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PROSPECTUS
[AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO]
5900 "O" Street
VARIABLE UNIVERSAL LIFE POLICY P.O. Box 82550/Lincoln, Nebraska 68501
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This prospectus describes a flexible premium variable life insurance Policy
("Policy") offered by Ameritas Variable Life Insurance Company ("AVLIC"). Like
traditional life insurance policies, the Policy provides Death Benefits to
Beneficiaries and gives you, the Policy Owner, the opportunity to increase the
Policy's Cash Value. The Policy is designed as a single premium Policy, but
allows additional premium payments. It also lets you change the level of Death
Benefits. This flexibility lets you provide for your changing insurance needs
under a single insurance Policy.
The Policy is different from traditional life insurance policies because you
select how Policy premiums will be invested. Although each Policy Owner is
guaranteed a Death Benefit, the Cash Value of the Policy, as well as the actual
Death Benefit, will vary with the performance of investments you select.
The Investment Options available through the Policy 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 prospectus. You may also choose
to allocate premium payments to the Fixed Account managed by AVLIC.
A Policy will be issued after AVLIC accepts a prospective Policy Owner's
application. The minimum premium required to purchase a Policy is $10,000,
except, for Insureds age 0 to 15 at their nearest birthday, the minimum premium
is $5,000. The Policy is available only to insure individuals who are age 80 or
less at their nearest birthday when the Policy is purchased. A Policy, once
purchased, may generally be canceled within 10 days after you receive it.
The Policy could be a modified endowment contract. Policy loans, partial
withdrawals or a surrender prior to age 59 1/2 may result in adverse tax
consequences and or penalties.
This prospectus is designed to assist you in understanding the opportunity and
risks associated with the purchase of a 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 Policy,
information about AVLIC, a list of the investment portfolios to which you may
allocate payments, as well as a detailed description of the Policy. The appendix
to the prospectus includes tables designed to illustrate how Cash Values and
Death Benefits may change with the investment experience of the Investment
Options.
This prospectus must be accompanied by a prospectus for each of the investment
portfolios available through the Policy.
Although the Policy is designed to provide life insurance, it 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 Policy involves investment risk, including the possible loss of
principal. The Policy Owner bears the entire investment risk for monies placed
in Separate Account V under this Policy. For this reason, the Policy may not be
suitable for all individuals. It may not be advantageous to purchase a 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 variable
universal life insurance policy.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains other information regarding registrants that file electronically
with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORY AUTHORITY HAS APPROVED THESE SECURITIES, OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
May 1, 2000
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TABLE OF CONTENTS
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PAGE
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DEFINITIONS................................................. 3
SUMMARY..................................................... 5
YEAR 2000................................................... 12
AVLIC AND THE SEPARATE ACCOUNT.............................. 12
Ameritas Variable Life Insurance Company................ 12
The Separate Account.................................... 13
Performance Information................................. 13
The Funds............................................... 14
Investment Objectives and Policies of the Funds'
Portfolios............................................ 16
Addition, Deletion or Substitution of Investments....... 18
Fixed Account........................................... 19
POLICY BENEFITS............................................. 19
Purposes of the Policy.................................. 19
Death Benefit Proceeds.................................. 20
Death Benefit Options................................... 20
Cash Value.............................................. 22
Benefits at Maturity.................................... 23
Payment of Policy Benefits.............................. 23
POLICY RIGHTS............................................... 24
Loan Benefits........................................... 24
Surrenders.............................................. 25
Transfers............................................... 25
Systematic Programs..................................... 26
Refund Privilege........................................ 26
Exchange Privilege...................................... 26
PAYMENT AND ALLOCATION OF PREMIUMS.......................... 27
Issuance of a Policy.................................... 27
Premiums................................................ 27
Allocation of Premiums and Cash Value................... 28
Policy Lapse and Reinstatement.......................... 29
CHARGES AND DEDUCTIONS...................................... 30
Premium Charge.......................................... 30
Monthly Deduction....................................... 30
Daily Charges Against the Separate Account.............. 31
Cash Surrender Charge................................... 32
Transfer Charge......................................... 32
Partial Withdrawal Charge............................... 32
GENERAL PROVISIONS.......................................... 33
DISTRIBUTION OF THE POLICIES................................ 35
FEDERAL TAX MATTERS......................................... 35
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS................ 38
THIRD PARTY SERVICES........................................ 38
VOTING RIGHTS............................................... 38
STATE REGULATION OF AVLIC................................... 39
EXECUTIVE OFFICERS AND DIRECTORS OF AVLIC................... 39
LEGAL MATTERS............................................... 41
LEGAL PROCEEDINGS........................................... 41
EXPERTS..................................................... 41
ADDITIONAL INFORMATION...................................... 41
FINANCIAL STATEMENTS........................................ F-I-1
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.
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DEFINITIONS
ACCRUED EXPENSE CHARGES - The sum of any monthly deductions that are due and
unpaid.
ATTAINED AGE - The Issue Age of the Insured plus the number of complete Policy
Years that the Policy has been in force.
AVLIC ("we, us, our") - Ameritas Variable Life Insurance Company, a Nebraska
stock company.
BENEFICIARY - The Beneficiary is designated by the Policy Owner in the
application. If changed, the Beneficiary is as shown in the latest change filed
and recorded with AVLIC. If no Beneficiary survives the Insured, the Policy
Owner or the Policy Owner's estate will be the Beneficiary. The interest of any
Beneficiary is subject to that of any assignee.
CASH SURRENDER VALUE - The Policy Cash Value on the date of Surrender, less any
Outstanding Policy Debt, any cash Surrender charge, and any Accrued Expense
Charges.
CASH VALUE - The total amount that a Policy provides for investment at any time.
It is equal to the total of the cash value held in Separate Account V and the
Fixed Account, and the cash value held in the General Account which secures
Policy loans.
DEATH BENEFIT - The amount of insurance coverage provided under the Policy.
DEATH BENEFIT PROCEEDS - The proceeds payable to the Beneficiary upon receipt by
AVLIC of the proof of the death of the Insured while the Policy is in force
equal to: (l) the Death Benefit; minus (2) any Outstanding Policy Debt; minus
(3) any monthly deduction that may apply to that period, including the deduction
for the month of death.
DUE PROOF OF DEATH - All of the following must be submitted:
(1) A certified copy of the death certificate;
(2) A Claimant Statement;
(3) The Policy; and
(4) Any other information that AVLIC may reasonably require to establish the
validity of the contract.
EARNINGS LOAN VALUE - The amount of cash value equaling the difference between
the Cash Value and the total premium paid.
FIXED ACCOUNT - An account that is a part of AVLIC's General Account to which
all or a portion of premium payments may be allocated for accumulation at fixed
rates of interest.
FUNDS - The Funds available on the Policy Date or as later changed by AVLIC. The
Funds available as of the date of this prospectus are the Calvert Variable
Series, Inc. Ameritas Portfolios ("Ameritas Portfolios"), Calvert Variable
Series, Inc. ("CVS Social Portfolios"), Variable Insurance Products Fund
("VIP"), Variable Insurance Products Fund II ("VIP II") (collectively the
"Fidelity Funds"), the Alger American Fund ("Alger American Fund"), the
MFS(R)Variable Insurance Trust ("MFS Trust"), and The Universal Institutional
Funds, Inc. ("Universal Institutional Funds" or "UIF"). The Funds have one or
more portfolios each. There is a portfolio that corresponds to each of the
Subaccounts of Separate Account V.
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.
GUIDELINE SINGLE PREMIUM - The "Guideline Single Premium" as defined in Section
7702 of the Internal Revenue Code of 1986. It is based on the single premium
that would be required to provide the future benefits under the Policy, computed
using certain assumptions, including an assumed interest rate of 6% and the
guaranteed cost of insurance rates, charges, and premium loads.
INSURED - The person upon whose life the Policy is issued.
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INVESTMENT OPTIONS - Refers to the Subaccounts and/or the Fixed Account offered
under this Policy.
ISSUE AGE - The age at the Insured's nearest birthday on the Policy Date.
ISSUE DATE - The date that all financial, contractual and administrative
requirements have been met and processed for the Policy.
MATURITY DATE - The Policy anniversary nearest the Insured's 95th birthday, if
living, unless the maturity has been extended by election of the Extended
Maturity Rider.
MINIMUM FIRST YEAR PREMIUM - The premium that must be paid on or before the date
the Policy is delivered to pay for insurance coverage under the selected Death
Benefit option.
MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy
Date except that whenever the Monthly Activity Date falls on a date other than a
Valuation Date, the Monthly Activity Date will be deemed the next Valuation
Date.
NET PREMIUM - The premium paid less any charge for premium taxes.
OUTSTANDING POLICY DEBT - The sum of all unpaid Policy loans and accrued
interest on Policy loans.
PLANNED PERIODIC PREMIUMS - A selected scheduled premium of a level amount at a
fixed interval. The Policy Owner is not required to select a scheduled premium.
The Policy Owner is also not required to follow this schedule, if selected, and
following this schedule does not necessarily ensure that the Policy will remain
in force.
POLICY - The flexible premium variable life insurance Policy offered by AVLIC
and described in this Prospectus.
POLICY DATE - The date set forth in the Policy that is the effective date of
coverage for all coverage provided in the original application and that is used
to determine Policy anniversary dates, Policy Years and Monthly Activity Dates.
Policy anniversaries are measured from the Policy Date. The Policy Date and the
Issue Date will be the same unless: (1) an earlier Policy Date is specifically
requested, or (2) when additional premiums or application amendments are needed
at the 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.
SEPARATE ACCOUNT V - Ameritas Variable Life Insurance Company Separate Account
V, a separate investment account established by AVLIC to receive and invest the
Net Premiums paid under the Policy and allocated by the Policy Owner to Separate
Account V.
SPECIFIED AMOUNT - The minimum Death Benefit under the Policy so long as the
Policy remains in force.
SUBACCOUNT - A subdivision of Separate Account V. Each Subaccount invests
exclusively in the shares of a specified portfolio of the Funds.
SURRENDER - The termination of the Policy before the Maturity Date during the
Insured's life for the Cash Surrender Value.
VALUATION DATE - A Valuation Date is each 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.
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SUMMARY
This summary is intended to highlight the most important features of the 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. 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
Policy, which is available upon request from AVLIC. Unless stated otherwise,
this prospectus assumes that the Policy is in force and that there is no
Outstanding Policy debt.
WHO IS THE ISSUER OF THE POLICY?
AVLIC is the issuer of each 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 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 THE POLICY?
The primary purpose of the Policy is to provide life insurance protection on the
Insured 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.)
- - the payment of benefits to the Policy Owner, if living, on the Maturity Date
(See the section on Benefits at Maturity.)
The 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 Premium will be invested. Thus, the value of a Policy will reflect
your investment choices over the life of the Policy.
WHAT ARE THE CHARGES ASSOCIATED WITH OWNERSHIP OF A POLICY?
PREMIUM CHARGES. AVLIC will not deduct premium charges from premium payments
made during the first year. A charge of 2 1/2% of the premiums will be deducted
from premium payments made after the first year to reimburse AVLIC for premium
taxes.
MONTHLY DEDUCTIONS FROM THE CASH VALUE. On each Monthly Activity Date, the Cash
Value will be reduced by the monthly deduction. The monthly deduction is equal
to: (1) a charge for the cost of insurance for the current Policy month, plus,
(2) one-twelfth of any flat extra rating charge. (See the sections on Monthly
Deduction and Rate Class.)
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT. A daily charge will be imposed at an
annual rate of 1.20% of the average daily net assets of each Subaccount, but not
the Fixed Account, to compensate AVLIC for certain mortality and expense risks
and administrative costs incurred in connection with the Policy. (See the
section on Daily Charges Against the Separate Account.)
No charges are currently made against Separate Account V for federal, state or
local taxes (in addition to state premium taxes). If there is a material change
from the expected treatment of AVLIC under federal, state or local tax laws,
AVLIC may determine to make deductions from Separate Account V to pay those
taxes. (See the section on Federal Tax Matters.)
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CASH SURRENDER CHARGE. If a Policy is Surrendered prior to the 7th Policy
anniversary, AVLIC will assess a cash Surrender charge based upon percentages of
premiums actually paid during the first Policy Year, limited as shown in the
Policy schedule pages. Subject to other considerations, the Policy Owner may
decide to minimize the cash Surrender charge by paying only the minimum amount
required during the first Policy Year. However, the amount paid will affect the
values and costs under the Policy and the duration of the Policy.
The maximum cash Surrender charge is 11.5% during the first year grading off to
0% during the next seven years. The maximum charge is based on a 9% deferred
sales cost and a 2.5% charge for premium tax. AVLIC has voluntarily lowered its
maximum cash Surrender charge to 9%, which would affect the charge for the first
three years. Because the cash 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. (See the section on
Cash Surrender Charge.)
TRANSFER CHARGE. The first 15 transfers per Policy Year are free of charge.
Then, a transfer charge of $10 may be assessed for each transfer of Cash Value
among Subaccounts, or the Fixed Account, to compensate AVLIC for administrative
costs in handling the transfer. The transfer charge will be deducted from the
amount transferred. (See the section on Transfer Charge.)
PARTIAL WITHDRAWAL CHARGE. AVLIC may deduct a charge, not to exceed the lesser
of $50 or 2% of the amount withdrawn, for each partial withdrawal. Currently the
charge is the lesser of $25 or 2% of the amount withdrawn. The charge will be
deducted from the amount paid as a result of the withdrawal and will compensate
AVLIC for the administrative costs of partial withdrawals. (See the section on
Partial Withdrawal Charge.)
