236 1,007,236 2,007,236 1,751,402 1,751,402 2,751,402 3,180,581 3,180,581 4,180,581
18 2,148,667 1,058,352 1,058,352 2,058,352 1,901,302 1,901,302 2,901,302 3,591,191 3,591,191 4,591,191
19 2,332,478 1,107,941 1,107,941 2,107,941 2,057,263 2,057,263 3,057,263 4,044,474 4,044,474 5,044,474
20 2,525,478 1,155,692 1,155,692 2,155,692 2,219,223 2,219,223 3,219,223 4,544,606 4,544,606 5,544,606
25 3,645,253 1,359,473 1,359,473 2,359,473 3,120,156 3,120,156 4,120,156 7,931,956 7,931,956 8,931,956
30 5,074,400 1,466,511 1,466,511 2,466,511 4,154,536 4,154,536 5,154,536 13,433,839 13,433,839 14,433,839
35 6,898,394 1,389,684 1,389,684 2,389,684 5,249,604 5,249,604 6,249,604 22,316,090 22,316,090 23,431,894
</TABLE>
- -------------------------
1) Assumes an annual $72,740 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED O%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
BRAVO!
A- 5
<PAGE> 97
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE
Male Issue Age: 45 Nontobacco Preferred Underwriting Class
Female Issue Age: 45 Nontobacco Preferred Underwriting Class
PLANNED PERIODIC ANNUAL PREMIUM: $72,740
INITIAL SPECIFIED AMOUNT: $1,077,173
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
0% HYPOTHETICAL GROSS 6% HYPOTHETICAL GROSS 12% HYPOTHETICAL GROSS
ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN ANNUAL INVESTMENT RETURN
(-1.85% NET) (4.15% NET) (10.15% NET)
ACCUMULATED --------------------------------- --------------------------------- ------------------------------------
END OF PREMIUMS AT ACCUMU- CASH ACCUMU- CASH ACCUMU- CASH
POLICY 5% INTEREST LATION SURRENDER DEATH LATION SURRENDER DEATH LATION SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ ----------- --------- --------- --------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 76,377 68,711 57,901 1,068,711 72,942 62,132 1,072,942 77,173 66,363 1,077,173
2 156,573 136,075 125,265 1,136,075 148,833 138,023 1,148,833 162,099 151,289 1,162,099
3 240,778 202,097 191,287 1,202,097 227,774 216,964 1,227,774 255,544 244,734 1,255,544
4 329,194 266,785 255,975 1,266,785 309,875 299,065 1,309,875 358,352 347,542 1,358,352
5 422,031 330,146 319,336 1,330,146 395,249 384,439 1,395,249 471,457 460,647 1,471,457
6 519,510 393,180 383,460 1,393,180 485,039 475,319 1,485,039 596,942 587,222 1,596,942
7 621,862 454,882 446,242 1,454,882 578,384 569,744 1,578,384 734,989 726,349 1,734,989
8 729,332 515,250 507,690 1,515,250 675,403 667,843 1,675,403 886,841 879,281 1,886,841
9 842,176 574,284 567,804 1,574,284 776,225 769,745 1,776,225 1,053,876 1,047,396 2,053,876
10 960,662 631,999 626,599 1,631,999 880,998 875,598 1,880,998 1,237,624 1,232,224 2,237,624
11 1,085,072 688,387 684,067 1,688,387 989,851 985,531 1,989,851 1,439,748 1,435,428 2,439,748
12 1,215,702 743,460 740,220 1,743,460 1,102,941 1,099,701 2,102,941 1,662,100 1,658,860 2,662,100
13 1,352,864 797,199 795,039 1,797,199 1,220,400 1,218,240 2,220,400 1,906,686 1,904,526 2,906,686
14 1,496,885 849,618 848,538 1,849,618 1,342,398 1,341,318 2,342,398 2,175,755 2,174,675 3,175,755
15 1,648,106 900,677 900,677 1,900,677 1,469,056 1,469,056 2,469,056 2,471,720 2,471,720 3,471,720
16 1,806,888 954,641 954,641 1,954,641 1,607,364 1,607,364 2,607,364 2,808,618 2,808,618 3,808,618
17 1,973,610 1,007,236 1,007,236 2,007,236 1,751,402 1,751,402 2,751,402 3,180,581 3,180,581 4,180,581
18 2,148,667 1,058,352 1,058,352 2,058,352 1,901,302 1,901,302 2,901,302 3,591,191 3,591,191 4,591,191
19 2,332,478 1,107,941 1,107,941 2,107,941 2,057,263 2,057,263 3,057,263 4,044,474 4,044,474 5,044,474
