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File Number 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MINNESOTA MUTUAL VARIABLE LIFE ACCOUNT
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(Name of Trust)
The Minnesota Mutual Life Insurance Company
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(Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
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(Depositor's Principal Executive Offices)
Dennis E. Prohofsky
Vice President, General Counsel and Secretary
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
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(Agent for Service)
Copy to:
J. Sumner Jones, Esq.
Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
hereby elects to register an indefinite amount of its Variable Adjustable Life
Second Death Insurance Policies under the Securities Act of 1933. The amount of
the filing fee is $500.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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MINNESOTA MUTUAL
VARIABLE LIFE ACCOUNT
OF
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-8B-2
N-8B-2 Item Caption in Prospectus
- ----------- ---------------------
1. Cover Page
2. Cover Page; General Descriptions, The Minnesota Mutual Life
Insurance Company, Variable Life Account
3. Not Applicable
4. Distribution of Policies
5. General Descriptions, Variable Life Account
6. General Descriptions, Variable Life Account
7. Not Applicable
8. Not Applicable
9. Legal Proceedings
10. Summary; Detailed Information About the Variable Adjustable Life
Insurance Policy; Policy Charges; Voting Rights
11. Summary; Detailed Information About the Variable Adjustable Life
Insurance Policy; General Descriptions, MIMLIC Series Fund, Inc.
12. Summary; Detailed Information About the Variable Adjustable Life
Insurance Policy; General Descriptions, MIMLIC Series Fund, Inc.
13. Detailed Information About the Variable Adjustable Life Insurance
Policy; Policy Charges
14. Detailed Information About the Variable Adjustable Life Insurance
Policy, Adjustable Life Insurance; Applications and Policy Issue
15. Detailed Information About the Variable Adjustable Life Insurance
Policy, Policy Premiums
16. Not Applicable
17. Summary; Detailed Information About the Variable Adjustable Life
Insurance Policy
18. MIMLIC Series Fund, Inc.
19. Voting Rights
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20. Not Applicable
21. Not Applicable
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. General Descriptions, The Minnesota Mutual Life Insurance Company
26. Not Applicable
27. General Descriptions, The Minnesota Mutual Life Insurance Company
28. Trustees and Principal Officers of Minnesota Mutual
29. General Descriptions, The Minnesota Mutual Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. General Descriptions, The Minnesota Mutual Life Insurance Company
36. Not Applicable
37. Not Applicable
38. Distribution of Policies
39. Distribution of Policies
40. Not Applicable
41. Distribution of Policies
42. Not Applicable
43. Not Applicable
44. Detailed Information About the Variable Adjustable Life Insurance
Policy, Policy Values
45. Not Applicable
46. Detailed Information About the Variable Adjustable Life Insurance
Policy, Policy Loans, Surrender
47. Not Applicable
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48. Not Applicable
49. Not Applicable
50. General Descriptions, Variable Life Account
51. Summary; Detailed Information About the Variable Adjustable Life
Insurance Policy, Policy Charges
52. Summary; General Descriptions, Variable Life Account; MIMLIC
Series Fund, Inc.
53. Federal Tax Status
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements
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PART I
INFORMATION REQUIRED IN PROSPECTUS
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This prospectus describes a Variable Adjustable Life Second Death Insurance
Policy ("VAL-SD") issued by The Minnesota Mutual Life Insurance Company
("Minnesota Mutual"). It provides life insurance protection payable at the death
of the second insured to die ("second death") so long as scheduled premiums are
paid. Under some plans of insurance, the face amount of insurance may decrease
or terminate during the life of the insureds. The lowest annual base premium
allowed for any plan of insurance is $600. The minimum face amount on a Policy
is $200,000.
The Policy may be adjusted, within described limits, as to face amount, premium
amount and the plan of insurance.
We assess certain charges under the Policy and these are fully described under
the heading "Policy Charges" in this prospectus on page 29. The Policy also
contains a cancellation right which is fully described under the heading "Free
Look" in this prospectus on page 29.
VAL-SD policy values may be invested in a separate account of Minnesota Mutual
called the Variable Life Account. Policy values may also be invested in a
Minnesota Mutual general account option. The actual cash value of all Policies
will vary with the investment experience of these options. The Variable Life
Account, through its sub-accounts, invests its assets in shares of MIMLIC Series
Fund, Inc. (the "Fund"). The Fund has ten Portfolios which are available to the
Variable Life Account. They are: the Growth Portfolio; the Bond Portfolio; the
Money Market Portfolio; the Asset Allocation Portfolio; the Mortgage Securities
Portfolio; the Index 500 Portfolio; the Capital Appreciation Portfolio; the
International Stock Portfolio; the Small Company Portfolio and the Value Stock
Portfolio. There is no minimum cash value associated with these variable
sub-accounts.
VAL-SD provides two death benefit options: the Cash Option and the Protection
Option. The Cash Option provides a guaranteed death benefit equal to the current
face amount. Favorable investment returns, if any, will be reflected only in
increased actual cash values, unless the policy value exceeds the net single
premium for the then current face amount, at which time the death benefit will
increase. The Protection Option provides a variable death benefit guaranteed to
be at least equal to the current face amount. Favorable investment returns, if
any, will be reflected primarily in increased life insurance coverage as well as
increased actual cash values. The Protection Option is only available until the
policy anniversary nearest the younger insured's age 70. At the policy
anniversary nearest the younger insured's age 70, the death benefit option will
be changed to the Cash Option.
Replacing existing insurance with a Policy described in this prospectus may not
be to your advantage.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO A CURRENT PROSPECTUS OF MIMLIC
SERIES FUND, INC. THIS PROSPECTUS SHOULD BE READ CAREFULLY AND RETAINED FOR
FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Minnesota Mutual Life Insurance Company
400 Robert Street North, St. Paul, Minnesota 55101-2098
(612) 298-3500
Dated:
PROSPECTUS
VARIABLE ADJUSTABLE LIFE SECOND DEATH INSURANCE POLICY
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TABLE OF CONTENTS
<TABLE>
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Page
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Summary..................................................... 1
Condensed Financial Information............................. 6
General Descriptions........................................ 7
The Minnesota Mutual Life Insurance Company............. 7
Variable Life Account................................... 7
MIMLIC Series Fund, Inc................................. 7
Additions, Deletions or Substitutions................... 8
Selection of Sub-Accounts............................... 8
The Guaranteed Principal Account........................ 9
Detailed Information about the Variable Adjustable Life
Insurance Policy
Adjustable Life Insurance............................... 10
Policy Adjustments...................................... 11
Applications and Policy Issue........................... 15
Policy Premiums......................................... 15
Policy Values........................................... 19
Death Benefit Options................................... 21
Variations in Death Benefit............................. 22
Policy Loans............................................ 22
Surrender............................................... 24
Free Look............................................... 25
Conversion.............................................. 25
Policy Exchange......................................... 25
Policy Charges.......................................... 25
Other Policy Provisions................................. 28
Other Matters
Federal Tax Status...................................... 31
Trustees and Principal Officers of Minnesota Mutual..... 35
Voting Rights........................................... 35
Distribution of Policies................................ 36
Legal Matters........................................... 37
Legal Proceedings....................................... 37
Experts................................................. 37
Registration Statement.................................. 37
Special Terms............................................... 38
Financial Statements of The Minnesota Mutual Life Insurance
Company....................................................
Appendix I- Illustrations of Policy Values, Death Benefits
and Premiums..................................... 39
Appendix II- Summary of Policy Charges...................... 45
Appendix III- Illustration of Death Benefit Calculation..... 50
Appendix IV-Policy Loan Example............................. 51
Appendix V-Example of Sales Load Computation................ 52
Appendix VI-Average Annual Returns.......................... 53
Appendix VII-S&P 500 Performance History.................... 54
Appendix VIII-Range of Return............................... 55
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SUMMARY
The following summary is designed to answer certain general questions
concerning the Policy and to give you a brief overview of the more significant
Policy features. This summary is not comprehensive and is qualified in its
entirety by the more specific information contained elsewhere in this
prospectus. Reference should be made to the heading "Special Terms" for the
definitions of unfamiliar terms.
WHAT IS A VARIABLE ADJUSTABLE LIFE SECOND DEATH INSURANCE POLICY?
The Variable Adjustable Life Insurance Policy (the "Policy") described in
this prospectus combines traditional insurance provisions, flexible
administrative procedures and significant and useful market sensitive investment
features. First and foremost, the Policy provides a guaranteed death benefit
payable at the second death so long as scheduled premiums are paid. In this
respect, the Policy is similar to conventional survivorship life policies. In
addition, however, the Policy contains adjustment features which give you the
flexibility to tailor the Policy to your individual requirements at issue and to
adjust the Policy thereafter as your insurance needs change. Policy values are
invested at your direction in the several portfolios of MIMLIC Series Fund, Inc.
(the "Fund") or in a Minnesota Mutual general account option. Such investment
enables you to obtain market rates of return on your investment in the Policy in
combination with guaranteed insurance protection.
WHAT IS THE GUARANTEED DEATH BENEFIT?
We guarantee that the face amount of insurance shown on the policy
specification page will be paid at the second death so long as you do not have
policy indebtedness and all scheduled premiums have been paid. Some Policies
will have a scheduled decrease in such guaranteed face amount at the end of the
initial policy protection period. In such case, the time and amount of the
decrease are also shown on the policy specification page. The importance of the
guarantee is that adverse investment performance may never reduce your life
insurance protection below the guaranteed amount. We impose a charge not to
exceed 3 cents per thousand dollars of face amount per month for providing this
guarantee.
WHAT MAKES THE POLICY "ADJUSTABLE"?
The Policy is termed "Adjustable" because it allows you the flexibility to
custom-design your Policy at issue and thereafter to change or "adjust" your
Policy as your insurance needs change. The three major components in designing
your Policy are the level of premiums you wish to pay, the level of death
benefit protection you need and the appropriate "plan" of insurance for you. You
may choose any two of the three components--premium, face amount and plan--and
we will calculate the third component.
Within very broad limits, including those designed to assure that the Policy
qualifies as life insurance for tax purposes, you may choose any level of
premium or death benefit that you wish. In addition, we offer a broad range of
"plans" of insurance. Generally speaking, a plan refers to the level of cash
value accumulation assumed in the design of the Policy and, for whole life
plans, the period of time over which you will have to pay premiums. The greater
your plan of insurance, the larger the policy values you may expect to be
available for investment in the Policy's actual cash value, loans or partial
surrenders and, for whole life plans, the shorter the period of time for which
you will have to pay premiums.
The maximum plan of insurance available is one where the Policy becomes
paid-up after the payment of ten annual premiums. A paid-up Policy is one for
which no additional premiums are required to guarantee the face amount of
insurance until the second death, provided there is no policy indebtedness.
Whole life plans may be suitable for individuals who wish to ensure lifetime
coverage, without any scheduled reduction in face amount as described below, by
the payment of relatively higher premiums and, in certain cases, for a lesser
period of time, or who wish to accumulate substantial cash values by utilizing
the investment features of the Policy.
The minimum plan that we offer at original issue is a ten year protection
Policy. If the younger insured's age at original issue is over 70, the minimum
plan of protection will
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be less than ten years, as described in the table below:
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YOUNGER INSURED'S MINIMUM PLAN
ISSUE AGE (IN YEARS)
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71 9
72 8
73 7
74 6
75 or greater 5
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As used herein a protection Policy is one which provides only a term plan of
insurance, namely one with a stated face amount and premium level, providing an
illustrated face amount for a specified number of years, always less than for
whole life. A protection plan of insurance is designed to accumulate cash value
at the end of the time during which the initial face amount is in force only to
the extent that investment returns exceed the assumed rate of return indicated
in your Policy as the tabular cash value. Absent an adjustment to a new plan, at
the end of the initial protection period you would have a whole life plan of
insurance for a lower face amount, based on continued payment of your scheduled
premiums. A protection plan requires the lowest initial level of premiums and
offers the most insurance protection with the lowest investment element. The
protection plan may be a suitable starting point for young policy owners who
have not reached their peak earning years but who have substantial life
insurance needs.
For any given face amount of insurance, you may select a plan that falls
anywhere between the minimum protection plan and the maximum ten premium payment
whole life plan. The higher the premium you pay, the greater will be your cash
value accumulation at any given time and therefore, for whole life plans, the
shorter the period during which you need to pay premiums before your Policy
becomes paid-up. For example, the table below shows the premium required for
various plans for two insureds, one female age 40 and one male age 40, both
standard nonsmokers for a $1,000,000 face amount VAL-SD policy.
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ANNUAL
PLAN OF INSURANCE PREMIUM
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Minimum-- 10 year protection plan $712
20 year protection plan $ 1,019
Whole life plan $ 10,805
25 pay life plan $ 13,396
Maximum-- 10 pay life plan $ 26,265
</TABLE>
The flexibility described above with respect to designing your Policy to
suit your needs at issue continues throughout the time the Policy remains in
force by virtue of its adjustability features. As your insurance needs and
personal circumstances change over the years, you may change, subject to the
limitations described herein, the premium and face amount and thus the plan.
Some limitations do apply to policy adjustments, and these limitations are
more fully described in this prospectus. See the heading "Policy Adjustments" in
this prospectus on page 14. Any policy adjustment for a change in premium must
result in a change of the annual premium of at least $300 and any adjustment to
a Policy's face amount generally must result in a change of the face amount of
at least $50,000. Other than an automatic adjustment at the point when the face
amount is scheduled to decrease, an automatic adjustment upon the change to the
Cash Option death benefit at the younger insured's age 70, or an adjustment to a
zero or stop premium, an adjusted Policy must provide a level face amount of
insurance to the next policy anniversary after the later of: (a) five years from
the date of adjustment; or (b) ten years from the date of policy issue. If the
younger insured's age at original issue is over 70, the adjusted Policy must
provide a level face amount of insurance to the next policy anniversary after
the later of: (a) five years from the date of adjustment; or (b) a certain
number of years from the date of policy issue, based on the table below:
<TABLE>
<CAPTION>
YOUNGER INSURED'S MINIMUM PLAN
ISSUE AGE (IN YEARS)
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<S> <C>
71 9
72 8
73 7
74 6
75 or greater 5
</TABLE>
WHAT MAKES THE POLICY "VARIABLE"?
The Policy is termed "Variable" because unlike traditional whole life and
universal life contracts which provide for accumulations of contract values at
fixed rates determined by the insurance company, Variable Adjustable Life policy
values may be invested in a separate account of ours called the Minnesota Mutual
Variable Life Account ("Variable Life Account"), the sub-accounts of which
invest in corresponding Portfolios of the Fund. Thus, your policy values
invested in
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these sub-accounts will reflect market rates of return.
The actual cash value of the Policies, to the extent invested in
sub-accounts of the Variable Life Account, will vary with the investment
experience of the sub-accounts of the Variable Life Account. These have no
guaranteed minimum actual cash value. Therefore, you bear the risk that adverse
investment performance may depreciate your investment in the Policy. At the same
time, the Policy offers you the opportunity to have your actual cash value
appreciate more rapidly than it would under comparable fixed benefit contracts
by virtue of favorable investment performance. In addition, under some Policies,
the death benefit will also increase and decrease (but not below the guaranteed
amount) with investment experience.
Those seeking the traditional insurance protections of a guaranteed cash
value may allocate premiums to the guaranteed principal account. The guaranteed
principal account is a general account option with a guaranteed accumulation at
a fixed rate of interest. While it is more fully described in the Policy,
additional information on this option may be found under the heading "The
Guaranteed Principal Account" in this prospectus on page 11.
WHAT VARIABLE INVESTMENT OPTIONS ARE AVAILABLE?
The Variable Life Account invests in ten Portfolios of the Fund. These offer
policy owners the opportunity to invest in stocks, bonds, mortgage securities
and money market instruments. Policy owners who wish to actively manage the
investment of their actual cash values may direct their funds to the Growth,
Bond, Money Market, Mortgage Securities, Index 500, Capital Appreciation,
International Stock, Small Company and Value Stock Portfolios. We also offer an
Asset Allocation Portfolio, which is designed to offer policy owners who do not
wish to direct their investment the opportunity to have the Fund's investment
adviser make the decisions concerning what percentages of the assets should be
invested in stocks, bonds and money market instruments at any given time. The
investment objectives and certain policies of these Portfolios of the Fund are
as follows:
The GROWTH PORTFOLIO seeks the long-term accumulation of capital. Current
income, while a factor in portfolio selection, is a secondary objective. The
Growth Portfolio will invest primarily in common stocks and other equity
securities. Common stocks are more volatile than debt securities and involve
greater investment risk.
The BOND PORTFOLIO seeks as high a level of long-term total rate of return
as is consistent with prudent investment risk. A secondary objective is to
seek preservation of capital. The Bond Portfolio will invest primarily in
long-term, fixed-income, high-quality debt instruments. The value of debt
securities will tend to rise and fall inversely with the rise and fall of
interest rates.
The MONEY MARKET PORTFOLIO seeks maximum current income to the extent
consistent with liquidity and the preservation of capital. The Money Market
Portfolio will invest in money market instruments and other debt securities
with maturities not exceeding one year. The return produced by these
securities will reflect fluctuations in short-term interest rates.
AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
The ASSET ALLOCATION PORTFOLIO seeks as high a level of long-term total
rate of return as is consistent with prudent investment risk. The Asset
Allocation Portfolio will invest in common stocks and other equity securities,
bonds and money market instruments. The Asset Allocation Portfolio involves
the risks inherent in stocks and debt securities of varying maturities and the
risk that the Portfolio may invest too much or too little of its assets in
each type of security at any particular time.
The MORTGAGE SECURITIES PORTFOLIO seeks a high level of current income
consistent with prudent investment risk. In pursuit of this objective the
Mortgage Securities Portfolio will follow a policy of investment primarily in
mortgage-related securities. Prices of mortgage-related securities will tend
to rise and fall inversely with the rise and fall of the general level of
interest rates.
The INDEX 500 PORTFOLIO seeks investment results that correspond generally
to the price and yield
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performance of the common stocks included in the Standard & Poor's Corporation
500 Composite Stock Price Index (the "Index"). It is designed to provide an
economical and convenient means of maintaining a broad position in the equity
market as part of an overall investment strategy. All common stocks, including
those in the Index, involve greater investment risk than debt securities. The
fact that a stock has been included in the Index affords no assurance against
declines in the price or yield performance of that stock.
The CAPITAL APPRECIATION PORTFOLIO seeks growth of capital. Investments
will be made based upon their potential for capital appreciation. Therefore,
current income will be incidental to the objective of capital growth. Because
of the market risks inherent in any equity investment, the selection of
securities on the basis of their appreciation possibilities cannot ensure
against possible loss in value.
The INTERNATIONAL STOCK PORTFOLIO seeks long-term capital growth. In
pursuit of this objective the International Stock Portfolio will follow a
policy of investing in stocks issued by companies, large and small, and debt
obligations of companies and governments outside the United States. Current
income will be incidental to the objective of capital growth. The Portfolio is
designed for persons seeking international diversification. Investors should
consider carefully the substantial risks involved in investing in securities
issued by companies and governments of foreign nations, which are in addition
to the usual risks inherent in domestic investments.
The SMALL COMPANY PORTFOLIO seeks long-term accumulation of capital. In
pursuit of this objective, the Small Company Portfolio will follow a policy of
investing primarily in common and preferred stocks issued by small companies,
defined in the terms of either market capitalization or gross revenues.
Investments in small companies usually involve greater investment risks than
fixed income securities or corporate equity securities generally. Small
companies will typically have a market capitalization of less than $1.5
billion or annual gross revenues of less than $1.5 billion.
The VALUE STOCK PORTFOLIO seeks long-term accumulation of capital. The
production of income through the holding of dividend paying stocks will be a
secondary objective of the Portfolio. The Value Stock Portfolio will invest
primarily in equity securities of companies which, in the opinion of the
Portfolio's investment adviser, have market values which appear low relative
to their underlying value or future earnings and growth potential.
There is no assurance that any Portfolio will meet its objectives.
Additional information concerning the investment objectives, policies and risks
of the Portfolios can be found in the current prospectus for the Fund, which is
attached to this prospectus.
HOW DO YOU ALLOCATE YOUR NET PREMIUMS?
In your initial policy application, you indicate how you want your net
premiums allocated among the guaranteed principal account and the sub-accounts
of the Variable Life Account. All future net premiums will be allocated in the
same proportion until you send us a written request to change the allocation.
Similarly, you may transfer amounts from one sub-account to another by sending
us a written request or by calling Minnesota Mutual.
WHAT DEATH BENEFIT OPTIONS ARE OFFERED UNDER THE POLICY?
The Policy provides two death benefit options: the Cash Option and the
Protection Option. Your choice will depend on whether you want favorable
investment experience of amounts invested in sub-accounts of the Variable Life
Account to be reflected in accelerated accumulations of actual cash value or in
enhanced life insurance coverage. If investment performance is less than that
assumed in the design of the Policy, the death benefit will still equal the
current face amount.
The Cash Option provides a fixed death benefit equal to the guaranteed face
amount. Favorable investment returns, if any, will be reflected in increased
actual cash values which will, on whole life plans, shorten the premium paying
period. Only if and when the policy value exceeds the net single premium for the
then current face amount will the death benefit vary.
The Protection Option provides a variable death benefit from the issue date
as well as variable actual cash values. Favorable investment returns will be
reflected both in increased life insurance coverage and
4
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increased cash value accumulations, although any increases in actual cash values
under the Protection Option will not be as great as under the Cash Option. The
Protection Option is only available until the policy anniversary nearest the
younger insured's age 70. At the policy anniversary nearest the younger
insured's age 70, the Protection Option is automatically converted to the Cash
Option. At that time we will automatically adjust your Policy. We will retain
the current premium amount, adjust the face amount to equal the death benefit
immediately preceding the adjustment, and waive any adjustment restrictions that
would otherwise apply.
DO YOU HAVE ACCESS TO YOUR POLICY VALUES?
Yes. Your actual cash value is available to you until the second death. You
may use the actual cash value to provide retirement income, as collateral for a
loan, to continue some insurance protection if you do not wish to continue
paying premiums or to obtain cash by surrendering your Policy in full or in
part.
You may also borrow up to 90 percent of your policy value as a policy loan.
Each alternative may be subject to conditions described in the Policy or in this
prospectus under the heading "Policy Values" on page 23 and certain transactions
may have tax consequences as described under the heading "Federal Tax Status" on
page 36.
WHAT CHARGES ARE ASSOCIATED WITH THE POLICY?
We assess certain charges from each premium payment, from policy values and
from the amounts held in the Variable Life Account. All of these charges, which
are largely designed to cover our expenses in providing insurance protection and
in distributing and administering the Policies, are fully described under the
heading "Policy Charges" in this prospectus on page 29. Because of the
significance of these charges in early policy years, prospective purchasers
should purchase a Policy only if they intend to and have the financial capacity
to keep it in force for a substantial period.
Against premiums we deduct sub-standard risk charges and premiums for
additional benefits.
Against base premiums we deduct a basic sales load of 7 percent and we may
also deduct a first year sales load not to exceed 23 percent. We also deduct
from premiums an underwriting charge, a premium tax charge of 2.5 percent and a
federal tax charge of 1.25 percent. Nonrepeating premiums are currently subject
to the premium tax charge and the federal tax charge.
Against the actual cash value of a Policy we deduct an administration charge
not to exceed $15 per month, a face amount guarantee charge not to exceed 3
cents per thousand dollars of face amount per month, a transaction charge for
each Policy adjustment or transfer, and a cost of insurance charge.
Against the assets held in the Variable Life Account we assess a mortality
and expense risk charge which is deducted from the Variable Life Account assets
on each valuation date at an annual rate of .50 percent of the Variable Life
Account average daily net assets.
MIMLIC Asset Management Company, one of our subsidiaries, acts as the
investment adviser to the Fund and deducts from the asset value of each
Portfolio of the Fund a fee for its services which are provided under an
investment advisory agreement. The investment advisory agreement provides that
the fee shall be computed at the annual rate of .4 percent of the Index 500
Portfolio, .75 percent of the Capital Appreciation, Small Company and Value
Stock Portfolios, 1.0 percent of the International Stock Portfolio and .5
percent of each of the remaining Portfolio's average daily net assets.
For more information about the Fund, see the prospectus of MIMLIC Series
Fund, Inc. which is attached to this prospectus.
ARE THE BENEFITS UNDER A POLICY SUBJECT TO FEDERAL INCOME TAX?
Under current federal tax law, life insurance policies receive tax-favored
treatment. The death benefit is generally excludable from the beneficiary's
gross income for federal income tax purposes, according to Section 101(a)(1) of
the Internal Revenue Code. Owners of a life insurance policy are not taxed on
any increase in the cash value while the policy remains in force.
If a Policy is a modified endowment policy under federal tax law, certain
distributions made during either insured's lifetime, such as loans and partial
withdrawals from, and collateral assignments of, the Policy are includable in
gross income on an income-first basis. A 10 percent penalty tax may also be
imposed on distributions made before the
5
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policy owner attains age 59 1/2. Policies that are not modified endowment
policies under federal tax law receive preferential tax treatment with respect
to certain distributions.
For a discussion of the tax issues associated with this Policy, see "Federal
Tax Status" in this prospectus on page .
HOW DO YOU PURCHASE A POLICY?
To be eligible to purchase a Policy both insureds must be between age 20 and
age 85 inclusive, satisfy our underwriting standards and the Policy must have a
face amount of at least $200,000. The procedure to purchase a Policy is to
complete an application, provide us with evidence of insurability satisfactory
to us and pay your first scheduled premium. See the heading "Applications and
Policy Issue" in this prospectus on page 19.
For a limited time after your application for the Policy and delivery of it,
the Policy may be returned for a refund of all premium payments within the terms
of its "free look" provision. See the heading "Free Look" in this prospectus on
page 29. As a conversion privilege you can obtain comparable fixed insurance
coverage by transferring all of the policy value to the guaranteed principal
account and thereafter allocating all premiums to that account.
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CONDENSED FINANCIAL INFORMATION
No condensed financial information is included in this prospectus for the
Variable Life Account because no variable life policies of this class have been
sold prior to the date of this prospectus.
6
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GENERAL DESCRIPTIONS
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
We are a mutual life insurance company organized in 1880 under the laws of
Minnesota. Our home office is at 400 Robert Street North, St. Paul, Minnesota
55101-2098, telephone: (612) 298-3500. We are licensed to do a life insurance
business in all states of the United States (except New York where we are an
authorized reinsurer), the District of Columbia, Canada and Puerto Rico.
VARIABLE LIFE ACCOUNT
A separate account called the Minnesota Mutual Variable Life Account was
established on October 21, 1985, by our Board of Trustees in accordance with
certain provisions of the Minnesota insurance law. The separate account is
registered as a "unit investment trust" with the Securities and Exchange
Commission under the Investment Company Act of 1940, but such registration does
not signify that the Securities and Exchange Commission supervises the
management, or the investment practices or policies, of the Variable Life
Account. The separate account meets the definition of a "separate account" under
the federal securities laws.
We are the legal owner of the assets in the Variable Life Account. The
obligations to policy owners and beneficiaries arising under the Policies are
general corporate obligations of Minnesota Mutual and thus our general assets
back the Policies. The Minnesota law under which the Variable Life Account was
established provides that the assets of the Variable Life Account shall not be
chargeable with liabilities arising out of any other business which we may
conduct, but shall be held and applied exclusively to the benefit of the holders
of those variable life insurance policies for which the separate account was
established. The investment performance of the Variable Life Account is entirely
independent of both the investment performance of our General Account and of any
other separate account which we may have established or may later establish.
The Variable Life Account currently has ten sub-accounts to which policy
owners may allocate premiums. Each sub-account invests in shares of a
corresponding Portfolio of the Fund.
MIMLIC SERIES FUND, INC.
The Variable Life Account currently invests exclusively in MIMLIC Series
Fund, Inc. (the "Fund"), a mutual fund of the series type. The Fund is
registered with the Securities and Exchange Commission as a diversified,
open-end management investment company, but such registration does not signify
that the Commission supervises the management, or the investment practices or
policies, of the Fund. The Fund issues its shares, continually and without sales
charge, only to us and certain of our separate accounts including the Variable
Life Account. Shares are sold and redeemed at net asset value.
The Fund's investment adviser is MIMLIC Asset Management Company ("MIMLIC
Management"). It acts as an investment adviser to the Fund pursuant to an
advisory agreement. MIMLIC Management is a subsidiary of Minnesota Mutual.
While MIMLIC Management acts as investment adviser to the Fund and its
Portfolios, Winslow Capital Management, Inc., a Minnesota corporation with
principal offices in Minneapolis, Minnesota, has been retained under an
investment sub-advisory agreement to provide investment advice to the Capital
Appreciation Portfolio of the Fund. Similarly, Templeton Investment Counsel,
Inc., a Florida corporation with principal offices in Fort Lauderdale, has been
retained under an investment sub-advisory agreement to provide investment advice
to the International Stock Portfolio of the Fund.
The Fund currently has fourteen investment Portfolios, ten of which are
available to the Variable Life Account. A series of the Fund's common stock is
issued for each Portfolio. The assets of each Portfolio are separate from the
others and each has different investment objectives and policies. Therefore,
each Portfolio operates as a separate investment fund and the investment
performance of one has no effect on the investment performance of any other
Portfolio.
All dividends and capital gains distributions from the Portfolios are
automatically reinvested in shares of that Portfolio at net asset value.
For more information on the Fund and its Portfolios, see "Summary--What
investment
7
<PAGE>
options are available?" in this prospectus and the prospectus of the MIMLIC
Series Fund, Inc. which is attached to this prospectus.
ADDITIONS, DELETIONS OR SUBSTITUTIONS
We reserve the right to add, combine or remove any sub-accounts of the
Variable Life Account when permitted by law. Each additional sub-account will
purchase shares in a new portfolio or mutual fund. Such sub-accounts may be
established when, in our sole discretion, marketing, tax, investment or other
conditions warrant such action. We will use similar considerations should there
be a determination to eliminate one or more of the sub-accounts of the Variable
Life Account. The addition of any investment option will be made available to
existing policy owners on such basis as may be determined by us.
We retain the right, subject to any applicable law, to make substitutions
with respect to the investments of the sub-accounts of the Variable Life
Account. If investment in a Fund Portfolio should no longer be possible or if we
determine it becomes inappropriate for variable policies, we may substitute
another mutual fund or portfolio for a sub-account. Substitution may be made
with respect to existing policy values and future premium payments. A
substitution may be made only with any necessary approval of the Securities and
Exchange Commission.
We reserve the right to transfer assets of the Variable Life Account as
determined by us to be associated with the Policies to another separate account.
A transfer of this kind may require the approvals of state regulatory
authorities and of the Securities and Exchange Commission.
We also reserve the right, when permitted by law, to de-register the
Variable Life Account under the Investment Company Act of 1940, to restrict or
eliminate any voting rights of the policy owners, and to combine the Variable
Life Account with one or more of our other separate accounts.
Shares of the Portfolios of the Fund are also sold to other of our separate
accounts, which are used to receive and invest premiums paid under our variable
annuity contracts and variable life insurance policies. It is conceivable that
in the future it may be disadvantageous for variable life insurance separate
accounts and variable annuity separate accounts to invest in the Fund
simultaneously. Although neither Minnesota Mutual nor the Fund currently
foresees any such disadvantages either to variable life insurance policy owners
or to variable annuity contract owners, the Fund's Board of Directors intends to
monitor events in order to identify any material conflicts between such policy
owners and contract owners and to determine what action, if any, should be taken
in response thereto. Such action could include the sale of Fund shares by one or
more of the separate accounts, which could have adverse consequences. Material
conflicts could result from, for example, (1) changes in state insurance laws,
(2) changes in federal income tax laws, (3) changes in the investment management
of any of the Portfolios of the Fund, or (4) differences in voting instructions
between those given by policy owners and those given by contract owners.