FUND EXPENSE SUMMARY. In addition to the charges against Separate Account V
described just above, management fees and expenses will be assessed by the fund
managers 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 was provided to AVLIC by the Funds and AVLIC has not
independently verified such information. Each of the Funds is managed by an
investment advisory organization that is entitled to receive a fee for its
services based on the value of the relevant portfolio's net assets. Each Fund,
other than the Ameritas Portfolios and CVS Social Portfolios, is managed by an
organization that is not affiliated with AVLIC. The Ameritas Portfolios are
managed by Ameritas Investment Corp., an AVLIC affiliate. CVS Social Portfolios
are managed by Calvert Asset management Company, Inc., also as AVLIC affiliate.
Other Calvert companies provide administrative services to certain of 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>
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TOTAL
(REFLECTING
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS IF ANY)
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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%
</TABLE>
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TOTAL
(REFLECTING
INVESTMENT WAIVERS WAIVERS AND/OR
ADVISORY & OTHER AND/OR REIMBURSEMENTS,
PORTFOLIO MANAGEMENT EXPENSES TOTAL REIMBURSEMENTS IF ANY)
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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 0.48% 0.09% 0.57% -- 0.57%(4)
VIP Growth 0.58% 0.08% 0.66% -- 0.66%(4)
VIP High Income 0.58% 0.11% 0.69% -- 0.69%
VIP Overseas 0.73% 0.18% 0.91% -- 0.91%(4)
VIP II Asset Manager 0.53% 0.10% 0.63% -- 0.63%(4)
VIP II Investment Grade Bond 0.43% 0.11% 0.54% -- 0.54%
VIP II Asset Manager: Growth 0.58% 0.13% 0.71% -- 0.71%(4)
VIP II Contrafund(R) 0.58% 0.09% 0.67% -- 0.67%(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, both before and after waivers and/or
reimbursements, have been restated to reflect the above.
(2) "Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be as follows:
<TABLE>
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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, resulting from a change in 1999 to the administrative
services agreement, as approved by the shareholders.
(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
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cash balances were used to reduce a portion of each applicable Fund's
expenses. After these reductions, the total operating expenses presented in
the table would have been:
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VIP Equity-Income 0.56%
VIP Growth 0.65%
VIP Overseas 0.87%
VIP II Asset Manager 0.62%
VIP II Asset Manager: Growth 0.70%
VIP II Contrafund 0.65%
</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>
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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.
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
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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.
WHAT PREMIUM MUST BE PAID TO KEEP A POLICY IN FORCE?
This Policy differs from a conventional life insurance policy in two important
ways. The failure to pay a Planned Periodic Premium will not in itself cause the
Policy to lapse and a Policy can lapse even if Planned Periodic Premiums have
been paid. (See the section on Payment and Allocation of Premiums.) The Policy
will lapse when its Cash Surrender Value is not sufficient to pay the monthly
deduction for insurance charges and administrative charges and the Grace Period
expires. The Policy is designed so that it may be used as a single premium
policy, where a single, large premium payment may be made. The Policy will not
be placed in force if the Minimum First Year Premium has not been paid on or
before the date the Policy is delivered. The Minimum First Year Premium for the
Policy is at least $10,000, except for Insureds age 0 to 15 at their nearest
birthday, the Minimum First Year Premium is at least $5,000. The Minimum First
Year Premium generally approximates 80% of the Guideline Single Premium for the
coverage amount selected, as defined for federal tax purposes. If the initial
premium is less than 100% of the Guideline Single Premium, the Policy Owner may
establish a schedule of premium payments ("Planned Periodic Premiums"), subject
to federal tax law limits on total premiums paid. (See the section on Premiums.)
HOW ARE PREMIUMS PAID, PROCESSED AND CREDITED TO ME?
Your Policy will be issued after a completed application is accepted, and the
initial premium payment is received, by AVLIC at its Home Office. AVLIC's Home
Office is located at 5900 "O" Street, P.O. Box 82550, Lincoln, NE 68501. Your
initial premium will be allocated to the Money Market Subaccount for 13 days
following the Issue Date, and then will be allocated to the Subaccounts and/or
the Fixed Account, according to selections you made in your application. You
have the right to examine your 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, any applicable Accrued Expense
Charges will be deducted 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 Allocation of Premiums and Cash Value.)
As already noted, the Policy 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 maximum
premium limits established under the federal tax laws and the impact that
reduced premium payments may have on the Cash Surrender Value of your Policy.
(See the section on Premiums.)
HOW DOES THE INVESTMENT COMPONENT OF MY 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
Policy Owners and owners of certain other variable universal life products
offered by AVLIC. Separate Account is divided into separate Subaccounts. Each
Subaccount invests exclusively in shares of one of the investment portfolios
available through the Policy. You may allocate Net Premiums to one or more
Subaccounts, or to AVLIC's Fixed Account in your initial application. These
allocations may be changed by notifying AVLIC's Home Office. (If you make more
than 15 transfers in a Policy Year, a transfer fee of $10 may be deducted from
each additional transfer.) You may make transfers from the Subaccounts to the
Fixed Account. One hundred percent of the amount deposited, plus interest, may
be transferred out of the Fixed Account during the 30 day period following each
Policy anniversary date. The aggregate value of your interests in the
Subaccounts and the Fixed Account will represent the Cash Value of your Policy.
(See the section on Cash Value.)
The Policy's Cash Value in Separate Account V will reflect the amount and
frequency of premium payments, the investment experience of the chosen
Subaccounts, Policy loans, any partial withdrawals, and
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any charges imposed in connection with the Policy. The entire investment risk is
borne by the Policy Owner. AVLIC does not guarantee a minimum Cash Value in
Separate Account V.
WHAT INVESTMENT OPTIONS ARE AVAILABLE THROUGH THE POLICY?
The Investment Options available through the Policy 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 Witter Investment Management Inc. but continues to do
business in certain instances using the name Morgan Stanley Asset Management.
These portfolios are listed in the Fund Expense Summary, above.
Details about the investment objectives and policies of each of the available
investment portfolios and management fees and expenses, appear in the section 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 POLICY WORK?
A Policy provides for the payment of a minimum Death Benefit upon the death of
the Insured. The amount of the minimum Death Benefit -- sometimes referred to as
the Specified Amount of your Policy -- is chosen by you at the time your Policy
is established. However, Death Benefit Proceeds -- the actual amount that will
be paid after AVLIC receives Due Proof of Death of the Insured -- will vary over
the life of your Policy, depending on which of the two available coverage
options you select.
If you choose Option A, Death Benefit Proceeds payable under your Policy will be
the Specified Amount of your Policy or the applicable percentage of its Cash
Value, whichever is greater. If you choose Option B, Death Benefit Proceeds
payable under your Policy will be the Specified Amount of your Policy PLUS the
Cash Value of your Policy, or if it is higher, the applicable percentage of the
Cash Value on the date of death. In either case, the applicable percentage is
established based on the age of the Insured at the date of death. (See the
section on Death Benefit Options.)
If the Extended Maturity Rider is in effect, the Death Benefit will be the Cash
Value.
ARE THERE ANY RISKS INVOLVED IN OWNING A POLICY?
Yes. Over the life of your Policy, the Subaccounts to which you allocate your
premiums will fluctuate with changes in the stock market and overall economic
factors. These fluctuations will be reflected in the Cash Value of your Policy
and may result in loss of principal. For this reason, the purchase of a Policy
may not be suitable for all individuals. It may not be advantageous to purchase
a Policy to replace or augment your existing insurance arrangements. Appendix A
includes tables illustrating the impact that hypothetical market returns would
have on Cash Values under a Policy.
IS THE CASH VALUE OF MY POLICY AVAILABLE BEFORE THE MATURITY DATE WITHOUT
SURRENDER?
Yes. You may access the value of your Policy in one of two ways. First, you may
obtain a loan, secured by the Policy. The maximum amount you may borrow is 85%
of the Cash Value, less the cash Surrender charge and any accrued expenses
(Texas and Virginia Policy Owners may borrow 100% of the Cash Surrender Value
after deducting interest and Policy charges for the Policy Year.) The minimum
amount of any loan request is $1,000. The available loan amount at any time is
the maximum loan amount less any Outstanding Policy Debt. The maximum interest
rate on a loan is 8% annually. The current interest rates are 6% annually on the
portion of a loan that exceeds the Earnings Loan Value and 4.5% on the portion
of the loan that is less than the Earnings Loan Value. (See the section on Loan
Benefits.) Interest is due on each Policy anniversary and if not paid when due,
will be added to the outstanding loan. When the loan is made or when interest is
not paid when due, an amount sufficient to secure the Policy debt is transferred
out of Separate Account V and into AVLIC's General Account as security for the
loan and will earn interest at the annual rate of 4.5%, credited on the Policy
anniversary. Upon partial or full loan repayment, the portion of the Cash Value
in the General Account securing the repaid portion of the Policy loan will be
transferred to Separate Account V or the Fixed Account. Any loan transaction
will permanently affect the values of the Policy. If the Outstanding Policy Debt
exceeds the Policy's Cash Value less any cash Surrender charge and accrued
expenses, the excess must be repaid within the specified
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time period or the Policy will terminate without value. Should the Policy lapse
while loans are outstanding the portion of the loans attributable to earnings
will become taxable distributions. THIS POLICY MAY BE A MODIFIED ENDOWMENT
CONTRACT. THERE ARE ADVERSE TAX CONSEQUENCES FOR MODIFIED ENDOWMENT CONTRACTS,
INCLUDING WHEN A POLICY LOAN PROVISION IS EXERCISED. (See the section on Federal
Tax Matters.)
You may also access the value of your Policy by making a partial withdrawal. A
partial withdrawal may not exceed the Cash Surrender Value, and the Cash
Surrender Value after a partial withdrawal must be at least $1000. Partial
withdrawals will reduce both the Cash Value and the Death Benefit payable under
the Policy. AVLIC may deduct a charge from each partial withdrawal. (See the
section on Surrenders -- Partial Withdrawals.)
CAN I ADJUST DEATH BENEFITS?
Yes. After the first Policy anniversary, you may adjust the Death Benefit by
changing the Death Benefit option. After the second Policy Year you may adjust
the Death Benefit by decreasing the Specified Amount of the Policy. A change in
the Specified Amount and a change in the Death Benefit option may only be made
once per year, and are subject to certain limits. No change will be allowed if
the resulting Specified Amount is less than the minimum allowed. The minimum
Specified Amount during the first three Policy Years is the amount that a
premium of $10,000 ($5,000 for ages 0-15) will purchase; after that, the minimum
is $15,000. A change in the Death Benefit option from Option A to Option B will
require satisfactory evidence of insurability. Finally, no decrease will be
allowed if the Specified Amount is less than $15,000 in the first three Policy
Years. (See the sections on Change in Death Benefit Option and Change in
Specified Amount.)
WHAT IS THE TAX TREATMENT OF THE POLICY?
The Internal Revenue Code ("the Code") defines a modified endowment insurance
contract as one where the accumulated amount paid under the contract at any time
during the first seven contract years exceeds the sum of the net level premiums
which would have been paid on or before that time if the Policy was paid up
after the payment of seven level annual premiums. Because the Policy is designed
to operate as a single premium contract, the initial premium exceeds the amounts
allowed in the 7-pay test. Partial withdrawals or full Surrenders, assignments,
Policy pledges, and loans (including loans to pay loan interest) under the
Policy will be taxable to the extent of any gain under the Policy. A 10% penalty
tax also applies to the taxable portion of any distribution prior to the Policy
Owner reaching age 59 1/2. The 10% penalty tax does not apply if the Policy
Owner 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 Policy Owner or the joint lives
of the Policy Owner and Beneficiary. (See the section on Federal Tax Matters.)
Like death benefits payable under conventional life insurance policies, life
insurance proceeds payable under a Policy should be completely excludable from
the gross income of the Beneficiary. As a result, the Beneficiary generally will
not be taxed on these proceeds. (See the section on Federal Tax Matters.)
MAY I RETURN THE POLICY FOR A REFUND OR EXCHANGE IT FOR ANOTHER POLICY?
REFUND PRIVILEGE. You have period of time (a "free look period") to examine a
Policy and return it for a refund. You may cancel the Policy within 45 days
after Part I of the application is signed, within 10 days after you receive the
Policy, or 10 days after AVLIC delivers a cancellation notice, whichever is
later. The amount of the refund is the greater of the premium paid or the
premium paid adjusted by investment gains or losses. (See the section on Refund
Privilege.)
EXCHANGE PRIVILEGE. During the first 24 months after the Policy Date of the
Policy, subject to certain restrictions, you may exchange the Policy for a
non-variable life insurance policy issued by AVLIC or an affiliate. The policy
provisions and applicable charges for the new policy will be based on the same
policy date and issue age as under the Policy. (See the section on Exchange
Privilege.)
WHEN DOES MY POLICY TERMINATE?
You may terminate your Policy by Surrendering the Policy during the lifetime of
the Insured for its Cash Surrender Value. As noted above, your Policy will
terminate if you fail to maintain sufficient Cash Surrender Value to cover
Policy charges.
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Finally, your Policy will terminate on its Maturity Date if the named Insured is
living on that date, unless you have elected the extended maturity rider. (See
the section on General Provisions -- Additional Insurance Benefits (Riders).)
The Maturity Date is the Policy anniversary nearest to the Insured's 95th
birthday. On the Maturity Date, AVLIC will pay you an amount equal to the Cash
Value of your Policy, less any Outstanding Policy Debt.
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 AND THE SEPARATE ACCOUNT
AMERITAS VARIABLE LIFE INSURANCE COMPANY
Ameritas Variable Life Insurance Company ("AVLIC") is a stock life insurance
company organized in the State of Nebraska. AVLIC was incorporated on June 22,
1983 and commenced business December 29, 1983. AVLIC is currently licensed to
sell life insurance in 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"), a Nebraska stock life insurance company, which owns a
majority interest in AMAL Corporation; and AmerUs Life Insurance Company
("AmerUs Life"), an Iowa stock life insurance company, which owns a minority
interest in AMAL Corporation. The Home Offices of both AVLIC and Ameritas Life
are at 5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska 68501 ("Home Office").