20 2,525,478 1,155,692 1,155,692 2,155,692 2,219,223 2,219,223 3,219,223 4,544,606 4,544,606 5,544,606
25 3,645,253 1,359,473 1,3594,73 2,359,473 3,120,156 3,120,156 4,120,156 7,931,956 7,931,956 8,931,956
30 5,074,400 1,466,511 1,466,511 2,466,511 4,154,536 4,154,536 5,154,536 13,433,839 13,433,839 14,433,839
35 6,898,394 1,389,684 1,389,684 2,389,684 5,249,604 5,249,604 6,249,604 22,316,090 22,316,090 23,431,894
</TABLE>
- ---------------
1) Assumes an annual $72,740 premium is paid at the beginning of each policy
year. Values would be different if premiums with a different frequency or in
different amounts.
2) Assumes that no policy loan has been made. Excessive loans or withdrawals may
cause this policy to lapse because of insufficient cash value.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED,
PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH
VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF
RETURN AVERAGED O%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS
CAN BE MADE BY AVLIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
BRAVO!
A- 6
<PAGE> 98
INCORPORATION BY REFERENCE
The Registrant, Separate Account V, purchases or will purchase units from the
portfolios of these Funds at the direction of its Policy Owners. 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
Calvert Variable Series, Inc.
Registration No. 2-80154
Variable Insurance Products Fund
Registration No. 2-75010
Variable Insurance Products Fund II
Registration No. 33-20773
The Alger American Fund
Registration No. 33-21722
MFS Variable Insurance Trust
Registration No. 333-74668
The Universal Institutional Funds, Inc.
Registration No. 333-3013
<PAGE> 99
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 of 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> 100
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The prospectus consisting of 89 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
Written consents of the following:
(a) Russell J. Wiltgen
(b) Donald R. Stading
(c) Deloitte & Touche LLP
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 Ameritas Variable Life Insurance
Company, **
(b) Bylaws of Ameritas Variable Life Insurance Company. ***
(7) Not applicable.
(8) (a) Participation Agreement in the Variable Insurance Products Fund.
**
(b) Participation Agreement in the Alger American Fund. **
(c) Participation Agreement in the MFS Variable Insurance Trust. *
(d) Participation Agreement in the Morgan Stanley Universal Funds,
Inc. *
(e) Participation Agreement in the Calvert Variable Series, Inc. ******
(9) Not Applicable.
(10) Application for Policy. *****
(11) Code of Ethics. *******
2. (a)(b) Opinion and Consent of Donald R. Stading.
3. No financial statements will be omitted from the final Prospectus pursuant to
Instruction 1(b) or (c) or Part I.
4. Not applicable.
5. Not applicable.
6. (a)(b) Opinion and Consent of Russell J. Wiltgen.
7. Consent of Deloitte & Touche LLP.
8. Form of Notice of Withdrawal Right and Refund pursuant to Rule
6e-3(T)(b)(13)(viii) under the Investment Company Act of 1940.**
- - Incorporated by reference to the initial Registration Statement for
Ameritas Variable Life Insurance Company Separate Account V, File No.
333-15585, filed November 5, 1996.
** Incorporated by reference to the Pre-Effective Amendment to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 333-15585, filed January 17, 1997.
*** Incorporated by Reference to Pre-Effective Amendment No. 1 to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account VA-2, File No. 333-36507, filed February 20, 1998.