SELECTION OF SUB-ACCOUNTS
Although the purpose of the Policy is primarily to provide lifetime life
insurance protection payable at the second death, a central objective is to
provide benefits that will increase in value if favorable investment results are
achieved. Historically, for investments held over relatively long periods, the
investment performance of common stocks has generally been superior to that of
long-term or short-term debt securities, even though common stocks have been
subject to more dramatic changes in value over short periods of time.
Accordingly, the common stock sub-accounts, growth or value, may be the more
desirable option for policy owners who are willing to accept such short-term
risks. The selection of the aggressive growth sub-account and the small company
sub-account will tend to magnify such risks, as will the international stock
sub-account, while the selection of the index sub-account will tend to match
those risks with the performance of those common stocks included in the
underlying index.
On the other hand, the experience of the recent past has been sharply
divergent from the long-term historical record. Short-term interest rates were,
for a time, at a historically high level and for some period the prices of a
diversified portfolio of equity securities were declining during a period when
the cost of living was rising. The value of long-term bonds and mortgage
securities have fallen and risen to a much greater extent than in the past. Some
policy owners, who desire the greatest safety of principal, may prefer the money
market sub-account, recognizing that
8
<PAGE>
the level of short-term rates may change rather rapidly. Some policy owners may
wish to divide their funds among two or more sub-accounts. Some may wish to rely
on MIMLIC Management's judgment for an appropriate asset mix by choosing the
asset allocation sub-account. You must make a choice, taking into account how
willing you might be to accept investment risks and the manner in which your
other assets are invested.
THE GUARANTEED PRINCIPAL ACCOUNT
The guaranteed principal account is a general account option. You may
allocate net premiums and may transfer your actual cash value subject to Policy
limitations to the guaranteed principal account which is part of Minnesota
Mutual's general account.
Because of exemptive and exclusionary provisions, interests in Minnesota
Mutual's general account have not been registered under the Securities Act of
1933, and the general account has not been registered as an investment company
under the Investment Company Act of 1940. Therefore, neither the guaranteed
principal account nor any interest therein is subject to the provisions of these
Acts, and Minnesota Mutual has been advised that the staff of the SEC does not
review disclosures relating to it. Disclosures regarding the guaranteed
principal account may, however, be subject to certain generally applicable
provisions of the Federal Securities Laws relating to the accuracy and
completeness of statements made in prospectuses.
This prospectus describes a VAL-SD insurance policy and is generally
intended to serve as a disclosure document only for the aspects of the Policy
relating to the sub-accounts of the Variable Life Account. For complete details
regarding the guaranteed principal account, please see the VAL-SD Policy.
GENERAL DESCRIPTION Minnesota Mutual's general account consists of all
assets owned by Minnesota Mutual other than those in the Variable Life Account
and any other separate accounts which Minnesota Mutual may establish. The
guaranteed principal account is that portion of the general assets of Minnesota
Mutual which is attributable to this Policy and other variable policies,
exclusive of policy loans. The description is for accounting purposes only and
does not represent a division of the general account assets for the specific
benefit of variable life policies. Allocations to the guaranteed principal
account become part of the general assets of Minnesota Mutual and are used to
support insurance and annuity obligations. Subject to applicable law, Minnesota
Mutual has sole discretion over the investment of assets of the general account.
Policy owners do not share in the actual investment experience of the assets in
the general account.
A portion or all the net premiums may be allocated or transferred to
accumulate at a fixed rate of interest in the guaranteed principal account. Such
amounts are guaranteed by Minnesota Mutual as to principal and a minimum rate of
interest. Transfers from the guaranteed principal account to the sub-accounts of
the Variable Life Account are subject to certain limitations with respect to
timing and amount.
GENERAL ACCOUNT VALUE Minnesota Mutual bears the full investment risk for
amounts allocated to the guaranteed principal account and guarantees that
interest credited to each policy owner's actual cash value in the guaranteed
principal account will not be less than an annual rate of 4 percent without
regard to the actual investment experience of the general account. Consequently,
if a policy owner allocates all net premiums only to the guaranteed principal
account, and if all scheduled premiums are paid when due, there is no policy
adjustment, and we deduct the maximum cost of insurance charges and all other
charges as set forth in this Policy, then the actual cash value will be at least
equal to the tabular cash value of the Policy. Minnesota Mutual may, at its sole
discretion, credit a higher rate of interest, "excess interest," although it is
not obligated to credit interest in excess of 4 percent per year, and might not
do so. Any interest credited on the Policy's actual cash value in the guaranteed
principal account in excess of the guaranteed minimum rate per year will be
determined at the sole discretion of Minnesota Mutual. The policy owner assumes
the risk that interest credited may not exceed the guaranteed minimum rate.
Even if excess interest is credited to the actual cash value in the
guaranteed principal account, no excess interest will be credited to that
portion of the policy value which is in the loan account in the general account.
However, such loan account will be credited interest at a rate which is not less
than the policy loan interest rate minus 2 percent per annum.
9
<PAGE>
- --------------------------------------------------------------------------------
DETAILED INFORMATION ABOUT THE VARIABLE
ADJUSTABLE LIFE SECOND DEATH INSURANCE POLICY
ADJUSTABLE LIFE INSURANCE
VARIABLE ADJUSTABLE LIFE SECOND DEATH This Policy is similar both to a
Minnesota Mutual product known as "adjustable life" and to a Minnesota Mutual
product known as "joint survivor life". This Policy, like joint survivor life
insurance, pays a death benefit at the death of the second to die of two named
insureds. This Policy, like adjustable life insurance, permits you to determine
the amount of life insurance protection you need and the amount of money you can
afford to pay. Based on your selection of any two of the three components of a
Policy-- face amount, premium and plan--we will then calculate the third. Thus,
adjustable life allows you the flexibility to custom-design a Policy to meet
your needs. Theoretically, each Policy can be unique because of the different
combinations of ages, amount of life insurance protection and premium. In
addition, adjustable life is designed to adapt to your changing needs and
objectives by allowing you to change your Policy after issue. The face amount
and premium level, and thus the plan of insurance, may be adjusted by you,
subject to the limitations described herein, so long as the Policy remains in
force.
FLEXIBILITY AT ISSUE The Policy offered by this prospectus provides the
same type of flexibility found in conventional adjustable life. Subject to
certain minimums, maximums and our underwriting standards, you may choose any
level of premium or face amount that you wish. This flexibility results in a
broad range of plans of insurance. Generally speaking, a plan, when used with
respect to the Policy, refers to the level of cash value accumulation assumed in
the design of the Policy and, for whole life plans, the period of coverage over
which you will have to pay premiums.
Whole life insurance plans provide life insurance in an amount at least
equal to the initial face amount at the second death whenever that occurs.
Premiums may be payable for a specified number of years or until the second
death. Whole life insurance plans contemplate an eventual cash value
accumulation, at or before the younger insured's age 100, equal to the net
single premium required for that face amount of insurance. The net single
premium for a whole life insurance plan is the amount of money that is
necessary, on any given date, to pay for all future guaranteed cost of insurance
charges for the entire lifetime of both insureds without the payment of
additional premium. This determination assumes that the current face amount of
the Policy will be constant and that the Policy will perform at its assumed rate
of return.
Protection insurance plans provide life insurance in an amount at least
equal to the initial face amount at the second death for a specified period.
Protection plans of insurance assume an eventual exhaustion of cash value at the
end of that period, except for the cash value associated with a residual amount
of insurance coverage at the end of the initial protection period. Under this
Policy, after that initial protection period, insurance coverage in a reduced
amount is available until the second death.
The "greater" your plan of insurance, the larger the policy values you may
expect to be available for investment in the Fund Portfolios, loans or partial
surrenders and, for whole life plans of insurance, the shorter the period of
time for which you will have to pay premiums. Under the Policy, the highest
premium amount permitted at the time of issue, or the maximum plan of insurance,
for a specific face amount is one which will provide a fully paid-up Policy
after the payment of ten annual premium payments. A Policy is paid-up when its
policy value is such that no further premiums are required to provide the face
amount of insurance coverage until the second death, provided there is no policy
indebtedness.
Examples of such whole life plans include Policies which become paid-up upon
the payment of a designated number of annual premiums, such as ten pay life or
twenty pay life. If you select a premium level for a specific face amount which
would cause the Policy to become paid-up at other than a policy anniversary, you
will be required to pay scheduled premiums until the policy anniversary
immediately following the date the Policy is scheduled to become paid-up. The
Policy will be issued with a scheduled increase in face amount to reflect the
fact that the scheduled premiums were in excess of the
10
<PAGE>
premiums required to have a paid-up Policy for the initial face amount of
coverage.
If you select a premium amount which is less than the premium required for a
whole life plan or, in other words, if you select a protection plan of
insurance, the guaranteed face amount of insurance provided by the Policy will
not be level during the lifetimes of both insureds. In that instance, the
initial face amount will be in effect until the Policy's tabular cash value,
i.e., the cash value which is assumed in designing the Policy and which would be
guaranteed in a conventional fixed-benefit policy, is exhausted. At that time a
lower amount of insurance will become effective, such amount being calculated on
the basis of the continued payment of the scheduled premiums and a whole life
plan of insurance. The result is that the Policy, on issue, will have an initial
guaranteed death benefit extending to a stated date. In addition, a lower death
benefit is illustrated, which is guaranteed thereafter until the second death.
For example, if a standard risk VAL-SD Policy were issued with a face amount
of $1,000,000 and an annual premium of $11,300, the plan of insurance for a male
age 40 and a female age 40 at issue, both nonsmokers, would be full coverage for
twenty years at which time the face amount would be reduced to $95,615
guaranteed until the second death.
The table below shows the tabular cash values and guaranteed death benefits
for the Policy described in the above example, and the scheduled reduction which
occurs twenty years after issue.
SCHEDULED REDUCTION
<TABLE>
<CAPTION>
GUARANTEED
MINIMUM
POLICY ANNUAL TABULAR VALUE DEATH BENEFIT
YEAR PREMIUM END OF YEAR AT ISSUE
- ----------- ----------- --------------- ----------------
<S> <C> <C> <C>
5 $ 11,300 $ 38,443 $ 1,000,000
10 11,300 80,437 1,000,000
15 11,300 91,878 1,000,000
20 11,300 590 1,000,000
21 11,300 6,289 95,615
25 11,300 26,742 95,615
</TABLE>
At the policy anniversary when the scheduled reduction is to occur, we will
attempt to make a policy adjustment to maintain the face amount of $1,000,000
and the annual premium of $11,300. If the actual cash value with the annual
premium is sufficient to provide at least one year of protection at the then
current face amount, we will adjust your Policy, keeping your face amount and
annual premium constant, either eliminating the scheduled reduction in the face
amount or providing that reduction at a later policy anniversary.
If we cannot make the adjustment to maintain the current face amount, the
scheduled reduction in face amount will occur as scheduled; the resulting face
amount will not be less than that guaranteed.
The lowest annual base premium allowed for any plan of insurance is $600.
Subject to this limitation, the lowest premium you may choose for any specific
amount of life insurance protection is a premium which will provide a level
death benefit for a period which shall be the longer of ten years from the
policy issue date or five years from the date of a policy adjustment. If the
younger insured's age at original issue is over age 70, the minimum plan of
protection will be less than ten years, as described in the table below:
<TABLE>
<CAPTION>
YOUNGER INSURED'S MINIMUM PLAN
ISSUE AGE (IN YEARS)
- ----------------- -------------
<S> <C>
71 9
72 8
73 7
74 6
75 or greater 5
</TABLE>
This is the minimum plan of insurance for any given face amount. The minimum
initial face amount on a Policy is $200,000.
POLICY ADJUSTMENTS
Adjustable life insurance policies allow an owner to change the premium,
face amount or the plan of insurance of the Policy after it is issued. Subject
to the limitations described more fully below, you can at any time change the
face amount of your Policy or your scheduled premium. A change in scheduled
11
<PAGE>
premium or face amount will usually result in a change in the plan of insurance.
Depending upon the change you request, the premium paying period may be
lengthened or shortened for whole life plans or the plan may be converted from a
whole life plan to a protection type plan which provides for a scheduled
reduction in face amount at a future date. For Policies having a protection type
plan, a change in face amount or premium may convert the Policy to a whole life
plan by eliminating the scheduled decrease in face amount or it may change the
time at which the decrease is scheduled to occur.
Changes in premium, face amount or the plan of insurance are referred to as
policy adjustments. They may be made singly or in combination with one another.
There are also four other types of policy adjustments: (1) a partial surrender
of a Policy's cash value; (2) an adjustment so that there are no further
scheduled base premiums; (3) an automatic adjustment at the point when the face
amount is scheduled to decrease; and (4) an automatic adjustment made upon the
change in the death benefit option at the policy anniversary nearest the younger
insured's age 70. When a Policy is adjusted, we compute a new plan of insurance,
face amount or premium amount, if any. If a partial surrender of actual cash
value is made, the Policy will be automatically adjusted to a new face amount
which will be equal to the old face amount less the amount of the partial
surrender, unless a different face amount is requested or required to satisfy
the restrictions on adjustability described below. An adjustment providing for
no further scheduled base premium payments, regardless of whether the Policy is
paid-up, is also referred to as a "stop premium" mode and is described under the
caption "Avoiding Lapse" on page 22 of this prospectus. At the point when the
face amount is scheduled to decrease, an adjustment may be made to maintain the
current face amount and premium of the Policy, as described on page 17. Certain
adjustments may cause a Policy to become a modified endowment contract. See
"Federal Tax Status" for a description of the federal tax treatment of modified
endowment contracts.
In computing either a new face amount or new plan of insurance as a result
of an adjustment, we will make the calculation on the basis of the higher of the
Policy's "policy value" or its "tabular cash value" at the time of the change.
The "policy value" is the actual cash value of the Policy plus the amount of any
policy loan, while the "tabular cash value" is what the actual cash value of the
Policy would have been if all scheduled premiums were paid annually on the
premium due date, there were no policy adjustments or policy loans, any
percentage increase in the actual cash value matched the Policy's assumed rate
of return, the net investment experience of the sub-accounts selected by the
owner or the interest credited to the guaranteed principal account matched the
policy's assumed rate of return, the maximum cost of insurance charges were
deducted once at the end of the policy year and other charges provided for in
the Policy were deducted at the maximum amount. See, for a further description
of these values, the sections "Policy Values" and "Variations in Death Benefit"
in this prospectus on pages 23 and 26. If the policy value is higher than the
tabular cash value, a policy adjustment will translate the excess value into
enhanced insurance coverage, as either a higher face amount or an improved plan
of insurance. If the policy value is less than the tabular cash value, use of
the tabular cash value insures that the Policy's guarantee of a minimum death
benefit is not impaired by the adjustment.
Any adjustment will result in a redetermination of a Policy's tabular cash
value. For a further discussion of the tabular cash value, see the heading
"Variations in Death Benefit" in this prospectus on page 26. After adjustment,
the tabular cash value shall be equal to the greater of the policy value or the
tabular cash value prior to that adjustment, plus any nonrepeating premium paid
at the time of the adjustment and minus the amount of any partial surrender made
at the time of the adjustment.
On adjustment, you may request a new Policy face amount. In the absence of
instructions to the contrary, we will calculate the face amount after adjustment
depending on the Policy's death benefit option and the type of adjustment. If
the Policy has the Cash Option death benefit the new face amount will be equal
to the face amount of the Policy less the amount of any partial surrender made
as part of the adjustment. With the Protection Option death benefit, the face
amount after adjustment will be equal to the face amount
12
<PAGE>
of the Policy immediately prior to the adjustment.
All of these changes may be accomplished under a single Policy. There is no
need to surrender the Policy or purchase a new one simply because of a change in
your insurance needs. Whenever adjustments are made, new policy information
pages will be provided. These pages state the new face amount, scheduled
premium, plan of insurance, attained ages and tabular cash value.
NONREPEATING PREMIUMS The Policy also allows a policy owner to pay a
premium called a nonrepeating premium. This payment of premium is in addition to
the scheduled premium payments called for by the terms of the Policy. While the
payment of a nonrepeating premium does not cause an adjustment to the Policy,
any such payment will be reflected in the tabular cash value of the Policy at
issue or upon any later adjustment. The payment of a nonrepeating premium will
increase the policy values you have available for investment in the Fund. We may
impose additional restrictions or refuse to permit nonrepeating premiums at our
discretion.
RESTRICTIONS ON ADJUSTMENTS Adjustments can be made on any monthly
anniversary of the policy date. You may request a policy adjustment by
completing an application for adjustment. Adjustments will not apply to any
additional benefit agreements which are attached to your Policy. Any adjustment
will be effective on the date that it is approved by us and recorded at our home
office.
An adjustment must satisfy certain limitations on premiums, face amount and
plan. Other limitations on adjustments and combinations of adjustments may also
apply. The current limits on adjustments are those described here. We reserve
the right to change these limitations from time to time.
An adjustment may not result in more than a paid-up whole life plan for the
then current face amount. If either insured is over age 85, increases in face
amount requiring evidence of insurability will not be allowed.
Any adjustment for a change of premium must result in a change of the annual
premium of at least $300. Any adjustment involving an increase in premium may
not result in a whole life plan of insurance requiring the payment of premiums
for less than ten years or to the younger insured's age 100, if less. In
addition, any Policy adjustment, other than a change to a stop premium, must
result in a Policy with an annual base premium of at least $600.
Any adjustment for a change of the face amount must result in a change of
the face amount of at least $50,000, except for a partial surrender under the
Policy or face amount changes which are required to satisfy limitations
pertaining to plans of insurance. The face amount requested must be at least
$200,000, except in the case of a reduction in face amount equal to the amount
of a partial surrender.
After adjustment, other than an automatic adjustment at the point when the
face amount is scheduled to decrease, an automatic adjustment made upon the
change to the Cash Option death benefit at the younger insured's age 70, or
adjustment to stop premium, the Policy must provide a level face amount of
insurance to the next policy anniversary after the later of: (a) five years from
the date of adjustment; or (b) ten years from the date of issue. If the younger
insured's age at original issue is over age 70, the minimum plan of protection
will be less than ten years from the policy issue date, as described on page 14.
An automatic adjustment at the point when the face amount is scheduled to
decrease or an adjustment to stop premium requires that a Policy have an actual
cash value at the time of the adjustment as would be sufficient to keep the
Policy in force until the next policy anniversary.
If you are disabled and receiving, or are entitled to receive, waiver of
premium benefits under a Waiver of Premium Agreement attached to this Policy, no
adjustments will be permitted, except as provided in the Waiver of Premium
Agreement.
PROOF OF INSURABILITY All adjustments resulting in an increase in face amount
require proof of insurability on both insureds. In addition, proof of
insurability is required for partial surrenders where, at the request of the
policy owner, no reduction is made in the Policy's death benefit. Decreases in
face amount or premium and increases in premium not resulting in any increase in
death benefit do not require evidence of insurability. We may require evidence
of insurability when a nonrepeating premium is paid if the death benefit of your
Policy increases as a result of the payment of a nonrepeating premium.
13
<PAGE>
CHARGES IN CONNECTION WITH POLICY ADJUSTMENTS In connection with a policy
adjustment, we will make a special $95 charge to cover the administrative costs
associated with processing the adjustment. If, however, the only policy
adjustment is a partial surrender, the transaction charge shall be the lesser of
$95 or 2 percent of the amount surrendered. In addition, because of the
underwriting and selling expenses anticipated for any change resulting in an
increase in premium, we will assess a new first year sales load on any increase
in premium on adjustment. We will also assess an underwriting charge on any
increase in face amount requiring evidence of insurability. See, for a further
description of these charges, the section "Policy Charges" in this prospectus on
page 29. Limiting the first year sales load and underwriting charge to the
increased premium or face amount is in substance the equivalent of issuing a new
Policy for the increase. A policy adjustment will always be more favorable than
the purchase of a second Policy for the increased amount since there is no
duplication of administrative charges.
The chart below illustrates the kinds of changes that may be made as a
policy adjustment and the effect of each.
<TABLE>
<S> <C> <C> <C>
IF YOU MAKE THIS KIND OF IT WILL DO THIS:
ADJUSTMENT,
If you. . .
Decrease the current while the premium remains then: a scheduled decrease in
face amount........... the same................... the current face amount, if
or while the premium any, will take place at a
Retain the current increases.................. later policy anniversary; a
face amount........... scheduled decrease in the
face amount will be
eliminated; or the premium
paying period will be
shortened.
If you. . .
Increase the current with no increase in then: a scheduled decrease in
face amount........... premium.................... the current face amount, if
or while the premium any, will take place at an
Retain the current decreases.................. earlier policy anniversary; a
face amount........... while the premium and face scheduled decrease in the
or amount remain the same..... face amount will occur; or
Make a partial the premium paying period
surrender............. will be lengthened.
If you. . .
Stop base premium..... while the face amount then: a scheduled decrease in
remains the same........... the current face amount, if
any, will take place at an
earlier policy anniversary
and no insurance will be
provided after the decrease;
or, a scheduled decrease in
the face amount will occur.
However, you must continue to
pay the charge for a
sub-standard risk, or your
Policy will lapse.
</TABLE>
You may request a description of the effect of other types or combinations
of adjustments from us.
14
<PAGE>
APPLICATIONS AND POLICY ISSUE
Persons wishing to purchase a Policy must send a completed application to us
at our home office. The minimum face amount we will issue on a Policy is
$200,000 and we require an annual base premium on each Policy of at least $600.
The minimum plan of insurance at policy issue is a protection plan which has a
level death benefit for a period of ten years. If the younger insured's age at
original issue is over age 70, the minimum plan of protection will be less than
ten years from the Policy issue date, as described on page 14. Both insureds
must be between age 20 and age 85 inclusive when the Policy is issued. Before
issuing any Policy, we require evidence of insurability satisfactory to us on
both insureds. In some cases we will require a medical examination. Persons whom
we evaluate as good mortality risks are offered the most favorable premium
rates, while a higher premium is charged to persons with a greater mortality
risk. Acceptance of an application is subject to our underwriting rules and we
reserve the right to reject an application for any reason.
If we accept an application, accompanied by a check for all or at least
one-twelfth of the annual premium, the policy date will be the issue date, which
is the date the decision to accept the application and issue the Policy is made.
The policy date will be used to determine subsequent policy anniversaries and
premium due dates.
If we accept an application not accompanied by a check for the initial
premium, a Policy will be issued with a policy date which is 15 days after the
issue date. The 15 day period has been determined to be the normal time during
which delivery of the Policy to the policy owner is expected to occur. We/or our
agent must receive the initial premium within 60 days after the issue date. No
life insurance coverage is provided until the initial premium is paid. If the
initial premium is paid after the policy date (and the policy date is not
changed as described below), you will have paid for insurance coverage during a
period when no coverage was in force. Therefore, in such circumstance you should
consider requesting a current policy date, i.e., the date on which our home
office receives the premium. You will be sent updated policy pages to reflect
the change in policy date. This request should be made at or prior to the time
you pay the initial premium.
In certain circumstances it may be to your advantage to have the policy date
be the same as the issue date in order to preserve an issue age on which premium
rates are based. In that case, all premiums due between the issue date and the
date of delivery of the Policy must be paid on delivery.
When the Policy is issued, the face amount, premium, tabular cash values and
a listing of any supplemental agreements are stated on the policy information
pages of the policy form, page 1.
POLICY PREMIUMS
The Policy has a level premium until the second death or until the Policy
becomes paid-up. We guarantee that we will not increase the amount of premiums
for a Policy in force. Subject to the limitations discussed under the heading
"Restrictions on Adjustments" in this prospectus on page 16, you may choose to
adjust the Policy at any time and alter the amount of future premiums.
In addition to scheduled premiums, you may pay a nonrepeating premium. We
may refuse to accept a nonrepeating premium. The maximum nonrepeating premium we
will accept is the amount sufficient to change your Policy to a paid-up whole
life policy for the then current face amount. The minimum nonrepeating premium
is $500. We will waive this minimum amount for nonrepeating premiums if you make
arrangements for the payment of a nonrepeating premium through an automatic bank
check plan and the amount of each such payment under that plan is an amount of
at least $200. We will bill for nonrepeating premiums in connection with
Policies having a minimum base premium of at least $2,400. The minimum
nonrepeating premium in those circumstances remains at $500. We may impose
additional restrictions or refuse to permit nonrepeating premiums at our
discretion.
The payment of a nonrepeating premium may have federal income tax
consequences. See the heading "Federal Tax Status" in this prospectus on page
36.
The amount of premium required for a Policy will depend on the Policy's
initial face amount; the plan of insurance; the insureds' ages at issue; sex,
risk classification and smoking status of each insured and the additional
benefits associated with the Policy.
The first premium is due as of the policy date and must be paid on or before
the date
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your Policy is delivered. Between the date we receive an initial premium for the
Policy, either a full first premium or a partial premium, and the date insurance
coverage commences under the Policy, insurance may be in effect under the terms
of a conditional insurance agreement. All scheduled premiums after the first
premium are payable on or before the date they are due and must be mailed to us
at our home office. In some cases, you may elect to have premiums paid
automatically under our automatic bank check plan through pre-authorized
transfers from a bank checking account or such other account as may be approved
by your bank.
Scheduled premiums on the Policy are payable until the second death on an
annual, semi-annual, quarterly or monthly basis on the due dates set forth in
the Policy. For this purpose, a scheduled premium may be paid no earlier than
twenty days prior to the date that it is due. For premiums paid after the due
date, see the paragraph following the heading "Lapse" in this section of the
prospectus.
Charges for additional benefits and for sub-standard risks are deducted from
premiums to calculate base premiums. From base premiums we deduct charges
assessed against premiums and nonrepeating premiums to calculate net premiums.
Net premiums, namely premiums after the deduction of the charges assessed
against premiums and nonrepeating premiums, are allocated to the guaranteed
principal account or sub-accounts of the Variable Life Account which, in turn,
invest in Fund shares.
You make your selection on your application for the Policy. You may change
your allocation instructions for future premiums by giving us a written request.
The allocation to the guaranteed principal account or to any sub-account of the
Variable Life Account must be at least 10 percent of the net premium. We reserve
the right to delay the allocation of net premiums to named sub-accounts for a
period of 30 days after Policy issue or an adjustment. If we exercise this
right, net premiums will be allocated to the Money Market sub-account until the
end of that period. This right, which has not been implemented to date, will be
exercised by us only when we believe economic conditions make such an allocation
necessary to reduce market risk during the free look period.
We reserve the right to restrict the allocation of premiums to the
guaranteed principal account. If we do so, no more than 50 percent of the net
premium may be allocated to the guaranteed principal account. Currently, we do
not exercise such a restriction, and this restriction is not applicable when you
are allocating all of your premiums to the guaranteed principal account as a
conversion privilege.
The Policy allows for transfers of the actual cash value between the
guaranteed principal account and the Variable Life Account or among the
sub-accounts of the Variable Life Account. You may request a transfer at any
time or you may arrange in advance for systematic transfers: transfers of
specified dollar or unit value amounts to be made periodically among the
sub-accounts and the guaranteed principal account. The amount to be transferred
to or from a sub-account or the guaranteed principal account must be at least
$250. If the balance is less than $250, the entire actual cash value
attributable to that sub-account or the guaranteed principal account must be
transferred. If a transfer would reduce the actual cash value in the sub-account
from which the transfer is to be made to less than $250, we reserve the right to
include that remaining sub-account actual cash value in the amount transferred.
We will make the transfer on the basis of sub-account unit values as of the end
of the valuation period during which your written or telephone request is
received at our home office. A transfer is subject to a transaction charge, not
to exceed $25, for each transfer of actual cash value among the sub-accounts and
the guaranteed principal account. Currently, there is a charge of $10 only for
non-systematic transfers in excess of four per year. Establishing a systematic
transfer program will be deemed to be a non-systematic transfer for purposes of
determining the transfer charge. None of these requirements will apply when you
are transferring all of the policy value to the guaranteed principal account as
a conversion privilege.
Your instructions for transfer may be made in writing or you, or a person
authorized by you, may make such changes by telephone. To do so, you may call us
at (612) 298-3737 between the hours of 8:00 a.m. and 4:30 p.m., Central Time,
our regular business hours. Policy owners may also submit their requests for
transfer, surrender or other transactions to us by facsimile (FAX) transmission.
Our FAX number is (612) 223-4194.
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Transfers made pursuant to a telephone call are subject to the same
conditions and procedures as would apply to written transfer requests. During
periods of marked economic or market changes, policy owners may experience
difficulty in implementing a telephone transfer due to a heavy volume of
telephone calls. In such a circumstance, policy owners should consider
submitting a written transfer request while continuing to attempt a telephone
redemption. We reserve the right to restrict the frequency of, or otherwise
modify, condition, terminate or impose charges upon, telephone transfer
privileges. For more information on telephone transfers, contact us.
While for some policy owners we have used a form to pre-authorize telephone
transactions, we now make this service automatically available to all policy
owners. We will employ reasonable procedures to satisfy ourselves that
instructions received from policy owners are genuine and, to the extent that we
do not, we may be liable for any losses due to unauthorized or fraudulent
instructions. We require policy owners to identify themselves in those telephone
conversations through policy numbers, social security numbers and such other
information as we may deem to be reasonable. We record telephone transfer
instruction conversations and we provide the policy owners with a written
confirmation of the telephone transfer.
The maximum amount of actual cash value to be transferred out of the
guaranteed principal account to the sub-accounts of the Variable Life Account
may be limited to 20 percent of the guaranteed principal account balance.
Transfers to or from the guaranteed principal account may be limited to one such
transfer per policy year. Neither of these restrictions will apply when you are
transferring all of the policy value to the guaranteed principal account as a
conversion privilege.
Transfers from the guaranteed principal account must be made by a written or
telephone request. It must be received by us or postmarked in the 30-day period
before or after the last day of the policy year. Written requests for transfers
which meet these conditions will be effective after we approve and record them
at our home office. Currently, we do not impose such restrictions.
In the case of a transfer, the charge is assessed against the amount
transferred.
LAPSE Your Policy may lapse in one of two ways: (1) if a scheduled premium is
not paid; or (2) if there is no actual cash value when there is a policy loan.
As a scheduled premium policy, your Policy will lapse if a premium is not
paid on or before the date it is due or within the 31-day grace period provided
by the Policy. You may pay that premium during the 31-day period immediately
following the premium due date. Your premium payment, however, must be received
in our home office within the 31-day grace period. The insurance provided by
this Policy will continue during this 31-day period. If the second death occurs
during the 31-day grace period, we will deduct a premium for the 31-day grace
period from the death proceeds.
If a Policy covers an insured in a sub-standard risk class, the portion of
the scheduled premium equal to the charge for such risk will continue to be
payable notwithstanding the adjustment to a stop premium mode. As with any
scheduled premium, failure to pay the premium for the sub-standard risk within
the grace period provided will cause the Policy to lapse.
If scheduled premiums are paid on or before the dates they are due or within
the grace period, absent any policy loans, the Policy will remain in force even
if the investment results of the sub-accounts have been so unfavorable that the
actual cash value has decreased to zero. However, should the actual cash value
decrease to zero while there is an outstanding policy loan the Policy will
lapse, even if the Policy was paid-up and all scheduled premiums had been paid.
If the Policy lapses because not all scheduled premiums have been paid or if
a Policy with a policy loan has no actual cash value, we will send you a notice
of default that will indicate the payment required to keep the Policy in force
on a premium paying basis. If the payment is not received within 31 days after
the date of mailing the notice of default, the Policy will terminate or the
nonforfeiture benefits will apply. For more information on lapse, see "Avoiding
Lapse" on page 22.
If at the time of any lapse a Policy has a surrender value, that is, an
amount remaining after subtracting from the actual cash value all unpaid policy
charges, it will be used to purchase extended term insurance. The extended term
benefit is a fixed life insurance benefit calculated on the 1980 Commissioners
Standard Ordinary Mortality Tables with 4 percent interest. As an alternative to
the
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extended term insurance, you may have the surrender value paid to you in a
single sum payment, thereby terminating the Policy. Unless you request a single
sum payment of your surrender value within 62 days of the date of the first
unpaid premium, we will apply it to purchase extended term insurance, payable at
the second death.