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 the 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 financial insurance strength from Standard & Poor's. This is the
third
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highest of Standard & Poor's 21 ratings. Ameritas Life enjoys a long standing A+
(Superior) rating from A.M. Best, the second highest of Best's ratings.
Ameritas Life, AmerUs Life and AMAL Corporation guarantee the obligations of
AVLIC. This guarantee will continue until AVLIC is recognized by a national
rating agency as having a financial rating equal to or greater than Ameritas
Life, or until AVLIC is acquired by another insurance company which has a
financial rating by a national rating agency equal to or greater than Ameritas
Life and which agrees to assume the guarantee. AmerUs Life will be relieved of
its obligations under the guarantee if it sells its interest in AMAL Corporation
to another insurance company which has a financial rating by a national rating
agency equal to or greater than that of AmerUs Life, and the purchaser assumes
the guarantee.
Ameritas Investment Corp. ("AIC"), the principal underwriter of the Policies,
may publish in advertisements and reports to Policy Owners, the ratings and
other information assigned to Ameritas Life and AVLIC by one or more independent
rating services. Published material may also include charts and other
information concerning dollar cost averaging, portfolio rebalancing, earnings
sweep, tax-deference, asset allocation, diversification, long term market
trends, index performance, and other investment methods and programs. The
purpose of the ratings is to reflect the financial strength of AVLIC. The
ratings do not relate to the performance of Separate Account V.
THE SEPARATE ACCOUNT
Ameritas Variable Life Insurance Company Separate Account V ("Separate Account
V") was established under Nebraska law on August 28, 1985.
The assets of Separate Account V are held by AVLIC segregated from all of
AVLIC's other assets, are not chargeable with liabilities arising out of any
other business which AVLIC may conduct, and income, gains, or losses of Separate
Account V are credited without regard to the other 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 account 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. We may
also provide a hypothetical illustration of Cash Value, Cash Surrender Value and
Death Benefit based on historical investment returns of the Funds for a sample
Insured based on assumptions as to age, sex, and other Policy specific
assumptions.
We may also provide individualized hypothetical illustrations of Cash Value,
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, premium
charge and cash 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.
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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 Funds"); 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. 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
Capitalization Alger Management
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, VIP Growth, VIP High Income and VIP Overseas. VIP II, also
managed by Fidelity, offers the following portfolios: VIP II Asset Manager, VIP
II Investment Grade Bond, VIP II Asset Manager: Growth, and VIP II Contrafund.
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 separate from the assets of
the other portfolios. Thus, each portfolio operates as a separate investment
portfolio, and the income or losses of one portfolio generally have no effect on
the investment performance of any other portfolio.
The investment objectives and policies of each portfolio are summarized below.
There is no assurance that any of the portfolios will achieve their stated
objectives. More detailed information, including a description of investment
objectives, policies, restrictions, expenses and risks, is in the prospectuses
for each of the Funds, which must accompany or precede this Prospectus. All
underlying fund information, including Fund prospectuses, has been provided to
AVLIC by the underlying Funds. AVLIC has not independently verified this
information. One or more of the Portfolios may employ investment techniques that
involve certain risks, including investing in non-investment grade, high risk
debt securities, entering into repurchase agreements and reverse repurchase
agreements, lending portfolio securities, engaging in "short sales against the
box," investing in instruments issued by foreign banks, entering into firm
commitment agreements and investing in warrants and restricted securities. In
addition, certain of the portfolios may invest in securities of foreign issuers.
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The Leveraged AllCap Portfolio may borrow money to increase its portfolio of
securities, and may purchase or sell options and enter into futures contracts on
securities indexes to increase gain or to hedge the value of the Portfolio.
Certain of the portfolios are permitted to invest a portion of their assets in
non-investment grade, high risk debt securities; these portfolios include the
VIP High Income, VIP Equity-Income, VIP II Asset Manager: Growth, VIP II Asset
Manager Portfolios of the Fidelity 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 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 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.
Each Policy Owner 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 Cash Surrender Values, partial withdrawals, and make
Policy loans or to transfer assets among Investment Options as requested by
Policy Owners. 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 its separate accounts from the Funds, to resolve the matter.
The risks of such mixed and shared funding are described further in the
prospectuses of the Funds.
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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 market Seeks as high a level of
Market securities of domestic and foreign issuers, including current income as is consistent
U.S. government securities and repurchase agreements. with preservation of capital
Invests more than 25% of total assets in the financial and liquidity.
services industry.
- --------------------------------------------------------------------------------------------------------------------
Ameritas Index 500 Under normal circumstances, seeks to track the Standard Seeks investment results that
& Poor's 500. correspond 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 have broad Seeks long-term capital
product lines, markets, financial resources and depth appreciation.
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.
- --------------------------------------------------------------------------------------------------------------------
Ameritas Income & Invests in dividend paying equity securities, such as Primarily seeks to provide a
Growth common or preferred stocks, preferably those which the high level of dividend income.
Subadviser believes also offer opportunities for Its secondary goal is to
capital appreciation. provide capital appreciation.
- --------------------------------------------------------------------------------------------------------------------
Ameritas Small Focuses on small, fast-growing companies that offer Seeks long-term capital
Capitalization innovative products, service or technologies to a appreciation.
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 growth Seeks long-term capital
Growth potential. Under normal circumstances, the portfolio appreciation.
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 least 65% Seeks long-term growth of
Growth of its total assets in common stocks and related capital.
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 least 80% Seeks long-term growth of
of its total assets in common stocks and related capital and future income.
securities, such as preferred stocks, convertible
securities and depositary receipts. The portfolio
focuses on companies that the Subadviser 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 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 least 65% Seeks to provide reasonable
Income of its total assets in common stocks and related current income and long-term
securities, such as preferred stocks, convertible growth of capital and income.
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 Subadviser
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 common stocks of Seeks to provide long-term
Growth small- cap companies. Returns in the portfolio will be capital appreciation by
mostly from the changes in the price of the portfolio's investing primarily in equity
holdings (capital appreciation). The portfolio securities of companies that
currently defines small-cap companies as those with have small market
market capitalization of $1 billion or less at the time capitalizations.
the portfolio initially invests. *
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CVS Social MidCap Invests primarily in the common stocks of mid-size Seeks to provide long-term
Growth companies. Returns in the portfolio will be mostly from capital appreciation by
the changes in the price of the portfolio's holdings investing primarily in
(capital appreciation.) The portfolio currently defines non-diversified portfolio of
diversified portfolio of the mid-cap companies as those the equity securities of
within the range of market capitalizations of the S&P's mid-sized companies that are
MidCap 400 Index. Most companies in the Index have a undervalued but demonstrate a
capitalization of $500 million to $10 billion. * potential for growth.
- --------------------------------------------------------------------------------------------------------------------
CVS Social Invests primarily in the common stocks of mid- to Seeks to provide a high total
International large-cap companies using a value approach. The return consistent with
Equity portfolio identifies those countries with markets and reasonable risk by investing
economies that it believes currently provide the most primarily in a globally
favorable climate for investing. The portfolio invests diversified portfolio for
primarily in more developed economies and markets. No equity securities.
more that 5% of portfolio assets are invested in the
U.S. *
- --------------------------------------------------------------------------------------------------------------------
CVS Social Balanced Typically invests about 60% of its assets in stocks and Seeks to achieve a competitive
40% in bonds or other fixed-income investments. Stock total return through an
investments are primarily common stock in large-cap actively managed portfolio of
companies, while the fixed-income investments are stocks, bonds and money market
primarily a wide variety of investment grade bonds. * instruments which offer income
and capital growth opportunity
and which satisfy the
investment and social 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 equity Seeks reasonable income. Will
securities, which tends to lead to investments in large also consider the potential for
cap "value" stocks. capital 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. Investing in Seeks capital appreciation.
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-producing debt securities, preferred stocks and income while also considering
convertible securities, with an emphasis on growth of capital.
lower-quality debt securities.
- --------------------------------------------------------------------------------------------------------------------
VIP Overseas Investing at least 65% of total assets in foreign Seeks long-term growth of
securities. Investing primarily in common stocks. capital.
- --------------------------------------------------------------------------------------------------------------------
VIP II Asset Manager Allocating the Fund's assets among stocks, bonds, and Seeks high total return with
short-term and money market instruments. Maintaining a reduced risk over the long term
neutral mix over time of 50% of assets in stocks, 40% by allocating its assets in
of bonds, and 10% of assets in short-term and money stocks, bonds, and short-term
market instruments. instruments.
- --------------------------------------------------------------------------------------------------------------------
VIP II Investment Investing in U.S. dollar-denominated investment-grade Seeks as high a level of
Grade Bond bonds. current income as is consistent
with the preservation of
capital.
- --------------------------------------------------------------------------------------------------------------------
VIP II Asset Allocating the Fund's assets among stocks, bonds, and Seeks to maximize total return
Manager: Growth short- term and money market instruments. Maintaining a by allocating its assets among
neutral mix over time of 70% of assets in stocks, 25% stocks, bonds, short-term
of assets in bonds, and 5% of assets in short-term and instruments and other
money market instruments. investments.
- --------------------------------------------------------------------------------------------------------------------
VIP II Contrafund Investing primarily in common stocks. Investing in Seeks long-term capital
securities of companies whose value it believes is not appreciation.
fully recognized by the public.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT POLICIES OBJECTIVE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALGER AMERICAN FUND
- --------------------------------------------------------------------------------------------------------------------
Balanced The portfolio focuses on stocks of companies with Seeks current income and long-
growth potential and fixed income securities, with term capital appreciation by
emphasis on income-producing securities which appear to investment in common stocks and
have some potential for capital appreciation. Under fixed income and convertible
normal circumstances, it invests in common stocks and securities, with emphasis on
fixed income securities, which include commercial paper income producing securities
and bonds rated within the four highest rating which appear to have potential
categories by an established rating agency or if not for capital appreciation.
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 invests in Seeks long-term capital
the equity securities of companies of any size which appreciation.
demonstrate promising growth potential. The portfolio
can leverage, that is, borrow money, up to one-third of
its total assets to buy additional securities. By
borrowing money, the portfolio has the potential to
increase its returns if the increase in the value of
the securities purchased exceeds the cost of borrowing,
including interest paid on the money borrowed.
- --------------------------------------------------------------------------------------------------------------------
MFS TRUST
- --------------------------------------------------------------------------------------------------------------------
Utilities Series Invests, under normal market conditions, at least 65% Will seek capital growth and
of its total assets in equity and debt securities of current income (income above
both domestic and foreign companies in the utilities that available from a portfolio
industry. invested entirely in equity
securities).
- --------------------------------------------------------------------------------------------------------------------
Global Governments Invests, under normal market conditions, at least 65% Will seek to provide income and
Series of its total assets in debt obligations that are issued capital appreciation.
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 least 65% Will seek capital appreciation.
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 emerging Long-term capital appreciation.
Equity 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 issuers Long-term capital appreciation.
throughout the world, including U.S. issuers and
emerging market countries, using an approach based on
individual stock selection and emphasizing bottom up
approach to identify stocks that are undervalued.
- --------------------------------------------------------------------------------------------------------------------
International Magnum Invests primarily in equity securities of non-U.S. Long-term capital appreciation.
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 Asian Long-term capital appreciation.
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 companies in Above-average current income
the U.S. real estate industry, including real estate and long-term capital
investment trusts and real estate operation companies. appreciation.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
AVLIC reserves the right, subject to applicable law, to add, delete, combine, or
substitute investments in Separate Account V if, in our judgment, marketing
needs, tax considerations, or investment conditions warrant. This may happen due
to a change in law or a change in a Fund's objectives or restrictions, or for
LIFE
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<PAGE> 19
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 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.) AVLIC guarantees that it will
credit interest at a declared rate of at least 4.5%.
Each month, AVLIC will establish the declared rate for the Policies with a
Policy Date or Policy anniversary date in that month. Interest will be credited
on the amounts transferred or allocated to the Fixed Account at the declared
rate effective for the month of issue. The declared rate is guaranteed for the
remainder of the Policy Year. During the 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.
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 and interest credited
thereto, less any deduction for charges and expenses. The Policy Owner bears the
investment risk after the expiration of a contract year. 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 1940 Act. 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.
POLICY BENEFITS
The rights and benefits under the Policy are summarized in this prospectus. The
Policy itself is what controls the rights and benefits. A copy of the Policy is
available upon request from AVLIC.
PURPOSES OF THE POLICY
The Policy is designed to provide you with both (1) lifetime insurance
protection to the Policy anniversary nearest the Insured's 95th birthday and (2)
flexibility in the amount and frequency of premium payments and the level of
life insurance proceeds payable under the Policy. Unlike traditional life
insurance, other than the Minimum First Year Premium, you are not required to
pay scheduled premiums to keep your Policy in force. The Policy is designed so
that a single premium payment may be made or you have the flexibility to vary
subsequent premium payments.
Moreover, the Policy lets you adjust the level of Death Benefits payable under
the Policy without having to purchase a new Policy. You can accomplish this by
decreasing the Specified Amount or changing the Death Benefit option. Thus, as
your insurance needs or financial conditions change, you have the flexibility to
adjust your life insurance benefits and vary premium payments.
LIFE
19
<PAGE> 20
The Death Benefit may, and the Cash Value will, vary with the investment
experience of the chosen Subaccounts of Separate Account V. Thus the Policy
Owner benefits from any appreciation in value of the underlying assets, but
bears the investment risk of any depreciation in value. As a result, whether or
not a Policy continues in force may depend in part upon the investment
experience of the chosen Subaccounts. The failure to pay a Planned Periodic
Premium will not necessarily cause the Policy to lapse, but the Policy could
lapse even if planned periodic premiums have been paid, depending upon the
investment experience of Separate Account V.