***** Incorporated by reference to Pre-Effective Amendment No. 2 to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 333-71505, filed July 14, 1999.
****** 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.
******* Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement for Ameritas Variable Life Insurance Company
Separate Account V, File No. 333-15585, filed February 29, 2000.
<PAGE> 101
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. 2 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 22nd day of February,
2000.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Lawrence J. Arth
- --------------------------- Director, Chairman of the Board February 22, 2000
Lawrence J. Arth and Chief Executive Officer
/s/ William J. Atherton
- --------------------------- Director, President and February 22, 2000
William J. Atherton Chief Operating Officer
/s/ Kenneth C. Louis
- --------------------------- Director, Executive Vice President February 22, 2000
Kenneth C. Louis
/s/ Gary R. McPhail
- --------------------------- Director, Executive Vice President February 22, 2000
Gary R. McPhail
/s/ Thomas C. Godlasky
- --------------------------- Director, Senior Vice President February 22, 2000
Thomas C. Godlasky and Chief Investment Officer
/s/ JoAnn M. Martin
- --------------------------- Director, Controller February 22, 2000
JoAnn M. Martin
</TABLE>
<PAGE> 102
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael G. Fraizer
- --------------------------- Director February 22, 2000
Michael G. Fraizer
/s/ William W. Lester
- --------------------------- Treasurer February 22, 2000
William W. Lester
/s/ Donald R. Stading
- --------------------------- Secretary and General Councel February 22, 2000
Donald R. Stading
</TABLE>
<PAGE> 103
EXHIBIT INDEX
EXHIBIT
2. (a)(b) Opinion and Consent of Donald R. Stading
6. (a)(b) Opinion and Consent of Russell J. Wiltgen.
7. Consent of Deloitte & Touche LLP.
<PAGE> 1
EXHIBIT 2.(a)(b)
Opinion and Consent of Donald R. Stading
[AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO]
February 29, 2000
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
Gentlemen:
With reference to the Post-Effective Amendment No. 2 to Registration No.
333-71505 on Form S-6 filed by Ameritas Variable Life Insurance Company and
Ameritas Variable Life Insurance Company Separate Account V with the Securities
and 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. 2 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
<PAGE> 1
EXHIBIT 6.(a)(b)
Opinion and Consent of Russell J. Wiltgen
[AMERITAS LIFE INSURANCE CORP. LOGO]
February 29, 2000
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
Gentlemen:
This opinion is furnished in connection with the registration by Ameritas
Variable Life Insurance Company of a flexible premium variable universal life
insurance policy ("Contract") under the Securities Act of 1933. The prospectus
included in Post-Effective Amendment No. 2 to Registration Statement No.
333-71505 on Form S-6 describes the Contract. The form of Contract was prepared
under my direction and I am familiar with the Registration Statement and
Exhibits thereto. This contract was developed and filed under Securities and
Exchange Commission Rule 6E-3(T), as interpreted at this time by the SEC staff.
In my opinion:
The illustrations of death benefits and accumulation values included in the
section entitled "Illustrations of Death Benefits and Accumulation Values" in
the Appendices of the prospectus, based on the assumptions stated in the
illustrations, are consistent with the provisions of the Contract. The rate
structure of the Contract has not been designed so as to make the
relationship between premiums and benefits, as shown in the illustrations,
appear more favorable to prospective purchasers of the Contract for a male
age 55 and a female age 55, than to prospective purchasers of the Contract
for other ages or for two males or two females.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment No. 2 to the Registration Statement and to the reference to my name
under the heading "Experts" in the prospectus.
Sincerely,
/s/ Russell J. Wiltgen
Russell J. Wiltgen
Vice President - Individual Product Management
<PAGE> 1
EXHIBIT 7
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 2 to Registration
Statement No. 333-71505 of Ameritas Variable Life Insurance Company Separate
Account V of our reports dated February 5, 2000, on the financial statements of
Ameritas Variable Life Insurance Company and the subaccounts of 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
February 28, 2000