The duration of the extended term benefit is determined by applying the
surrender value of your Policy as of the end of the grace period as a net single
premium to buy fixed benefit term insurance. The extended term benefit is not
provided through the Variable Life Account and the death benefit will not vary
during the extended term insurance period. The amount of this insurance will be
equal to the face amount of your Policy, less the amount of any policy loans at
the date of lapse. During the extended term period a Policy has a surrender
value equal to the reserve for the insurance coverage for the remaining extended
term period. At the end of the extended term period all insurance provided by
your Policy will terminate and the Policy will have no further value.
You may arrange for automatic premium loans to keep the Policy in force in
the event that a scheduled premium payment is not made. For more information on
this option, please see the heading "Policy Loans" in this prospectus on page
26.
REINSTATEMENT At any time within three years from the date of lapse you may
ask us to restore your Policy to a premium paying status. We will require:
(1) your written request to reinstate the Policy;
(2) that you submit to us at our home office during the lifetime of both
insureds evidence satisfactory to us of the insurability of both insureds so
that we may have time to act on the evidence during the lifetime of both
insureds; and
(3) at our option a premium payment which is equal to all overdue premiums with
interest at a rate not to exceed 6 percent per annum compounded annually and
any policy loan in effect at the end of the grace period following the date
of default with interest at a rate not exceeding 8 percent per annum
compounded annually. At the present time we do not require the payment of
all overdue premiums.
If your Policy is reinstated, it will be contestable for two years from the
date of reinstatement as to representations contained in your request to
reinstate.
After a lapse and reinstatement, the reinstated Policy may be adjusted. The
standard minimum requirements for adjustments will continue to apply, as
described under the section "Restrictions on Adjustments" in this prospectus on
page 16.
AVOIDING LAPSE If your Policy has sufficient loan value, you can avoid a
lapse due to the failure to pay a scheduled premium by arranging for an
automatic premium loan. The effect of a policy loan on policy values and the
restrictions applicable thereto are described under the caption "Policy Loans"
on page 26 of this prospectus. An automatic premium loan is particularly
advantageous for a policy owner who contemplates early repayment of the amount
loaned, since it permits the policy owner to restore policy values without
additional sales and underwriting charges. Automatic premium loans for the long
term are generally not advantageous.
You may also avoid a lapse due to the failure to pay a scheduled premium by
adjusting your Policy to a stop premium mode. The greater of your policy value
or tabular cash value will be used to determine a new plan of insurance based on
the greater of the then current face amount or death benefit of the Policy and
the assumption that no further base premiums will be paid. The new plan may be a
term or protection plan, but unlike other term plans there will be no reduced
face amount of coverage at the time the tabular cash value is scheduled to
expire because no further premiums will be payable. If at that time the Policy
has a surrender value, it will be used either to purchase extended term coverage
or it will be paid to you in a single sum thereby terminating the Policy.
The insurance coverage resulting from an adjustment to a stop premium mode
is similar to the coverage available under the extended term option in that
under both, the coverage is available only for a limited period of time. The
arrangements are, however, fundamentally different. Extended term coverage is a
fixed benefit with fixed cash values providing a longer guaranteed period of
coverage than the same amount applied as a stop premium. The stop premium mode
provides variable insurance with an actual cash value and, under the Protection
Option, a death benefit
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that will vary to reflect any investment experience of selected sub-accounts and
the deduction of smaller cost of insurance charges than the maximum charges
derived from the 1980 CSO mortality tables. Because the actual cash value
continues to exist, policy charges assessed to the actual cash value will
continue to be made while the Policy is on stop premium. For example, if a
Policy covers an insured in a sub-standard risk class, the portion of the
scheduled premium equal to the charge for such risk will continue to be payable.
There are also other differences which should be considered. In general, if
you contemplate resuming premium payments at a future date, the stop premium
mode may be more desirable in that you may resume premium payments at any time
without evidence of insurability, while the reinstatement option available
during the extended term period requires proof of insurability and must be
exercised within three years following the date of lapse.
If you do not contemplate resuming premium payments, your choice between
permitting your Policy to lapse and adjusting it to a stop premium mode should
depend on, first, whether the surrender value of your Policy at that time
exceeds its tabular cash value and, second, whether you expect your Policy's
policy value to exceed its tabular cash value in the future. If at the time of
possible lapse your Policy's surrender value is less than its tabular cash
value, you should consider adjusting to a stop premium mode because the period
of insurance coverage will be based on the higher tabular cash value while the
period of extended term coverage upon lapse would be computed on the basis of
the lower surrender value. If the two values are the same, the period of
guaranteed coverage under the extended term option will be longer than under the
stop premium mode. Thus, you should be sure that the benefit of using the higher
tabular cash value is not offset by the shorter period of guaranteed insurance
coverage usually resulting from the stop premium mode.
On the other hand, if the surrender value of your Policy exceeds its tabular
cash value, you should evaluate the benefit of a guaranteed longer period of
insurance coverage under the extended term option against the possibility of
longer coverage under the stop premium mode. With the stop premium mode there
may be an available policy value at the end of the plan which could be used to
continue the face amount of the Policy to a later time than provided under the
extended term option. In considering this possibility, you should keep in mind
that a Policy with the Cash Option death benefit is more likely to have a higher
policy value than a comparable Policy with the Protection Option death benefit.
POLICY VALUES
The Policy has an actual cash value which varies with the investment
experience of the guaranteed principal account and the sub-accounts of the
Variable Life Account. Depending upon the death benefit selected, the death
benefit may also vary although it will never be less than the then current face
amount. Net premiums, namely premiums after the deduction of all charges, will
be allocated to the guaranteed principal account or sub-accounts of the Variable
Life Account selected by you on your application for the Policy.
The value of the Policy's interest in the guaranteed principal account and
the sub-accounts of the Variable Life Account is known as its actual cash value.
It is determined separately for your guaranteed principal account actual cash
value and for your separate account actual cash value. The separate account
actual cash value will include all sub-accounts of the Variable Life Account.
Unlike a traditional fixed benefit life insurance policy, a Policy's actual cash
value cannot be determined in advance, even if scheduled premiums are made when
required, because the separate account actual cash value varies daily with the
investment performance of the sub-accounts of the Variable Life Account in which
the Policy participates. Even if the policy owner continues to pay scheduled
premiums when due, the separate account actual cash value of a Policy could
decline to zero because of unfavorable investment experience and the assessment
of charges. Upon request, we will tell you the actual cash value of your Policy.
We will also send you a report each year on the policy anniversary advising you
of your Policy's actual cash value, the face amount and the death benefit as of
the date of the report. It will also summarize Policy transactions during the
year. It will be as of a date within two months of its mailing.
The guaranteed principal account actual cash value is the sum of all net
premium
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payments allocated to the guaranteed principal account. This amount will be
increased by any interest, dividends, loan repayments, policy loan interest
credits and transfers into the guaranteed principal account. This amount will be
reduced by any policy loans, unpaid policy loan interest, partial surrenders,
transfers into the sub-accounts of the Variable Life Account and charges
assessed against your guaranteed principal account actual cash value. Interest
is credited on the guaranteed principal account actual cash value of your
Policy. Interest is credited daily at a rate of not less than 4 percent per
year, compounded annually. We guarantee this minimum rate for the life of the
Policy without regard to the actual experience of the general account. As
conditions permit, we will credit additional amounts of interest to the
guaranteed principal account actual cash value. Your guaranteed principal
account actual cash value is guaranteed by us. It cannot be reduced by any
investment experience of the general account.
The portion of a Policy's separate account actual cash value is determined
separately. The separate account actual cash value is not guaranteed. The
determination of the separate account actual cash value is made by multiplying
the current number of sub-account units credited to a Policy by the current
sub-account unit value. A unit is a measure of your Policy's interest in a sub-
account. The number of units credited with respect to each net premium payment
is determined by dividing the portion of the net premium payment allocated to
each sub-account by the then current unit value for that sub-account. The number
of units so credited is determined as of the end of the valuation period during
which we receive your premium at our home office.
Once determined, the number of units credited to your Policy will not be
affected by changes in the unit value. However, the number will be increased by
the allocation of subsequent net premiums, nonrepeating premiums, dividends,
loan repayments, loan interest credits and transfers to that sub-account. The
number of units of each sub-account credited to your Policy will be decreased by
policy charges to the sub-account, policy loans and loan interest, transfers
from that sub-account and partial surrenders from that sub-account. Such number
of sub-account units will decrease to zero on a policy surrender, the purchase
of extended term insurance or termination.
The unit value of a sub-account will be determined on each valuation date.
The amount of any increase or decrease will depend on the net investment
experience of that sub-account. The value of a unit for each sub-account was
originally set at $1.00 on the first valuation date. For any subsequent
valuation date, its value is equal to its value on the preceding valuation date
multiplied by the net investment factor for that sub-account for the valuation
period ending on the subsequent valuation date.
The net investment factor for a valuation period is: the gross investment
rate for such valuation period, less a deduction for the mortality and expense
risk charge under this Policy which is assessed at an annual rate of .50 percent
against the average daily net assets of each sub-account of the Variable Life
Account. The gross investment rate is equal to:
(1) the net asset value per share of a Fund share held in the sub-account of the
Variable Life Account determined at the end of the current valuation period;
plus
(2) the per share amount of any dividend or capital gain distributions by the
Fund if the "ex-dividend" date occurs during the current valuation period;
with the sum divided by
(3) the net asset value per share of that Fund share held in the sub-account
determined at the end of the preceding valuation period.
We determine the value of the units in each sub-account on each day on which
the Portfolios of the Fund are valued. The net asset value of the Fund's shares
is computed once daily, and, in the case of the Money Market Portfolio, after
the declaration of the daily dividend, as of the primary closing time for
business on the New York Stock Exchange (as of the date hereof the primary close
of trading is 3:00 p.m. (Central Time), but this time may be changed) on each
day, Monday through Friday, except (i) days on which changes in the value of the
Fund's portfolio securities will not materially affect the current net asset
value of the Fund's shares, (ii) days during which no Fund's shares are tendered
for redemption and no order to purchase or sell the Fund's shares is received by
the Fund and (iii) customary national
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business holidays on which the New York Stock Exchange is closed for trading (as
of the date hereof, New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day).
Although the actual cash value for each Policy is determinable on a daily
basis, we update our records to reflect that value on each monthly anniversary.
We also make policy value determinations on the date of the second death and on
a policy adjustment, surrender, and lapse. When the policy value is determined,
we will assess and update to the date of the transaction those charges made
against your actual cash value, namely the administration charge not to exceed
$15 per month, the face amount guarantee charge not to exceed 3 cents per
thousand of face amount per month, and the cost of insurance charge. Increases
or decreases in policy values will not be uniform for all Policies but will be
affected by policy transaction activity, cost of insurance charges and the
existence of policy loans.
To illustrate the operation of the Policy under various assumptions, we have
prepared several tables, along with additional explanatory text, that may be of
assistance. For these tables, please see Appendix I, "Illustrations of Policy
Values, Death Benefits and Premiums," found on page 74 of this prospectus. For
additional materials and tables, including values after policy charges, please
see Appendix II, Summary of Policy Charges, found on page 84 of this prospectus.
DEATH BENEFIT OPTIONS
The death benefit provided by the Policy depends upon the death benefit
option you choose. You may choose one of two available death benefit
options--the Cash Option or the Protection Option. If you fail to make an
election, the Cash Option will be in effect. The scheduled premium for a Policy
is the same no matter which death benefit option is chosen.
Under the Cash Option, the death benefit will be the current face amount at
the time of the second death. The death benefit will not vary unless the policy
value exceeds the net single premium for the then current face amount.
Under the Protection Option, the death benefit will be the policy value,
plus the larger of:
(a) the then current face amount; and
(b) the amount of insurance which could be purchased using the policy value as a
net single premium.
The Protection Option is only available until the policy anniversary nearest
the younger insured's age 70. At the policy anniversary nearest the younger
insured's age 70, the Protection Option death benefit is automatically converted
to the Cash Option death benefit. At that time, we will automatically adjust
your Policy and adjust the face amount to equal the death benefit immediately
preceding the adjustment.
You should select the death benefit option that best meets your needs and
objectives. The Protection Option results primarily in an increased death
benefit. If you are satisfied with the amount of your insurance coverage and
wish to have any favorable investment results reflected to the maximum extent in
increasing actual cash values, you should choose the Cash Option. In addition,
there are other distinctions between the two options which may influence your
selection. In the event of a superior investment performance, the Cash Option
will result in a Policy becoming paid-up more rapidly than the Protection
Option. This is because of larger cost of insurance charges under the Protection
Option resulting from the additional amount of death benefit provided under that
option. But under the Cash Option favorable investment experience does not
increase the death benefit unless the policy value exceeds the net single
premium for the then current face amount, and the beneficiary will not benefit
from any larger actual cash value which exists at the time of the second death
because of the favorable investment experience.
You may elect to have the death benefit option changed while the Policy is
in force by filing a written request with us at our home office. We may require
that you provide us with satisfactory evidence of the insurability of both
insureds before we make a change to the Protection Option. The change will take
effect when we approve and record it in our home office. A change in death
benefit option may have federal income tax consequences. See the heading
"Federal Tax Status" in this prospectus on page 36.
The amount payable as death proceeds upon the second death will be the death
benefit provided by the Policy, plus any
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additional insurance provided by an additional benefit agreement, if any, minus
any policy charges and minus any policy loans. In addition, if the Cash Option
death benefit is in effect at the second death, we will pay to the beneficiary
any part of a paid premium that covers the period from the end of the policy
month in which the second death occurred to the date to which premiums are paid.
VARIATIONS IN DEATH BENEFIT
PROTECTION OPTION The death benefit provided by the Protection Option will
vary with the investment experience of the allocation options selected by the
policy owner, any interest credited as a result of a policy loan and the extent
to which we assess lower insurance charges than those maximums derived from the
1980 Commissioners Standard Ordinary Mortality Tables.
The amount of the death benefit is equal to the policy value, plus the
larger of:
(a) the then current face amount; and
(b) the amount of insurance which could be purchased using the policy value as a
net single premium.
CASH OPTION As noted, the death benefit under the Cash Option does not vary
from the Policy's face amount until the policy value exceeds the net single
premium for the current face amount. At this point, the death benefit under the
Cash Option is the greater of the face amount of the Policy when it became
paid-up or the amount of insurance which could be purchased at the date of the
second death by using the policy value as a net single premium based upon the
policy assumptions as defined in your Policy. The policy value of a Policy will
never exceed the net single premium for a death benefit payable at the second
death.
A Policy is paid-up when no additional premiums are required to provide the
face amount of insurance. We may or may not accept additional premiums. When a
Policy becomes paid-up, the policy value will then equal or exceed the net
single premium needed to purchase an amount of insurance equal to the face
amount of the Policy. However, its actual cash value will continue to vary daily
to reflect the investment experience of the Variable Life Account and any
interest credited as a result of a policy loan. Once a Policy becomes paid-up,
it will always retain its paid-up status regardless of any subsequent decrease
in its policy value. However, on a paid-up Policy with indebtedness, where the
actual cash value decreases to zero, a loan repayment may be required to keep
the Policy in force. See the discussion in this prospectus under the heading
"Policy Loans," below.
We will make a determination on each policy anniversary as to whether a
Policy is paid-up. When a Policy becomes paid-up, we will send you a new page 1.
For an illustration of the calculation of the death benefit under the Policy
options, please see Appendix III, "Illustration of Death Benefit Calculation,"
on page 89 of this prospectus.
POLICY LOANS
You may borrow from us using only your Policy as the security for the loan.
The total amount of your loan may not exceed 90 percent of your policy value. A
loan taken from, or secured by a Policy, may have federal income tax
consequences. See the heading "Federal Tax Status" in this prospectus on page
36.
The policy value is the actual cash value of your Policy plus any policy
loan. Any policy loan paid to you in cash must be in an amount of at least $100.
Policy loans in smaller amounts are allowed under the automatic premium loan
provision. We will deduct interest on the loan in arrears. At your request, we
will send you a loan request form for your signature. You may also obtain a
policy loan by calling Minnesota Mutual between the hours of 8:00 a.m. and 4:30
p.m., Central Time, our regular business hours. Should you make a telephone call
to us you will be asked, for security purposes, for your personal identification
and policy number. The Policy will be the only security required for your loan.
Your policy value will be determined as of the date we receive your written
request at our home office.
When you take a loan, we will reduce the actual cash value. It will be
reduced by the amount you borrow and any unpaid interest. Unless you direct us
otherwise, the policy loan will be taken from your guaranteed principal account
actual cash value and separate account actual cash value in the same proportion
that those values bear to each other and, as to the actual cash value in the
separate account, from each sub-account in the proportion that the actual cash
value in such sub-account bears to your actual cash value in all of the
sub-accounts. The number of units to be cancelled will be based upon the value
of the units as of the end of the
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<PAGE>
valuation period during which we receive your loan request at our home office.
This amount shall be transferred to the loan account. The loan account continues
to be part of the Policy in the general account. A policy loan has no immediate
effect on policy value since at the time of the loan the policy value is the sum
of your actual cash value and any policy loan.
The actual cash value of your Policy may decrease between premium due dates.
If your Policy has indebtedness and no actual cash value, the Policy will lapse.
In this event, to keep your Policy in force, you will have to make a loan
repayment. We will give you notice of our intent to terminate the Policy and the
loan repayment required to keep it in force. The time for repayment will be
within 31 days after our mailing of the notice.
POLICY LOAN INTEREST The interest rate on a policy loan will not be more than
the rate shown on page 1 of your Policy. The interest rate charged on a policy
loan will not be more than that permitted in the state in which the Policy is
delivered.
Policy loan interest is due on the date of the second death, on a policy
adjustment, surrender, lapse, a policy loan transaction and on each policy
anniversary. If you do not pay the interest on your loan in cash, your policy
loan will be increased and your actual cash value will be reduced by the amount
of the unpaid interest. The new loan will be subject to the same rate of
interest as the loan in effect.
Interest is also credited to your Policy when there is a policy loan.
Interest credits on a policy loan shall be at a rate which is not less than your
policy loan interest rate minus 2 percent per annum. Policy loan interest
credits are allocated to your actual cash value as of the date of the second
death, on a policy adjustment, surrender, lapse, a policy loan transaction and
on each policy anniversary. Interest credits are allocated to the guaranteed
principal account and separate account following your instructions to us. We
will use your instructions for the allocation of net premiums. In the absence of
such instructions, this amount will be allocated to the guaranteed principal
account actual cash value and separate account actual cash value in the same
proportion that those values bear to each other and, as to the actual cash value
in the separate account, to each sub-account in the proportion that the actual
cash value in such sub-account bears to your actual cash value in all of the
sub-accounts.
Currently, the loan account credits interest, as described above, at a rate
which is not less than your policy loan interest rate minus 2 percent per annum.
However, depending on the insured's age and the period of time that the Policy
has been in force, we may credit the Policy with interest at a more favorable
rate. Under our current procedures, if all the conditions are met then your loan
will be credited at a rate which is equal to the policy loan rate minus .75
percent per annum. The conditions which must be met are: (a) the age of either
insured must be age 55 or older as of the last policy anniversary; and (b) the
number of years during which the Policy has been in force as a VAL-SD Policy,
must be greater than or equal to 10.
Policy loans may also be used as automatic premium loans to keep your Policy
in force. If you asked for this service in your application, or if you write us
and ask for this service after your Policy has been issued, we will make
automatic premium loans. You can also write to us at any time and tell us you do
not want this service. If you have this service and you have not paid the
premium that is due before the end of the grace period, we will make a policy
loan to pay the premium. Interest on such a policy loan is charged from the date
the premium was due. However, in order for an automatic premium loan to occur,
the amount available for a loan must be enough to pay at least a quarterly
premium. If the loan value is not enough to pay at least a quarterly premium,
your Policy will lapse.
POLICY LOAN REPAYMENTS If your Policy is in force, your loan can be repaid in
part or in full at any time before the second death. Your loan may also be
repaid within 60 days after the date of the second death, if we have not paid
any of the benefits under the Policy. Any loan repayment must be at least $100
unless the balance due is less than $100. When implemented, we will waive this
minimum loan repayment provision for loan repayments made under our automatic
payment plan where loan repayments are in an amount of at least $25.
Loan repayments are allocated to the guaranteed principal account until all
loans from the guaranteed principal account have been repaid, thereafter, loan
repayments are allocated to the guaranteed principal account
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or the sub-accounts of the Variable Life Account as you direct. In the absence
of your instructions, loan repayments will be allocated to the guaranteed
principal account actual cash value and separate account actual cash value in
the same proportion that those values bear to each other and, as to the actual
cash value in the separate account, to each sub-account in the proportion that
the actual cash value in such sub-account bears to your actual cash value in all
of the sub-accounts.
Loan repayments reduce your loan account by the amount of the loan
repayment.
A policy loan, whether or not it is repaid, will have a permanent effect on
the policy value because the investment results of the sub-accounts will apply
only to the amount remaining in the sub-accounts. The effect could be either
positive or negative. If net investment results of the sub-accounts are greater
than the amount being credited on the loan, the policy value will not increase
as rapidly as it would have if no loan had been made. If investment results of
the sub-accounts are less than the amount being credited on the loan, the policy
value will be greater than if no loan had been made. For an example of the
effect of a policy loan on a Policy and its death benefit, please see Appendix
IV, "Policy Loan Example," in this prospectus on page 90.
SURRENDER
You may request a surrender or partial surrender of your Policy at any time
while either insured is living. On surrender, the surrender value of the Policy
is the actual cash value minus unpaid policy charges which are assessed against
actual cash value. The determination of the surrender value is made as of the
end of the valuation period during which we receive your surrender request at
our home office. You may surrender the Policy by sending us the Policy and a
written request for its surrender. You may request that the surrender value be
paid to you in cash or, as an alternative, you may request that the surrender
value be applied on a settlement option or to provide extended term insurance.
A partial surrender of the actual cash value of the Policy is also permitted
in any amount of $500 or more. In addition, the amount of a partial surrender
may not exceed the amount available as a policy loan. With the Cash Option death
benefit, if the Policy is paid-up, the face amount of the Policy will be reduced
by the amount of the partial surrender.
If the Policy is paid-up, the death benefit is reduced so as to retain the
same ratio between the policy value and the death benefit of the Policy as
existed prior to the partial surrender. With the Protection Option death
benefit, the face amount of the Policy is not changed by the amount of the
partial surrender. However, if the Policy is not paid-up, the death benefit of
the Policy is reduced by the amount of the partial surrender; if the Policy is
paid-up, the death benefit of the Policy is reduced so as to retain the ratio
between the policy value and the death benefit of the Policy as existed prior to
the partial surrender.
We are currently waiving these restrictions requiring a minimum amount for a
partial surrender where a partial withdrawal from a Policy, which is on stop
premium, is being used to pay premiums for sub-standard risks or premiums on any
benefits and riders issued as part of the Policy. Transaction fees otherwise
applicable to such a partial surrender are also waived.
On a partial surrender, you may tell us which Variable Life Account
sub-accounts from which a partial surrender is to be taken or whether it is to
be taken in whole or in part from the guaranteed principal account. If you do
not, partial surrenders will be deducted from your guaranteed principal account
actual cash value and separate account actual cash value in the same proportion
that those values bear to each other and, as to the actual cash value in the
separate account, from each sub-account in the proportion that the actual cash
value in such sub-account bears to your actual cash value in all of the
sub-accounts. We will tell you, on request, what amounts are available for a
partial surrender under your Policy.
Payment of a surrender or partial surrender will be made as soon as
possible, but not later than seven days after our receipt of your written
request for surrender. However, an exception to this is that if any portion of
the actual cash value to be surrendered is attributable to a premium or
nonrepeating premium payment made by non-guaranteed funds such as a personal
check, we will delay mailing that portion of the surrender proceeds until we
have reasonable assurance that the payment has cleared and that good payment has
been collected. The amount you receive
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<PAGE>
on surrender may be more or less than the total premiums paid to your Policy.
FREE LOOK
It is important to us that you are satisfied with this Policy after it is
issued. If you are not satisfied with it, you may return the Policy to us or
your agent by the later of: (a) ten days after you receive it; (b) 45 days after
you have signed the application; or (c) ten days after we mail to you a notice
of your right of withdrawal. If you return the Policy, you will receive within
seven days of the date we receive your notice of cancellation a full refund of
the premiums you have paid.
If the Policy is adjusted, as described under the heading "Policy
Adjustments" in this prospectus on page 14, and if the adjustment results in an
increased premium, you will again have a right to examine the Policy and you may
return the Policy within the time periods stated in the immediately preceding
paragraph. If you return the Policy, the requested premium adjustment will be
cancelled. You will receive a refund of the additional premiums paid within
seven days of the date we receive your notice of cancellation for that
adjustment.
CONVERSION
As a conversion privilege, you can obtain fixed insurance coverage by
transferring all of the policy value to the guaranteed principal account and
thereafter allocating all premiums to that account.
POLICY EXCHANGE
So long as both insureds are alive, you may ask us to exchange this Policy
for two individual policies, insuring each of the insureds separately. We will
require evidence of insurability to make the exchange. The two new policies will
be issued on the variable or fixed policy form we are using on the date of the
exchange; each new policy will have one-half the death benefit, cash value, loan
and dividends of this Policy.
POLICY CHARGES
PREMIUM CHARGES Premium charges vary depending on whether the premium is a
scheduled premium or a nonrepeating premium. Generally, the word "premium" when
used in this prospectus means a scheduled premium only. Charges for sub-standard
risks and for additional benefits are deducted from the premium, to calculate
the base premium.
From base premiums we deduct a sales load, an underwriting charge, a premium
tax charge and a federal tax charge.
(1) The SALES LOAD consists of a deduction from each premium of 7 percent and it
may also include a first year sales load deduction not to exceed 23 percent.
The first year sales load will apply only to base premiums, scheduled to be
paid in the twelve month period following either the policy date, or any
policy adjustment involving an increase in base premium or any policy
adjustment occurring during a period when a first year sales load is being
assessed. It will also apply only to that portion of an annual base premium
necessary for an original issue whole life plan of insurance. In other
words, for base premiums greater than this whole life premium, the amount of
the base premium in excess of such whole life base premium will be subject
only to the 7 percent basic sales load.
Only adjustments that involve an increase in base premium will result in
additional first year sales load being assessed on that increase in premium.
If any adjustment occurs during a period when a first year sales load is
being collected and the adjustment results in an increase in base premium,
an additional first year sales load, not to exceed 23 percent of the
increase in base premium, will be added to the uncollected portion of the
first year sales load that was being collected prior to the adjustment. This
total amount of first year sales load will then be collected during the 12
month period following the adjustment.
If any adjustment occurs during the 12 month period when a first year
sales load is being collected and the adjustment does not result in an
increase in base premium, the first year sales load percentage, not to
exceed 23 percent, that was in effect prior to the adjustment is multiplied
by the base premium in effect after the adjustment; this number is then
multiplied by a fraction equal to the number of months remaining in the
previous 12 month period divided by 12. This amount of first year sales load
will then be collected during the 12 month period following the adjustment.
All of the sales load charges are designed to average not more than
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9 percent of the base premiums over the lesser of: the joint life expectancy
of the insureds at policy issue or adjustment; or 15 years from the policy
issue or adjustment; or the premium paying period.
Compliance with the 9 percent ceiling will be achieved by reducing the
amount of the first year sales load, if necessary. For examples of how we
compute sales load charges, see the heading "Examples of Sales Load
Computations" in this prospectus on page 32.
The sales load is designed to compensate us for distribution expenses
incurred with respect to the Policies. The amount of the sales load in any
policy year cannot be specifically related to sales expenses for that year.
To the extent that sales expenses are not recovered from the sales load, we
will recover them from our other assets or surplus including profits from
mortality and expense risk charges.
(2) The UNDERWRITING CHARGE currently is an amount not to exceed $10 per $1,000
of face amount of insurance. This amount may vary by the age of the insureds
and the premium level for a given amount of insurance. This charge is made
ratably from premiums scheduled to be made during the first policy year and
during the twelve months following certain policy adjustments. The
underwriting charge is designed to compensate us for the administrative
costs associated with issuance or adjustment of the Policies, including the
cost of processing applications, conducting medical exams, classifying
risks, determining insurability and risk class and establishing policy
records. This charge is not guaranteed, so that on a policy adjustment the
then current underwriting charge will apply to any increase in face amount
which requires new evidence of insurability. In the event of a policy
adjustment which results in a face amount increase and no base premium, you
must then remit the then current underwriting charge to us prior to the
effective date of the adjustment or we will assess the charge against your
actual cash value as a transaction charge on adjustment. The underwriting
charge is not expected to be a source of profit to us.
(3) The PREMIUM TAX CHARGE of 2.5 percent is deducted from each base premium.
This charge is designed to cover the aggregate premium taxes we pay to state
and local governments for this class of policies. This charge is not
guaranteed and may be increased in the future, but only as necessary to
cover our premium tax expenses.
(4) The FEDERAL TAX CHARGE of 1.25 percent is deducted from each base premium.
This charge is designed to cover a federal tax related to premium payments.
This charge is not guaranteed and may be increased in the future, but only
as necessary to cover the federal tax related to premium payments.
<TABLE>
<CAPTION>
CHARGES TAKEN FROM BASE
PREMIUM PLUS, IN THE FIRST YEAR
- ------------------------ -------------------------
<S> <C>
7.00% Sales Load Additional Sales
1.25% Federal Tax Load (up to 23%)
2.50% Premium Tax Underwriting Charge
- -------------------
10.75% Total (up to $10/$1000 of
Insurance Coverage)
</TABLE>
NONREPEATING PREMIUMS Nonrepeating premiums are currently subject to the 2.5
percent premium tax charge and the 1.25 percent federal tax charge, but not to a
sales load charge. No underwriting charge is assessed against nonrepeating
premiums.
ACTUAL CASH VALUE CHARGES In addition to deductions from premiums and
nonrepeating premiums, we assess from the actual cash value of a Policy an
administration charge, the face amount guarantee charge, certain transaction
charges and the cost of insurance charge. These charges are as follows:
(1) The ADMINISTRATION CHARGE is designed to cover certain of our administrative
expenses, including those attributable to the records maintained for your
Policy. The administration charge is guaranteed not to exceed $15 per month.
Currently we charge $10 per month. This charge is not expected to be a
source of profit to us.
(2) The FACE AMOUNT GUARANTEE CHARGE is guaranteed not to exceed 3 cents per
thousand dollars of face amount per month. Currently we charge 2 cents per
thousand dollars. This charge is designed to compensate us for our guarantee
that the death benefit will always
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<PAGE>
be at least equal to the current face amount in effect at the time of the
second death regardless of the investment performance of the sub-accounts in
which net premiums have been invested. The face amount of a Policy at issue
or adjustment and the appropriate premium therefor reflect a "tabular cash
value" (defined on page 15 above) based upon an assumed annual rate of
return of 4 percent. If the policy value is less than the tabular cash value
at the time of the second death, it will not be sufficient to support the
face amount of the Policy under the actuarial assumptions made in designing
the Policy. The face amount guarantee is a guarantee that the face amount
will be available as a death benefit notwithstanding the failure of the
Policy to perform in accordance with the assumptions made in its design.
Thus, even if the policy value should be less than the amount needed to pay
the deductions to be made from the actual cash value on the next monthly
policy anniversary, see discussion below, the Policy's guaranteed death
benefit will remain in effect and the Policy will remain in force.
(3) The TRANSACTION CHARGES are for expenses associated with processing
transactions. There is a charge of $95 for each policy adjustment. We also
reserve the right to make a charge, not to exceed $25, for each transfer of
actual cash value among the guaranteed principal account and the
sub-accounts of the Variable Life Account. Currently we charge $10 only for
non-systematic transfers in excess of four per year. Establishing a
systematic transfer program will be deemed to be a non-systematic transfer
for purposes of determining the transfer charge. If the only policy
adjustment is a partial surrender, the transaction charge shall be the
lesser of $95 or 2 percent of the amount surrendered.