DEATH BENEFIT PROCEEDS
As long as the Policy remains in force, AVLIC will pay the Death Benefit
Proceeds of the Policy upon Due Proof of Death, according to the Death Benefit
option in effect at the time of the Insured's death. The amount of the Death
Benefits payable will be determined at the end of the Valuation Period during
which the Insured's death occurred. The Death Benefit Proceeds may be paid in a
lump sum or under one or more of the payment options set forth in the Policy.
(See the section on Payment Options.)
DEATH BENEFIT OPTIONS
The Policy provides two Death Benefit options, unless the Extended Maturity
Rider is in effect. If the Extended Maturity Rider is in effect, the Death
Benefit will be the same as the Cash Value. Extension of the Maturity Date may
result in adverse tax consequences. (See the sections on Benefits at Maturity
and General Provisions -- Extended Maturity Rider.) 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 Specified Amount currently is the amount that a premium of $10,000
($5,000 for ages 0-15) will purchase. 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.)
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.)
Under Option A, the Death Benefit is the current Specified Amount of the Policy
or, if greater, the applicable percentage of Cash Value on the date of death.
The applicable percentage is 250% for Insureds with an attained age 40 or
younger on the Policy anniversary prior to the date of death. For Insureds with
an Attained Age over 40 on that Policy anniversary, the percentage declines. For
example, the percentage at 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
108%, and at Attained Age 90 is 100%. Accordingly, under Option A the Death
Benefit will remain level at the Specified Amount unless the applicable
percentage of Cash Value exceeds the current Specified Amount, in which case the
amount of the Death Benefit will vary as the Cash Value varies. Policy Owners
who prefer to have favorable investment performance reflected in higher Cash
Value, rather than increased insurance coverage, generally should select Option
A.
LIFE
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<PAGE> 21
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.)
Under Option B, the Death Benefit is equal to the current Specified Amount plus
the Cash Value of the Policy or, if greater, the applicable percentage of the
Cash Value on the date of death. The applicable percentage is the same as under
Option A: 250% for Insureds with an Attained Age 40 or younger on the Policy
anniversary prior to the date of death. For Insureds with an Attained Age over
40 on that Policy anniversary the percentage declines as in Option A.
Accordingly, under Option B the amount of the Death Benefit will always vary as
the Cash Value varies (but will never be less than the Specified Amount). Policy
Owners who prefer to have favorable investment performance reflected in
increased insurance coverage, rather than higher Cash Values, generally should
select Option B.
CHANGE IN DEATH BENEFIT OPTION. Generally, the Death Benefit option in effect
may be changed once per year any time after the first Policy Year by sending
AVLIC a written request for change. AVLIC will require evidence of insurability
before making a change in the Death Benefit option from Option A to Option B.
The effective date of such a change will be the Monthly Activity Date on or
following the date the change is approved by AVLIC.
If the Death Benefit option is changed from Option A to Option B, the Death
Benefit after the change will equal the Specified Amount before the change plus
the Cash Value on the effective date of the change. If the Death Benefit option
is changed from Option B to Option A, the Death Benefit after the change will
equal the Death Benefit before the change minus the Cash Value on the effective
date of change.
No charges will be imposed upon a change in Death Benefit option, nor will such
a change in and of itself result in an immediate change in the amount of a
Policy's Cash Value. However, a change in the Death Benefit option may affect
the monthly cost of insurance charge since this charge varies with the net
amount at risk, which is the amount by which the Death Benefit that would be
payable on a Monthly Activity Date exceeds the Cash Value on that date. Changing
from Option B to Option A generally will decrease the net amount at risk, and
therefore cost of insurance charges. Changing from Option A to Option B
generally will result in a net amount at risk that remains level. Such a change,
however, will result in an increase in the cost of insurance charges over time,
since the cost of insurance rates increase with the Insured's age. If, however,
the change was from Option A to Option B, the cost of insurance rate may be
different for the increased Death Benefit. (See the section on Charges and
Deductions -- Cost of Insurance.)
CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the second
Policy Year a Policy Owner may decrease the Specified Amount of a Policy. A
decrease in Specified Amount may affect the cost of insurance rate and the net
amount at risk, both of which may affect a Policy Owner's cost of insurance
charge. (See the section on Charges and Deductions -- Cost of Insurance.)
Any 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 the amount a Minimum First Year Premium of $10,000 ($5,000 for ages
0-15) would have purchased during the first three Policy years and $15,000
thereafter. Further, no decrease will be allowed if the Specified Amount is less
than $15,000 in the first three Policy years. In addition, if following the
decrease in Specified Amount, the Policy would not comply with the maximum
premium limitations required by federal tax law (see the
LIFE
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<PAGE> 22
section on Premium Limitations), the decrease may be limited or Cash Value may
be returned to the Policy Owner at the Policy Owner's election, to the extent
necessary to meet these requirements.
METHODS OF AFFECTING INSURANCE PROTECTION. A Policy Owner may increase or
decrease the pure insurance protection provided by a Policy -- the difference
between the Death Benefit and the Cash Value -- in several ways as insurance
needs change. These ways include decreasing the Specified Amount of insurance,
changing the level of premium payments, and, to a lesser extent, making a
partial withdrawal of the Policy's Cash Value. The consequences of each of these
methods will depend upon the individual circumstances.
DURATION OF THE POLICY. The Policy will not be placed in force if the Minimum
First Year Premium has not been paid on or before the date the Policy is
delivered. The Policy will remain in force so long as the Cash Surrender Value
is sufficient to pay the monthly deduction. (See the section on Monthly
Deduction.) Where, however, the 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.)
CASH VALUE
The Policy's Cash Value in Separate Account V will reflect the investment
performance of the chosen Subaccounts of Separate Account V, the Net Premiums
paid, any partial withdrawals, and the charges assessed in connection with the
Policy. A Policy Owner may at any time Surrender the Policy and receive the
Policy's Cash Surrender Value. (See the section on Surrenders.) There is no
guaranteed minimum Cash Value.
DETERMINATION OF CASH VALUE. Cash Value is determined on each Valuation Date. On
the Policy Issue Date, the Cash Value in a Subaccount will equal the portion of
any premium allocated to the Subaccount, reduced by the portion of the first
monthly deduction allocated to that Subaccount. (See the section on Allocation
of Premiums and Cash Value.) Thereafter, on each Valuation Date, the Cash Value
of a Policy will equal:
(1) The aggregate of the values attributable to the Policy in each of
the Subaccounts on the Valuation Date, determined for each Subaccount by
multiplying the Subaccount's unit value by the number of Subaccount units
allocated to the Policy; plus
(2) The value of the Fixed Account; plus
(3) Any cash value impaired by Policy debt held in the General
Account; plus
(4) Any Net Premiums received on that Valuation Date; less
(5) Any partial withdrawal, and its charge, made on that Valuation
Date; less
(6) Any monthly deduction to be made on that Valuation Date; less
(7) Any federal or state income taxes charged against the Cash Value.
In computing the Policy's Cash Value, the number of Subaccount units allocated
to the Policy is determined after any transfers among Subaccounts, or the Fixed
Account, (and deduction of transfer charges) but before any other Policy
transactions, such as receipt of Net Premiums and partial withdrawals, on the
Valuation Date. Because the Cash Value is dependent upon a number of variables,
a Policy's Cash Value cannot be predetermined.
THE UNIT VALUE. The unit value of each Subaccount reflects the investment
performance of that Subaccount. The unit value of each Subaccount shall be
calculated by:
(1) Multiplying the per share net asset value of the corresponding
Fund portfolio on the Valuation Date times the number of shares
held by the Subaccount, before the purchase or redemption of any
shares on that date; minus
(2) A Daily Charge not exceeding an annual rate of 1.20% for mortality
and expense risk of (.90%) and administrative costs (.30%); and
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<PAGE> 23
(3) Dividing the result by the total number of units held in the
Subaccount on the Valuation Date, before the purchase or
redemption of any units on that 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.
BENEFITS AT MATURITY
If the Insured is living, AVLIC will pay the Cash Value of the Policy, less
Outstanding Policy Debt, on the Maturity Date. The Policy will mature on the
Policy anniversary nearest the Insured's 95th birthday, if living, unless the
maturity has been extended by election of the Extended Maturity Rider. The
Policy may be subject to certain adverse tax consequences when continued beyond
the original scheduled Maturity Date. (See the section on General
Provisions -- Extended Maturity Rider.)
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds under the Policy will usually be paid within seven days
after AVLIC receives Due Proof of Death. Cash value benefits will ordinarily be
paid within seven days of receipt of a written request. Payments may be
postponed in certain circumstances. (See the section on Postponement of
Payments.) The Policy Owner may decide the form in which the benefits will be
paid. During the Insured's lifetime, the Policy Owner may arrange for the Death
Benefit Proceeds to be paid in a lump sum or under one or more of the optional
methods of payment described below. These choices are also available if the
Policy is Surrendered or matures. If no election is made, AVLIC will pay the
benefits in a lump sum.
When Death Benefits are payable in a lump sum and no election for an optional
method of payment is in force at the death of the Insured, the Beneficiary may
select one or more of the optional methods of payment.
An election or change of method of payment must be in writing. A change in
Beneficiary revokes any previous settlement election. Further, if the Policy is
assigned, any amounts due to the assignee will first be paid in one sum. The
balance, if any, may be applied under any payment option. Once payments have
begun, the payment option may not be changed.
PAYMENT OPTIONS. The minimum amount of each payment is $25. If a payment would
be less than $25, AVLIC has the right to make payments less often so that the
amount of each payment is at least $25. Once a payment option is in effect, the
proceeds will be transferred to AVLIC's General Account. AVLIC may make other
payment options available in the future. For additional information concerning
these options, see the Policy itself. The following payment options are
currently available:
- 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.
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<PAGE> 24
As an alternative to the above payment options, the proceeds may be paid in any
other manner approved by AVLIC. Further, one of AVLIC's affiliates may make
payments under the above payment options. If an affiliate makes the payment, it
will do so according to the rules set out above.
POLICY RIGHTS
LOAN BENEFITS
LOAN PRIVILEGES. AVLIC will permit the Policy Owner to borrow money from it
using the Policy as the only security for the loan. The maximum amount that may
be borrowed is 85% of the Cash Value less the cash surrender charge and any
accrued expenses as of the date of the Policy loan. The minimum amount of any
loan request is $1,000. The loan may be completely or partially repaid at any
time while the Insured is living, prior to the Maturity Date. Loans usually are
paid within seven days after receipt of a written request. Texas and Virginia
Policy Owners may borrow 100% of the Cash Surrender Value after deducting
interest and Policy charges for the remainder of the Policy Year. LOANS MAY HAVE
ADVERSE TAX CONSEQUENCES. (See the section on Tax Treatment of Policy Proceeds.)
INTEREST. The interest rate charged on the portion of the Outstanding Policy
Debt not exceeding the Earnings Loan Value is 4.5% per year. Outstanding Policy
Debt in excess of the Earnings Loan Value is charged 6% interest per year. The
determination of whether the Outstanding Policy Debt exceeds the Earnings Loan
Value will be made each time a loan is taken. AVLIC may increase either of these
rates to a maximum of 8%. Interest accrues daily and is due on each Policy
anniversary date. If unpaid when due, interest will be added to the amount of
the loan and bear interest at the same rate.
EFFECT OF POLICY LOANS. When a loan is made, Cash Value equal to the amount of
the loan will be transferred from the Cash Value in Separate Account V to the
General Account of AVLIC as security for the indebtedness. The Cash Value
transferred out of Separate Account V will be allocated among the Subaccounts,
or the Fixed Account, in accordance with the instructions given when the loan is
requested. The minimum amount which can remain in a Subaccount as a result of a
loan is $100. If no instructions are given, the amount will be withdrawn in
proportion to the various deposits in the Subaccount or Fixed Account. If loan
interest is not paid when due in any Policy Year, on the Policy anniversary
thereafter, AVLIC will loan the interest and allocate the amount transferred to
secure the excess indebtedness among the Subaccounts and the Fixed Account as
set out just above. No charge will be imposed for these transfers. A Policy loan
will permanently affect the Cash Value of a Policy, and may permanently affect
the amount of the Death Benefit, even if the loan is repaid. Should the Policy
lapse while Policy loans are outstanding the portion of the loans attributable
to earnings will become taxable.
Cash value in the General Account held to secure indebtedness will be credited
with interest at a rate of 4.5% per year. Currently, the net cost to borrow to
the Policy Owner ranges from 0% interest per annum (on the amount not exceeding
the Earnings Loan Value) to 1.5% per annum. However, the Policy permits a
maximum net cost to borrow of 3.5%. Interest earned on amounts held in the
General Account will be allocated to the Subaccounts and the Fixed Account on
each Policy anniversary in the same proportion that Net Premiums are being
allocated to those Subaccounts and the Fixed Account at the time. Upon repayment
of indebtedness, the portion of the repayment allocated to a Subaccount in
accordance with the repayment of indebtedness provision (see below) will be
transferred to the Subaccount and increase the Cash Value in that Subaccount or
the Fixed Account.
OUTSTANDING POLICY DEBT. The Outstanding Policy Debt equals the total of all
Policy loans and accrued interest on policy loans. If the Outstanding Policy
Debt exceeds the Cash Value less any cash surrender charge and any accrued
expenses, the Policy Owner must pay the excess. AVLIC will send a notice of the
amount which must be paid. If the Policy Owner does not make the required
payment within the 61 days after AVLIC sends the notice, the Policy will
terminate without value. 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 loans only if the Policy Owner so requests. As a
loan is repaid, the Cash Value in the General Account securing the repaid loan
will be allocated among the Subaccounts and the Fixed Account in the same
proportion that Net Premiums are being allocated to those Subaccounts at the
time of repayment.
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SURRENDERS
At any time during the lifetime of the Insured and prior to the Maturity Date,
the Policy Owner may totally Surrender the Policy by sending a written request
to AVLIC. Certain partial withdrawals may also be made. Surrenders from Separate
Account V will generally be paid within seven days of receipt of the written
request. (See the section on Postponement of Payments.) SURRENDERS AND PARTIAL
WITHDRAWALS MAY HAVE ADVERSE TAX CONSEQUENCES. (See the Federal Tax Matters
subsections on Modified Endowment Contract and Tax Penalty on Early
Withdrawals.) Surrenders may be subject to a cash Surrender charge. (See the
section on Cash Surrender Charge.)
TOTAL SURRENDERS. If the Policy is being totally Surrendered, the Policy must be
returned to AVLIC along with the request. AVLIC will pay an amount equal to the
Cash Surrender Value at the end of the Valuation Period during which the
Surrender request is received at AVLIC's Home Office. 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 exceed the Cash Surrender Value on the date the
request is received and in Policy Years one through seven, may not exceed 10% of
the Minimum First Year Premium. The Cash Surrender Value after a partial
withdrawal must be at least $1,000. The amount paid will be deducted from the
Policy's Cash Value at the end of the Valuation Period during which the request
is received. The amount will be deducted from the Subaccounts according to the
instructions of the Policy Owner when the withdrawal is requested, provided that
the minimum amount remaining in a Subaccount as a result of the allocation is
$100. If no instructions are given, the amount will be withdrawn in proportion
to the various deposits in the Subaccount and/or Fixed Account.
The Death Benefit may be reduced by the amount of any partial withdrawal and may
affect the way in which the cost of insurance charge is calculated and the
amount of pure insurance protection under the Policy. (See the section on
Monthly Deduction--Cost of Insurance, Death Benefit Options--Methods of
Affecting Insurance Protection.) If Option B is in effect, the Specified Amount
will not change, but the Cash Value will be reduced.
The Specified Amount remaining in force after a partial withdrawal, during the
first three Policy Years, may not be less than the amount a premium of $10,000
would purchase ($5,000 for ages 0-15) and thereafter may not be less than
$15,000. Also, no partial withdrawal will be allowed if the Specified Amount is
less than $15,000 in the first three years. Any request for a partial withdrawal
that would reduce the Specified Amount below this amount will not be
implemented. A fee not to exceed the lesser of $50.00 or 2% of the amount
withdrawn is deducted from each partial withdrawal amount paid. Currently the
charge is the lesser of $25 or 2% of the amount withdrawn. (See the section on
Partial Withdrawal Charge.)
TRANSFERS
Cash Value may be transferred among the Subaccounts of Separate Account V. 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 after a
transfer is $100. AVLIC will effectuate transfers and determine all values in
connection with transfers on the later of the date designated in the request or
at the end of the Valuation Period during which the transfer request is
received. Cash Value on the date of a transfer will not be affected except to
the extent of any transfer charge. Transfers may also be made from the
Subaccounts to the Fixed Account. One hundred percent of the amount deposited,
plus interest thereon, may be transferred out of the Fixed Account during the
30-day period following the yearly anniversary of the date of the Policy.
An unlimited number of transfers may be made, with the first fifteen transfers
per Policy Year permitted free of charge. A transfer charge may be imposed each
additional time amounts are transferred. This charge will be deducted pro rata
from each Subaccount (and, if applicable, the Fixed Account) in which the Policy
Owner is invested. The charge is $10 per transfer. This amount will be deducted
pro rata from each Subaccount (and if applicable, the Fixed Account) in which
the Policy Owner is invested. Transfers resulting from Policy loans or exercise
of the exchange privilege will not be subject to a transfer charge. In
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addition, such transfers will not be counted for purposes of the limitation on
the number of transfers allowed in each year. AVLIC may at any time revoke or
modify the transfer privilege, including the minimum amount transferable. (See
the section on Tax Status of the Policy.)
The privilege to initiate transactions by telephone will be made available to
Policy Owners automatically. AVLIC will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine, and if it does not,
AVLIC may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures AVLIC follows for transactions initiated by
telephone include, but are not limited to, requiring the Policy Owner to provide
the Policy number at the time of giving transfer instructions; AVLIC's tape
recording of all telephone transfer instructions; and the provision, by AVLIC,
of written confirmation of telephone transactions.
When available, procedures for making transfers through our website can be
accessed at the Internet address stated in the Ameritas Variable Life Insurance
Company section of this prospectus.
Transfers may be subject to additional restrictions 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.
SYSTEMATIC PROGRAMS
AVLIC may offer systematic programs as discussed below. We will count your
transfers in these programs when determining whether the transfer fee applies.
Lower minimum amounts may be allowed to transfer as part of a systematic
program. There is no separate charge for participation in these programs at this
time. All other normal transfer restrictions, as described above, apply. The
Fixed Account can not be used in any systematic program.
PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, you can instruct
AVLIC to allocate Cash Value among the Subaccounts of Separate Account V on a
systematic basis, according to allocation instructions you specified.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program you can instruct
AVLIC to automatically transfer, on a systematic basis, a predetermined amount
or percentage you specify from any one Subaccount to any Subaccount(s) of
Separate Account V.
EARNINGS SWEEP. Permits systematic redistribution of earnings among Subaccounts.
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.
REFUND PRIVILEGE
You may cancel the Policy within the later of 10 days after you receive it,
within 10 days after AVLIC mails a cancellation notice, or within 45 days of
completing Part I of the application. If a Policy is canceled within this time
period, a refund will be paid. The refund will be the greater of the premium
paid or the premium paid adjusted by investment gains or losses.
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 the Policy Owner's bank. (See the section on
Postponement of Payments.)
EXCHANGE PRIVILEGE
During the first 24 Policy months after the Policy Date, you may exchange the
Policy for a non-variable life insurance policy issued by AVLIC or an affiliate.
No new evidence of insurability will be required.
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The policy date, issue age and risk classification for the Insured will be the
same under the new policy as under the old. In addition, the policy provisions
and applicable charges for the new policy and its riders will be based on the
same policy date and issue age as under the Policy. Cash values for the exchange
and payments will be established after making adjustments for investment gains
or losses and after recognizing variance, if any, between payment or charges,
dividends or Cash Values under the flexible contract and under the new policy.
You may elect either the same specified amount or the same net amount at risk
for the new policy as under the old.
To make the change, the Policy, a completed application for exchange and any
required payment must be received by AVLIC. The exchange will be effective on
the valuation date when all financial and contractual arrangements for the new
policy have been completed.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and submit
it to AVLIC's Home Office (5900 "O" Street, P.O. Box 82550, Lincoln, Nebraska
68501). A Policy will generally be issued only to individuals 80 years of age on
their nearest birthday or less who supply satisfactory evidence of insurability
to AVLIC. AVLIC may, at its sole discretion, issue a Policy to an individual
above the age of 80. Acceptance is subject to AVLIC's underwriting rules, and
AVLIC reserves the right to reject an application for any reason.
The Policy Date is the effective date of coverage for all coverage applied for
in the original application. The Policy Date is used to determine Policy
anniversary dates, Policy Years and Policy months. The Policy Date and the Issue
Date will be the same unless: (1) an earlier Policy Date is specifically
requested, or (2) when additional premiums or application amendments are needed.
When there are additional requirements before issue (see below) the Policy Date
will be when it is sent for delivery and the Issue Date will be the date the
requirements are met.
The Issue Date is the date that all financial, contractual and administrative
requirements have been met and processed for the Policy. When all required
premiums and application amendments have been received by AVLIC in its Home
Office, the Issue Date will be the date the Policy is mailed to the Policy Owner
or sent to the agent for delivery to the Policy Owner. When application
amendments or additional premiums need to be obtained upon delivery of the
Policy, the Issue Date will be when the Policy receipt and federal funds are
received; and the application amendments are received and reviewed in AVLIC's
Home Office. On the Issue Date, the premium paid (plus any interest credited on
premiums paid before the Issue Date less any cost of insurance charge for the
period between the Policy Date and the Issue Date) is allocated to the Money
Market Subaccount. After the expiration of the refund period, the Cash Value
will be allocated to the Subaccounts or the Fixed Account as selected by the
Policy Owner.
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 the Insured's lower Issue Age 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 a Specified Amount at the time of the application. The amount
of the interim coverage is limited to the smaller of (1) the amount of insurance
applied for, (2) $100,000, or (3) $25,000 if the proposed Insured is under age
10 or over age 60 at his nearest birthday.
PREMIUMS
The Minimum First Year Premium must be paid on or before the date the Policy is
delivered. No insurance will take effect before the Minimum First Year Premium
is received in AVLIC's home office in federal funds. No other premiums are
required. The amounts and frequency of the Planned Periodic Premiums are shown
in the Schedule of Premiums in the Policy. However, subject to certain
limitations, a Policy Owner has flexibility in determining the frequency and
amount of premiums since the planned
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periodic premium schedule is not binding on the Policy Owner. The timing and
amount of premium payments will have an effect on the values under, and the
duration of, the Policy, including the cash surrender charge, the cost of
insurance charge, the premium tax charges and the Cash Value under the Policy.
MINIMUM FIRST YEAR PREMIUM. The Minimum First Year Premium is equal to the
amount designated in the Policy. The Minimum First Year Premium will be no less
than $10,000, except on Insureds who have an age nearest birthday of 0 to 15,
for which the Minimum First Year Premium will be no less than $5,000. The
Minimum First Year Premium generally approximates 80% of the Guideline Single
Premium, as defined for federal tax purposes, for the initial Specified Amount.
There is no representation that the Policy will not lapse if the Minimum First
Year Premium is paid, nor is there a guarantee that the Policy will not lapse
even if Planned Periodic Premiums are paid.
PREMIUM FLEXIBILITY. A Policy Owner may make a single premium payment, make
unscheduled premium payments at any time in any amount, or skip planned periodic
premium payments, subject to the premium limitations described below. Therefore,
unlike conventional insurance policies, this Policy does not obligate the Policy
Owner to pay premiums in accordance with a rigid and inflexible premium
schedule.
The level of premium payments does, however, affect the nature of the Policy,
including the amount of pure insurance coverage and the charge for that
coverage. Comparing two Policies that are identical in all respects other than
the amount of the initial premium paid, the Policy with the larger initial
premium will have a greater Cash Value and, therefore, will provide less pure
insurance protection (a lower net amount at risk) and have a smaller monthly
cost of insurance charge. AVLIC does reserve the right to limit the number and
amount of additional or unscheduled premium payments.
PLANNED PERIODIC PREMIUMS. At the time the Policy is issued, if the initial
premium is less than 100% of the Guideline Single Premium, the Policy Owner may
determine a planned periodic premium schedule that provides for the payment of
level premiums at selected intervals; subject, however, to a minimum planned
periodic premium schedule of $1,200 on an annual basis and a maximum schedule of
no greater than the limitation on total premiums established by federal tax law.
The Policy Owner is not required to pay premiums in accordance with this
schedule. The Policy Owner has considerable flexibility to alter the amount and
frequency of premiums paid.
Policy Owners can also change the frequency and amount of Planned Periodic
Premiums by sending a written request to the Home Office, although AVLIC
reserves the right to limit any increase. Premium payment notices will be sent
annually, semi-annually or quarterly depending upon the frequency of the Planned
Periodic Premiums. Payment of the Planned Periodic Premiums does not guarantee
that the Policy remains in force. Instead, the duration of the Policy depends
upon the Policy's Cash Surrender Value. (See the section on Duration of the
Policy.) Thus, even if Planned Periodic Premiums are paid by the Policy Owner,
the Policy will nonetheless lapse any time Cash Surrender Value is insufficient
to pay certain monthly charges, and a Grace Period expires without a sufficient
payment. (See the section on Policy Lapse and Reinstatement.)
Any premium received in an amount different from the planned periodic premium
will be considered an unscheduled premium.
PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both
planned and unscheduled, exceed the current maximum premium limitations
established by federal tax laws. If at any time a premium is paid which would
result in total premiums exceeding the current maximum premium limitation, AVLIC
will only accept that portion of the premium which will make total premiums
equal the maximum. Any part of the premium in excess of that amount will be
returned or applied as otherwise agreed and no further premiums will be accepted
until allowed by the current maximum premium limitations prescribed by law.
AVLIC may also establish a minimum acceptable premium amount.
ALLOCATION OF PREMIUMS AND CASH VALUE
ALLOCATION OF PREMIUMS. In the application for a Policy, the Policy Owner
allocates premiums to one or more Subaccounts of Separate Account V and/or to
the Fixed Account. Allocations must be whole
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number percentages and must total 100%. The allocation for future premiums may
be changed without charge at any time by providing proper notification to the
Home Office.
The initial premium is allocated as of the Issue Date of the Policy to the Money
Market Subaccount for 13 days. Thereafter, the Cash Value will be allocated to
the Subaccounts or the Fixed Account as selected by the Policy Owner. Premium
payments received by AVLIC prior to the Issue Date are held in the General
Account 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 that are
available to AVLIC until the date the amounts are transferred to the Money
Market Subaccount, but in no event will interest be credited prior to the Policy
Date. After the first Policy Year, all premiums are subject to a premium charge,
and thus the Net Premium is allocated to the selected Subaccount or the Fixed
Account. If there is any Outstanding Policy Debt at the time of payment, AVLIC
will treat it as a premium payment unless otherwise instructed in proper written
notice.