(4) The COST OF INSURANCE CHARGE compensates us for providing the death benefit
under a Policy. The charge is calculated by multiplying the net amount at
risk under your Policy by a rate which is based on the age, gender, risk
class, and the smoking habits of each insured. The rate also reflects the
plan of insurance and any policy adjustments since issue. The rate is
guaranteed not to exceed the maximum charges for mortality derived from the
1980 Commissioners Standard Ordinary Mortality Tables. The net amount at
risk is the death benefit under your Policy less your policy value. Where
circumstances require, we will base our rates on "unisex," rather than
sex-based, mortality tables.
Administration, face amount guarantee and cost of insurance charges are
assessed against your actual cash value on the monthly policy anniversary. In
addition, such charges are assessed on the occurrence of the second death,
policy surrender, lapse or a policy adjustment. Transaction charges are assessed
against your actual cash value at the time of a policy adjustment or when a
transfer is made. In the case of a transfer, the charge is assessed against the
amount transferred. Charges will be assessed against your guaranteed principal
account actual cash value and separate account actual cash value in the same
proportion that those values bear to each other and, as to the actual cash value
in the separate account, from each sub-account in the proportion that the actual
cash value in such sub-account bears to your actual cash value in all of the
sub-accounts.
CHARGES TAKEN FROM ACTUAL CASH VALUE
-------------------------------------
- - Administration Charge
- - Face Amount Guarantee Charge
- - Cost of Insurance Charge
- - Transaction Charge
SEPARATE ACCOUNT CHARGES We assess a mortality and expense risk charge
directly against the assets held in the Variable Life Account. The mortality and
expense risk charge compensates us for assuming the risks that cost of insurance
charges will be insufficient to cover actual mortality experience and that the
other charges will not cover our expenses in connection with the Policy. The
mortality and expense risk charge is deducted from Variable Life Account assets
on each valuation date at an annual rate of .50 percent of the average daily net
assets of the Variable Life Account.
We reserve the right to charge or make provision for any taxes payable by us
with respect to the Variable Life Account or the Policies by a charge or
adjustment to such assets. No such charge or provision is made at the present
time.
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CHARGES TAKEN FROM SEPARATE ACCOUNT
-------------------------------------
- - .50% Mortality and Expense Risk Charge
EXAMPLES OF SALES LOAD COMPUTATIONS As noted previously, all sales load charges
are designed to average not more than 9 percent of base premiums over the lesser
of: the joint life expectancy of the insureds at policy issue or adjustment, or
15 years from the policy issue or adjustment; or the premium paying period. A
number of examples of sales load computations are included in Appendix V,
Example of Sales Load Computation, in this prospectus on page 91.
It should be noted from the above that the sales load charges are designed
to be spread over time and they assume a continuation of the Policy. Early
adjustment of the Policy to lower premium levels or early surrender of policy
values will have the effect of increasing the portion of premium payments used
for sales load charges. In addition, because a first year sales load is applied
to increases in premium, a pattern of adjustments should be avoided where a
decreased premium schedule is followed by a subsequent increase in premium.
OTHER POLICY PROVISIONS
Additional Benefits When a Policy is issued, you may be able to obtain
additional policy benefits. These benefits will be provided by a rider to the
Policy, which will require the payment of additional premium. The Waiver of
Premium Agreement provides for the payment of policy premium in the event of a
covered insured's disability. You may add the Waiver of Premium coverage on
either or both insureds.
The Single Life Term Insurance Agreement, which has an extra cost, allows
you to purchase a specified amount of additional insurance, on one, specific,
named insured. The insurance provided is term insurance, renewable to age 90 and
convertible. The premiums are indeterminate, which means that there is a table
of renewal premiums that we currently charge, along with a table of guaranteed
renewal premiums which are the maximums which we can charge. This agreement is
most useful in situations where there is also a need at the death of the first
insured.
The Estate Preservation Agreement permits you to purchase additional
four-year term insurance on the death of the designated insured, without
evidence of insurability. This right extends for a period of 90 days after the
death of that person. Typically, the person you designate will be the younger of
the two persons insured under this Policy. In the event that both insureds under
this Policy die simultaneously, we will pay nothing under this Agreement. The
Estate Preservation Agreement is useful if there is a need to have the Policy
owned initially by one or both of the insureds and subsequently to change the
ownership to a trust.
The Short Term Agreement is temporary protection insurance, on a fixed death
benefit basis only, issued for a period of time less than a year. It is issued
to provide temporary life insurance coverage until the later issue date of the
Policy. It may be used in situations where specific policy dating is required,
yet insurance coverage is needed immediately. The Short Term Agreement
terminates on the policy issue date of the Policy.
BENEFICIARY When we receive proof satisfactory to us of the second death, we
will pay the death proceeds of a Policy to the beneficiary or beneficiaries
named in the application for the Policy unless the owner has changed the
beneficiary. In that event, we will pay the death proceeds to the beneficiary
named in the last change of beneficiary request as provided below. You must give
us proof of the first death as soon as is reasonably possible, even though no
death benefit is payable at the first death.
If a beneficiary dies before the second death, that beneficiary's interest
in the Policy ends with that beneficiary's death. Only those beneficiaries who
are living at the second death will be eligible to share in the death proceeds.
If no beneficiary is living at the second death we will pay the death proceeds
of this Policy to the owner, if living, otherwise to the owner's estate, or, if
the owner is a corporation, to it or its successor.
If both insureds die under circumstances which make it impossible to
determine the order of their deaths, we will assume that the older insured died
first.
You may change the beneficiary designated to receive the proceeds. If you
have reserved the right to change the beneficiary, you can file a written
request with us to change the beneficiary. If you have not reserved the right to
change the beneficiary, the written consent of the irrevocable beneficiary will
be required.
Your written request will not be effective until it is recorded in our home
office. After it has been so recorded, it will take effect as of
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<PAGE>
the date you signed the request. However, if the second death occurs before the
request has been so recorded, the request will not be effective as to those
death proceeds we have paid before your request was recorded in our home office
records.
ASSIGNMENT The Policy may be assigned. The assignment must be in writing and
filed at our home office in St. Paul, Minnesota. We assume no responsibility for
the validity or effect of any assignment of the Policy or of any interest in it.
Any proceeds which become payable to an assignee will be payable in a single
sum. Any claim made by an assignee will be subject to proof of the assignee's
interest and the extent of the assignment.
SETTLEMENT OPTIONS The proceeds of a Policy will be payable if the Policy is
surrendered, or we receive proof satisfactory to us of the second death. These
events must occur while the Policy is in force. The proceeds will be paid at our
home office and in a single sum unless a settlement option has been selected. We
will deduct any indebtedness and unpaid charges from the proceeds. Proof of any
claim under this Policy must be submitted in writing to our home office.
We will pay interest on single sum death proceeds from the date of the
second death until the date of payment. Interest will be at an annual rate
determined by us, but never less than 3 percent.
The proceeds of a Policy may be paid in other than a single sum and you may,
before the second death, request that we pay the proceeds under one of the
Policy's settlement options. We may also use any other method of payment that is
agreeable between you and us. A settlement option may be selected only if the
payments are to be made to a natural person in that person's own right.
Each settlement option is payable in fixed amounts as described below. The
payments do not vary with the investment performance of the Variable Life
Account.
OPTION 1--INTEREST PAYMENTS
This is an annuity based upon the payment of interest on the proceeds at
such times and for a period that is agreeable to you and us. Withdrawals of
proceeds may be made in amounts of at least $500. At the end of the period, any
remaining proceeds will be paid in either a single sum or under any other method
we approve.
OPTION 2--PAYMENTS FOR A SPECIFIED PERIOD
This is an annuity payable for a specified number of years. The amount of
guaranteed payments for each $1,000 of proceeds applied is as shown in the
Policy. Monthly payments for periods not shown and current rates are available
from us at your request.
OPTION 3--LIFE INCOME
This is an annuity payable monthly during the lifetime of the person who is
to receive the income and terminating with the last monthly payment immediately
preceding that person's death. We may require proof of the gender and sex of the
annuitant. The amount of guaranteed payments for each $1,000 of proceeds applied
is as shown in the Policy. Monthly payments for ages not shown and current rates
are available from us at your request. It would be possible under this option
for the annuitant to receive only one annuity payment if he died prior to the
due date of the second annuity payment, two if he died before the due date of
the third annuity payment, etc.
OPTION 4--PAYMENTS OF A SPECIFIED AMOUNT
This is an annuity payable in a specified amount until the proceeds and
interest are fully paid.
If you request a settlement option, you will be asked to sign an agreement
covering the election which will state the terms and conditions of the payments.
Unless you elect otherwise, a beneficiary may select a settlement option after
the second death.
The minimum amount of interest we will pay under any settlement option is 3
percent per annum. Additional interest earnings, if any, on deposits under a
settlement option will be payable as determined by us.
MISSTATEMENT OF AGE If the date of birth of either insured has been
misstated, the amount of proceeds payable under the Policy will be adjusted to
reflect cost of insurance charges based upon the insured's correct date of
birth.
INCONTESTABILITY After a Policy has been in force during the lifetimes of
both insureds for two years from the original policy date, we cannot contest the
Policy, except for fraud or for nonpayment of premium. However, if there has
been a face amount increase or a reinstatement for which we required evidence of
insurability, that increase or the reinstatement will be contestable for two
years with respect to information provided at that time, during the lifetimes of
both insureds, from the
29
<PAGE>
effective date of the increase or the reinstatement.
SUICIDE If either insured, whether sane or insane, dies by suicide, within
two years of the original policy date, our liability will be limited to an
amount equal to the premiums paid for the Policy. If there has been a face
amount increase for which we required evidence of insurability, and if either
insured dies by suicide within two years from the effective date of the
increase, our liability with respect to the increase will be limited to an
amount equal to the premiums paid for such increase.
DIVIDENDS The Policies are participating policies. Each year we will
determine if this class of Policies and your Policy will share in our divisible
surplus. We call your share of this participation a dividend. We do not
anticipate that dividends will be declared with respect to these Policies.
Dividends, if received, may be added to your actual cash value or, if you so
elect, they may be paid in cash.
A dividend applied to actual cash value will be allocated to the guaranteed
principal account or to the sub-accounts of the separate account in accordance
with your instructions for new premiums. In the absence of instruction,
dividends will be allocated to the guaranteed principal account actual cash
value and separate account actual cash value in the same proportion that those
actual cash values bear to each other and, as to the actual cash value in the
separate account, to each sub-account in the proportion that the actual cash
value in such sub-account bears to your actual cash value in all of the sub-
accounts.
REPORTS Each year we will send you a report. This report will show your
Policy's status on the policy anniversary. It will include the actual cash
value, the face amount and the variable death benefit as of the date of the
report. It will also show the premiums paid during the year, policy loan
activity and the policy value. The report will be sent to you without cost. The
report will be as of a date within two months of its mailing.
PAYMENT OF PROCEEDS Normally, we will pay any policy proceeds within seven
days after our receipt of all the documents required for such a payment. Other
than the death proceeds, which are determined as of the date of the second
death, the amount of payment will be determined as of the end of the valuation
period during which a request is received at our home office. However, we
reserve the right to defer policy payments, including policy loans, for up to
six months from the date of your request, if such payments are based upon policy
values which do not depend on the investment performance of the Variable Life
Account. In that case, if we postpone a payment other than a policy loan payment
for more than 31 days, we will pay you interest at 3 percent per annum for the
period beyond that time that payment is postponed. For payments based on policy
values which do depend on the investment performance of the Variable Life
Account, we may defer payment only: (a) for any period during which the New York
Stock Exchange is closed for trading (except for normal holiday closing); or (b)
when the Securities and Exchange Commission has determined that a state of
emergency exists which may make such payment impractical.
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OTHER MATTERS
FEDERAL TAX STATUS
INTRODUCTION
The discussion contained herein is general in nature and is not intended as
tax advice. Each person concerned should consult a competent tax adviser. No
attempt is made to consider any applicable state or other tax laws. In addition,
this discussion is based on our understanding of federal income tax laws as they
are currently interpreted. No representation is made regarding the likelihood of
continuation of current income tax laws or the current interpretations of the
Internal Revenue Service.
We are taxed as a "life insurance company" under the Internal Revenue Code.
The operations of the Variable Life Account form a part of, and are taxed with,
our other business activities. Currently, no federal income tax is payable by us
on income dividends received by the Variable Life Account or on capital gains
arising from the Variable Life Account's activities. The Variable Life Account
is not taxed as a "regulated investment company" under the Code and it does not
anticipate any change in that tax status.
In order to qualify as a life insurance contract for federal tax purposes,
the Policy must meet the definition of a life insurance contract which is set
forth in Section 7702 of the Internal Revenue Code of 1986, as amended (the
"Code"). The manner in which Section 7702 should be applied to certain features
of the Policy offered in this prospectus is not directly addressed by Section
7702 or any guidance issued to date under Section 7702. Nevertheless, Minnesota
Mutual believes it is reasonable to conclude that the Policy will meet the
Section 7702 definition of a life insurance contract. In the absence of final
regulations or other pertinent interpretations of Section 7702, however, there
is necessarily some uncertainty as to whether a Policy will meet the statutory
life insurance contract definition, particularly if it insures a substandard
risk. If a Policy were determined not to be a life insurance contract for
purposes of Section 7702, such Policy would not provide most of the tax
advantages normally provided by a life insurance contract.
If it is subsequently determined that a Policy does not satisfy Section
7702, Minnesota Mutual may take whatever steps are appropriate and reasonable to
attempt to cause such a Policy to comply with Section 7702. For these reasons,
Minnesota Mutual reserves the right to restrict Policy transactions as necessary
to attempt to qualify it as a life insurance contract under Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Variable Life Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for federal tax purposes. The Variable Life Account, through
the Fund, intends to comply with the diversification requirements prescribed in
Regulations Section 1.817-5, which affect how the Fund's assets may be invested.
Although the investment adviser is an affiliate of Minnesota Mutual, Minnesota
Mutual does not have control over the Fund or its investments. Nonetheless,
Minnesota Mutual believes that each Portfolio of the Fund in which the Variable
Life Account owns shares will be operated in compliance with the requirements
prescribed by the Treasury.
In certain circumstances, owners of variable life policies may be considered
the owners, for federal income tax purposes, of the assets of the separate
account used to support their policies. In those circumstances, income and gains
from the separate account assets would be includible in the variable life policy
owner's gross income. The IRS has stated in published rulings that a variable
policy owner will be considered the owner of separate account assets if the
policy owner possesses incidents of ownership in those assets, such as the
ability to exercise the investment control over the assets. The Treasury
Department has also announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without
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<PAGE>
being treated as owners of the underlying assets." As of the date of this
prospectus, no such guidance has been issued.
The ownership rights under the Policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the owner of a Policy has the choice of more sub-accounts in which to
allocate net purchase payments and policy values, and may be able to transfer
among sub-accounts more frequently than in such rulings. These differences could
result in a policy owner being treated as the owner of the assets of the
Variable Life Account. In addition, we do not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury Department has
stated it expects to issue. We therefore reserve the right to modify the Policy
as necessary to attempt to prevent a policy owner from being considered the
owner of a pro rata share of the assets of the Variable Life Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
In general the policy owner is not currently taxed on any part of his
interest until the policy owner actually receives cash from the Policy. As
discussed below, taxability is determined by the individual's contributions to
the Policy and prior Policy activity. The death benefit under a Policy should,
however, be excludable from the gross income of the beneficiary under Section
101(a)(1) of the Code.
Depending on the circumstances, the exchange of a Policy, the receipt of a
Policy in an exchange, a change in the Policy's Death Benefit Option (E.G., a
change from Cash Option to Protection Option), a policy loan, a partial
surrender, a surrender, a change in ownership, a change of insured, an
adjustment of face amount, or an assignment of the Policy may have federal
income tax consequences. A person considering any such transaction should
consult a tax adviser before effecting the transaction.
We also believe that policy loans will be treated as indebtedness and will
not be currently taxable as income to the policy owner. However, if there is any
borrowing against the Policy, whether a modified endowment contract or not, the
interest paid on loans may not be tax deductible.
A surrender or partial surrender of the actual cash values of a Policy may
have tax consequences. On surrender, a policy owner generally will not be taxed
on values received except to the extent that they exceed the gross premiums paid
under the Policy. An exception to this general rule occurs in the case of a
partial withdrawal, a decrease in the face amount, or any other change that
reduces benefits under the Policy in the first 15 years after the Policy is
issued and that results in a cash distribution to the policy owner in order for
the Policy to continue complying with the Section 7702 definitional limits. In
that case, such distribution will be taxed in whole or in part as ordinary
income (to the extent of any gain in the Policy) under rules prescribed in
Section 7702. Premiums for additional benefits are not used in the calculation
for computing the tax on actual cash values. Finally, upon a complete surrender
or lapse of a Policy or when benefits are paid at a Policy's maturity date, if
the amount received plus the amount of indebtedness exceeds the total investment
in the Policy, the excess will generally be treated as ordinary income subject
to tax.
It should be noted, however, that under the Internal Revenue Code the tax
treatment described above is available only for policies not described as
modified endowment contracts. In general, the tests used in the Code to make
such a determination will have an impact on policies which have a high premium
in relation to the death benefit. Thus, the Code requires that the cumulative
premiums paid on a life insurance policy during the first seven contract years
not exceed the sum of the net level premiums which would be paid under a 7-pay
life policy ("7-pay test"). If the cumulative premiums during the first seven
contract years exceed the 7-pay test, the policy is a modified endowment
contract.
Modified endowment contracts would still be treated as life insurance with
respect to the tax treatment of death proceeds and to the extent that the inside
build-up of cash value would not be taxed on a yearly basis. However, any
amounts received by the policy owner, such as dividends, cash withdrawals, loans
and amounts received from partial or total surrender of the contract would be
subject to the same tax treatment as the same amounts received under an annuity.
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<PAGE>
This annuity tax treatment includes the 10 percent additional income tax which
would be imposed on the portion of any distribution that is included in income
except where the distribution or loan is made on or after the policy owner
attains age 59 1/2, or is attributable to the policy owner becoming disabled, or
as part of a series of substantially equal periodic payments for the life of the
policy owner or the joint lives of the policy owner and beneficiary.
Compliance with the 7-pay test does not imply or guarantee that only seven
payments will be required for the initial death benefit to be guaranteed for
life. Making additional payments or reducing the benefits (for example, through
a partial withdrawal, a change in death benefit option, or a scheduled
reduction) may either violate the 7-pay test or reduce the amount that may be
paid in the future under the 7-pay test. Further, reducing the death benefit at
any time will require retroactive retesting and will probably result in a
failure of the 7-pay test regardless of any efforts by Minnesota Mutual to
provide a payment schedule that will not violate the 7-pay test.
Any Policy received in an exchange for a modified endowment contract will be
considered a modified endowment contract and will be subject to the tax
treatment accorded to modified endowment contracts. A Policy that is not
originally classified as a modified endowment contract can become so classified
if there is a reduction in benefits at any time or if a material change is made
in the contract at any time. A material change includes, but is not limited to,
a change in the benefits that was not reflected in a prior 7-pay test
computation.
A policy which is subject to a "material change" shall be treated as newly
entered into on the date on which such material change takes effect. Appropriate
adjustment shall be made in determining whether such a policy meets the 7-pay
test by taking into account the previously existing cash surrender value. While
certain adjustments described herein may result in a material change, the law
provides that any cost of living increase described in the regulations and based
upon an established broad-based index will not be treated as a material change
if any increase is funded ratably over the remaining period during which
premiums are required to be paid under the policy. To date, no regulations under
this provision have been issued.
If a Policy becomes a modified endowment contract, distributions that occur
during the Policy year it becomes a modified endowment contract and any
subsequent Policy year will be taxed as distributions from a modified endowment
contract. In addition, distributions from a Policy within two years before it
becomes a modified endowment contract will be taxed in this manner. This means
that a distribution made from a Policy that is not a modified endowment contract
could later become taxable as a distribution from a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a modified
endowment contract will depend upon the circumstances of each Policy.
Accordingly, a prospective policy owner should contact a competent tax adviser
before purchasing a policy to determine the circumstances under which the Policy
would be a modified endowment contract. In addition, a policy owner should
contact a competent tax adviser before paying any nonrepeating premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in the
case of an exchange) to be treated as a modified endowment contract.
MULTIPLE POLICIES
All modified endowment contracts, issued by us (or an affiliated company) to
the same policy owner during any calendar year will be treated as one modified
endowment contract for purposes of determining the amount includable in gross
income under Section 72(e) of the Code. Additional rules may be promulgated
under this provision to prevent avoidance of its effects through serial
contracts or otherwise. For further information on current aggregation rules
under this provision, see your own tax adviser. A life insurance policy received
in exchange for a modified endowment contract will also be treated as a modified
endowment contract. Accordingly, a policy owner should consult a tax adviser
before effecting an exchange of any life insurance policy.
TAXATION OF POLICY SPLIT. A Policy may be split into two other individual
contracts upon the occurrence of certain events. A policy split could have
adverse tax consequences; for example, it is not clear whether a policy
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<PAGE>
split will be treated as a nontaxable exchange under Section 1031 through 1043
of the Code. If a policy split is not treated as a nontaxable exchange, a split
could result in the recognition of taxable income in an amount up to any gain in
the Policy at the time of the split. Before you exercise rights provided by the
policy split provision, it is important that you consult with a competent tax
adviser regarding the possible consequences of a policy split.
OTHER TAX CONSIDERATIONS. The transfer of the Policy or the designation of a
beneficiary may have federal, state, and/or local transfer and inheritance tax
consequences, including the imposition of gift, estate and generation-skipping
transfer taxes. For example, the transfer of the Policy to, or the designation
as beneficiary of, or the payment of proceeds to, a person who is assigned to a
generation which is two or more generations below the generation assignment of
the policy owner, may have Generation Skipping Transfer tax considerations under
Section 2601 of the Code.
The individual situation of each policy owner or beneficiary will determine
the extent, if any, to which federal, state and local transfer taxes may be
imposed. Consult with your tax adviser for specific information in connection
with these taxes.
The particular situation of each policy owner or beneficiary will determine
how ownership or receipt of policy proceeds will be treated for purposes of
federal estate tax as well as state and local estate, inheritance, generation
skipping and other taxes.
In addition, the tax consequences associated with a Policy remaining in
force after the younger insured's 100th birthday are unclear. A tax adviser
should be consulted in such circumstances.
OTHER TRANSACTIONS. Changing the policy owner may have tax consequences.
Exchanging this Policy for another involving the same insureds should have no
federal income consequences if there is no debt and no cash or other property is
received, according to Section 1035(a)(1) of the Code. The new policy would have
to satisfy the 7-pay test from the date of the exchange to avoid
characterization as a modified endowment contract. An exchange of a life
insurance contract for a new life insurance contract may, however, result in a
loss of grandfathering status for statutory changes made after the old policy
was issued. A tax adviser should be consulted before effecting an exchange.
The Policies may be used in various arrangements, including nonqualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you are
contemplating the use of such Policies in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax adviser regarding the tax attributes of the particular
arrangement.
It should be understood that the foregoing description of the federal income
tax consequences under the Policies is not exhaustive and that special rules are
provided with respect to situations not discussed. Statutory changes in the
Internal Revenue Code, with varying effective dates, and regulations adopted
thereunder may also alter the tax consequences of specific factual situations.
Due to the complexity of the applicable laws, tax advice may be needed by a
person contemplating the purchase of a variable life insurance policy or
exercising elections under such a policy. For further information, a qualified
tax adviser should be consulted.
At the present time, we make no charge to the Variable Life Account for any
federal, state or local taxes (other than state premium taxes) that we incur
that may be attributable to such Account or to the Policies. We, however,
reserve the right in the future to make a charge for any such tax or other
economic burden resulting from the application of the tax laws that we determine
to be properly attributable to the Variable Life Account or the Policies.
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<PAGE>
TRUSTEES AND PRINCIPAL MANAGEMENT OFFICERS OF MINNESOTA MUTUAL
<TABLE>
<CAPTION>
Trustees Principal Occupation
- ------------------------- -----------------------------------------------------------
<S> <C>
Anthony L. Andersen Chair--Board of Directors, H. B. Fuller Company, St. Paul,
Minnesota (Adhesive Products)
John F. Grundhofer Chairman of the Board, President and Chief Executive
Officer, First Bank System, Inc., Minneapolis, Minnesota
(Banking)
Harold V. Haverty Chairman of the Board, Deluxe Corporation, Shoreview,
Minnesota (Check Printing)
Lloyd P. Johnson Retired since May 1995, prior thereto, for more than five
years Chairman, Norwest Corporation, Minneapolis, Minnesota
(Banking)
David S. Kidwell, Ph.D. Dean and Professor of Finance, The Curtis L. Carlson School
of Management, University of Minnesota, since August 1991;
prior thereto, Dean of the School and Professor, University
of Connecticut, School of Business Administration from 1988
to July 1991
Reatha C. King, Ph.D. President and Executive Director, General Mills Foundation,
Minneapolis, Minnesota
Thomas E. Rohricht Member, Doherty, Rumble & Butler Professional Association,
St. Paul, Minnesota (Attorneys)
Terry N. Saario, Ph.D. President, Northwest Area Foundation, St. Paul, Minnesota
(Private Regional Foundation)
Robert L. Senkler Chairman of the Board, The Minnesota Mutual Life Insurance
Company since August 1995; Chief Executive Officer and
President, The Minnesota Mutual Life Insurance Company
since July 1994; prior thereto for more than five years
Vice President and Actuary, The Minnesota Mutual Life
Insurance Company
Michael E. Shannon Vice Chairman and Chief Financial and Administrative
Officer, Ecolab, Inc., St. Paul, Minnesota (Specialty
Chemical Company)
Frederick T. Weyerhaeuser Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
</TABLE>
Principal Officers (other than Trustees)
<TABLE>
<CAPTION>
Name Position
- ------------------- ----------------------
<S> <C>
John F. Bruder Senior Vice President
Keith M. Campbell Vice President
Paul H. Gooding Vice President and
Treasurer
Robert E. Hunstad Executive Vice
President
James E. Johnson Senior Vice President
and Actuary
Joel W. Mahle Vice President
Dennis E. Prohofsky Vice President,
General Counsel and
Secretary
<CAPTION>
Name Position
- ------------------- ----------------------
<S> <C>
Gregory S. Strong Vice President and
Actuary
Terrence M. Senior Vice President
Sullivan
Randy F. Wallake Senior Vice President
</TABLE>
All Trustees who are not also officers of Minnesota Mutual have had the
principal occupation (or employers) shown for at least five years with the
exception of Dr. Kidwell, whose prior employment is as indicated above. All
officers of Minnesota Mutual have been employed by Minnesota Mutual for at least
five years.
VOTING RIGHTS
We will vote the Fund shares held in the various sub-accounts of the
Variable Life
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<PAGE>
Account at regular and special shareholder meetings of the Fund in accordance
with your instructions. If, however, the 1940 Act or any regulation thereunder
should change and we determine that it is permissible to vote the Fund shares in
our own right, we may elect to do so. The number of votes as to which you have
the right to instruct will be determined by dividing your Policy's actual cash
value in a sub-account by the net asset value per share of the corresponding
Fund portfolio. Fractional shares will be counted. The number of votes as to
which you have the right to instruct will be determined as of the date
coincident with the date established by the Fund for determining shareholders
eligible to vote at the meeting of the Fund. Voting instructions will be
solicited in writing prior to such meeting in accordance with procedures
established by the Fund. We will vote Fund shares held by the Variable Life
Account as to which no instructions are received in proportion to the voting
instructions which are received from policy owners with respect to all Policies
participating in the Variable Life Account. Each policy owner having a voting
interest will receive proxy material, reports and other material relating to the
Fund.
We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that shares be voted so as to
cause a change in subclassification or investment policies of the Fund or
approve or disapprove an investment advisory contract of the Fund. In addition,
we may disregard voting instructions in favor of changes in the investment
policies or the investment adviser of the Fund if we reasonably disapprove of
such changes. A change would be disapproved only if the proposed change is
contrary to state law or disapproved by state regulatory authorities on a
determination that the change would be detrimental to the interests of policy
owners or if we determined that the change would be inconsistent with the
investment objectives of the Fund or would result in the purchase of securities
for the Fund which vary from the general quality and nature of investments and
investment techniques utilized by other separate accounts created by us or any
of our affiliates which have similar investment objectives. In the event that we
disregard voting instructions, a summary of that action and the reason for such
action will be included in your next semi-annual report.
DISTRIBUTION OF POLICIES
The Policies will be sold by our state licensed life insurance agents who
are also registered representatives of MIMLIC Sales Corporation ("MIMLIC Sales")
or of other broker-dealers who have entered into selling agreements with MIMLIC
Sales. MIMLIC Sales acts as principal underwriter for the Policies. MIMLIC Sales
is a wholly-owned subsidiary of MIMLIC Asset Management Company, which in turn
is a wholly-owned subsidiary of Minnesota Mutual. MIMLIC Asset Management
Company is a registered investment adviser and the investment adviser to the
Fund.
MIMLIC Sales Corporation, whose address is 400 Robert Street North, St.
Paul, Minnesota 55101-2098, is a registered broker-dealer under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc. The Policies are sold in the states where their sale is lawful.
The insurance underwriting and the determination of each proposed insured's risk
classification and whether to accept or reject an application for a Policy is
done in accordance with our rules and standards.
Commissions to registered representatives on the sale of Policies include:
up to 40 percent of gross premium in the first policy year; 3 percent of the
gross premium in policy years two through ten; 2 percent in policy years
thereafter; and 0 percent of nonrepeating premiums. This description of
commissions shows the maximum amount of commissions payable under the VAL-SD
Insurance Policy for plans of insurance described as protection and whole life
insurance plans. The commissions payable on premiums received for plans
described as greater than whole life plans will differ from the percentages
shown above, as a first year commission will be paid only on such amounts as we
may classify as a first year premium, based upon a whole life premium per $1,000
of face amount. The premiums received in excess of that amount will pay
commissions at a rate of 2 percent.
In addition, MIMLIC Sales Corporation or Minnesota Mutual will pay, based
uniformly on the sales of VAL-SD Insurance Policies by registered
representatives, credits which allow registered representatives (Agents) who are
responsible for sales of the Policies to attend conventions and other meetings
sponsored by us or our affiliates for the purpose of
36
<PAGE>
promoting the sale of insurance and/or investment products offered by us and our
affiliates. Such credits may cover the registered representatives'
transportation, hotel accommodations, meals, registration fees and the like. We
may also pay registered representatives additional amounts based upon their
production and the persistency of life insurance and annuity business placed
with us.
LEGAL MATTERS
Legal matters in connection with federal securities laws applicable to the
issue and sale of the VAL-SD Policies have been passed upon by Jones & Blouch
L.L.P., 1025 Thomas Jefferson Street, N.W., Washington, D.C. 20007. All other
legal matters, including the right to issue such Policies under Minnesota law
and applicable regulations thereunder, have been passed upon by Donald F.
Gruber, Esquire, 400 Robert Street North, St. Paul, Minnesota 55101.
LEGAL PROCEEDINGS
As an insurance company, we are ordinarily involved in litigation. We are of
the opinion that such litigation is not material with respect to the Policies or
the Variable Life Account.
EXPERTS
The financial statements of Minnesota Mutual included in this prospectus
have been audited by KPMG Peat Marwick LLP, independent auditors, 4200 Norwest
Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, whose reports
thereon appears elsewhere herein, and have been so included in reliance upon the
report of KPMG Peat Marwick LLP and upon the authority of said firm as experts
in accounting and auditing.
Actuarial matters included in this prospectus have been examined by Jaymes
G. Hubbell, F.S.A., Second Vice President and Actuary of Minnesota Mutual, as
stated in his opinion filed as an exhibit to the Registration Statement.
REGISTRATION STATEMENT
We have filed with the Securities and Exchange Commission a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
Policies offered hereby. This prospectus does not contain all the information
set forth in the registration statement and amendments thereto and the exhibits
filed as a part thereof, to all of which reference is hereby made for further
information concerning the Variable Life Account, Minnesota Mutual, and the
Policies. Statements contained in this prospectus as to the contents of Policies
and other legal instruments are summaries, and reference is made to such
instruments as filed.
37
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL TERMS
As used in this prospectus, the following terms have the indicated meanings:
ACTUAL CASH VALUE: the value of your Variable Life Account and guaranteed
principal account interest under a Policy. It is composed of a Policy's interest
in the guaranteed principal account and in one or more sub-accounts of the
Variable Life Account. The interest in each is valued separately. For each
Variable Life Account sub-account, the value is determined by multiplying the
current number of sub-account units credited to a Policy by the current
sub-account unit value. Actual cash value does not include the loan account.
BASE PREMIUM: the premium less any amount deducted from the premium for
additional benefits and for sub-standard risks.
CODE: the Internal Revenue Code of 1986, as amended.
FIRST DEATH: the death of the first insured to die. You must give us proof of
the first death as soon as is reasonably possible.
FUND: the mutual fund or separate investment portfolio within a series mutual
fund which we have designated as an eligible investment for the Variable Life
Account, currently, MIMLIC Series Fund, Inc. and its Portfolios.
GENERAL ACCOUNT: all of our assets other than those in the Variable Life Account
or in other separate accounts established by us.
GUARANTEED PRINCIPAL ACCOUNT: the portion of the general account of Minnesota
Mutual which is attributable to variable policies, exclusive of policy loans. It
is not a separate account or a division of the general account.
LOAN ACCOUNT: the portion of the general account attributable to policy loans
under Policies of this type. The loan account balance is the sum of all
outstanding loans under this Policy.
NET SINGLE PREMIUM: the amount of money necessary, at any given date, to pay for
all future guaranteed cost of insurance charges for the entire lifetime of both
insureds, or for the coverage period in the case of extended term insurance,
without the payment of additional premium. We will determine the net single
premium using the policy assumptions and the assumption that the current face
amount of the Policy will remain constant.
NONREPEATING PREMIUM: a payment made to this Policy in addition to its scheduled
payments.
POLICY OWNER: the owner of a Policy.
POLICY VALUE: the actual cash value of a Policy plus any policy loan.
POLICY YEAR: a period of one year beginning with the policy date or a policy
anniversary.
PREMIUM: a scheduled payment required for this Policy.
SECOND DEATH: the death of the second insured to die. We will pay the death
proceeds when we receive due proof of the second death.
UNIT: an accounting device used to determine the interest of a Policy in the
sub-accounts of the Variable Life Account.
VALUATION DATE: each date on which a Fund Portfolio is valued.
VALUATION PERIOD: the period between successive valuation dates measured from
the time of one determination to the next.
VARIABLE LIFE ACCOUNT: a separate investment account called the Minnesota Mutual
Variable Life Account, where the investment experience of its assets is kept
separate from our other assets.
WE, OUR, US: The Minnesota Mutual Life Insurance Company.
YOU, YOUR: the policy owner.
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<PAGE>
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APPENDIX I
ILLUSTRATIONS OF POLICY VALUES, DEATH BENEFITS AND PREMIUMS
The Appendix I illustrations beginning on page 76 show the projected actual
cash values and death benefits for various combinations of age, premium level,
face amount of insurance, death benefit option and level of cost of insurance
charges. The illustrations assume that 100 percent of net premiums are invested
in the sub-accounts of the Variable Life Account. Illustrations are provided for
a male and female, both non-smokers and both aged 40. The plan of insurance for
each illustration is a whole life plan, each with an initial face amount of
$1,000,000. Both death benefit options--the Cash Option and the Protection
Option are shown. We show all illustrations based on both guaranteed maximum and
current charges.
Guaranteed maximum cost of insurance charges will vary by age, sex, and risk
class. We use the male, female and unisex 1980 Commissioners Standard Ordinary
Mortality Tables ("1980 CSO"), as appropriate. The unisex tables are used in
circumstances where legal considerations require the elimination of sex-based
distinctions in the calculation of mortality costs. Our maximum cost of
insurance charges are based on an assumption of mortality not greater than the
mortality rates reflected in 1980 CSO Tables.
In most cases we intend to impose cost of insurance charges which are
substantially lower than the maximum charges determined as described above. In
addition to the factors governing maximum cost of insurance charges, actual
charges will vary depending on the level of scheduled premiums for a given
amount of insurance, the duration of the Policy and the smoking habits of both
insureds. We illustrate current cost of insurance charges since they represent
our current practices with respect to mortality charges for this class of
Policies.
Similarly, we impose a current administration charge and a current face
amount guarantee charge which are less than the guaranteed contractual. These
current charges are expected to compensate us for the actual costs of
administration and for guaranteeing the face amount. If the actual costs change,
these charges may increase or decrease, as necessary although they may not
exceed the maximum stated in the Policy.
The illustrations labeled "Using Current Charges" show actual cash values
and death benefits resulting from charging the Policy for cost of insurance,
administration and the face amount guarantee at the current level. The
illustrations labeled "Using Guaranteed Maximum Charges" shows actual cash
values and death benefits when cost of insurance, administration and the face
amount guarantee charges are deducted from the Policy at the maximum level as
stated in the Policy. These two ledger formats can be compared to demonstrate
the result of our charging less than the maximum charges.
The illustrations show how actual cash values and death benefits would vary
over time if the return on the assets held in the Variable Life Account equaled
a gross annual rate after tax, of 0 percent, 6 percent and 12 percent. The
actual cash values and death benefits would be different from those shown if the
returns averaged 0 percent, 6 percent and 12 percent but fluctuated over the
life of the Policy. The illustrations assume scheduled premiums are paid when
due.
The amounts shown for the hypothetical actual cash value and death benefit
as of each policy year reflect the fact that the net investment return on the
assets held in the sub-accounts is lower than the gross, after-tax return. This
is because a daily investment management fee assessed against the net assets of
the Fund and a daily mortality and expense risk charge assessed against the net
assets of the Variable Life Account are deducted from the gross return. The
mortality and expense risk charge reflected in the illustrations are at an
annual rate of .50 percent. The investment management fee illustrated represents
an average of the fee charged for all ten Fund Portfolios. Although five of the
portfolios of the Fund currently pay fees at a .50 percent annual rate, the
Index 500 Portfolio pays a lower fee (.40 percent) and the Capital Appreciation
Portfolio, the Small Company Portfolio, the Value Stock Portfolio and the
International Stock Portfolio pay a higher fee (.75 percent, .75 percent, .75
percent and 1.0 percent, respectively). As the International Stock Portfolio
pays a management fee based upon the size of the Portfolio, its actual 1994
result of .82 percent is reflected in the calculation of the illustrations. In
addition to the deduction for the investment management fee, the illustrations
also reflect a deduction for those Fund costs and expenses not assumed by
Minnesota Mutual. It is anticipated that, because of Minnesota Mutual's
absorption of certain expenses, the ratio of those expenses to average daily net
assets will not exceed .15 percent, with the exception of the International
Stock Portfolio where the maximum expense ratio is 1.00 percent. As this maximum
is not applicable as the
39
<PAGE>
Portfolios grow in asset size, actual 1994 results are reflected in the
calculation of the Growth, Bond, Asset Allocation, Mortgage Securities, Index
500, Capital Appreciation and International Stock Portfolios, at .06 percent,
.11 percent, .06 percent, .10 percent, .10 percent, .08 percent and .42 percent,
respectively. Therefore, gross annual rates of return of 0 percent, 6 percent
and 12 percent correspond to approximate net annual rates of return of -1.24
percent, 4.76 percent and 10.76 percent. (For a description of the arrangement
whereby Minnesota Mutual voluntarily absorbs certain expenses of the Fund, see
"Investment Adviser" in the attached prospectus for MIMLIC Series Fund, Inc.)
The tables reflect the fact that no charges for federal, state or local
income taxes are currently made against the Variable Life Account. If such a
charge is made in the future, it will take a higher gross rate of return to
produce after-tax returns of 0 percent, 6 percent and 12 percent than it does
now.
Upon request, we will furnish a comparable illustration based upon the age,
sex and risk classification of each insured, and on the face amount, premium,
plan of insurance and gross annual rate of return requested. It should be
remembered that actual illustrations may be materially different from those
illustrated, depending upon the actual situation. For example, illustrations for
smokers or individuals who are rated sub-standard will differ materially in
premium amount and illustrated values, even though the insureds may be the same
ages as the insureds in our sample illustration.
40
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ADJUSTABLE LIFE INSURANCE
VAL-SD
DEATH BENEFIT OPTION--CASH OPTION
MALE NONSMOKER ISSUE AGE 40
FEMALE NONSMOKER ISSUE AGE 40
INITIAL DEATH BENEFIT--$1,000,000(1)
$10,805.48 INITIAL SCHEDULED PREMIUM(2)
USING CURRENT CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.24% NET) (4.76% NET) (10.76% NET)
POL BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10805 175 1000000 198 1000000 221 1000000
2 10805 9321 1000000 9923 1000000 10529 1000000
3 10805 18343 1000000 20102 1000000 21936 1000000
4 10805 27236 1000000 30746 1000000 34552 1000000
5 10805 36000 1000000 41879 1000000 48507 1000000
6 10805 44638 1000000 53524 1000000 63945 1000000
7 10805 53142 1000000 65697 1000000 81018 1000000
8 10805 61516 1000000 78424 1000000 99904 1000000
9 10805 69751 1000000 91722 1000000 120789 1000000
10 10805 77850 1000000 105636 1000000 143891 1000000
15 10805 117406 1000000 186587 1000000 303216 1000000
20 10805 154553 1000000 288506 1000000 572714 1328034
25 10805 188855 1000000 416639 1000000 1022073 1995649
30 10805 218614 1000000 578301 1000859 1767787 2928800
</TABLE>
(1) The initial death benefit is guaranteed to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$5,402.74 semi-annually, $2,701.37 quarterly, or $900.46 monthly. The death
benefits and policy values would be slightly different for a policy with
more frequent premium payments.
(3) Assumes no policy loan has been made.
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, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND POLICY VALUES FOR A POLICY 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 POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
41
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ADJUSTABLE LIFE INSURANCE (CONTINUED)
VAL-SD
DEATH BENEFIT OPTION--CASH OPTION
MALE NONSMOKER ISSUE AGE 40
FEMALE NONSMOKER ISSUE AGE 40
INITIAL DEATH BENEFIT--$1,000,000(1)
$10,805.48 INITIAL SCHEDULED PREMIUM(2)
USING GUARANTEED MAXIMUM CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.24% NET) (4.76% NET) (10.76% NET)
POL BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10805 0 1000000 14 1000000 32 1000000
2 10805 8968 1000000 9546 1000000 10131 1000000
3 10805 17816 1000000 19523 1000000 21307 1000000
4 10805 26536 1000000 29956 1000000 33666 1000000
5 10805 35130 1000000 40868 1000000 47337 1000000
6 10805 43600 1000000 52280 1000000 62461 1000000
7 10805 51938 1000000 64210 1000000 79185 1000000
8 10805 60147 1000000 76682 1000000 97684 1000000
9 10805 68220 1000000 89714 1000000 118142 1000000
10 10805 76159 1000000 103333 1000000 140769 1000000
15 10805 113506 1000000 180892 1000000 295274 1000000
20 10805 145831 1000000 276131 1000000 552611 1283692
25 10805 170060 1000000 391427 1000000 973192 1906649
30 10805 177897 1000000 527990 1000000 1643184 2738252
</TABLE>
(1) The initial death benefit is guaranteed to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$5,402.74 semi-annually, $2,701.37 quarterly, or $900.46 monthly. mThe death
benefits and policy values would be slightly different for a policy with
more frequent premium payments.
(3) Assumes no policy loan has been made.
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, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND POLICY VALUES FOR A POLICY 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 POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
42
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ADJUSTABLE LIFE INSURANCE (CONTINUED)
VAL-SD DEATH BENEFIT OPTION--PROTECTION OPTION
MALE NONSMOKER ISSUE AGE 40
FEMALE NONSMOKER ISSUE AGE 40
INITIAL DEATH BENEFIT--$1,000,000(1)
$10,805.48 INITIAL SCHEDULED PREMIUM(2)
USING CURRENT CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.24% NET) (4.76% NET) (10.76% NET)
POL BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10805 175 1000000 198 1000000 221 1000000
2 10805 9320 1000175 9923 1000198 10528 1000221
3 10805 18343 1009320 20101 1009923 21935 1010528
4 10805 27234 1018343 30744 1020101 34549 1021935
5 10805 35995 1027234 41873 1030744 48500 1034549
6 10805 44629 1035995 53513 1041873 63932 1048500
7 10805 53128 1044629 65678 1053513 80994 1063932
8 10805 61492 1053128 78392 1065678 99862 1080994
9 10805 69714 1061492 91672 1078392 120726 1099862
10 10805 77796 1069714 105569 1091672 143973 1120726
15 10805 117327 1109581 186463 1168759 303588 1264852
20 10805 154398 1147209 288192 1265954 573015 1836455
25 10805 188465 1181925 415688 1387870 1021188 2907337
30 10805 216345 1211592 574417 1539902 1760440 4501137
</TABLE>
(1) The initial death benefit is guaranteed to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$5,402.74 semi-annually, $2,701.37 quarterly, or $900.46 monthly. The death
benefits and policy values would be slightly different for a policy with
more frequent premium payments.
(3) Assumes no policy loan has been made.
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, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND POLICY VALUES FOR A POLICY 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 POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
43
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ADJUSTABLE LIFE INSURANCE (CONTINUED)
VAL-SD
DEATH BENEFIT OPTION--PROTECTION OPTION
MALE NONSMOKER ISSUE AGE 40
FEMALE NONSMOKER ISSUE AGE 40
INITIAL DEATH BENEFIT--$1,000,000(1)
$10,805.48 INITIAL SCHEDULED PREMIUM(2)
USING GUARANTEED MAXIMUM CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.24% NET) (4.76% NET) (10.76% NET)
POL BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10805 0 1000000 14 1000000 32 1000000
2 10805 8968 1000000 9546 1000014 10131 1000032
3 10805 17816 1008968 19522 1009546 21306 1010131
4 10805 26534 1017816 29954 1019522 33663 1021306
5 10805 35126 1026534 40862 1029954 47331 1033663
6 10805 43592 1035126 52270 1040862 62448 1047331
7 10805 51924 1043592 64191 1052270 79162 1062448
8 10805 60124 1051924 76651 1064191 97644 1079162
9 10805 68184 1060124 89664 1076651 118074 1097644
10 10805 76106 1068184 103257 1089664 140662 1118074
15 10805 113229 1106180 180423 1163718 294470 1257323
20 10805 144796 1139056 274025 1253950 548224 1762381
25 10805 166843 1163589 383495 1360587 952970 2731277
30 10805 168896 1170807 500409 1477166 1557662 4037926
</TABLE>
(1) The initial death benefit is guaranteed to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$5,402.74 semi-annually, $2,701.37 quarterly, or $900.46 monthly. The death
benefits and policy values would be slightly different for a policy with
more frequent premium payments.
(3) Assumes no policy loan has been made.
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, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND POLICY VALUES FOR A POLICY 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 POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
44
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX II
SUMMARY OF POLICY CHARGES
What sets cash value life insurance apart from other types of savings and
investment vehicles? It is the only product creating immediate and substantial
dollars in the form of a death benefit plus offering an accumulation component.
This is unlike other vehicles that can only create dollars over time as
contributions are made.
All life insurance policies have basically the same charges, although the
charges may be taken in different ways or at different points in time. VAL-SD
has two distinct ways to recover expenses from a standard policy:
I. CHARGES TAKEN FROM THE BASE PREMIUM:
As premium contributions are received by Minnesota Mutual each year, the
company takes a certain percentage to partially cover expenses. A sales load is
taken to pay commissions to the agent. Two charges are also taken as a
percentage of the premium to cover the state premium tax and a federal tax
related to premiums.
Also, in the first year of any life insurance policy, two things are
different than in ongoing years: a larger commission is paid, and the policy
must be underwritten. To begin to cover these costs, an additional sales load
and an underwriting charge are taken from the premium in just the first year.
These two charges may be assessed on future increases in premium and face amount
adjustments.
<TABLE>
<S> <C>
CHARGES TAKEN FROM PREMIUM: PLUS, IN FIRST YEAR:
7.00% Sales Load Additional sales load (up to 23%)
1.25% Federal Tax Underwriting charge (up to
2.50% Premuim Tax $10/$1,000 of insurance coverage)
- -----------------
10.75% TOTAL
</TABLE>
II. CHARGES TAKEN FROM THE ACTUAL CASH VALUE:
After the above charges are taken from the premium, the remaining amount is
the net premium. The net premium is then invested in the guaranteed principal
account and/or in the MIMLIC Series Fund portfolio(s) you have selected which is
referred to as your actual cash value or the Variable Life Account. With a
VAL-SD insurance policy, the actual cash value amount is determined by the
number of units in each of your portfolios and their current value.
There are two sets of charges that affect your actual cash value. One set is
a direct charge and the other set is an indirect charge. The direct set is the
cost of insurance, the face amount guarantee charge and an administration charge
which is taken from the policy actual cash value on a monthly basis. (Refer to
Table A) The cost of insurance charge goes to cover the risk of death while the
administration charge covers the cost of maintaining each policy. The face
amount guarantee charge compensates the company for guaranteeing the face amount
of the policy. In addition, transaction charges are also taken from the actual
cash value as transactions occur.
TABLE A
DIRECT CHARGES TAKEN FROM ACTUAL CASH VALUE:
- - Administration charge (currently $10/month)
- - Face amount guarantee charge (currently
2 CENTS/1,000/month
- - Cost of insurance charge
- - If applicable: Transaction Charges
45
<PAGE>
In addition to the charges described above, there are additional charges for
substandard risk policies. These charges are taken directly from the premium.
The indirect set of charges include the Mortality and Expense Risk charge
(from the Variable Life Account) plus the Advisory Fee and Fund Expense (from
the MIMLIC Series Fund). The Mortality and Expense Risk charge protects the
insurance company from the risk that total policy charges may not be adequate to
cover actual company expenses. The Series Fund charges cover the advisory fee of
the fund manager and portfolio expense for each of the portfolios.
For illustration purposes, we use an average of the actual Mortality and
Expense Risk Charge, Advisory Fee and Fund Expense which is 1.24%. These are
listed for each portfolio in Table B.
Your actual cash value is determined daily, net of the charges associated
with the portfolios you have selected, so they do not appear as a direct
expense. This is reflected illustratively by an assumed net rate or return.
Consider this example: assumed gross rate of 9.00%-Average of actual expenses
total in Table B of 1.24%=assumed net rate of return of 7.76%.
TABLE B -- INDIRECT CHARGES
ACTUAL VARIABLE LIFE SEPARATE ACCOUNT EXPENSES AND SERIES FUND FEES
<TABLE>
<CAPTION>
MORTALITY ADVSY FUND
PORTFOLIO NAME & EXP RISK FEE + EXP* = TOTAL
<S> <C> <C> <C> <C> <C> <C>
Index 500 .50 .40 + .10 = 1.00
Asset Allocation .50 .50 + .06 = 1.06
Bond .50 .50 + .11 = 1.11
Growth .50 .50 + .06 = 1.06
Money Market .50 .50 + .15 = 1.15
Mortgage Securities .50 .50 + .10 = 1.10
Capital Appreciation .50 .75 + .08 = 1.33
Value Stock .50 .75 + .15 = 1.40
Small Company .50 .75 + .15 = 1.40
International Stock .50 .82 + .42 = 1.74
--
------ ----- -----
AVERAGE .50 .597 + .138 = 1.24
</TABLE>
* Actual 1994
(THE AVERAGE OF THE MAXIMUM VARIABLE LIFE SEPARATE ACCOUNT AND SERIES FUND FEES
AND EXPENSES IS 1.35%)
46
<PAGE>
[CHART]
The chart shows how the premium paid for the policy becomes part of the cash
value of the policy. During the first four policy years, the chart depicts the
charges that are taken from each annual premium; the resulting net premium then
becomes part of the actual cash value. Certain charges are then taken from the
actual cash value; the resulting policy values grow over the four year period.
47
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ADJUSTABLE LIFE INSURANCE
VAL-SD
DEATH BENEFIT OPTION--CASH OPTION
MALE NONSMOKER ISSUE AGE 40
FEMALE NONSMOKER ISSUE AGE 40
INITIAL DEATH BENEFIT--$1,000,000(1)
$10,805.48 INITIAL SCHEDULED PREMIUM(2)
USING CURRENT CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 9.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.24% NET) (7.76% NET) (10.76% NET)
POL BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10805 175 1000000 209 1000000 221 1000000
2 10805 9321 1000000 10225 1000000 10529 1000000
3 10805 18343 1000000 21009 1000000 21936 1000000
4 10805 27236 1000000 32611 1000000 34552 1000000
5 10805 36000 1000000 45095 1000000 48507 1000000
6 10805 44638 1000000 58530 1000000 63945 1000000
7 10805 53142 1000000 72980 1000000 81018 1000000
8 10805 61516 1000000 88527 1000000 99904 1000000
9 10805 69751 1000000 105247 1000000 120789 1000000
10 10805 77850 1000000 123263 1000000 143891 1000000
15 10805 117406 1000000 237397 1000000 303216 1000000
20 10805 154553 1000000 403023 1000000 572714 1328034
25 10805 188855 1000000 647844 1292512 1022073 1995649
30 10805 218614 1000000 1001819 1698242 1767787 2928800
</TABLE>
(1) The initial death benefit is guaranteed to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$5,402.74 semi-annually, $2,701.37 quarterly, or $900.46 monthly. The death
benefits and policy values would be slightly different for a policy with
more frequent premium payments.
(3) Assumes no policy loan has been made.
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, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND POLICY VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 9%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
48
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ADJUSTABLE LIFE INSURANCE (CONTINUED)
VAL-SD
DEATH BENEFIT OPTION--CASH OPTION
MALE NONSMOKER ISSUE AGE 40
FEMALE NONSMOKER ISSUE AGE 40
INITIAL DEATH BENEFIT--$1,000,000(1)
$10,805.48 INITIAL SCHEDULED PREMIUM(2)
USING GUARANTEED MAXIMUM CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) (-1.24% 9.00% GROSS(3) 12.00% GROSS(3)
INITIAL NET) (7.76% NET) (10.76% NET)
POL BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- ------- ------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10805 0 1000000 23 1000000 32 1000000
2 10805 8968 1000000 9838 1000000 10131 1000000
3 10805 17816 1000000 20406 1000000 21307 1000000
4 10805 26536 1000000 31775 1000000 33666 1000000
5 10805 35130 1000000 44007 1000000 47337 1000000
6 10805 43600 1000000 57171 1000000 62461 1000000
7 10805 51938 1000000 71330 1000000 79185 1000000
8 10805 60147 1000000 86562 1000000 97684 1000000
9 10805 68220 1000000 102943 1000000 118142 1000000
10 10805 76159 1000000 120563 1000000 140769 1000000
15 10805 113506 1000000 230544 1000000 295274 1000000
20 10805 145831 1000000 388011 1000000 552611 1283692
25 10805 170060 1000000 614960 1230800 973192 1906649
30 10805 177897 1000000 929410 1584303 1643184 2738252
</TABLE>
(1) The initial death benefit is guaranteed to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$5,402.74 semi-annually, $2,701.37 quarterly, or $900.46 monthly. The death
benefits and policy values would be slightly different for a policy with
more frequent premium payments.
(3) Assumes no policy loan has been made.
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, AND PREVAILING INTEREST RATES. THE
DEATH BENEFITS AND POLICY VALUES FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 9%, AND 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY MINNESOTA MUTUAL OR THE FUND THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
49
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX III
ILLUSTRATION OF DEATH BENEFIT CALCULATION
As an example of the calculation of the death benefit under the Policy,
assume a Policy and insureds with the following characteristics: The insureds
are a male and a female, both non-smokers and both age 40 at Policy issue. The
VAL-SD Insurance Policy has a face amount of $1,000,000, with a level face
amount and a whole life plan of insurance. The Protection Option has been chosen
as the form of the death benefit option. Further, assume that 100 percent of net
premiums are invested in the Variable Life Account sub-accounts, that the gross
investment rate in the Variable Life Account was 12 percent each year and that
Minnesota Mutual deducted current charges. This situation is shown in Appendix
I, "Illustrations of Policy Values, Death Benefits and Premiums," on page 74 of
this prospectus.
Now, further assume that the second death occurs at the end of the tenth
policy year, during which time all of the premiums have been paid. No policy
loans or withdrawals have been made under the Policy.
Given these assumptions, the policy value (the actual cash value plus any
policy loan) on the date of the second death--composed of the Policy's interest
in one or more of the sub-accounts of the Variable Life Account--is equal to
$143,973. Under the Protection Option the death benefit will be $1,143,973.
The total proceeds would be adjusted to include any additional insurance
provided by an additional benefit agreement and the amount payable would be
reduced by any unpaid policy charges or any policy loan.
As an alternative, consider the same example, except that the Cash Option
death benefit was elected. This situation is shown in Appendix I, "Illustrations
of Policy Values, Death Benefits and Premiums," on page 74 of this prospectus.
The death benefit under the Cash Option does not vary from the Policy's face
amount until the policy value exceeds the net single premium for the then
current face amount. In this example, again assuming timely payment of premiums,
no withdrawals and no policy loan activity, the policy value on the date of the
second death would be $143,891. This is a higher value than under the Protection
Option, reflecting lower mortality costs charged to the Policy because of the
level death benefit. Here, the death benefit is the current face amount or
$1,000,000.
In determining the total proceeds payable under the Policy, the same
adjustments are made to the death benefit as described under the Protection
Option. However, under the Cash Option any premium paid beyond the end of the
policy month in which the second death occurs is also included as part of the
Policy proceeds.
50
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX IV
POLICY LOAN EXAMPLE
As an example of the effect of a policy loan upon the Policy and upon the
death benefit, assume a Policy with the following characteristics: The insureds
are a male and a female, both non-smokers and both age 40 at Policy issue. The
VAL-SD Insurance Policy has a face amount of $1,000,000, with a level face
amount and a whole life plan of insurance. The Protection Option has been chosen
as the form of the death benefit. Further, assume that 100 percent of net
premiums are invested in the sub-accounts of the Variable Life Account, that the
gross investment rate in the Variable Life Account was 12 percent each year and
that Minnesota Mutual deducted current charges. This situation is shown in
Appendix I, "Illustrations of Policy Values, Death Benefits and Premiums," on
page 74 of this prospectus.
Now assume that the owner of the Policy takes a policy loan in the amount of
$5,000 at the end of the fourth policy year and after all premiums have been
paid for that year.
When a loan is taken, the actual cash value invested in the Variable Life
Account is reduced by the amount borrowed and any unpaid interest. The amount is
then transferred to the loan account. Interest is charged on the policy loan as
described in the Policy, but for purposes of this example, assume a policy loan
interest rate of 8 percent per annum. Interest is also credited to a Policy when
there is a policy loan. Interest credits on a policy loan are at a rate which is
not less than the policy loan interest rate less 2 percent per annum. The
interest credit in this example would then be 6 percent.
The following table shows the effect on the year five values, namely those
values at the end of that year, if a policy loan of $5,000 is made at the end of
the fourth year.
<TABLE>
<CAPTION>
End of Year
Policy Value Total Death Benefit
With Loan Without Loan With Loan Without Loan
- ----------- ------------- ---------- ------------
<S> <C> <C> <C>
$ 48,234 $ 48,500 $1,048,234 $1,048,500
</TABLE>
Note that the difference in policy values here represents the difference
between the actual Policy performance in the sub-accounts of the Variable Life
Account and the interest credited on the principal amount of the policy loan. If
interest credited on a policy loan exceeds the Policy performance, then a Policy
with a loan will have a greater value than a Policy with no loan activity. Where
Policy performance exceeds the interest credited on a policy loan, the resulting
policy value will be lower than it would have been if the loan were not made.
Now consider an identical situation to that above except that the Cash
Option death benefit was elected. The following table shows the effect on the
same year five values if a policy loan of $5,000 is made at the end of the
fourth year.
<TABLE>
<CAPTION>
End of Year
Policy Value Total Death Benefit
With Loan Without Loan With Loan Without Loan
- ----------- ------------- ---------- ------------
<S> <C> <C> <C>
$ 48,241 $ 48,507 $1,000,000 $1,000,000
</TABLE>
The values above under the "With Loan" headings are policy values, which is
the actual cash value of a Policy plus any policy loan. If the owner were to
surrender the Policy at the end of the fifth year, the owner would receive only
the actual cash value in the sub-accounts of the Variable Life Account.
Similarly, if the second death were to occur at the end of the fifth year we
would pay out the death benefit listed under the "With Loan" heading less the
amount of the policy loan.
51
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX V
EXAMPLE OF SALES LOAD COMPUTATION
As an example of the method we use to compute sales load, assume a
protection type plan where the annual base premium is $10,000 and where the
premium paying period, prior to any reduction in face amount, is 20 years. The
insureds are a male and a female, both non-smokers and both age 60 at Policy
issue, with a joint life expectancy of 25 years. As premiums are paid in each
year, we will assess a basic sales load of 7 percent or $700 in each year. Also,
as premiums are paid in the first year, we will assess a first year sales load
of 23 percent or $2,300. Therefore, in the first year the sales load charges
will total $3,000 or 30 percent ($3,000 DIVIDED BY $10,000), and over the 15
year period from policy issue sales load charges will total $12,800 or 8.54
percent ($12,800 DIVIDED BY $150,000).
Compliance with the 9 percent limitation will be achieved by reducing the
first year sales load, if necessary. For example, consider a Policy with a
protection type plan where the annual base premium is $10,000 and where the
premium paying period prior to any reduction in face amount is 20 years. Further
assume that the insureds are a male and a female, both non-smokers and both age
80 at Policy issue, with a joint life expectancy of 9 years. In this case, the
first year sales load must be reduced so that the total sales load will not
exceed 9 percent over the joint life expectancy of the insureds. As premiums are
paid in each year we will assess the basic sales load of 7 percent, or $700, but
the first year sales load applicable to premiums paid in the first year will be
reduced from 23 percent to 18 percent, or $1,800. Therefore, in the first year
the sales load charges will total $2,500 or 25 percent ($2,500 DIVIDED BY
$10,000), and over the period of the joint life expectancy of the insureds sales
load charges will total $8,100 or 9 percent ($8,100 DIVIDED BY $90,000).
As an example of the method we use to assess sales load when an adjustment
occurs during a period in which a first year sales load is being collected,
consider a Policy where an adjustment is made after one-half of the first annual
premium is paid. Assume that the premium is $10,000 annually as in the example
above and further assume that the premiums are being paid on a monthly basis,
$833.33 per month. As premiums are paid in each year we will assess a basic
sales load of 7 percent of premiums received or $700 in that year. A first year
sales load, taken in addition to the basic sales load, would also be assessed in
a total amount of $2,300. Now assume an adjustment is made, after the payment of
six monthly premiums, and that the premium is increased from $10,000 to $12,000.
Both before and after the adjustment we will continue to assess a basic sales
load of 7 percent of the premiums received. However, since only one-half of the
first year sales load of $2,300 has been collected, a first year sales load of
$1,150 remains to be collected. The $2,000 increase in premium will also be
assessed a first year sales load of 23 percent, or $460. Both are added together
and will be collected in the 12 months following the adjustment. Therefore,
after the adjustment of the premium to a $12,000 amount, and assuming that
premiums continue to be paid on a monthly basis, each monthly premium of $1,000
will be subjected to a total sales load amount of $204.17, consisting of $70 of
basic sales load, and $134.17 of first year sales load.
52
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX VI
AVERAGE ANNUAL RETURNS
TWENTY-YEAR HOLDING PERIODS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STOCKS BONDS US TREAS. INFLATION
<S> <C> <C> <C> <C> <C>
1954 10.63 3.77 0.55 1954 3.64
1959 13.48 2.1 0.99 1959 3.69
1964 15.11 2.45 1.63 1964 2.9
1969 14.92 1.93 2.6 1969 1.96
1974 10.85 2.83 3.64 1974 2.75
1979 6.53 4.1 4.72 1979 4.34
1984 8.28 4.66 6.8 1984 6.12
1989 9.54 8.3 7.5 1989 6.3
1994 12.76 10.16 7.49 1994 5.91
</TABLE>
Ending periods from 1954-1994
Source: Stocks, Bonds, Bills and Inflation (SBBI), 1994 Yearbook, Ibbotson
Associates, Inc., Chicago. All rights reserved.