The value of amounts allocated to Subaccounts of Separate Account V will vary
with the investment performance of these Subaccounts, and the Policy Owner bears
the entire investment risk. This will affect the Policy's Cash Value, and may
affect the Death Benefit as well. Policy Owners should periodically review their
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 Cash Surrender Value is insufficient to cover the
monthly deduction, and a Grace Period expires without a sufficient payment. The
Grace Period is 61 days from the date AVLIC mails a notice that the Grace Period
has begun. AVLIC will notify the Policy Owner at the beginning of the Grace
Period by mail addressed to the last known address on file with AVLIC. The
notice will specify the premium required to keep the Policy in force. Failure to
pay the required amount within the Grace Period will result in lapse of the
Policy. If the Insured dies during the Grace Period, any overdue monthly
deductions and Outstanding Policy Debt will be deducted from the proceeds.
If the Cash Surrender Value is insufficient to cover the monthly deduction, the
Policy Owner must pay a premium during the Grace Period sufficient to cover the
monthly deduction. (See the section on Charges and Deductions.)
REINSTATEMENT. A lapsed Policy may be reinstated any time within 2 years after
the end of the Grace Period (or if required by state law, longer periods), but
before the Maturity Date. We will reinstate your Policy based on the Insured's
underwriting classification at the time of the reinstatement. Reinstatement is
subject to the following:
(1) Evidence of insurability of the Insured satisfactory to AVLIC;
(2) Payment of a premium equal to the greater of $1,000 or an amount that,
after the deduction of premium charges, is large enough to cover the
monthly deductions for at least the three Policy months commencing with
the effective date of reinstatement; and
(3) Any Policy debt will be reinstated with interest due and accrued.
(4) The Policy cannot be reinstated if it has been surrendered for its full
Cash Surrender Value.
The amount of Cash Value on the date of reinstatement will be equal to the
amount of the Cash Value on the date of lapse, increased by the premium paid at
reinstatement, less the premium charges and the amounts stated above, plus that
part of the deferred sales load (i.e., cash surrender charge) which would apply
if the Policy were Surrendered on the date of reinstatement. The last addition
to the Cash Value is designed to avoid duplicate cash surrender charges. The
original Policy Date will be used for purposes of calculating the cash surrender
charge. If any Policy debt was reinstated, that debt will be held in AVLIC's
General Account. Cash Value calculations will then proceed as described in the
section on Determination Of Cash Value.
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The effective date of reinstatement will be the first Monthly Activity Date on
or next following the date of approval by AVLIC of the application for
reinstatement.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate AVLIC for:
(1) providing the insurance benefits set forth in the Policy and any optional
insurance benefits added by rider; (2) administering the Policy; (3) assuming
certain risks in connection with the Policy; and (4) incurring expenses in
distributing the Policy. The nature and amount of these charges are described
more fully below.
PREMIUM CHARGE
No premium charges will be deducted from premium payments made during the first
Policy Year prior to their allocation to the selected Subaccounts or the Fixed
Account. However, a charge equal to 2.5% of the premium will be deducted from
each payment made after the first Policy Year prior to allocation among the
selected Subaccounts to reimburse AVLIC for premium taxes. Various states and
their subdivisions impose a tax on premiums received by insurance companies.
Premium taxes vary from state to state.
Although no deduction for premium taxes is made from premiums paid during the
first Policy Year, upon Surrender, a portion of the cash surrender charge
includes a charge for state premium taxes of no greater than 2.5% of the
premiums paid. (See the section on Cash Surrender Charge.) The charges for
premium taxes represent an amount AVLIC considers necessary to pay all premium
taxes imposed by the states and their subdivisions.
MONTHLY DEDUCTION
Charges will be deducted on each Monthly Activity Date from the Cash Value of
the Policy to compensate AVLIC for insurance provided. The monthly deduction
includes: (1) the cost of insurance for the current Policy month, plus (2)
one-twelfth of any flat extra rating charge. The monthly deduction will be
deducted as of the Policy Date and on each Monthly Activity Date thereafter. It
will be allocated among the Subaccounts or the Fixed Account on a pro rata
basis. Each of these charges is described in more detail below.
COST OF INSURANCE. Because the cost of insurance depends upon several variables,
the cost for each Policy month can vary from month to month. AVLIC will
determine the monthly cost of insurance charges by multiplying the applicable
cost of insurance rate by the net amount at risk for each Policy month. The net
amount at risk on any Monthly Activity Date is the amount by which the Death
Benefit which would have been payable on that Monthly Activity Date exceeds the
Cash Value on that date.
COST OF INSURANCE RATE. The annual cost of insurance rate is based on the
Insured's sex, Attained Age, Policy duration and risk class. The rate will vary
if the Insured is a smoker or non-smoker or is considered a substandard risk
classification and rated with a tabular extra rating. For the initial Specified
Amount, the cost of insurance rate will not exceed those shown in the Schedule
of Guaranteed Annual Cost of Insurance Rates shown in the schedule pages of the
Policy. These guaranteed rates are based on the Insured's age nearest birthday,
risk class, and the 1980 Commissioners Standard Ordinary Smoker and Non-Smoker,
Male and Female Mortality Tables. Any change in the cost of insurance rates will
apply to all persons of the same age, sex and risk class and whose policies have
been in effect for the same length of time.
If the underwriting class for any increase in Death Benefit resulting from a
change in Death Benefit option from A to B is not the same as the underwriting
class at issue, the cost of insurance rate used after such increase will be a
composite rate based upon a weighted average of the rates of the different
underwriting classes. Decreases will also be reflected in the cost of insurance
rate as discussed earlier. The actual charges made during the Policy Year will
be shown in the annual report delivered to Policy Owners.
RATE CLASS. The rate class of an Insured may affect the cost of insurance rate.
AVLIC currently places Insureds into both standard rate classes and substandard
classes that involve a higher mortality risk. In an otherwise identical Policy,
an Insured in the standard rate class will have a lower cost of insurance than
an Insured in a rate class with higher mortality risks. If a Policy is rated at
issue with a tabular extra rating,
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the guaranteed rate is a multiple of the guaranteed rate for a standard issue.
This multiple factor is shown in the Schedule of Benefits in the Policy.
Insureds may also be assigned a flat extra rating to reflect higher mortality
risks. The flat extra rating charge will not impact the cost of insurance rate,
but 1/12 of any flat extra cost will be deducted as part of the monthly
deduction on each Monthly Activity Date.
DAILY CHARGES AGAINST THE SEPARATE ACCOUNT
A Daily Charge will be deducted from the value of the net assets of Separate
Account V to compensate AVLIC for mortality and expense risks assumed and the
administrative costs incurred in connection with the Policy. This daily charge
from Separate Account V will be at the rate of 0.003288 percent (equivalent to
an annual rate of 1.20 percent of the average daily net assets of Separate
Account V). 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 0.003288 percent multiplied by the number of days since
the last Valuation Date. No mortality and expense charges will be deducted from
the amounts in the Fixed Account.
Of this Daily Charge, .002466 percent (equivalent to an annual rate of 0.90
percent of the average daily net assets of Separate Account V) is deducted to
compensate AVLIC for the mortality and expense risk assumed under the Policies.
AVLIC believes that this level of charge is reasonable in relation to the risks
assumed by AVLIC under the Policies. The mortality risk assumed by AVLIC is that
Insureds' may live for a shorter time than assumed, and that an aggregate amount
of Death Benefits greater than that assumed accordingly will be paid. The
expense risk assumed is that expenses incurred in issuing and administering the
policies will exceed the administrative charges provided in the Policies.
AVLIC also deducts .000822 percent (equivalent to an annual rate of 0.30 percent
of the average daily net assets of Separate Account V) on a daily basis to
compensate it for administrative costs in connection with the Policy. AVLIC has
primary responsibility for the administration of the Policy and Separate Account
V. AVLIC intends to administer the Policy itself through an arrangement whereby
AVLIC may purchase some administrative services from Ameritas Life. The services
in connection with the Policy involve issuance of the Policy, ordinary ongoing
maintenance of the Policy, and future changes in the Policy initiated by the
Policy Owner. Administrative expenses in connection with the issuance of the
Policy are medical exams, review of applications for insurance underwriting
decisions, and processing of the applications and establishing Policy records.
Ongoing ordinary administrative expenses expected to be incurred in connection
with a Policy include premium billing; record keeping; processing Death Benefit
claims, cash Surrenders, and Policy changes; preparing and mailing reports; and
overhead costs. Future changes in the Policy initiated by the Policy Owner
include changes in the Death Benefit option. Administrative costs for changing
the Death Benefit option include the cost of processing applications and
changing and establishing Policy records. The Daily Charge is assessed
throughout the life of the Policy. AVLIC does not expect to make a profit on the
portion of the charge levied to cover administrative expenses.
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. These ranged from .28% to 1.79% at the most recent fiscal year end. No
such management fees are assessed against Net Premiums allocated to the Fixed
Account. (See the Summary section for the Fund Expense Summary.)
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.
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TAXES. Currently, no charge will be made against Separate Account V for 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. Charges for such taxes, if any, would be
deducted from Separate Account V as a portion of the Daily charge. (See the
section on Federal Tax Matters.)
CASH SURRENDER CHARGE
If a Policy is Surrendered prior to the 7th Policy anniversary, AVLIC will
assess a cash Surrender charge based upon percentages of the premiums actually
paid during the first Policy Year, limited as shown in the Policy schedule
pages. Paying less premium in the first year generally will have the effect of
reducing the cash Surrender charge. However, depending upon the investment
experience, if the Policy Owner chooses to pay less premium in the first year,
the cost of insurance charge may increase, the premium tax charge may be
greater, the Policy Values may be reduced and there is an increased risk that
the Policy will lapse. A portion of the cash Surrender charge includes a charge
to cover state premium taxes. The remainder of the charge is deducted to
compensate AVLIC for the cost of distributing the Policy. The cost includes
agents' commissions, the printing of prospectuses and sales literature, and
advertising.
The sales load portion of the cash Surrender charge in any Policy Year is not
necessarily related to actual distribution expenses incurred in that year.
Instead, AVLIC expects to incur the majority of distribution expenses in the
early Policy Years and to recover amounts to pay such expenses over the life of
the Policy. AVLIC anticipates that funds generated by the sales loads will not
be sufficient to cover distribution expenses. To the extent that sales and
distribution expenses exceed sales loads in any year, AVLIC will pay them from
its other assets or surplus in its General Account, which include amounts
derived from mortality and expense risk charges and other charges made under the
Policy. AVLIC believes that this distribution financing arrangement will benefit
Separate Account V and the Policy Owners.
AVLIC has voluntarily lowered its maximum cash Surrender charge to 9%, which
amount will be charged on Surrenders during Policy Years one, two and three. The
Policy provides that cash Surrender charges may equal, respectively, 11.5%,
10.5% and 9.5% for the first three years. Thereafter, the cash Surrender charge
grades to 8.5% in year four, 7% in year five, 5% in year six, 2% in year seven
and 0% after the seventh year. The charge allowed by the Policy is based on a 9%
sales load and a 2.5% charge for premium tax. The sales load and premium tax
components of the cash Surrender charge grade down proportionately. There is no
cash Surrender charge assessed upon decreases in the Specified Amount of the
Policy or partial withdrawals of Cash Value. There is no additional cash
surrender charge attributable to payments made after the first Policy Year.
Because the cash 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.
TRANSFER CHARGE
A transfer charge of $10.00 may be imposed for each additional transfer among
the Subaccounts or the Fixed Account after fifteen per Policy Year to compensate
AVLIC for the costs of effecting the transfer. Since the charge reimburses AVLIC
for the cost of effecting the transfer only, it 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. The amount of the
transfer charge is guaranteed not to be increased.
PARTIAL WITHDRAWAL CHARGE
A charge will be imposed for each partial withdrawal to compensate AVLIC for the
administrative costs in effecting the requested payment and in making necessary
calculations for any reductions in Specified Amount which may be required by
reason of the partial withdrawal. The charge will be deducted from the amount of
the withdrawal. The current charge made will be the lesser of 2% of the amount
withdrawn or $25. This charge is guaranteed not to be more than the lesser of
$50 or 2% of the amount withdrawn. AVLIC does not expect to make any profit from
the partial withdrawal charge.
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GENERAL PROVISIONS
THE CONTRACT. The Policy, the application, any supplemental applications, and
any 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. The Policy itself is what controls the
rights and benefits. A copy of the Policy 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. The Policy Owner may name both primary and contingent Beneficiaries
in the application. Payments will be shared equally among Beneficiaries of the
same class unless otherwise stated. If a Beneficiary dies before the Insured,
payments will be made to any surviving Beneficiaries of the same class;
otherwise to any Beneficiary(ies) of the next class; otherwise to the Policy
Owner; otherwise to the estate of the owner.
CHANGE OF BENEFICIARY. The Policy Owner may change the Beneficiary by written
request at any time during the Insured's lifetime unless otherwise provided in
the previous designation of Beneficiary. The change will take effect as of the
date the change is recorded at the Home Office. AVLIC will not be liable for any
payment made or action taken before the change is recorded.
CHANGE IN POLICY OWNER OR ASSIGNMENT. In order to change the owner of the Policy
or assign Policy rights, an assignment of the Policy must be made in writing and
filed with AVLIC at its Home Office. The change will take effect as of the date
the change is recorded at the Home Office, and AVLIC will not be liable for any
payment made or action taken before the change is recorded. Payment of proceeds
is subject to the rights of any assignee of record. A collateral assignment is
not a change of ownership.
PAYMENT OF PROCEEDS. The proceeds are subject first to any indebtedness to AVLIC
and then to the interest of any assignee of record. The balance of any Death
Benefit Proceeds shall be paid in one sum to the designated Beneficiary unless
an optional method of payment is selected. If no beneficiary survives the
Insured, the proceeds shall be paid in one sum to the Policy Owner, if living;
otherwise to any successor-owner, if living; otherwise to the Policy Owner's
estate. Any proceeds payable on the Maturity Date or upon full Surrender shall
be paid in one sum unless an optional method of payment is elected.
INCONTESTABILITY. The Policy is incontestable after it has been in force for two
years from the Policy Date during the lifetime of the Insured. However, this two
year provision shall not apply to riders that provide disability or accidental
Death Benefits. Any reinstatement of a Policy shall be incontestable only after
having been in force during the lifetime of the Insured for two years after the
effective date of the reinstatement.
MISSTATEMENT OF AGE, SEX, OR SMOKING. If the age, sex, or smoking habits of the
Insured have been misstated, the amount of the Death Benefit and Cash Values
under the Policy will be adjusted. The Death Benefit will be adjusted in
proportion to the correct and incorrect cost of insurance rates. The adjustment
in the Cash Value will be the difference between the cost of insurance
deductions that were made and those that should have been made.
SUICIDE. Suicide within two years of the Policy Date is not covered by the
Policy, unless otherwise provided by state law. If the Insured, while sane or
insane, commits suicide within two years after the Policy Date, AVLIC will pay
only the premiums received, less any partial withdrawals and any Outstanding
Policy Debt. 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 is not a
defense to the payment of Accidental Death Benefits unless the insane person
intended suicide when the Insured applied for the Policy.
POSTPONEMENT OF PAYMENTS. Payment of any amount upon complete surrender, partial
withdrawal, Policy loans, benefits payable at death or maturity, and transfers
may be postponed whenever: (1) the New York
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Stock Exchange is closed other than customary week-end and holiday closings, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; (2) the Commission by order permits
postponement for the protection of Policy Owners; (3) an emergency exists, as
determined by the Commission, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of Separate Account V's net assets; or, (4) Surrenders or partial
withdrawals from the Fixed Account may be deferred for up to 6 months from the
date of written request.
Payments under the Policy of any amounts derived from premiums paid by check may
be delayed until such time as the check has cleared the Policy Owner's bank.
REPORTS AND RECORDS. AVLIC will maintain all records relating to Separate
Account V and will mail to the Policy Owner, at the last known address of
record, within 30 days after each Policy anniversary, an annual report which
shows the current Cash Value, 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 otherwise notified 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.
ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER). Upon
satisfactory proof of terminal illness and 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 coverage, less an amount up to two guideline level premiums.
Future premium allocations after the payment of the benefit must be
allocated to the Fixed Account. Payment will not be made for amounts less
than $4,000 or more than $250,000 on all policies issued by AVLIC or its
affiliates.
AVLIC may charge the lesser of 2% of the benefit or $50 as a withdrawal
charge to cover the costs of administration.
Satisfactory proof of terminal illness must include a written statement
from a licensed physician who is not related to the Insured or the Policy
Owner stating that the Insured has a non-correctable medical condition
that, with a reasonable degree of medical certainty, will result in the
death of the Insured in less than 12 months (6 months in certain states)
from the physician's statement. Further, the condition must first be
diagnosed while the Policy was in force.
The accelerated benefit first will be used to repay any outstanding Policy
loans and unpaid loan interest, and will also affect future loans, partial
withdrawals, and Surrenders. The accelerated benefit will be treated as a
lien against the Death Benefit Policy value and will thus reduce the
proceeds payable on the death of the Insured.
There is no extra premium for this rider. This rider is not available in
all states.
EXTENDED MATURITY RIDER. This rider may be elected by submitting a written
request to AVLIC during the 90 days prior to Maturity Date. If elected, as
long as the Cash Surrender Value is greater than zero, the Policy may
remain in force for purposes of providing a benefit at the time of the
Insured's death. Once this rider becomes effective, no further premium
payments will be accepted, and no monthly charges will be made for cost of
insurance, riders or flat extra rating. All other Policy provisions not
specifically noted herein will remain in effect while the Policy continues
in force. Interest on Policy loans will continue to accrue and become part
of the Outstanding Policy Debt. This
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rider does not extend the original Maturity Date for purposes of
determining benefits under any other riders. Death Benefit Proceeds are
payable to the beneficiary.
There is no extra premium for this rider. This rider is not available in
all states.
The Internal Revenue Service has not issued a ruling regarding the tax
consequences of this rider. The Policy may be subject to certain adverse
tax consequences when continued beyond the Maturity Date. Due to the lack
of specific guidance by the Internal Revenue Service on this issue, the
result is not certain. If the Policy is not treated as a life insurance
contract for federal income tax purposes after the original scheduled
Maturity Date, among other things, the Death Benefit may be taxable to the
recipient. The Policy Owner should consult a qualified tax advisor
regarding the possible adverse tax consequences resulting from extension of
the original scheduled Maturity Date.
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("AIC"), a wholly owned subsidiary of AMAL Corporation
and an affiliated company of AVLIC, will act as the principal underwriter of the
Policies, pursuant to an Underwriting Agreement between itself and AVLIC. AIC
was organized under the laws of the State of Nebraska on December 29, 1983, and
is a registered broker/dealer pursuant to the Securities Exchange Act of 1934
and a member of the National Association of Securities Dealers. 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 by individuals who are registered representatives of AIC
and who are licensed as life insurance agents for AVLIC. In addition, AIC has
entered into agreements with other registered broker/dealers to permit their
registered representatives to sell the Policies subject to applicable law.
Registered representatives who sell the Policy will receive commissions based
upon a commission schedule. After issuance of the Policy, commissions paid by
AVLIC to broker-dealers may vary, but are not expected to exceed 5% of premiums
paid in the first Policy Year. Further, registered representatives who meet
certain production standards may receive additional compensation and managers
receive override commission with respect to the policies.
FEDERAL TAX MATTERS
The following discussion provides a general description of the federal income
tax considerations associated with the Policy. This discussion is not intended
as tax advice. Any person concerned about these tax implications should consult
a competent tax advisor. This discussion is based upon AVLIC's understanding of
the present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). The following summary does not purport
to be complete or to cover all situations.
Special rules not described in this Prospectus may be applicable in certain
situations. Specifically, this discussion does not address tax provisions that
may be applicable if the Policy Owner is a corporation. Moreover, no attempt has
been made to consider in detail any applicable state or other tax (except
premium taxes, see the section on Premium Charge) laws.
Counsel and other competent advisors should be consulted for more complete
information before a Policy is purchased. AVLIC makes no representation as to
the likelihood of the continuation of present federal income tax laws nor of the
interpretations by the Internal Revenue Service. Federal tax laws are subject to
change and thus tax consequences to the Insured, Policy Owner or Beneficiary may
be altered.
(1) TAXATION OF AVLIC. AVLIC is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986 (the "Code"). At this
time, since Separate Account V is not an
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entity separate from AVLIC, and its operations form a part of AVLIC, it will
not be taxed separately as a "regulated investment company" under Subchapter
M of the Code.
Net investment income and realized net capital gains on the assets of
Separate Account V are reinvested and are taken into account in determining
the Death Benefit and Cash Value of the Policy. As a result, such net
investment income and realized net capital gains are automatically retained
as part of the reserves under 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) in various states.
At present, these taxes are not significant. 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) MODIFIED ENDOWMENT CONTRACT. The Code (Section 7702A) states that a Policy
becomes a "modified endowment contract" if it does not meet a 7-pay premium
test described in the section. Because this Policy is designed to operate
generally as a single premium contract, it does not meet that test. While
gains remaining in the Policy continue to be tax deferred, distributions
such as partial or full Surrenders, assignments, Policy pledges, and loans
(including loans to pay loan interest) under the Policy will be taxable to
the extent of any gain under the Policy. 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 Code. Any life insurance policy received in
exchange for a modified endowment contract will also be treated as a
modified endowment contract.
(3) TAX PENALTY ON EARLY WITHDRAWALS. 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.
(4) TAX STATUS OF THE POLICY. The Code (Section 7702) also includes a definition
of a life insurance contract for federal tax purposes, which places
limitations on the amount of premiums that may be paid for the Policy and
the relationship of the Cash Value to the Death Benefit. AVLIC believes that
the Policy meets the statutory definition of a life insurance contract. If
the Death Benefit of a Policy is changed, the applicable definitional
limitations may change. In the case of a decrease in the Death Benefit, a
partial withdrawal, a change in Death Benefit option, or any other such
change that reduces future benefits under the Policy during the first 15
years after a Policy is issued and that results in a cash distribution to
the Policy Owners in order for the Policy to continue complying with the
Section 7702 definitional limitations on premiums and cash values, the
Policy Owner must include in ordinary income (to the extent of any gain in
the Policy) certain amounts prescribed in Section 7702 which are so
distributed.
The Code (Section 817(h)) also authorizes the Secretary of the Treasury
(the "Treasury") to set standards by regulation or otherwise for the
investments of Separate Account V to be "adequately diversified" in order
for the Policy to be treated as a life insurance contract for federal tax
purposes. 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 Funds' assets may
be invested.
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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, the
Company 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.
(5) TAX TREATMENT OF POLICY PROCEEDS. AVLIC believes that the Policy will be
treated in a manner consistent with a fixed benefit life insurance policy
for federal income tax purposes. Thus, AVLIC believes that the Death Benefit
payable prior to the original Maturity Date under either Death Benefit
option under the Policy will generally be excludable from the gross income
of the beneficiary under Section 101(a)(1) of the Code, and the Policy Owner
will not be deemed to be in constructive receipt of the cash value under the
Policy until its actual Surrender. However, 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.
However, in the event of certain cash distributions under the Policy
resulting from any change which reduces future benefits under the Policy,
the distribution will be taxed in whole or in part as ordinary income (to
the extent of gain in the Policy). (See the previous discussion on Tax
Status of the Policy.)
AVLIC also believes that loans received under a Policy will be treated as
debt of the Policy Owner and that part of any loan under a Policy will
constitute income to the Policy Owner so long as the Policy remains in
force, unless the Policy becomes a modified endowment contract. (See
previous discussion on Modified Endowment Contract.) Should the Policy
lapse while Policy loans are outstanding the portion of the loans
attributable to earnings will become taxable.
Loans received from a modified endowment contract will be considered
distributions to the extent of any gain under the Policy. 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 individuals who are or were officers, employees or persons financially
interested in the taxpayer's trade or business. Certain transitional rules
for then existing debt are included in the Health Insurance Act. The
transitional rules 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. 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). Any
material change in a policy (including a material
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increase in the death benefit) may cause the policy to be treated as a new
policy for purposes of this rule. 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 contracts 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.
Also, as a general rule, no deduction is allowed for any amount paid or
accrued on indebtedness incurred or continued to purchase or carry a
business owned single premium life insurance policy. Policy Owners should
consult a competent tax advisor concerning the tax implications of these
changes for their Policies.
The right to exchange the Policy for a non-variable life insurance policy
(see the section on Exchange Privilege), the right to change Policy Owners
(see the section on General Provisions) and the provision for partial
withdrawals (see the section on Surrenders) may have tax consequences
depending on the circumstances of such exchange, change, or withdrawal.
Upon complete Surrender or when benefits are paid at maturity, if the
amount received plus any Outstanding Policy Debt exceeds the total premiums
paid 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 Policy 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 the 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 separate and apart from the General Account assets. AVLIC
maintains records of all purchases and redemptions of Fund 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
contracts. 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 contracts. 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
contracts.
VOTING RIGHTS
All of the assets held in the Subaccounts of Separate Account V will be invested
in shares of the corresponding portfolios of the Funds. AVLIC is the legal
holder of those shares and as such has the right to vote to elect the Board of
Directors of the Funds, to vote upon certain matters that are required by the
1940 Act to be approved or ratified by the shareholders of a mutual fund, and to
vote 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 the Funds held in
Separate Account V at regular and special shareholder meetings of the Funds in
accordance with instructions received from Policy Owners. The number of votes
for which each Policy Owner has the right to provide instructions will be
determined as of the record date selected by the
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Board of Directors of the Funds. AVLIC will furnish Policy Owners with the
proper forms, materials and reports to enable them to give it these
instructions.
The number of Fund shares in a Subaccount for which instructions may be given by
a Policy Owner is determined by dividing the Policy's Cash Value held in that
Subaccount by the net asset value of one share in the corresponding portfolio of
the Fund. Fractional shares will be counted. Fund shares held in each Subaccount
for which no timely instructions from Policy Owners are received and Fund shares
held in each Subaccount which do not support Policy Owner interests will be
voted by AVLIC in the same proportion as those shares in that Subaccount for
which timely instructions are received. Voting instructions to abstain on any
item to be voted will be applied on a pro rata basis to reduce the votes
eligible to be cast. Should applicable federal securities laws or regulations
permit, AVLIC may elect to vote shares of the Funds in its own right.
Matters on which Policy Owners may give voting instructions include the
following: (1) election of the Board of Directors of the Fund; (2) ratification
of the independent accountant of the Fund; (3) approval of the Investment
Advisory Agreement for the Portfolio(s) of the Fund corresponding to the Policy
Owner's selected Subaccount; and (4) any change in the fundamental investment
policies of the Portfolio(s) corresponding to the Policy Owner's selected
Subaccount(s).
DISREGARD OF VOTING INSTRUCTION. AVLIC may, if required by state insurance
officials, disregard voting instructions if those instructions would require
shares to be voted to cause a change in the subclassification or investment
objectives or policies of one or more of the Funds' portfolios, or to approve or
disapprove an investment adviser or principal underwriter for the Funds. In
addition, AVLIC itself may disregard voting instructions that would require
changes in the investment objectives or policies of any portfolio or in an
investment adviser or principal underwriter for a Fund, 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.