The above information contains the average annual rate of return over
twenty-year holding periods for common stocks (S&P 500), high grade corporate
bonds, 30-day U.S. Treasury bills, and inflation (example: 1934-1954, 1940-1959,
etc.). These average rates assume reinvestment of capital gains, dividends and
interest. This is a retrospective view of performance and should in no way be
construed as a projection of future trends.
This graph shows that even though stock investments tend to be more volatile
in short time intervals historically, they have generated rates of return that
have consistently been higher than inflation. Bonds and U.S. Treasury bills have
not always kept up with inflation. The figures do not take into account the
charges associated with a Variable Adjustable Life policy, but do indicate the
potential gain of holding the assets illustrated.
Some additional statistics on the performance of stocks in relation to high
grade, long-term corporate bonds and U.S. Treasury bills over the 50 twenty-year
periods beginning in 1926 and ending in 1994 include:
The average annual return was higher than that of bonds in 47 of the 50
periods.
The average annual return of stocks was higher than that of U.S. Treasury
bills in all of the 50 periods.
The average annual return of stocks was higher than inflation in all of the
50 periods.
In the 40 thirty-year periods beginning in 1926 and ending in 1994, the
average annual return of stocks was higher than that of bonds, U.S. Treasury
bills and inflation in all 40 time periods.
From 1926 through 1994, the average annual return for this 69 year period
was:
10.2% for common stocks
5.4% for high-grade, long-term corporate bonds
3.7% for U.S. Treasury bills
F.35701 Rev. 5-95
53
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX VII
S&P 500
PERFORMANCE HISTORY 1926-1994
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
<S> <C>
1926 11.62
37.5
43.6
-8.4
-24.9
-43.3
-8.2
54
-1.4
47.7
33.9
-35
31.1
0
1940 -9.8
11.6
20.3
25.9
19.8
36.4
-8.1
5.7
5.5
18.8
1950 31.7
24
18.4
-0.01
52.6
31.6
6.6
-10.8
43.4
12
1960 0
26.9
-8.7
22.8
16.5
12.5
-10.1
24
-8.5
1970 4
14.3
19
-14.7
-26.5
37.2
23.8
-7.2
6.6
18.4
1980 32.4
-4.9
21.4
22.5
6.3
32.2
18.5
5.2
16.8
31.5
-3.2
30.4
7.67
1993 9.99
1994 1.31
</TABLE>
Source: Stocks, Bonds, Bills and Inflation (SBBI), 1995 Yearbook, Ibbotson
Associates, Inc., Chicago. All rights reserved.
The above chart illustrates that, in any calendar year, the rate of return
for stocks can be positive or negative. However, when viewed over the entire
period of 69 years, stocks have had a positive return in more than two out of
every three years. For the person with a long term view, the results of this
pattern have been very rewarding.
F.35701 Rev. 5-95
54
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX VIII
RANGE OF RETURNS
ROLLING PERIOD RETURNS USING IBBOTSON ASSET CLASS INFORMATION*
(1960 THROUGH 1994)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH LOW MEAN 1 YEAR
<S> <C> <C> <C> <C>
Small Cap 83.57 -30.9 17.23
Large Cap 37.2 -26.47 11.43
Corp. Bonds 43.79 -8.09 7.99
Gov...t Bonds 40.36 -9.18 7.65
U.S. T-Bills 14.71 2.13 6.19
high low mean 5 year
Small Cap 39.81 -12.25 15.06
Large Cap 20.4 -2.35 10.57
Corp. Bonds 22.41 -2.22 7.35
Gov...t Bonds 21.62 -2.14 6.87
U.S. T-Bills 11.12 2.72 6.48
high low mean 10 year
Small Cap 30.38 3.2 14.49
Large Cap 17.59 1.24 9.99
Corp. Bonds 16.27 1.68 7.26
Gov...t Bonds 15.56 1.3 6.72
U.S. T-Bills 9.17 3.52 6.77
high low mean 15 year
Small Cap 23.33 5.87 15.06
Large Cap 16.61 4.31 9.56
Corp. Bonds 11.57 3.11 6.88
Gov...t Bonds 11.68 2.46 6.37
U.S. T-Bills 8.32 4.22 6.81
high low mean 20 year
Small Cap 18.82 11.47 15.01
Large Cap 12.76 6.76 9.51
Corp. Bonds 10.16 3.05 6.86
Gov...t Bonds 10.1 2.59 6.35
U.S. T-Bills 7.72 4.72 6.81
high low mean 30 year
Small Cap 15.1 13.47 14.33
Large Cap 10.87 10.15 10.4
Corp. Bonds 7.69 6.8 7.2
Gov...t Bonds 7.37 6.18 6.71
U.S. T-Bills 6.64 6.16 6.46
</TABLE>
Source: Ibbotson & Associates.
* Past performance is no guarantee of future results.
The above chart illustrates the volatility in the rate of return for stocks,
represented by Small Cap Stocks, Large Cap Stocks (S&P 500), Corporate Bonds,
Gov't Bonds, and U.S. T-Bills for progressively longer holding periods. This
volatility is reduced as the holding period is increased from one year to just
five years. For holding periods of 10 years or longer, volatility of return is
reduced even more. These longer holding periods have produced returns that are
quite consistent, and are very attractive when compared with the returns from
U.S. Treasury bills and high-grade, long-term corporate bonds.
The strategy of reducing the year-to-year volatility in the rate of return
for stocks by lengthening the holding period can work to the advantage of a
person who buys a cash value life insurance policy like Variable Adjustable
Life, and utilizes stock sub-accounts. That's because the holding period for
such a policy typically can be extremely long--at least 10 years, and possibly
20, 30 or more years.
F.35701 Rev. 5-95
55
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
INDEMNIFICATION UNDERTAKING
The State of Minnesota has an indemnification statute (Minnesota Statutes
300.083), as amended, effective January 1, 1984, which requires indemnification
of individuals only under the circumstances described by the statute. Expenses
incurred in the defense of any action, including attorneys' fees, may be
advanced to the individual after written request by the board of directors upon
receiving an undertaking from the individual to repay any amount advanced unless
it is ultimately determined that he or she is entitled to be indemnified by the
corporation as authorized by the statute and after a determination that the
facts then known to those making the determination would not preclude
indemnification.
Indemnification is required for persons made a part to a proceeding by reason of
their official capacity so long as they acted in good faith, received no
improper personal benefit and have not been indemnified by another organization.
In the case of a criminal proceeding, they must also have had no reasonable
cause to believe the conduct was unlawful. In respect to other acts arising out
of official capacity: (1) where the person is acting directly for the
corporation there must be a reasonable belief by the person that his or her
conduct was in the best interests of the corporation or, (2) where the person is
serving another organization or plan at the request of the corporation, the
person must have reasonably believed that his or her conduct was not opposed to
the best interests of the corporation. In the case of persons not directors,
officers or policy-making employees, determination of eligibility for
indemnification may be made by a board-appointed committee of which a director
is a member. For other employees, directors and officers, the determination of
eligibility is made by the Board or a committee of the Board, special legal
counsel, the shareholder of the corporation or pursuant to a judicial
proceeding.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Life
Account pursuant to the foregoing provisions, or otherwise, The Minnesota Mutual
Life Insurance Company and Minnesota Mutual Variable Life Account have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by The Minnesota Mutual Life Insurance
Company and Minnesota Mutual Variable Life Account of expenses incurred or paid
by a director, officer or controlling person of The Minnesota Mutual Life
Insurance Company and Minnesota Mutual Variable Life Account in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
of controlling person in connection with the securities being registered, The
Minnesota Mutual Life Insurance Company and Minnesota Mutual Variable Life
Account will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The Facing Sheet.
Cross Reference Sheet.
Part I
The prospectus consisting of 55 pages.
Part II
Undertakings - Indemnification.
The Signatures.
Written consents of the following persons:
Donald F. Gruber, Esq.
KPMG Peat Marwick LLP - to be supplied by amendment
Jaymes G. Hubbell, F.S.A.
Jones & Blouch L.L.P.
The following Exhibits:
A. Exhibits described in Item IX(A) of Form N-8B-2.
(1) The indenture or agreement under the terms of which the trust was
organized or issued securities.
Resolution of the Board of Trustees of The Minnesota Mutual Life
Insurance Company dated October 21, 1985.
(2) The indenture or agreement pursuant to which the proceeds of payments
of securities are held by the custodian or trustee, if such indenture
or agreement is not the same as the indenture or agreement referred to
immediately above.
None.
(3) Distributing Policies:
(a) Agreements between the trust and principal underwriter or between
the depositor and principal underwriter.
Distribution Agreement.
(b) Specimen of typical agreements between principal underwriter and
dealers, managers, sales supervisors and salesmen.
Agent and General Agent Sales Agreements.
(c) Schedules of sales commissions referred to in Item 38(c).
Combined with the Exhibit listed under A.(3)(b) above.
(4) Any agreement between the depositor, principal underwriter and the
custodian or trustee other than indentures or agreements set forth
above as paragraphs (1), (2) and (3) with respect to the trust or its
securities.
None.
<PAGE>
(5) The form of each type of security.
(a) Variable Adjustable Life Insurance Policy; form 95-690.
(b) Waiver of Premium Agreement; form 95-917.
(c) Estate Preservation Agreement; form 95-943.
(d) Single Life Term Insurance Agreement; form 95-944.
(e) Short Term Agreement; form F. E324.1 3-65.
(6) The certificate of incorporation or other instrument of organization
and bylaws of the depositor.
(a) Charter of the Depositor; previously filed on August 25, 1995, as
this Exhibit 6(a) to Form N-4, file Number 33-62147, is hereby
incorporated by reference.
(b) Bylaws of the Depositor, previously filed on August 25, 1995, as
this Exhibit 6(b) to Form N-4, File Number 33-62147, is hereby
incorporated by reference.
(7) Any insurance policy under a contract between the trust and the
insurance company or between the depositor and the insurance company,
together with the table of insurance premiums.
None.
(8) Any agreement between the trust or the depositor concerning the trust
with the issuer, depositor, principal underwriter or investment
adviser of any underlying investment company or any affiliated person
of such persons.
None.
(9) All other material contracts not entered into in the ordinary course
of business of the trust or of the depositor concerning the trust.
None.
(10) Form of application for a periodic payment plan certificate.
(a) New Issue Application - Part 1; form F. 3198 Rev. 3-91.
(b) Supplement to Application - Part 1; form F. 43186V 7-95.
(c) Application - Part 3 - Authorization New Issue; form F. 42663 3-
91.
(d) Policy Change Application - Part 1; form F. 44096 2-92.
(e) Policy Change Application - Part 3; form F. 44098 2-92.
B. A Specimen or Copy of Each Security Being Registered.
See Exhibits Listed under A.(5).
<PAGE>
C. An opinion of counsel as to the legality of the securities being
registered.
Opinion and Consent of Donald F. Gruber, Esq.
D. Consent of KPMG Peat Marwick LLP.
To be supplied by amendment.
E. Opinion and Consent of Mr. Jaymes G. Hubbell, F.S.A.
F. Consent of Jones & Blouch L.L.P.
G. Adjustment Computation Required by Rule 6e-2(b)(13)(v)(B).
Combined with the Exhibit listed under H. below.
H. Memorandum on Administrative Procedures with Respect to Issuance, Transfer
and Redemption, Required by Rule 6e-2(b)(12)(ii).
I. Notice of Withdrawal Right and Statement of Charges Required by Rule 6e-
2(b)(13)(viii)(c).
(1) Notice of Withdrawal Right and Request for Cancellation of Policy.
(2) Notice of Withdrawal Right and Request for Cancellation of Policy
Adjustment.
J. The Minnesota Mutual Life Insurance Company - Power of Attorney to Sign
Registration Statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Minnesota Mutual Variable Life Account, has duly caused this Registration
Statement to be signed on its behalf by the Undersigned, thereunto duly
authorized, in the City of Saint Paul, and State of Minnesota, on the 17th day
of November, 1995.
MINNESOTA MUTUAL VARIABLE LIFE ACCOUNT
(Registrant)
By: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By /s/ Robert L. Senkler
--------------------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the Depositor, The
Minnesota Mutual Life Insurance Company, has duly caused this Registration
Statement to be signed on its behalf by the Undersigned, thereunto duly
authorized, in the City of Saint Paul, and State of Minnesota, on the 17th day
of November, 1995.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By /s/ Robert L. Senkler
--------------------------------------------------
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in their capacities
with the Depositor and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Robert L. Senkler* Chairman of the)
- -------------------------
Robert L. Senkler Board, President)
and Chief)
Executive Officer)
)
Anthony L. Andersen* Trustee)
- -------------------------
Anthony L. Andersen )
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
John F. Grundhofer* Trustee)
- -------------------------
John F. Grundhofer )
)
Harold V. Haverty* Trustee)
- -------------------------
Harold V. Haverty )
)
Lloyd P. Johnson* Trustee) /s/ Dennis E. Prohofsky
- ------------------------- -----------------------------
Lloyd P. Johnson ) Dennis E. Prohofsky
) Attorney-in-Fact
David S. Kidwell, Ph.D.* Trustee)
- -------------------------
David S. Kidwell, Ph.D. ) Dated: November 17, 1995
)
Reatha C. King, Ph.D.* Trustee)
- -------------------------
Reatha C. King, Ph.D. )
)
Thomas E. Rohricht* Trustee)
- -------------------------
Thomas E. Rohricht )
)
Trustee)
- -------------------------
Terry N. Saario, Ph.D. )
)
Trustee)
- -------------------------
Michael E. Shannon )
)
Frederick T. Weyerhaeuser* Trustee)
- -------------------------
Frederick T. Weyerhaeuser )
</TABLE>
_____________
*Registrant's Officer and Trustee executing power of attorney dated February 13,
1995, a copy of which is filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
A.(1) Resolution of the Board of Trustees of The Minnesota Mutual Life
Insurance Company dated October 21, 1985.
A.(3)(a) Distribution Agreement.
A.(3)(b) Agent and General Agent Sales Agreements.
A.(5)(a) Variable Adjustable Life Insurance Policy; form 95-690.
A.(5)(b) Waiver of Premium Agreement; form 95-917.
A.(5)(c) Estate Preservation Agreement; form 95-943.
A.(5)(d) Single Life Term Insurance Agreement; form 95-944.
A.(5)(e) Short Term Agreement; form F. E324.1 3-65.
A.(10)(a) New Issue Application - Part 1; form F. 3198 Rev. 3-91.
A.(10)(b) Supplement to Application - Part 1; form F. 43186V 7-95.
A.(10)(c) Application - Part 3 - Authorization New Issue; form F. 42663 3-
91.
A.(10)(d) Policy Change Application - Part 1; form F. 44096 2-92.
A.(10)(e) Policy Change Application - Part 3; form F. 44098 2-92.
C. Opinion and Consent of Donald F. Gruber, Esq.
E. Opinion and Consent of Mr. Jaymes G. Hubbell, F.S.A.
F. Consent of Jones & Blouch L.L.P.
H. Memorandum on Administrative Procedures with Respect to
Issuance, Transfer and Redemption, Required by Rule
6e-2(b)(12)(ii).
I.(1) Notice of Withdrawal Right and Request for Cancellation of
Policy.
I.(2) Notice of Withdrawal Right and Request for Cancellation of
Policy Adjustment.
J. The Minnesota Mutual Life Insurance Company - Power of Attorney
to Sign Registration Statements.
<PAGE>
Exhibit 99-A(1)
CERTIFICATE OF SECRETARY
I, Dennis E. Prohofsky, hereby certify that I am the Secretary of The
Minnesota Mutual Life Insurance Company, Saint Paul, Minnesota; that I have
charge, custody and control of the record books and corporate seal of said
Company; that the following is a true and correct copy of a resolution adopted
by the Board of Trustees of said Company at a meeting held October 21, 1985, at
which meeting a quorum was present and acting throughout; and that the meeting
was duly called for the purpose of acting upon the subject matter described in
said resolution:
"RESOLVED, That The Minnesota Mutual Life Insurance Company hereby
establishes a separate account, Separate Account I, which shall be known as
"Minnesota Mutual Variable Life Account," in accordance with subdivision 1
of section 61A.14 of Minnesota Statutes 1967, as amended, for the purpose
of issuing contracts on a variable basis;
FURTHER RESOLVED, That MIMLIC Sales Corporation will be the principal
underwriter of the variable life insurance contracts funded through the
Minnesota Mutual Variable Life Account, and the variable life insurance
contracts will be sold by licensed life insurance agents who are registered
representatives of The Minnesota Mutual Life Insurance Company and MIMLIC
Sales or other broker-dealers who have entered into selling agreements with
MIMLIC Sales;
FURTHER RESOLVED, That such separate account is to be registered as a unit
investment trust pursuant to the provisions of the Investment Company Act
of 1940, as amended, and that application be made for such exemptions from
that Act as may be necessary or desirable;
FURTHER RESOLVED, That there be prepared and filed with the Securities and
Exchange Commission in accordance with the provisions of the Securities Act
of 1933, as amended, registration statement and any amendments thereto,
relating to such contracts on a variable basis as may be offered to the
public;
FURTHER RESOLVED, That the Chief Executive Officer of the Company or such
officer or officers as he may designate be, and they hereby are, authorized
to seek such exemptive or other relief as may be necessary or appropriate
in connection with the separate account or the offered contracts; and
FURTHER RESOLVED; That the Chief Executive Officer of the Company or such
officer or officers as he may designate be, and they hereby are authorized
and directed to take such further action as may in their judgment be
necessary or desirable to implement the foregoing resolutions."
I hereby certify that the above resolution has not been modified, amended
or rescinded and continues in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of The Minnesota Mutual Life Insurance Company this 23rd day of August,
1995.
/s/ Dennis E. Prohofsky
----------------------------
Dennis E. Prohofsky
(Seal) Secretary
<PAGE>
Exhibit 99-A(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this _____ day of _________________, 1995, between and among
The Minnesota Mutual Life Insurance Company, a Minnesota corporation ("Minnesota
Mutual"), and MIMLIC Sales Corporation, a Minnesota corporation ("Distributor").
WITNESSETH:
WHEREAS, Minnesota Mutual is the depositor of Minnesota Mutual Variable
Life Account, (the "Account"); and
WHEREAS, Minnesota Mutual proposes to offer for sale certain Variable
Adjustable Life Second Death Insurance Policies (the "Policies") which may be
deemed to be securities under the Securities Act of 1933 ("1933 Act") and the
laws of some states; and
WHEREAS, the Distributor, a wholly-owned subsidiary of MIMLIC Asset
Management Company, which is in turn a wholly-owned subsidiary of Minnesota
Mutual, is registered as a broker-dealer with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934 ("1934 Act") and is
a member of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the parties desire to have Minnesota Mutual perform certain
services in connection with the sale of the Policies;
NOW, THEREFORE, in consideration of the convenants and mutual promises of
the parties made to each other, it is hereby covenanted and agreed as follows:
1. The Distributor will act as the exclusive principal underwriter of the
Polices and as such will assume full responsibility for the securities
activities of all the associated persons. The Distributor will train the
associated persons, use its best efforts to prepare them to complete
satisfactorily the applicable NASD and state examinations so that they may be
qualified, register the associated persons as its registered representatives
before they engage in securities activities, and supervise and control them in
the performance of such activities. Unless otherwise permitted by applicable
state law, all persons engaged in the sale of the Policies must also be agents
of Minnesota Mutual.
2. The Distributor will assume full responsibility for the continued
compliance by itself and the associated persons with the NASD Rules of Fair
Practice and federal and state laws, to the extent applicable, in connection
with the sale of the Policies. The Distributor will make timely filings with
the SEC, NASD, and any other regulatory authorities of all reports and any sales
literature relating to the Policies required by law to be filed by the
Distributor. Minnesota Mutual will make available to the Distributor copies of
any agreements or plans intended for use in connection with the sale of Policies
in sufficient number and in adequate time for clearance by the
<PAGE>
appropriate regulatory authorities before they are used, and it is agreed that
the parties will use their best efforts to obtain such clearance as
expeditiously as is reasonably possible.
3. Only with the consent of Minnesota Mutual may Distributor enter into
agreements with other broker-dealers duly licensed under applicable federal and
state laws for the sale and distribution of the Policies and perform such duties
as may be provided for in such agreements.
4. Minnesota Mutual, with respect to these Policies, will prepare and
file all registration statements and prospectuses (including amendments) and all
reports required by law to be filed with federal and state regulatory
authorities. Minnesota Mutual will bear the cost of printing and mailing all
notices, proxies, proxy statements, and periodic reports that are to be
transmitted to persons having voting rights under the Policies. Minnesota
Mutual will make prompt and reasonable efforts to effect and keep in effect, at
its expense, the registration or qualification of its Policies in such
jurisdictions as may be required by federal and state regulatory authorities.
5. Minnesota Mutual will (a) maintain and preserve in accordance with
Rules 17a-3 and 17a-4 under the 1934 Act all books and records required to be
maintained by it in connection with the offer and sale of the Policies, which
books and records shall be and remain the property of the Distributor and shall
at all times be subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act and by all other regulatory bodies having jurisdiction,
and (b) upon or prior to completion of each "transaction" as that term is used
in Rule 10B-10 of the 1934 Act, send a written confirmation for each such
transaction reflecting the facts of the transaction and showing that it is being
sent by Minnesota Mutual acting in the capacity of agent for the Distributor.
6. All premium and nonrepeating premium payments and any other monies
payable upon the sale, distribution, renewal or other transaction involving the
Policies shall be paid or remitted directly to, and all checks shall be drawn to
the order of, Minnesota Mutual, and the Distributor shall not have or be deemed
to have any interest in such payments or monies. All such payments and monies
received by the Distributor shall be remitted daily by the Distributor to
Minnesota Mutual for allocation to the Account in accordance with the Policies
and any prospectus with respect to the Policies.
7. Minnesota Mutual will, in connection with the sale of the Policies,
pay on its behalf all amounts (including sales commissions) due to the sales
representatives of the Distributor or to broker-dealers who have entered into
sales agreements with the Distributor. The records in respect of such payments
shall be properly reflected on the books and records maintained by Minnesota
Mutual.
8. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, the Distributor shall receive from Minnesota Mutual the following
amounts:
(a) Upon receipt of proper evidence of expenditures, an amount sufficient
to reimburse the Distributor for its expenses incurred in carrying out
the terms of this Agreement, and
<PAGE>
(b) such other amounts as may from time to time be agreed upon by the
Distributor and Minnesota Mutual.
9. As compensation for its services performed and expenses incurred under
this Agreement, Minnesota Mutual will receive all amounts deducted as charges
assessed against premiums, base premiums and nonrepeating premiums paid for the
Policies, charges assessed against the actual cash values of the Policies and
charges assessed against the Account assets attributable to the Policies, as
specified in the Policies and in the prospectus or prospectuses forming a part
of any registration statement with respect to the Policies filed with the SEC
under the 1933 Act. It is understood that Minnesota Mutual assumes the risk
that the above compensation for its services under the Policies may not prove
sufficient to cover its actual expenses in connection therewith and that its
compensation for assuming such risk shall be included in and limited to the
foregoing charges described in said prospectus(es).
10. Minnesota Mutual will, except as otherwise provided in this Agreement,
bear the cost of all services and expenses, including legal services and
expenses and registration, filing and other fees, in connection with (a)
registering and qualifying the Policies, and (to the extent requested by the
Distributor) the associated persons with federal and state regulatory
authorities and the NASD and (b) printing and distributing all Policies and all
periodic reports, sales literature and advertising prepared, filed or
distributed with respect to the Policies.
11. Each party hereto shall advise the others promptly of (a) any action
of the SEC or any authorities of any state or territory, of which it has
knowledge, affecting registration or qualification of the Policies, or the right
to offer the Policies for sale, and (b) the happening of any event which makes
untrue any statement, or which requires the making of any change, in the
registration statement or prospectus in order to make the statements therein not
misleading.
12. The services of the Distributor and Minnesota Mutual under this
Agreement are not deemed to be exclusive and the Distributor and Minnesota
Mutual shall be free to render similar services to others, including, without
implied limitation, such other separate accounts as are now or hereafter
established by Minnesota Mutual, so long as the services of the Distributor and
Minnesota Mutual hereunder are not impaired or interfered with thereby.
13. This Agreement shall upon execution become effective as of the date
first above written, and shall continue in effect indefinitely unless terminated
by either party on 60 days' written notice to the other.
14. This Agreement may be amended at any time by mutual consent of the
parties.
15. This Agreement shall be governed by and construed in accordance with
the laws of Minnesota.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
Witness: By:
----------------------- --------------------------------
Secretary Chairman of the Board, President
and Chief Executive Officer
MIMLIC SALES CORPORATION
Witness: By:
----------------------- --------------------------------
Vice President President
<PAGE>
Exhibit 99-A(3)(b)
Variable Contract Supplement -- Agent
(a) GENERAL. This supplement is a part of your Agent's Contract to which it is
attached and is subject to all its terms, definitions and conditions. This
supplement describes both the compensation we will provide on your variable
contract business and your responsibilities with respect to the solicitation,
sale or distribution of these contracts for us.
(b) DEFINITIONS. Whenever we use the following words this is what we mean:
VARIABLE ANNUITY BUSINESS. All variable annuities, which are registered,
contain identifiable sales charges and have contract values varying with the
investments in a separate account, which we issue on applications you obtain.
This does not include group or fixed annuities.
VARIABLE ADJUSTABLE LIFE BUSINESS. The Variable Adjustable Life insurance
policies (including VAL, VAL '95 and VAL-SD) which we may issue on applications
you obtain. This does not include group or fixed annuities.
VARIABLE CONTRACTS. Variable annuity business and variable adjustable life
business.
ANNUITIZATION BUSINESS. The election of an annuity payment option which you
initiate for a deferred annuity (except for Policy Form 87-9154).
EARNED PREMIUM AND CONTRIBUTIONS. Money which we have received in our home
office and applied to pay the premiums due or contributions on Variable contract
business.
FIRST-YEAR PREMIUMS AND CONTRIBUTIONS. Premiums due or contributions paid on a
policy during the first policy year.
FIRST-YEAR COMMISSIONS. Commissions on earned first-year premiums or
contributions.
PRODUCTION BONUS. An amount credited on first-year premiums paid on your
Variable Adjustable Life Business.
RENEWAL PREMIUMS. A continuous stream of premiums or contributions established
at the time of sale.
RENEWAL COMMISSIONS. Commissions on earned renewal premiums or contributions
during the second through the tenth policy year.
TRAILING COMMISSIONS. Commissions on Qualifying Accumulation Values at the end
of each calendar quarter.
QUALITY BONUS. An amount credited on each renewal premium paid on your VAL and
VAL '95 business in the second and third policy years.
F. 36071 Rev. 1-95
<PAGE>
SERVICE FEES. The amount credited on each renewal premium paid on your Variable
Adjustable Life business and amount credited on each renewal contribution paid
on Variable Annuity business after the tenth policy year.
(c) LICENSES. You will do all things necessary to get, and to keep in good
standing, all licenses which you will need to solicit and sell variable
contracts as a life insurance salesman for us in the jurisdictions in which you
do business.
(d) BROKER-DEALER. You will do all things necessary to get, and to keep in
good standing, all licenses which you will need to solicit and sell variable
contracts for us and which are required because of your status as a registered
representative of the broker-dealer authorized to distribute the variable
contracts as our agent. You will also contract with the broker-dealer, such
contract to govern your conduct and undertakings with respect to the sale of our
variable contracts.
(e) THIS AGREEMENT. For all purposes under this supplement, we will consider
the variable contracts to be our products.
(f) COMMISSIONS ON VARIABLE CONTRACTS:
(1) FIRST-YEAR COMMISSIONS.
Commissions are a percentage of earned first-year premiums and
contributions.
<TABLE>
<CAPTION>
KIND OF POLICY RATE OF COMMISSION
-------------- ------------------
<S> <C>
*VAL and VAL '95 50%
*VAL-SD 40%
Variable Annuity Business
(Forms 92-9283 and 92-9284) 3%
MultiOption Select Variable
Annuity Business (Form 94-9307)
</TABLE>
F. 36071 Rev. 1-95
<PAGE>
<TABLE>
<CAPTION>
Contribution Amount Rate of Commissions
------------------- -------------------
<S> <C>
$25 - 499,999 3.00%
$500,000 - 749,999 2.75%
$750,000 - 999,999 2.50%
$1,000,000 -1,499,999 2.25%
$1,500,000 -1,999,999 2.00%
$2,000,000 -2,499,999 1.75%
$2,500,000 -2,999,999 1.50%
$3,000,000 -3,999,999 1.25%
$400,000,000 -4,000,000 1.00%
$5,000,000+ MegAnnuity
</TABLE>
*Target Premium Definition -- first-year commission rate applies
to premium up to whole life plan of insurance. Premiums in excess
will receive a 4% first-year commission rate on VAL and VAL '95,
and a 2% first-year commission on VAL-SD.
First-year commissions are vested and will be credited to you as they
become due.
(2) RENEWAL COMMISSIONS.
Renewal commissions are percentages of earned renewal premiums and
contributions during the second through tenth policy year.
<TABLE>
<CAPTION>
RATE OF COMMISSIONS
-------------------
SECOND POLICY YEAR
KIND OF POLICY THROUGH TENTH POLICY YEAR
-------------- -------------------------
<S> <C>
VAL and VAL '95 4%
VAL-SD 3%
Variable Annuity Business
(Forms 92-9283 and 92-9284) 3%
MultiOption Select Variable
Annuity Business (Form 94-9307)
</TABLE>
F. 36071 Rev. 1-95
<PAGE>
<TABLE>
<CAPTION>
Contribution Amount Rate of Commissions
------------------- -------------------
<S> <C>
$25 - 499,999 3.00%
$500,000 - 749,999 2.75%
$750,000 - 999,999 2.50%
$1,000,000 -1,499,999 2.25%
$1,500,000 -1,999,999 2.00%
$2,000,000 -2,499,999 1.75%
$2,500,000 -2,999,999 1.50%
$3,000,000 -3,999,999 1.25%
$400,000,000 -4,000,000 1.00%
$5,000,000+ MegAnnuity
</TABLE>
"Renewal commissions will be vested as described in Section 7(d) of the
Agent's contract."
(3) TRAILING COMMISSIONS ON VARIABLE ANNUITY BUSINESS
(i) MULTIOPTION ANNUITIES (POLICY FORMS 92-9283, 92-9284 AND 94-9307)
Trailing commissions are payable in an amount equal to .03125% of
Qualifying Accumulation Values at the end of each calendar quarter
(.125% annually); provided, that such trailing commissions will not be
paid unless the aggregate of all Qualifying Accumulation Values, as of
the end of the quarter for which such trailing commissions are
determined, is at least:
<TABLE>
<CAPTION>
AGGREGATE VALUE OF FOR CALENDAR QUARTERS
QUALIFYING ACCUMULATION VALUES ENDING IN
------------------------------ ---------
<S> <C>
$ 70,000 1994
80,000 1995
90,000 1996
100,000 1997 and later
</TABLE>
"Qualifying Accumulation Values" means, with respect to each
MultiOption annuity contract included in your Variable Annuity
Business, all separate account accumulation values held under such
contract; provided, that the separate account accumulation values held
under any contract shall not be Qualifying Accumulation Values unless
such separate account accumulation values are at least:
SINGLE PREMIUM CONTRACTS
------------------------
$10,000
F. 36071 Rev. 1-95
<PAGE>
FLEXIBLE PAYMENT CONTRACTS
--------------------------
$15,000 in contract years 1-5
$25,000 in contract years 6-10
$35,000 in contract years 11 and later
Trailing commissions will be calculated and paid one month following
the end of each quarter. No trailing commissions will be paid after
your Agency relationship has been terminated.