LIFE
39
<PAGE> 40
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.
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 TECHNOLOGY*
Assistant Vice President -- Variable Operations: Ameritas Life.
WILLIAM W. LESTER, TREASURER*
Senior Vice President -- Investments and Treasurer: Ameritas Life; also serves
as officer of 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.
SHIELA 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
LIFE
40
<PAGE> 41
** 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 total assets 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.
LIFE
41
<PAGE> 42
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> 43
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> 44
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> 45
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> 46
<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> 47
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> 48
<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> 49
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> 50
<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> 51
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> 52
<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> 53
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> 54
<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> 55
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> 56
<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> 57
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> 58
<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> 59
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> 60
<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> 61
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> 62
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
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> 63
AMERITAS VARIABLE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT V
NOTES TO FINANCIAL STATEMENTS
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> 64
<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> 65
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> 66
<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> 67
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> 68
<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> 69
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> 70
<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> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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> 81
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> 82
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> 83
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> 84
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> 85
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> 86
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> 87
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS AND CASH VALUES
The following tables illustrate how the Cash Values and Death Benefits of a
Policy may change with the investment experience of the Fund. The tables show
how the Cash Values and Death Benefits of a Policy issued to an Insured of a
given age and specified underwriting risk classification who pays the given
premium at issue would vary over time if the investment return on the assets
held in each portfolio of the Funds were a uniform, gross, after-tax annual rate
of 0%, 6%, or 12%. The tables on pages A-3 through A-6 illustrate a Policy
issued to a male, age 35, under a non-smoker underwriting risk classification.
This Policy provides for a standard smoker and non-smoker classification and
different rates for certain Specified Amounts. The Cash Values and Death
Benefits would be different from those shown if the gross annual investment
rates of return averaged 0%, 6%, and 12% over a period of years, but fluctuated
above and below those averages for individual Policy Years, or if the Insured
were assigned to a different underwriting risk classification.
The second column of the tables shows the accumulated value of the premiums paid
at 5%. The following columns show the Death Benefits and the Cash Values for
uniform hypothetical rates of return shown in these tables. The tables on pages
A-3 and A-5 are based on the current cost of insurance rates, current expense
deductions and 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. Since these
are recent tables and are split to reflect smoking habits and sex, the current
cost of insurance rates used by AVLIC are at this time equal to the maximum cost
of insurance rates for many ages. AVLIC anticipates reflecting future
improvements in actual mortality experience through adjustments in the current
cost of insurance rates actually applied. AVLIC also anticipates reflecting any
future improvements in expenses incurred by applying lower percent of premiums
of loads and other expense deductions. The Death Benefits and Cash Values shown
in the tables on pages 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, Cash Surrender Values and Cash 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 0.89% (which is in
excess of the current equivalent annual rate of 0.88% 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 costs (which is
equivalent to a charge at an annual rate of 1.20% of the average net assets of
the Subaccounts). After deduction of these amounts, the illustrated gross annual
investment rates of return of 0%, 6%, and 12%, correspond to approximate net
annual rates of -2.09%, 3.91%, and 9.91% respectively.
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 portfolio's 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. MFS Co. has agreed to
bear expenses for the Global Governments Series and New Discovery Series,
subject to reimbursement by the series, such that each
LIFE
A- 1
<PAGE> 88
series "Other Expenses" shall not exceed .25% of the average daily net assets of
the series during the current fiscal year. These agreements are expected to
continue in future years but may be terminated at any time. As long as the
expense limitations continue for a portfolio, if a reimbursement occurs, it has
the effect of lowering the portfolio's expense ratio and increasing its total
return.
The 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 fifteen
transfers have been made in any Policy Year so that no transfer charges have
been incurred. Illustrated values would be different if the proposed Insured
were female, a smoker, in substandard risk classification, or were another age,
or if a higher or lower premium was illustrated.
Upon request, AVLIC will provide comparable illustration based upon the proposed
Insured's age, sex and underwriting classification, the Specified Amount, the
Death Benefit option, and Planned Periodic Premium schedule requested, and any
available riders requested. These illustrations may be provided to you in
printed form by your registered representative. AVLIC may also make these
illustrations available to you by electronic means, such as through our website.
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.
LIFE
A- 2
<PAGE> 89
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Single Endowment at Age 95
Male Issue Age: 35 Non-Smoker Standard Underwriting Class
MINIMUM FIRST YEAR PREMIUM: $10,000
INITIAL SPECIFIED AMOUNT: $55,620
DEATH BENEFIT OPTION: A
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
CASH VALUE LESS ANY
CASH SURRENDER CHARGE (1)(2) DEATH BENEFIT (1)(2)
---------------------------------------- ----------------------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ACCUMULATED ANNUAL INVESTMENT RATE OF RETURN OF: ANNUAL INVESTMENT RATE OF RETURN OF:
END OF PREMIUMS AT ---------------------------------------- ----------------------------------------
POLICY 5% INTEREST 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YEAR PER YEAR (-2.09% NET) (3.91% NET) (9.91% NET) (-2.09% NET) (3.91% NET) (9.91% NET)
- ------ ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 8,815 9,413 10,011 55,620 55,620 55,620
2 11,025 8,532 9,735 11,010 55,620 55,620 55,620
3 11,576 8,249 10,065 12,105 55,620 55,620 55,620
4 12,155 8,016 10,453 13,356 55,620 55,620 55,620
5 12,762 7,882 10,949 14,822 55,620 55,620 55,620
6 13,400 7,796 11,503 16,466 55,620 55,620 55,620
7 14,071 7,807 12,163 18,349 55,620 55,620 55,620
8 14,774 7,715 12,730 20,286 55,620 55,620 55,620
9 15,513 7,419 13,104 22,193 55,620 55,620 55,620
10 16,288 7,118 13,484 24,288 55,620 55,620 55,620
15 20,789 5,492 15,458 38,183 55,620 55,620 72,929
20 26,532 3,515 17,469 59,998 55,620 55,620 94,196
Ages
60 33,863 876 19,333 94,459 55,620 55,620 126,576
65 43,219 0* 21,064 149,151 0* 55,620 181,964
70 55,160 0* 21,998 235,218 0* 55,620 272,853
75 70,399 0* 20,803 371,035 0* 55,620 397,007
</TABLE>
- ---------------
* In the absence of an additional premium
1) Assumes a minimum first year premium of $10,000 is paid at issue with no
additional premium payment. Values would be difference if premiums are paid
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. Should a
policy lapse with loans outstanding the portion of the loans attributable to
earnings will become taxable.
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.
LIFE
A- 3
<PAGE> 90
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Single Endowment at Age 95
Male Issue Age: 35 Non-Smoker Standard Underwriting Class
MINIMUM FIRST YEAR PREMIUM: $10,000
INITIAL SPECIFIED AMOUNT: $55,620
DEATH BENEFIT OPTION: A
USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
CASH VALUE LESS ANY
CASH SURRENDER CHARGE(1)(2) DEATH BENEFIT(1)(2)
---------------------------------------- ----------------------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ACCUMULATED ANNUAL INVESTMENT RATE OF RETURN OF: ANNUAL INVESTMENT RATE OF RETURN OF:
END OF PREMIUMS AT ---------------------------------------- ----------------------------------------
POLICY 5% INTEREST 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YEAR PER YEAR (-2.09% NET) (3.91% NET) (9.91% NET) (-2.09% NET) (3.91% NET) (9.91% NET)
- ------ ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 8,565 9,163 9,761 55,620 55,620 55,620
2 11,025 8,382 9,585 10,860 55,620 55,620 55,620
3 11,576 8,199 10,015 12,055 55,620 55,620 55,620
4 12,155 8,016 10,453 13,356 55,620 55,620 55,620
5 12,762 7,882 10,949 14,822 55,620 55,620 55,620
6 13,400 7,796 11,503 16,466 55,620 55,620 55,620
7 14,071 7,807 12,163 18,349 55,620 55,620 55,620
8 14,774 7,715 12,730 20,286 55,620 55,620 55,620
9 15,513 7,419 13,104 22,193 55,620 55,620 55,620
10 16,288 7,118 13,484 24,288 55,620 55,620 55,620
15 20,789 5,492 15,458 38,183 55,620 55,620 72,929
20 26,532 3,504 17,460 59,990 55,620 55,620 94,185
Ages
60 33,863 725 19,211 94,343 55,620 55,620 126,420
65 43,219 0* 20,225 148,329 0* 55,620 180,961
70 55,160 0* 19,450 232,468 0* 55,620 269,663
75 70,399 0* 14,584 364,477 0* 55,620 389,991
</TABLE>
- ---------------
* In the absence of an additional premium
1) Assumes a minimum first year premium of $10,000 is paid at issue with no
additional premium payment. Values would be difference if premiums are paid
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. Should a
policy lapse with loans outstanding the portion of the loans attributable to
earnings will become taxable.
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.
LIFE
A- 4
<PAGE> 91
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Single Endowment at Age 95
Male Issue Age: 35 Non-Smoker Standard Underwriting Class
MINIMUM FIRST YEAR PREMIUM: $10,000
INITIAL SPECIFIED AMOUNT: $55,620
DEATH BENEFIT OPTION: B
USING CURRENT SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
CASH VALUE LESS ANY
CASH SURRENDER CHARGE(1)(2) DEATH BENEFIT(1)(2)
ACCUMULATED ---------------------------------------- ----------------------------------------
PREMIUMS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF AT ANNUAL INVESTMENT RATE OF RETURN OF: ANNUAL INVESTMENT RATE OF RETURN OF:
POLICY 5% INTEREST 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YEAR PER YEAR (-2.09% NET) (3.91% NET) (9.91% NET) (-2.09% NET) (3.91% NET) (9.91% NET)
- ------ ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 8,798 9,395 9,992 65,318 65,915 66,512
2 11,025 8,499 9,698 10,969 65,019 66,218 67,489
3 11,576 8,199 10,006 12,035 64,719 66,526 68,555
4 12,155 7,950 10,369 13,251 64,420 66,839 69,721
5 12,762 7,799 10,837 14,673 64,119 67,157 70,993
6 13,400 7,696 11,358 16,263 63,816 67,478 72,383
7 14,071 7,689 11,982 18,081 63,509 67,802 73,901
8 14,774 7,579 12,509 19,938 63,199 68,129 75,558
9 15,513 7,264 12,836 21,747 62,884 68,456 77,367
10 16,288 6,944 13,164 23,723 62,564 68,784 79,343
15 20,789 5,220 14,761 36,685 60,840 70,381 92,305
20 26,532 3,145 16,095 56,787 58,765 71,715 112,407
Ages
60 33,863 450 16,760 87,945 56,070 72,380 143,565
65 43,219 0* 16,598 136,807 0* 72,218 192,427
70 55,160 0* 14,337 212,866 0* 69,957 268,486
75 70,399 0* 7,785 330,599 0* 63,405 386,219
</TABLE>
- ---------------
* In the absence of an additional premium
1) Assumes a minimum first year premium of $10,000 is paid at issue with no
additional premium payment. Values would be difference if premiums are paid
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. Should a
policy lapse with loans outstanding the portion of the loans attributable to
earnings will become taxable.
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.
LIFE
A- 5
<PAGE> 92
ILLUSTRATION OF POLICY VALUES
AMERITAS VARIABLE LIFE INSURANCE COMPANY
ENDOWMENT AT AGE 95
Single Endowment at Age 95
Male Issue Age: 35 Non-Smoker Standard Underwriting Class
MINIMUM FIRST YEAR PREMIUM: $10,000
INITIAL SPECIFIED AMOUNT: $55,620
DEATH BENEFIT OPTION: B
USING MAXIMUM SCHEDULE OF COST OF INSURANCE RATES
<TABLE>
<CAPTION>
CASH VALUE LESS ANY
CASH SURRENDER CHARGE(1)(2) DEATH BENEFIT(1)(2)
---------------------------------------- ----------------------------------------
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
ACCUMULATED ANNUAL INVESTMENT RATE OF RETURN OF: ANNUAL INVESTMENT RATE OF RETURN OF:
END OF PREMIUMS AT ---------------------------------------- ----------------------------------------
POLICY 5% INTEREST 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
YEAR PER YEAR (-2.09% NET) (3.91% NET) (9.91% NET) (-2.09% NET) (3.91% NET) (9.91% NET)
- ------ ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 8,548 9,145 9,742 65,318 65,915 66,512
2 11,025 8,349 9,548 10,819 65,019 66,218 67,489
3 11,576 8,149 9,956 11,985 64,719 66,526 68,555
4 12,155 7,950 10,369 13,251 64,420 66,839 69,721
5 12,762 7,799 10,837 14,673 64,119 67,157 70,993
6 13,400 7,696 11,358 16,263 63,816 67,478 72,383
7 14,071 7,689 11,982 18,081 63,509 67,802 73,901
8 14,774 7,579 12,509 19,938 63,199 68,129 75,558
9 15,513 7,264 12,836 21,747 62,884 68,456 77,367
10 16,288 6,944 13,164 23,723 62,564 68,784 79,343
15 20,789 5,220 14,761 36,685 60,840 70,381 92,305
20 26,532 3,134 16,083 56,775 58,754 71,703 112,395
Ages
60 33,863 296 16,581 87,738 55,916 72,201 143,358
65 43,219 0* 15,348 135,315 0* 70,968 190,935
70 55,160 0* 10,689 208,044 0* 66,309 263,664
75 70,399 0* 0* 318,899 0* 0* 374,519
</TABLE>
- ---------------
* In the absence of an additional premium
1) Assumes a minimum first year premium of $10,000 is paid at issue with no
additional premium payment. Values would be difference if premiums are paid
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. Should a
policy lapse with loans outstanding the portion of the loans attributable to
earnings will become taxable.
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.
LIFE
A- 6