(ii) MEGANNUITY (POLICY FORM 87-9154)
Trailing commissions are payable in an amount equal to .05% of
accumulation values in excess of $5 million, as of the end of each
calendar quarter (.20% annually), held under MegAnnuity contracts
included in your Variable Annuity Business.
Trailing commissions will be calculated and paid one month following
the end of each quarter. No trailing commissions will be paid after
your Agency relationship has been terminated.
(g) COMMISSIONS ON ANNUITIZATION BUSINESS. We agree to credit to you
commissions on your annuitization business if the values have been held by us in
a deferred annuity for at least five years. If those values have been held by
us in a deferred annuity for more than five but less than ten years, we will
credit to you 1.5% of those values. If the values have been held by us in a
deferred annuity for more than ten years, we will credit to you an amount equal
to 3% of those values. In calculating this commission, any new contributions
made within the last two years will not be considered.
(h) COMMISSIONS ADJUSTMENT. We reserve the right to refund any purchase
payments credited to our General Account under a variable contract. If we do
make such a refund, we will charge you with the amount of any commission
previously paid on the refunded payment. All charges thus made will be a debt
which you owe us and will become a first lien against any and all amount due
you; we may offset this debt against any amount which we would otherwise credit
to you under the Agent's contract.
(i) PRODUCTION BONUS. We will credit you with a production bonus on first-
year earned commissions, which you earn on Variable Adjustable Life. We will
calculate the production bonus according to the schedule shown in the Contract
Update.
(j) QUALITY BONUS. We will credit you with a quality bonus for each renewal
premium paid on your VAL and VAL '95 business in the second and third policy
years. We will calculate the quality bonus according to the schedule shown in
the Contract Update.
(k) SERVICE FEES. We will credit you with a service fee for each renewal
premium paid on your Variable Adjustable Life business for the second and later
policy years. The amount of the service fee is shown in the Contract Update for
life renewal premiums. We will credit you with a service
F. 36071 Rev. 1-95
<PAGE>
fee for each renewal contribution paid on your Variable Annuity business (except
for Policy Form 87-9154), for the eleventh and later policy years. The amount
of service fee is 3% of the renewal contribution. For MultiOption Select
Variable Annuity, the service fee is paid on the following schedule:
<TABLE>
<CAPTION>
Contribution Amount Rate of Service Fees
------------------- --------------------
<S> <C>
$25 - 499,999 3.00%
$500,000 - 749,999 2.75%
$750,000 - 999,999 2.50%
$1,000,000 -1,499,999 2.25%
$1,500,000 -1,999,999 2.00%
$2,000,000 -2,499,999 1.75%
$2,500,000 -2,999,999 1.50%
$3,000,000 -3,999,999 1.25%
$400,000,000 -4,000,000 1.00%
$5,000,000+ MegAnnuity
</TABLE>
(l) All provisions of Sections 6-10 of the Agent's contract will apply where
applicable to any compensation payable under this supplement.
(m) MINIMUM PRODUCTION REQUIREMENTS. In determining whether you have satisfied
the minimum production requirements shown in the Contract Update, we will give
you credit for your Variable Annuity business and Variable Adjustable Life
business. The credit will be equal to 100% of commissions credited on your
Variable Adjustable Life and Variable Annuity business.
(n) TERMINATION OF THIS SUPPLEMENT. We reserve the right to modify or
terminate this supplement at any time; however, any such modification or
termination will be made uniformly among all of our agencies of the same class
or as required by law or other competent authority.
F. 36071 Rev. 1-95
<PAGE>
(o) EFFECTIVE DATE. This supplement shall become effective as of the date
shown below.
Executed this _____ day of _________________, 19___
______________________________
Agent's Signature
______________________________
General Agent's Signature
The Minnesota Mutual Life Insurance Company
By____________________________
Authorized Officer
Minnesota Mutual
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
F. 36071 Rev. 1-95
<PAGE>
Variable Contract Supplement -- General Agent
(a) GENERAL. This supplement is a part of your General Agent's Contract to
which it is attached and is subject to all its terms, definitions and
conditions. This supplement describes both the compensation we will provide on
your variable contract business and your responsibilities with respect to the
solicitation, sale or distribution of these contracts for us.
(b) DEFINITIONS. Whenever we use the following words this is what we mean:
PERSONAL VARIABLE ANNUITY BUSINESS. All variable annuities, which are
registered, contain identifiable sales charges and have contract values varying
with the investments in a separate account, which we issue on applications you
obtain. This does not include group or fixed annuities.
PERSONAL VARIABLE ADJUSTABLE LIFE BUSINESS. Variable Adjustable Life insurance
policies (including VAL, VAL '95 and VAL-SD) which we may issue on applications
you obtain. This does not include group or fixed annuities.
PERSONAL ANNUITIZATION BUSINESS. The election of an annuity payment option
which you initiate for a deferred annuity (except for Policy Form 87-9154).
AGENCY VARIABLE ANNUITY BUSINESS. All variable annuities which are registered,
contain identifiable sales charges and have contract values varying with the
investments in a separate account, which we issue on applications you or your
agents obtain. This does not include group or fixed annuities.
AGENCY VARIABLE ADJUSTABLE LIFE BUSINESS. Variable Adjustable Life insurance
policies (including VAL, VAL '95 and VAL-SD) which we may issue on applications
you and your agents obtain. This does not include group or fixed annuities.
AGENCY ANNUITIZATION BUSINESS. The election of any annuity payment option which
you or one of your agents initiate for a deferred annuity (except for Policy
Form 87-9154).
EARNED PREMIUM. Money which we have received in our home office and applied to
pay the premiums due on variable contract business.
FIRST-YEAR PREMIUMS. Premiums due on a policy during the first policy year.
FIRST-YEAR COMMISSIONS. Commissions on earned first-year premiums.
PRODUCTION BONUS. An amount credited on first-year premiums paid on your Agency
Variable Annuity and Agency Variable Adjustable Life Business.
RENEWAL PREMIUM. Premiums due on a policy after the first policy year.
F. 36072 Rev. 1/94
<PAGE>
RENEWAL COMMISSIONS. Commissions on earned renewal premiums during the second
through the tenth policy year.
TRAILING COMMISSIONS. Commissions on Qualifying Accumulation Values at the end
of each calendar quarter.
QUALITY BONUS. An amount credited on each renewal premium paid on your personal
and agency VAL and VAL '95 business in the second and third policy years.
SERVICE FEES. The amount credited on each renewal premium paid on your Variable
Adjustable Life business and amount credited on each renewal premium paid on
Variable Annuity business after the tenth policy year.
VARIABLE CONTRACTS. Personal and agency variable annuity business and personal
and agency variable adjustable life business.
(c) LICENSES. You will do all things necessary to get, and to keep in good
standing, all licenses which you will need to solicit and sell variable
contracts as a life insurance salesman for us in the jurisdictions in which you
do business.
(d) BROKER-DEALER. You will do all things necessary to get, and to keep in
good standing, all licenses which you will need to solicit and sell variable
contracts for us and which are required because of your status as a registered
representative of the broker-dealer authorized to distribute the variable
contracts as our agent. You will also contract with the broker-dealer, such
contract to govern your conduct and undertakings with respect to the sale of our
variable contracts.
(e) THIS AGREEMENT. For all purposes under this supplement, we will consider
the variable contracts to be our products.
(f) COMMISSIONS ON VARIABLE CONTRACTS.
(1) FIRST-YEAR COMMISSIONS.
Commissions are a percentage of earned first-year premiums on your
personal business.
<TABLE>
<CAPTION>
KIND OF POLICY RATE OF COMMISSION
-------------- ------------------
<S> <C>
*Personal VAL and VAL '95 50%
*Personal VAL-SD 40%
Personal Variable Annuity Business
(Forms 84-9091 and 84-9092) 3%
</TABLE>
*Target Premium Definition -- first-year commission rate applies
to premium up to whole life plan of insurance. Premiums in excess
will receive a 4%
F. 36072 Rev. 1/94
<PAGE>
first-year commission rate on VAL and VAL '95, and a 2% first-year
commission on VAL-SD.
First-year commissions are vested and will be credited to you as they
become due.
(2) RENEWAL COMMISSIONS.
Renewal commissions are percentages of earned renewal premiums
during the second through tenth policy years on your personal business.
<TABLE>
<CAPTION>
RATE OF COMMISSION
------------------
SECOND POLICY YEAR
KIND OF POLICY THROUGH TENTH POLICY YEAR
-------------- -------------------------
<S> <C>
Personal VAL and VAL '95 4%
Personal VAL-SD 3%
Personal Variable Annuity Business
(Forms 84-9091 and 84-9092) 3%
</TABLE>
Renewal commissions will be vested as described in Section 7(d)
of the General Agent's contract.
(3) TRAILING COMMISSIONS ON PERSONAL VARIABLE ANNUITY BUSINESS
(i) MULTIOPTION ANNUITIES (POLICY FORMS 84-9091 AND 84-9092)
Trailing commissions are payable in an amount equal to .03125% of
Qualifying Accumulation Values at the end of each calendar quarter
(.125% annually); provided, that such trailing commissions will not be
paid unless the aggregate of all Qualifying Accumulation Values, as of
the end of the quarter for which such trailing commissions are
determined, is at least:
<TABLE>
<CAPTION>
AGGREGATE VALUE OF FOR CALENDAR QUARTERS
QUALIFYING ACCUMULATION VALUES ENDING IN
------------------------------ ---------
<S> <C>
$ 60,000 1993
70,000 1994
80,000 1995
90,000 1996
100,000 1997 and later
</TABLE>
"Qualifying Accumulation Values" means, with respect to each
MultiOption annuity contract included in your Personal Variable
Annuity Business, all separate
F. 36072 Rev. 1/94
<PAGE>
account accumulation values held under such contract; provided, that
the separate account accumulation values held under any contract shall
not be Qualifying Accumulation Values unless such separate account
accumulation values are at least:
SINGLE PREMIUM CONTRACTS
------------------------
$10,000
FLEXIBLE PAYMENT CONTRACTS
--------------------------
$15,000 in contract years 1-5
$25,000 in contract years 6-10
$35,000 in contract years 11 and later
Trailing commissions will be paid during the month following the end
of each quarter. No trailing commissions will be paid after your
General Agency relationship has been terminated.
(ii) MEGANNUITY (POLICY FORM 87-9154)
Trailing commissions are payable in an amount equal to .05% of
accumulation values in excess of $5 million, as of the end of each
calendar quarter (.20% annually), held under MegAnnuity contracts
included in your agents' Variable Annuity Business. Your margin is
50% of those trailing commissions.
Trailing commissions will be paid during the month following the end
of each quarter. No trailing commissions will be paid after your
General Agency relationship has been terminated.
(g) COMMISSIONS ON PERSONAL ANNUITIZATION BUSINESS. We agree to credit to
you a one-time commission on your personal annuitization business if the values
have been held by us in a deferred annuity for at least five years. If those
values have been held by us in a deferred annuity for more than five but less
than ten years, we will credit to you 1.5% of those values. If the values have
been held by us in a deferred annuity for more than ten years, we will credit to
you an amount equal to 3% of those values.
(h) MARGINS AND EXPENSE ALLOWANCE ON VARIABLE CONTRACTS. We agree to credit
you with margins and an expense allowance on certain of your agency Variable
Annuity (except for Policy Form 87-9154) and all Variable Adjustable Life
insurance business.
For all Variable Adjustable Life business written by you and your agents, we
will calculate the first-year margins according to the schedule in the Contract
Update. For Variable Annuity Contracts written by you and your agents, we will
credit to you first-year margins in an amount equal to 50% of all earned first-
year commissions.
On VAL and VAL '95 business, on the second through the tenth policy years, we
will credit to you renewal margins in an amount equal to 1 1/2% and an expense
allowance equal to 1 1/2% of
F. 36072 Rev. 1/94
<PAGE>
the earned renewal premiums credited to your agency. For VAL-SD, the renewal
margins and expense allowance will each equal 1%. On Variable Annuity business
we will credit to you as renewal margins an amount equal to 50% of the earned
renewal commissions credited to your agency.
First-year and renewal margins are vested and will be credited to you as they
become due. The vesting of renewal margins will be as stated in Section 8 of
the General Agent's Contract; however, renewal margins for Flexible Payment
Variable Annuity business will be vested at 25% of those earned renewal
commissions. No expense allowance will be credited after your General Agency
relationship has been terminated.
Trailing margins will be credited to you for each MultiOption annuity contract
(Policy Forms 84-9091 and 84-9092) on which a trailing commission is paid to you
or your agents (the "Trailing Commission Contracts"), in an amount equal to 100%
of such trailing commissions; provided, that such trailing margins will not be
credited unless the aggregate separate account accumulation values held under
the Trailing Commission Contracts, as of the end of the quarter for which such
trailing margins are determined, is at least:
<TABLE>
<CAPTION>
AGGREGATE VALUE OF FOR CALENDAR QUARTERS
SEPARATE ACCOUNT ACCUMULATION VALUES ENDING IN
------------------------------------ ---------
<S> <C>
$ 600,000 1993
700,000 1994
800,000 1995
900,000 1996
1,000,000 1997 and later
</TABLE>
Trailing margins will also be credited to you for each MegAnnuity contract
(Policy Form 87-9154) on which a trailing commission is paid to you or your
agents in an amount equal to 50% of such trailing commissions.
No trailing margins will be paid after your General Agency relationship has been
terminated.
(i) MARGINS ON AGENCY ANNUITIZATION BUSINESS. We agree to credit you with a
one-time margin on your agency annuitization business in an amount equal to 50%
of all commissions paid on your agency annuitization business. They will be
credited to you as long as you or one of your agents is the agent of record.
(j) COMMISSION AND MARGIN ADJUSTMENT. We reserve the right to refund any
purchase payments credited to our General Account under a variable contract. If
we do make such a refund, we will charge you with the amount of any commission
or any margin previously paid on the refunded payment. All charges thus made
will be a debt which you owe us and will become a first lien against any and all
amounts due you; we may offset this debt against any amount which we would
otherwise credit to you under the General Agent's contract.
F. 36072 Rev. 1/94
<PAGE>
(k) PRODUCTION BONUS. We will credit you with a production bonus on first-
year earned commissions, which you and your agents earn on Flexible Payment
Variable Annuities (except for Policy Form 87-9154) and Variable Adjustable
Life. No production bonus will be paid on commissions for Single Payment
Variable Annuities, or annuitization business. We will calculate the production
bonus according to the schedule shown in the Contract Update.
(l) QUALITY BONUS. We will credit you with a quality bonus for each renewal
premium paid on your personal and agency VAL and VAL '95 business in the second
and third policy years. We will calculate the quality bonus according to the
schedule shown in the Contract Update.
(m) SERVICE FEES.
(1) On agency business, we will credit you with a service fee for each
renewal premium paid on your Variable Adjustable Life and Variable
Annuity business (except for Policy Form 87-9154) for the eleventh and
later policy years. The amount of the service fee payment on Variable
Adjustable Life business is as shown in the Contract Update on your
agency business. The amount of service fee payment on Variable
Annuity business is 1.5% of renewal premiums paid.
(2) On your personal business, we will credit you with a service fee for
each renewal premium paid on your Variable Adjustable Life business
for the second and later policy years. The amount of the service fee
payment is as shown in the Contract Update for life-earned renewal
premiums on your personal business. We will credit you with a service
fee for each renewal premium paid on your Variable Annuity business
(except for Policy Form 87-9154) for the eleventh and later years.
The amount of service fee payment is 3% of renewal premiums paid.
(n) All provisions of Sections 6-10 and 12 of the General Agent's contract will
apply where applicable to any compensation payable under this supplement.
(o) MINIMUM PRODUCTION REQUIREMENTS. In determining whether you have satisfied
the minimum production requirements shown in the Contract Update, we will give
you credit for your Variable Annuity business and Variable Adjustable Life
business. The credit will be equal to 100% of commission credited on your
Variable Adjustable Life and Variable Annuity business.
(p) TERMINATION OF THIS SUPPLEMENT. We reserve the right to modify or
terminate this supplement at any time; however, any such modification or
termination will be made uniformly among all of our agencies of the same class
or as required by law or other competent authority.
F. 36072 Rev. 1/94
<PAGE>
(q) EFFECTIVE DATE. This supplement shall become effective as of the date
shown below.
Executed this _____ day of _________________, 19___.
______________________________
General Agent's Signature
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By____________________________
Authorized Officer
Minnesota Mutual
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
F. 36072 Rev. 1/94
<PAGE>
Exhibit 99-A(5)(a)
VARIABLE ADJUSTABLE LIFE SECOND DEATH POLICY
Variable Benefits.
Premiums as stated on the Policy Information Page.
Face Amount and Premium may be adjusted by the owner.
Participating
THE INITIAL DEATH BENEFIT OF THIS POLICY WILL EQUAL THE FACE AMOUNT SHOWN ON
PAGE 1. THE DEATH BENEFIT MAY INCREASE OR DECREASE, AS DESCRIBED ON PAGE 2,
DEPENDING ON THE OPTION ELECTED AND ON SEPARATE ACCOUNT INVESTMENT EXPERIENCE.
HOWEVER, THE DEATH BENEFIT SHALL NEVER BE LESS THAN THE CURRENT FACE AMOUNT
SHOWN ON PAGE 1.
THE ACTUAL CASH VALUE OF THIS POLICY WILL VARY FROM DAY TO DAY. IT MAY INCREASE
OR DECREASE DEPENDING UPON SEPARATE ACCOUNT INVESTMENT EXPERIENCE. THERE IS NO
GUARANTEED MINIMUM CASH VALUE.
READ YOUR POLICY CAREFULLY
THIS IS A LEGAL CONTRACT
We promise to pay to the beneficiary, subject to the provisions of this policy,
the death proceeds when we receive proof satisfactory to us of the second death.
This policy, including any adjustment of it, is issued in consideration of the
application for this policy and the payment of the premiums.
The owner and the beneficiary are as named in the initial application unless
they are changed as provided in this policy.
Signed for The Minnesota Mutual Life Insurance Company at St. Paul, Minnesota,
on the policy date.
President
Secretary
Registrar
NOTICE OF YOUR RIGHT TO EXAMINE THIS POLICY
IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS POLICY AFTER IT IS
ISSUED. IF YOU ARE NOT SATISFIED WITH IT, YOU MAY RETURN THE POLICY TO US OR
YOUR AGENT BY THE LATER OF: (A) 10 DAYS AFTER YOU RECEIVE IT; (B) 45 DAYS AFTER
YOU SIGNED THE APPLICATION; OR (C) 10 DAYS AFTER WE MAIL THE NOTICE OF YOUR
RIGHT OF WITHDRAWAL. IF YOU RETURN THE POLICY, YOU WILL RECEIVE A FULL REFUND
OF ANY PREMIUMS YOU HAVE PAID WITHIN 7 DAYS OF THE DATE WE RECEIVE YOUR NOTICE
OF CANCELLATION. IF YOU ADJUST YOUR POLICY AND THE ADJUSTMENT RESULTS IN AN
INCREASED PREMIUM, YOU WILL AGAIN HAVE A RIGHT TO EXAMINE THE POLICY. IF YOU
ARE NOT THEN SATISFIED, YOU MAY RETURN THE POLICY WITHIN THE TIMES GIVEN ABOVE
AND THE REQUESTED ADJUSTMENT WILL BE CANCELLED. YOU WILL RECEIVE A REFUND OF
ANY ADDITIONAL PREMIUM PAID WITHIN 7 DAYS OF THE DATE WE RECEIVE YOUR NOTICE OF
CANCELLATION.
Minnesota Mutual
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
95-690
<PAGE>
<TABLE>
<CAPTION>
INDEX
<S> <C>
Additional Information 15
Assignment 15
Beneficiary 13
Death Benefit 5
Definitions 2
Dividends 12
General Information 3
Grace Period 7
Incontestability 15
Lapse (Premiums) 7
Nonrepeating Premium 7
Ownership 3
Payment of Proceeds 12
Policy Adjustments 10
Policy Charges 4
Policy Exchange Option 15
Policy Loans 13
Premiums 6
Reinstatement (Premiums) 7
Separate Account 7
Settlement Options 12
Suicide Exclusion 15
Surrender 9
Value 9
</TABLE>
<PAGE>
YOUR POLICY INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
SMOKING STATUS: NONSMOKER INSURED: ELLIOTT A EXAMPLE
AGE & GENDER: 60 - MALE
SMOKING STATUS: NONSMOKER INSURED: ELAINE B EXAMPLE
AGE & GENDER: 60 - FEMALE
PREMIUM CLASS: STANDARD
TOTAL PREMIUMS:
*CURRENT FACE AMOUNT: $1,000,000
ANNUAL - $12,354.50
POLICY NUMBER: 1-000-001V
SEMI-ANNUAL - $6,177.25
ORIGINAL POLICY DATE: MAY 15 1995
QUARTERLY - $3,088.63
</TABLE>
DEATH BENEFIT OPTION ON POLICY DATE - * * * * * * * * * * * *
CASH * *
* VARIABLE ADJUSTABLE LIFE *
* SECOND DEATH POLICY *
* *
* PROCEEDS PAYABLE AT SECOND *
* DEATH OR SURRENDER *
* *
* FACE AMOUNT AND PREMIUM MAY *
* BE ADJUSTED BY THE OWNER. *
* *
* PARTICIPATING *
* *
* * * * * * * * * * * *
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FACE PREMIUMS ANNUAL
TYPE OF COVERAGE AMOUNT PAYABLE PREMIUM
BASIC POLICY THROUGH
WHOLE LIFE INSURANCE $1,000,000 MAY 14 2015 $11,300.00
PAYABLE AT THE SECOND DEATH
WITH SCHEDULED CHANGE THROUGH
IN FACE AMOUNT $95,615 MAY 14 2035 $11,300.00
</TABLE>
*THE CURRENT FACE AMOUNT IS GUARANTEED TO MAY 14 2015. IN ADDITION, A WHOLE
LIFE INSURANCE FACE AMOUNT OF $95,615 IS GUARANTEED THEREAFTER FOR LIFE.
CONTINUED ON PAGE 1B
95-690-1A 1A
<PAGE>
YOUR POLICY INFORMATION
<TABLE>
<CAPTION>
INSURED: ELLIOTT A EXAMPLE POLICY NUMBER: 1-000-001V
INSURED: ELAINE B EXAMPLE
ADDITIONAL AGREEMENTS - CONTINUED FROM PAGE 1A
FACE PREMIUMS ANNUAL
TYPE OF COVERAGE AMOUNT PAYABLE PREMIUM
<S> <C> <C> <C>
SINGLE LIFE TERM $250,000 THROUGH $932.50
INSURANCE AGREEMENT MAY 14 1996
INSURED: ELAINE B EXAMPLE
SEE FOLLOWING PAGES FOR
RENEWAL PREMIUMS THROUGH MAY 14, 2029
ESTATE PRESERVATION AGREEMENT THROUGH $122.00
DESIGNATED INSURED: ELAINE B EXAMPLE MAY 14, 2005
OTHER INSURED: ELLIOTT A EXAMPLE
AGREEMENT TERMINATES ON MAY 14, 2005
TOTAL ANNUAL PREMIUM ON POLICY DATE $12,354.50
</TABLE>
THE ADMINISTRATIVE CHARGE ON THIS POLICY IS $15 PER MONTH.
THERE WILL BE NO CHARGE FOR SURRENDERING YOUR POLICY.
95-690-1B 1B
<PAGE>
YOUR POLICY INFORMATION
TABLE OF POLICY VALUES - VARIABLE ADJUSTABLE LIFE - POLICY NUMBER
1-000-001V
THESE VALUES DO NOT INCLUDE DIVIDENDS AND ARE SUBJECT TO THE POLICY VALUES
SECTION IN THIS POLICY.
<TABLE>
<CAPTION>
POLICY TABULAR EXTENDED
ANNIVERSARY CASH TERM
MAY 15 VALUE* INSURANCE
YEARS DAYS
<S> <C> <C> <C>
1996 0 0 0
1997 9,571 5 264
1998 19,223 7 33
1999 28,880 7 250
2000 38,443 7 338
2001 47,804 7 334
2002 56,832 7 268
2003 65,388 7 160
2004 73,315 7 26
2005 80,437 6 223
2006 86,502 6 41
2007 91,118 5 202
2008 93,981 4 355
2009 94,464 4 122
2010 91,878 3 247
2011 85,452 3 0
2012 74,275 2 102
2013 57,308 1 198
2014 33,295 0 287
2015 590 0 4
YEAR 25 26,742 2 286
YEAR 30 46,384 3 53
</TABLE>
ANNUAL POLICY LOAN INTEREST RATE: 8% PAYABLE IN ARREARS
ANNUAL POLICY REINSTATEMENT INTEREST RATE: 6%
*THE TABULAR CASH VALUE MAY BE MORE OR LESS THAN THE SURRENDER PROCEEDS.
<TABLE>
<CAPTION>
INSURED AGE FACE AMOUNT
<S> <C> <C>
ELLIOTT A EXAMPLE 60 $1,000,000 FOR 20 YEARS
ELAINE B EXAMPLE 60 $95,615 THEREAFTER
</TABLE>
95-690-1C 1C
<PAGE>
YOUR POLICY INFORMATION
NOTICE
THIS CONTRACT HAS AN ANNUAL ADMINISTRATIVE CHARGE AND CHARGES WHICH ARE
ASSESSED AGAINST PREMIUMS, BASE PREMIUMS, NONREPEATING PREMIUMS, YOUR ACTUAL
CASH VALUE AND THE SEPARATE ACCOUNT ASSETS. CHARGES ASSESSED AGAINST PREMIUM
INCLUDE, AMONG OTHERS, A BASIC AND FIRST YEAR SALES LOAD CHARGE. THE BASIC
SALES LOAD CHARGE, APPLIED TO BASE PREMIUMS, WILL NOT EXCEED 7 PERCENT. IN
ADDITION, A FIRST YEAR SALES LOAD MAY ALSO BE APPLIED. THE FIRST YEAR SALES
LOAD WILL NOT EXCEED 23 PERCENT.
A COMPLETE DESCRIPTION OF THESE CONTRACT CHARGES AND THEIR APPLICATION CAN
BE FOUND UNDER THE "POLICY CHARGES" SECTIONS OF THE POLICY.
95-690-1D 1D
<PAGE>
YOUR POLICY INFORMATION
SINGLE LIFE TERM INSURANCE AGREEMENT POLICY 1-0000-001V
GUARANTEED RENEWAL PREMIUMS
COVERED INSURED: ELLIOTT A EXAMPLE
<TABLE>
<CAPTION>
RENEWAL DATE
MAY 15 ANNUAL PREMIUM
<S> <C>
1996 $ 4,745.00
1997 $ 5,210.00
1998 $ 5,735.00
1999 $ 6,320.00
2000 $ 6,970.00
2001 $ 7,710.00
2002 $ 8,555.00
2003 $ 9,510.00
2004 $ 10,565.00
2005 $ 11,700.00
2006 $ 12,930.00
2007 $ 14,250.00
2008 $ 15,690.00
2009 $ 17,315.00
2010 $ 19,455.00
2011 $ 21,280.00
2012 $ 23,720.00
2013 $ 26,460.00
2014 $ 29,400.00
2015 $ 32,530.00
2016 $ 35,820.00
2017 $ 39,235.00
2018 $ 42,860 00
2019 $ 46,835.00
2020 $ 51,260.00
2021 $ 56,260 00
2022 $ 61,895.00
2023 $ 68,055.00
2024 $ 74,600.00
2025 $ 81,400.00
2026 $ 88,395.00
2027 $ 95,445.00
2028 $ 102,645.00
2029 $ 110,095.00
</TABLE>
95-690-1E 1E
<PAGE>
SINGLE LIFE TERM INSURANCE AGREEMENT POLICY 1-000-001V
CURRENT RENEWAL PREMIUMS
COVERED INSURED: ELLIOTT A EXAMPLE
<TABLE>
<CAPTION>
RENEWAL DATE
MAY 15 ANNUAL PREMIUM
<S> <C>
1996 $ 1,140.00
1997 $ 1,397.50
1998 $ 1,685.00
1999 $ 1,982.50
2000 $ 2,395.00
2001 $ 2,927.50
2002 $ 3,387.50
2003 $ 3,742.50
2004 $ 4,175.00
2005 $ 4,637.50
2006 $ 5,155.00
2007 $ 5,732.50
2008 $ 6,372.50
2009 $ 7,085.00
2010 $ 7,877.50
2011 $ 8,757.50
2012 $ 9,735.00
2013 $ 10,822.50
2014 $ 11,885.00
2015 $ 13,050.00
2016 $ 14,332.50
2017 $ 15,737.50
2018 $ 17,282.50
2019 $ 18,977.50
2020 $ 20,840.00
2021 $ 22,885.00
2022 $ 25,130.00
2023 $ 27,597.50
2024 $ 30,305.00
2025 $ 33,280.00
2026 $ 36,545.00
2027 $ 40,132.00
2028 $ 44,070.00
2029 $ 60,760.00
</TABLE>
95-690-1F 1F
<PAGE>
SUMMARY OF POLICY FEATURES
VARIABILITY
The net premiums paid for this policy are placed in the separate account; actual
cash values will reflect investment experience. Actual cash values are not
guaranteed and may be more or less than the tabular cash values shown on page 1.
The face amount of this policy is guaranteed as a death benefit payable at the
second death; investment experience may, depending on the death benefit option
selected, increase the amount of the death benefit. The policy may provide for
a scheduled reduction in face amount at a future policy anniversary as shown on
page 1.
ADJUSTABILITY (SEE PAGE 10)
The face amount and annual premium of your policy are shown on page 1. Subject
to the limitations described in this policy, you may at any time adjust:
-- the face amount, except for increases requiring evidence of
insurability if either insured is over 85.
-- the base premium to any amount from zero to an amount sufficient
to provide a policy which will become paid-up after the payment
of ten annual premiums.
ACTUAL CASH VALUE
Your policy has an actual cash value which is available to you during the
lifetime of either insured. You may use the actual cash value:
-- to provide retirement income (see page 12).
-- as collateral for a loan or as a policy loan (see page 13).
-- to continue some insurance protection if you cannot or do not
wish to continue paying premiums (see page 9).
-- to obtain cash by surrendering your policy, in full or in part
(see page 9).
DEATH PROCEEDS
The amount payable to the beneficiary at the second death is the total of the
following amounts:
-- The death benefit, which is the greater of the face amount of
this policy (see page 1), or the death benefit provided by the
variable features of this policy (see page 5).
PLUS -- Any additional insurance payable at the second death provided by
an additional benefit agreement (see page 1).
<PAGE>
PLUS -- Under the Cash Option death benefit, any premium paid beyond the
end of the policy month in which the second death occurs (see
page 5).
MINUS -- Any unpaid policy charges which we assess against actual cash
value (see page 4).
MINUS -- Any policy loan (see page 13).
SURRENDER PROCEEDS
The amount payable to the owner on the surrender of the policy is the surrender
value which is:
-- The actual cash value of the policy.
MINUS -- Any unpaid policy charges which we assess against actual cash
value (see page 4).
ADDITIONAL BENEFITS
The additional benefits, if any, listed on page 1 are described more fully in
the additional benefit agreements.
<PAGE>
DEFINITIONS
When we use the following words, this is what we mean:
THE INSUREDS
The two persons named on page 1.
YOU, YOUR
The owner of this policy as shown in the application, unless changed as provided
in this policy. The owner may be someone other than the insureds.
WE, OUR, US
The Minnesota Mutual Life Insurance Company.
FIRST DEATH
The death of the first insured to die. You must give us proof of the first death
as soon as is reasonably possible.
SECOND DEATH
The death of the second insured to die. We will pay the death proceeds when we
receive due proof of the second death.
POLICY DATE
The effective date of coverage under this policy and the date from which policy
anniversaries, policy years, policy months and premium due dates are determined.
POLICY ANNIVERSARY
The same day and month as your policy date for each succeeding year your policy
remains in force. A monthly policy anniversary is the same day as your policy
date for each succeeding month your policy remains in force.
WRITTEN REQUEST
A request in writing signed by you. We also may require that your policy be
sent in with your written request.
PREMIUM
A scheduled payment required for this policy. The premium amounts are shown on
page 1.
2
<PAGE>
NONREPEATING PREMIUM
A payment made to this policy in addition to its scheduled payments.
BASE PREMIUM
The premium less any amount charged for additional benefits and for substandard
risks (see page 4).
NET PREMIUM
The base premium or nonrepeating premium less policy charges assessed against
the premium. The net premium is the amount or amounts which are allocated to
the guaranteed principal account or the separate account.
PROCEEDS
The amount we will pay under the terms of this policy when your policy is
surrendered or on the second death.
FACE AMOUNT
The minimum amount of insurance provided at the second death , subject to the
conditions of this policy. The face amount is shown on page 1. Under some
schedules of premium and premium paying periods, the face amount of insurance
may be scheduled to decrease at some future policy anniversary. In those
circumstances, that face amount and the date of the decrease are also shown on
page 1.
CURRENT FACE AMOUNT
The face amount of this policy at any time when the policy is valued.
SEPARATE ACCOUNT
The separate investment account titled "Minnesota Mutual Variable Life Account."
We established this separate account under Minnesota law. The separate account
is composed of several sub-accounts. We own the assets of the separate account.
However, those assets not in excess of separate account liabilities are not
subject to claims arising out of any other business in which we engage.
GUARANTEED PRINCIPAL ACCOUNT
The portion of the general account of Minnesota Mutual which is attributable to
this policy and other variable policies , exclusive of policy loans. The
description is for accounting purposes
3
<PAGE>
only. It does not represent a separate account. It does not represent any
division of the general account for the specific benefit of variable policies.
FUND
The mutual fund or separate investment portfolio within a series mutual fund
which we designate as an eligible investment for the separate account and its
sub-accounts.
GENERAL ACCOUNT
All assets of The Minnesota Mutual Life Insurance Company other than those in
the separate account or in other separate accounts established by us.
LOAN ACCOUNT
The portion of the general account of Minnesota Mutual which is attributable to
policy loans under this policy and other variable policies. The loan account
balance is the sum of all outstanding loans under this policy.
VALUATION DATE
Any date on which a fund is valued.
VALUATION PERIOD
The period between successive valuation dates measured from the time of one
determination to the next.
UNIT
A measure of your interest in a sub-account of the separate account.
1940 ACT
The Investment Company Act of 1940, as amended, or any similar successor federal
act.
NET SINGLE PREMIUM
The amount of money that is necessary, at any given date to pay for all future
guaranteed cost of insurance charges for the entire lifetime of both insureds,
or for the coverage period in the case of extended term insurance, without the
payment of additional premium. We will determine the net single premium using
the policy assumptions and the assumption that the current face amount of the
policy will remain constant.
4
<PAGE>
ACTUAL CASH VALUE
The sum of the values under this policy in the separate account and the
guaranteed principal account. The interest in each is valued separately. They
are identified as the separate account actual cash value and the guaranteed
principal account actual cash value, respectively. Actual cash value does not
include the loan account.
The separate account actual cash value is composed of your interest in one or
more sub-accounts of the separate account. For each sub-account, the value is
determined by multiplying the current number of sub-account units credited to
this policy by the current sub-account unit value. The total of these values
will be the separate account actual cash value.
TABULAR CASH VALUE
The amount which would be equal to the actual cash value of this policy at any
time if: all scheduled premiums are paid when due assuming that premiums are
paid annually; there is no policy adjustment; there are no policy loans; any
percentage increase in the actual cash value matches the policy's assumed rate
of return; the net investment experience for each sub-account and/or the
interest credited to the guaranteed principal account matches the policy's
assumed rate of return; we deduct maximum cost of insurance charges, on the
assumption that they are taken once at the end of the policy year and we deduct
all other charges as set forth in this policy.
POLICY VALUE
The actual cash value of this policy, plus any policy loan.
LAPSE
The lives of both insureds are no longer insured except as may be provided in
the Values section of this policy.
TERMINATE
The lives of both insureds are no longer insured under any of the terms of the
policy.
INTEREST CREDITS
The amount of credit we add to the actual cash value of your policy as the
result of a policy loan.
AGE
The age of each insured at his or her nearest birthday.
5
<PAGE>
POLICY ASSUMPTIONS
The assumed rate of return is 4 percent and the assumed mortality rates are
equal to those in the 1980 CSO Tables.
1980 CSO TABLES
The 1980 Commissioners Standard Ordinary Mortality Tables, gender-distinct,
smoker-distinct, and age nearest birthday.
GENERAL INFORMATION
WHAT IS YOUR AGREEMENT WITH US?
Your policy, or any adjustment of it, contains the entire contract between you
and us. This includes the initial application and all subsequent applications
to adjust your policy. Any statements made either by you or by either insured,
in the initial application or in any application for adjustment will, in the
absence of fraud, be considered representations and not warranties. Also, any
statement made either by you or by either insured will not be used to void your
policy nor defend against a claim under your policy unless the statement is
contained in the initial application or in any application for adjustment of
this policy.
No change or waiver of any of the provisions of this policy will be valid unless
made in writing by us and signed by our president, a vice president, our
secretary or an assistant secretary. No agent or other person has the authority
to change or waive any provisions of your policy.
Any additional benefit agreement attached to this policy will become a part of
this policy and will be subject to all the terms and conditions of this policy
unless we state otherwise in the agreement.
HOW DO YOU EXERCISE YOUR RIGHTS UNDER THE POLICY?
You can exercise all the rights under this policy during the lifetime of either
insured by making a written request to us. This includes the right to change
the ownership. If your policy is assigned, we will also require the written
consent of the assignee. If you have designated an irrevocable beneficiary, the
written consent of that beneficiary will also be required.
POLICY CHARGES
WHAT TYPES OF CHARGES ARE THERE UNDER THIS POLICY?
Charges under this policy are those which we assess against your premiums, base
premiums, nonrepeating premiums, your actual cash value and the separate account
assets.
6
<PAGE>
WHAT CHARGES ARE ASSESSED AGAINST PREMIUMS?
Against premiums, we assess charges for additional benefits and for substandard
risks. The charges for additional benefits compensate us for additional
benefits which you may choose to make a part of this policy. The charge for
substandard risks is for providing the death benefit for policies whose
mortality risks exceed the standard.
WHAT CHARGES ARE ASSESSED AGAINST BASE PREMIUMS?
Against base premiums, we assess: (1) the basic and first year sales load; (2)
the underwriting charge; (3) the premium tax charge; and (4) the federal tax
charge.
(1) The sales load is for distribution expenses for this class of policies.
The basic sales load charge described herein applies to base premiums. The
basic sales load will not exceed 7 percent.
In addition to the basic sales load, a first year sales load may also be
applied. The first year sales load applies to base premiums, scheduled to
be paid in the twelve month period following the policy date and the date
of any policy adjustment. The first year sales load will not exceed 23
percent.
If any adjustment involving an increase in base premium occurs, a first
year sales load will be assessed on that increase in premium.
If any adjustment occurs during a period when a first year sales load is
being collected, an additional sales load will be collected over the next
twelve months. In that case, that additional first year sales load shall
be calculated using a percentage, not to exceed 23 percent, which shall be
equal to the first year sales load in effect prior to that adjustment.
This percentage shall be applied to the premium amount, determined on the
basis of the lesser of the base premium in effect prior to or following the
adjustment, to be received during the time from the current adjustment to
the end of the period over which the prior first year sales load was being
collected. This additional first year sales load will be collected during
the twelve month period following the adjustment together with the sales
load applicable to the adjustment.
All of the sales load charges are designed to average not more than 9
percent of the base premiums, over the lesser of:
(a) the joint life expectancy of the insureds at policy issue or
adjustment; or
(b) 15 years from policy issue or adjustment; or
(c) the premium paying period shown on page 1.
(2) The underwriting charge is for our underwriting costs, which include
medical exams, classifying risks and determining insurable interests.
The charge shall not exceed $10 per
7
<PAGE>
$1,000 of face amount of insurance at issue. We can increase this charge
in the future. This charge will be deducted ratably from your payments
of the first year base premium. Our then current underwriting charge
will also apply to increases in face amount which require new evidence of
insurability. In the event of a policy adjustment which results in a
face amount increase and no premium, you must remit the then current
base underwriting charge to us prior to the effective date of the
adjustment or we will assess the charge against your actual cash value as
a transaction charge on adjustment.
(3) The premium tax charge is for the average premium tax we pay to state and
local governments for this class of policies. The charge is currently
2.5 percent of each base premium. We can increase this charge in the
future.
(4) The federal tax charge is for a federal tax related to premium payments
for this class of policies. The charge is currently 1.25 percent of
each base premium. We can increase this charge in the future.
WHAT CHARGES ARE ASSESSED AGAINST NONREPEATING PREMIUMS?
Against nonrepeating premiums, we assess: (1) a basic sales load; (2) the
premium tax charge; and (3) the federal tax charge.
(1) The basic sales load is for distribution expenses for this class of
policies. The basic sales load will not exceed 7 percent of each
nonrepeating premium.
(2) The premium tax charge is for the average premium tax we pay to state and
local governments for this class of policies. The charge is currently
2.5 percent of each nonrepeating premium. We can increase this charge in
the future.
(3) The federal tax charge is for a federal tax related to premium payments
for this class of policies. The charge is currently 1.25 percent of each
nonrepeating premium. We can increase this charge in the future.
WHAT CHARGES ARE ASSESSED AGAINST YOUR ACTUAL CASH VALUE?
Against your actual cash value, we assess: (1) the administration charge; (2)
the face amount guarantee charge; (3) transaction charges; and (4) the cost of
insurance charge.
(1) The administration charge is for our administrative expenses, including
those attributable to the records we create and maintain for your policy.
The administration charge will not exceed $15 per contract month.
(2) The face amount guarantee charge is for providing the minimum death
benefit under the policy. The charge is guaranteed not to exceed 3 cents
per thousand dollars of face amount per month.
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(3) The transaction charges are for expenses associated with processing
transactions. We make a charge of $95 for each policy adjustment. We
may also make a charge, not to exceed $25, for each transfer of actual
cash value among the guaranteed principal account and sub-accounts of the
separate account.
(4) The cost of insurance charge is for providing the death benefit under
this policy. The charge is calculated by multiplying the net amount at
risk under your policy by a rate which is guaranteed not to exceed rates
determined on the basis of the 1980 CSO Tables. The rate varies with
policy characteristics such as the gender, age and risk class of each
insured. The net amount at risk is the death benefit under your policy
less your policy value.
WHEN ARE CHARGES ASSESSED AGAINST YOUR ACTUAL CASH VALUE?
Administration, face amount guarantee and cost of insurance charges are assessed
against your actual cash value. This is done monthly on the monthly policy
anniversary. In addition, such charges are assessed on the occurrence of the
second death, policy surrender, lapse or a policy adjustment.
Transaction charges are assessed at the time of a policy adjustment or when a
transfer is made. In the case of a transfer, the charge is assessed against the
amount transferred.
Charges will be assessed against your guaranteed principal account actual cash
value and separate account actual cash value in the same proportion that those
values bear to each other and, as to the actual cash value in the separate
account, from each sub-account in the proportion that the actual cash value in
such sub-account bears to your actual cash value in all of the sub-accounts.
WHAT CHARGES ARE ASSESSED AGAINST SEPARATE ACCOUNT ASSETS?
We assess a mortality and expense risk charge against separate account assets.
We also reserve the right to charge or make provision for income taxes payable
by us based on separate account assets.
WHAT IS THE MORTALITY AND EXPENSE RISK CHARGE?
This charge is for assuming the risks that the cost of insurance charge will be
insufficient to cover actual mortality experience and that the other charges
will not cover our expenses in connection with the policy. The mortality and
expense risk charge is deducted from separate account assets on each valuation
date at an annual rate of .50 percent of separate account assets.
DEATH BENEFIT
WHAT PROCEEDS ARE PAYABLE AT THE SECOND DEATH?
The amount payable at the second death shall be the death benefit provided by
this policy:
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- -- plus any additional insurance payable at the second death provided by an
additional benefit agreement;
- -- plus under the Cash Option, any premium paid beyond the end of the policy
month in which the second death occurs;
- -- minus any unpaid policy charges; and
- -- minus any policy loan.
WHAT ARE THE DEATH BENEFIT OPTIONS?
The death benefit options are:
(1) the Cash Option; or
(2) the Protection Option.
The Protection Option is only available until the policy anniversary nearest the
younger insured's age 70. At the policy anniversary nearest the younger
insured's age 70, the death benefit option will be changed to the Cash Option.
At that time, we will automatically adjust your policy and adjust the face
amount to equal the death benefit immediately preceding the adjustment.
WHAT IS THE CASH OPTION?
Under the Cash Option, the death benefit will be the then current face amount.
The death benefit will not vary with the investment results of the sub-accounts
of the separate account you have elected unless the policy value exceeds the net
single premium for the then current face amount.
If the policy value exceeds the net single premium for the then current face
amount, the death benefit will be that amount of insurance which could be
purchased for the insureds using the policy value as the net single premium.
WHAT IS THE PROTECTION OPTION?
Under the Protection Option, the death benefit will vary with the investment
results of the sub-accounts of the separate account you have elected. The death
benefit will be the policy value, plus the larger of:
(1) the then current face amount; or
(2) the amount of insurance which could be purchased using the policy value
as a net single premium.
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WHEN IS THE DEATH BENEFIT DETERMINED?
The death benefit is determined on each monthly policy anniversary and as of the
date of the second death. The death benefit amount as of any other date is
available from us on written request.
HOW IS THE DEATH BENEFIT OPTION ELECTED?
You elect a death benefit option on your policy application.
If you fail to make an election, the Cash Option will be in effect.
MAY THE DEATH BENEFIT OPTION BE CHANGED?
Yes. You may apply to have the death benefit option changed while this policy
is in force by filing a written request with us at our home office. We may
require evidence satisfactory to us of the insurability of both insureds before
we allow the change. The change will take effect when we approve and record it
in our home office.
WHAT HAPPENS WHEN THE POLICY IS PAID-UP?
When the policy is paid-up, we need no additional scheduled premiums in order to
provide a death benefit equal to the then current face amount until the second
death.
After the policy is paid-up, we may continue to accept scheduled premiums and
nonrepeating premiums. The payment of any premium after the policy is paid-up
may increase the face amount. We may require you to provide us with evidence
satisfactory to us of the insurability of both insureds before accepting any
premium after the policy is paid-up. The policy value of your policy will never
exceed the net single premium for the death benefit payable at the second
death.
HOW WILL YOU KNOW WHEN THE POLICY BECOMES PAID-UP?
Each policy anniversary we will determine if your policy has become paid-up.
When your policy becomes paid-up, we will send you a new page 1.
WILL A PAID-UP POLICY HAVE A NEW FACE AMOUNT?
Yes. A new face amount will be determined when it becomes paid-up. The new
face amount will not be less than the face amount of the policy when it became
paid-up.
WILL POLICY CHARGES CONTINUE TO APPLY TO A PAID-UP POLICY?
Yes.
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PREMIUMS
WHEN AND WHERE DO YOU PAY YOUR PREMIUMS?
Your first premium is due as of the policy date and must be paid when your
policy is delivered. All premiums after the first premium are payable on or
before the date they are due and must be mailed to us at our home office or such
other place as we may direct.
If you would like a receipt for a premium payment, we will give you one upon
request.
HOW OFTEN DO YOU PAY PREMIUMS?
You may pay your premiums once a year, twice a year, or four times a year.
These premiums are shown on page 1 as the annual, semi-annual and quarterly
premiums.
If you decide to pay premiums once a year, your annual premium will be due on
the policy anniversary.
If you decide to pay premiums more than once a year, your semi-annual premiums
will be due every six months and your quarterly premiums will be due every three
months. In each year, one of the premium due dates must fall on the policy
anniversary.
ARE THERE OTHER METHODS OF PAYING PREMIUMS?
Yes. It may be possible for you to make arrangements with your employer to pay
your premiums by payroll deduction. Also, with the consent of your financial
institution, you may request that your premiums be automatically withdrawn from
your account at that institution and paid directly to us. If for any reason
your employer or financial institution fails to pay a premium when it is due or
if this premium payment arrangement is ended, you must pay an annual, semi-
annual or quarterly premium directly to us at our home office before the end of
the grace period to keep your policy in force on a premium-paying basis.
CAN YOU STOP PAYING BASE PREMIUMS?
Yes. You may adjust the policy to stop paying base premiums. A stop premium
adjustment is one where, after the adjustment, no further base premium is
required. You may request a stop premium adjustment at any time your policy has
sufficient actual cash value at the date of the request to keep the policy in
force until your next policy anniversary. The policy will be adjusted on the
basis of no additional scheduled base premium and, unless instructed otherwise,
the face amount in effect at the time of the adjustment. On a stop premium
policy, any scheduled decrease in face amount shall be to zero and the policy
will lapse at that time.
CAN YOU PAY A NONREPEATING PREMIUM?
Yes. In addition to premiums shown on page 1, you may request to pay a
nonrepeating premium. However, we may at any time refuse to accept a
nonrepeating premium. If the death benefit of
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your policy increases as a result of the payment of a nonrepeating premium, we
may require you to provide us with evidence satisfactory to us of the
insurability of both insureds.
CAN YOU PAY A PREMIUM AFTER THE DATE IT IS DUE?
Yes. Your policy has a 31-day grace period. This means that if a premium is
not paid on or before the date it is due, you may pay that premium during the
31-day period immediately following the due date. Your premium payment,
however, must be received in our home office within the 31-day grace period.
The insurance will continue during this 31-day period.
If the second death occurs during this period, we will deduct a premium for the
31-day grace period from the death proceeds.
This 31-day grace period does not apply to the first premium payment. The first
premium must be paid on or before the date your policy is delivered.
WHAT HAPPENS IF A PREMIUM IS NOT PAID BEFORE THE END OF THE GRACE PERIOD?
If a premium is not paid before the end of the 31-day grace period, your policy
will lapse and no further premium payments may be made. However, even if your
policy lapses, the values, if any, provided for in the Values section of this
policy on page 9 will be available to you.
CAN YOU REINSTATE YOUR POLICY AFTER IT HAS LAPSED?
At any time within three years from the date of lapse, you may ask us to restore
your policy to a premium paying status. We will require:
(1) your written request to reinstate this policy;
(2) that you submit to us at our home office during the lifetime of both
insureds evidence satisfactory to us of the insurability of both
insureds so that we may have time to act on the evidence during the
lifetime of both insureds; and
(3) at our option, a premium payment which is equal to all overdue premiums
with interest at a rate not to exceed 6 percent per annum compounded
annually and any indebtedness in effect at the end of the grace period
following the date of default with interest at a rate not exceeding 8
percent per annum compounded annually.
If your policy is reinstated, it will be contestable for two years from the date
of reinstatement as to representations contained in your request to reinstate.
IS THERE A PREMIUM REFUND AT THE SECOND DEATH?
Yes. If the Cash Option death benefit is in effect at the second death, we
will pay to the beneficiary any part of a paid premium that covers the period
from the end of the policy month in which the second death occurs to the date
to which premiums are paid. However, if your policy
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contains a Waiver of Premium Agreement and the last premium was waived by us
under that agreement, we will not refund that premium. Also, we will not refund
a nonrepeating premium.
SEPARATE ACCOUNT
HOW WAS THE SEPARATE ACCOUNT ESTABLISHED?
We established the separate account under Minnesota law. It is registered as a
unit investment trust under the 1940 Act.
WHAT IS THE PURPOSE OF THE SEPARATE ACCOUNT?
Net premiums allocated to the separate account support the operation of this
policy (except extended term coverage, policy loans and settlement options) and
other variable policies. Assets may also be allocated for other purposes, but
not for the operation or support of policies other than variable life policies.
ARE SUB-ACCOUNTS AVAILABLE UNDER THE SEPARATE ACCOUNT?
Yes. The separate account is divided into sub-accounts. Net premiums will be
allocated to one or more of the sub-accounts you have chosen for such
allocation. We reserve the right to add, combine or remove any sub-account of
the separate account.
WHAT ARE THE INVESTMENTS OF THE SEPARATE ACCOUNT?
For each sub-account, there is a fund for the investment of that sub-account's
assets. The assets of the sub-accounts are invested in the funds at net asset
value. If investment in a fund should no longer be possible or if we determine
it becomes inappropriate for variable policies, we may substitute another fund.
Substitution may be with respect to both existing policy values and future
premiums. The investment policy of the separate account may not be changed,
however, without the approval of the regulatory authorities of the state of
Minnesota. If required, that approval process will be on file with the
regulatory authorities of the state in which this policy is delivered.
WHAT CHANGES MAY WE MAKE TO THE SEPARATE ACCOUNT?
We reserve the right, when permitted by law, to transfer assets of the separate
account which we determine to be associated with the class of policies to which
this policy belongs, to another separate account. If such a transfer is made,
the term "separate account," as used in this policy, shall then mean the
separate account to which the assets are transferred. A transfer of this kind
may require the advance approval of state regulatory authorities.
We reserve the right, when permitted by law, to:
(1) de-register the separate account under the 1940 Act;
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(2) restrict or eliminate any voting right of policy owners or other persons
who have voting rights as to the separate account; and
(3) combine the separate account with one or more other separate accounts.
HOW ARE NET PREMIUMS ALLOCATED?
They are allocated either to the guaranteed principal account or to the separate
account and its sub-accounts. Initially, you indicate your allocation in the
application. You may change your allocation for future premiums. You may do
this by giving us a written request. A change will not take effect until it is
recorded by us in our home office.
Allocations must be expressed in whole percentages. The allocation to any
alternative must be at least 10 percent of the net premium. We reserve the
right to restrict the allocation of premium. If we do so, no more than 50
percent of the net premium may be allocated to the guaranteed principal account.
We reserve the right to delay the allocation of net premiums to named sub-
accounts. Such a delay will be for a period of 30 days after issuance of a
policy or a policy adjustment. If we exercise this right, net premiums will be
allocated to the money market sub-account until the end of that period.
WHAT IS A TRANSFER?
A transfer is a reallocation of the actual cash value between the guaranteed
principal account and the separate account or among the sub-accounts of the
separate account.
MAY YOU MAKE TRANSFERS OF AMOUNTS UNDER THIS POLICY?
Yes. Transfers may be made by your written request. For transfers out of the
separate account or among the sub-accounts of the separate account, we will make
the transfer on the basis of sub-account unit values as of the end of the
valuation period during which your written request is received at our home
office. For transfers out of the guaranteed principal account, the transfer
will be made on the basis of your guaranteed principal account actual cash value
at the time of transfer.
ARE THERE LIMITATIONS ON TRANSFERS?
Yes. The amount of actual cash value to be transferred to or from a sub-account
of the separate account or the guaranteed principal account must be at least
$250. If the balance is less than $250, the entire actual cash value
attributable to that sub-account or the guaranteed principal account must be
transferred. If a transfer would reduce the actual cash value in the sub-
account from which the transfer is to be made to less than $250, we reserve the
right to include that remaining sub-account actual cash value in the amount
transferred.
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The maximum amount of actual cash value to be transferred out of the guaranteed
principal account to the sub-accounts of the separate account may be limited to
20 percent of the guaranteed principal account balance. Transfers to or from
the guaranteed principal account may be limited to one such transfer per policy
year.
Transfers from the guaranteed principal account must be made by a written
request. It must be received by us or postmarked in the 30-day period before or
after the last day of the policy year. Written requests for transfers which
meet these conditions will be effective after we approve and record them at our
home office.
HOW ARE UNITS DETERMINED?
The number of units credited with respect to each net premium payment is
determined by dividing the portion of the net premium payment allocated to each
sub-account by the then current unit value for that sub-account. This
determination is made as of the end of the valuation period during which your
premium is received at our home office. Once determined, the number of
accumulation units will not be affected by changes in the unit value.
HOW ARE UNITS INCREASED OR DECREASED?
The number of units of each sub-account credited to your policy will be
increased by the allocation of subsequent net premiums, policy dividends, loan
repayments, interest credits and transfers to that sub-account. The number of
units of each sub-account credited to your policy will be decreased by policy
charges to the sub-account, policy loans and unpaid loan interest, transfers
from that sub-account and partial surrenders from that sub-account. The number
of sub-account units will decrease to zero on a policy surrender, lapse or
termination.
HOW IS A UNIT VALUED?
The unit value will increase or decrease on each valuation date. The assets of
the separate account shall be valued at least as often as any policy benefits
vary but not less often than once a month. The amount of any increase or
decrease will depend on the net investment experience of the sub-accounts of the
separate account. The value of a unit for each sub-account was originally set
at $1.00 on the first valuation date. For any subsequent valuation date, its
value is equal to its value on the preceding valuation date multiplied by the
net investment factor for that sub-account for the valuation period ending on
the subsequent valuation date.
WHAT IS THE NET INVESTMENT FACTOR FOR EACH SUB-ACCOUNT?
The net investment factor is a measure of the net investment experience of a
sub-account.
The net investment factor for a valuation period is: the gross investment rate
for such valuation period, less a deduction for the charges under this policy
which are assessed against separate account assets.
The gross investment rate is equal to:
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(1) the net asset value per share of a fund share held in the sub-account of
the separate account determined at the end of the current valuation
period; plus
(2) the per-share amount of any dividend or capital gain distributions by the
fund if the "ex-dividend" date occurs during the current valuation
period; divided by
(3) the net asset value per share of that fund share held in the sub-account
determined at the end of the preceding valuation period.
VALUES
DOES THIS POLICY HAVE CASH VALUES?
Yes. This policy has two types of cash values. They are the actual cash value
and the tabular cash value.
HOW IS YOUR ACTUAL CASH VALUE DETERMINED?
It is determined separately for your guaranteed principal account actual cash
value and for your separate account actual cash value. The separate account
actual cash value will include all sub-accounts of the separate account.
The guaranteed principal account actual cash value is the sum of all net premium
payments allocated to the guaranteed principal account. This amount will be
increased by any interest, dividends, loan repayments, policy loan interest
credits and transfers into the guaranteed principal account. This amount will
be reduced by any policy loans, unpaid policy loan interest, partial surrenders,
transfers into the sub-accounts of the separate account and charges assessed
against your guaranteed principal account actual cash value.
The separate account actual cash value is the sum of units of each sub-account
multiplied by the accumulation unit value for that sub-account. The number of
units will be increased by any dividends, loan repayments, policy loan interest
credits and transfers into a sub-account of the separate account. The number of
units will be reduced by any policy loans, unpaid policy loan interest, partial
surrenders, transfers into the guaranteed principal account, and charges
assessed against your separate account actual cash value.
IS THE ACTUAL CASH VALUE GUARANTEED?
No. Your separate account actual cash value is not guaranteed.
Your guaranteed principal account actual cash value is guaranteed by us. It
cannot be reduced by any investment experience of the general account.
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WHAT IS THE TABULAR CASH VALUE OF YOUR POLICY?
A table of tabular cash values is shown on page 1. At your request, we will
tell you what the tabular cash values are for any date not shown.
HOW IS THE TABULAR CASH VALUE DETERMINED?
The methods and factors used to calculate your tabular cash values, reserves and
net single premiums are based upon the policy assumptions which your state
requires us to use.
We have filed the method used to calculate these values with the insurance
department in the state in which your policy is delivered. The method we use
provides tabular cash values at least as great as those provided by the
Commissioners Reserve Valuation Method. These tabular cash values and reserves
will be greater than, or equal to, the values required by law. The tabular cash
values are calculated on the assumption that there is no indebtedness on your
policy, premiums are paid annually, deaths occur at the end of the year, and
all charges have been assessed at the maximum amount. Also, the calculation of
the tabular cash values will be made with an allowance for the passage of time
and the payment of those premiums paid beyond the last policy anniversary. All
tabular values represent the values at the end of the policy year.
IS INTEREST CREDITED ON THE GUARANTEED PRINCIPAL ACCOUNT ACTUAL CASH VALUE?
Yes. Interest is credited on the guaranteed principal account actual cash value
of this policy. Interest is credited daily at a rate of not less than 4 percent
per year, compounded annually. We guarantee this minimum rate for the life of
the policy without regard to the actual experience of the general account.
MAY ADDITIONAL INTEREST BE CREDITED ON THE GUARANTEED PRINCIPAL ACCOUNT?
Yes. As conditions permit, we will credit additional amounts of interest to the
guaranteed principal account actual cash value.
MAY THE POLICY BE SURRENDERED?
Yes. You may request the surrender of the policy at any time until the second
death.
WHAT IS THE SURRENDER VALUE OF YOUR POLICY?
The surrender value is the actual cash value, minus unpaid policy charges which
are assessed against actual cash value.
However, if your policy is being used to provide extended term, your surrender
value at any time will be the reserve on that insurance. The surrender value of
any extended term insurance which is surrendered within 30 days after a policy
anniversary will be at least equal to that anniversary value.
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The determination of the surrender value is made as of the end of the valuation
period during which we receive your surrender request at our home office.
HOW DO YOU SURRENDER YOUR POLICY?
Send your policy and a written request for surrender to us at our home office.
Instead of payment in a single sum, you may request that your surrender value be
used to provide extended term insurance .
IS A PARTIAL SURRENDER PERMITTED?
Yes. You may make a partial surrender of your actual cash value. The amount of
a partial surrender must be $500 or more and it cannot exceed the amount
available as a policy loan. This is a policy adjustment as described on page
10. If the policy is not paid-up, a partial surrender will cause a decrease in
the death benefit equal to the amount surrendered.
MAY YOU DIRECT US AS TO HOW PARTIAL SURRENDERS WILL BE TAKEN FROM ACTUAL CASH
VALUE?
Yes. You may tell us the sub-accounts from which a partial surrender is to be
taken or whether it is to be taken in whole or in part from the guaranteed
principal account. If you do not, partial surrenders will be deducted from your
guaranteed principal account actual cash value and separate account actual cash
value in the same proportion that those values bear to each other and, as to the
actual cash value in the separate account, from each sub-account in the
proportion that the actual cash value in such sub-account bears to your actual
cash value in all of the sub-accounts.
WHAT HAPPENS IF THE PREMIUM DUE ON YOUR POLICY IS NOT PAID?
Your policy will lapse if the premium due is not paid before the end of the
grace period. If your policy has no actual cash value, it will terminate. If
your policy has a surrender value, it will be used to provide either:
(1) a single sum payment of that value to you, thereby terminating this
policy; or
(2) extended term insurance.
Unless, within 62 days of the date of the first unpaid premium, you request a
single sum payment of your surrender value as of the end of the grace period,
we will apply it to purchase extended term insurance . This insurance will be
effective as of the due date of the last unpaid premium and no further premiums
will be due. You may reinstate your policy as described in the Premiums section
on page 6.
MAY AUTOMATIC PREMIUM LOANS BE USED TO KEEP THE POLICY IN FORCE?
Yes. Please see the section on policy loans (see page 13).
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WHAT IS EXTENDED TERM INSURANCE?
It is term insurance that is purchased by applying the surrender value of your
policy as a net single premium to buy term insurance for the maximum period.
This extended term coverage has fixed benefits. Extended term benefits are not
provided by the separate account and they will not vary during the extended term
insurance period. The amount of this insurance will be equal to the face amount
of your policy, less the amount of any policy loan at the date of lapse. At the
end of the extended term period, all insurance under this policy will terminate
and this policy will have no further value.
MAY POLICY PAYMENTS BE DEFERRED?
Yes. We reserve the right to defer policy payments for up to six months from
the date of your written request, if such payments are based upon policy values
which do not depend on the investment performance of the separate account. In
that case, if we postpone our payment for more than 31 days, we will pay you
interest at 3 percent per annum for the period during which payment is
postponed. Otherwise, this right of deferral will be: (a) for any period
during which the New York Stock Exchange is closed for trading (except for
normal holiday closing); or (b) when the Securities and Exchange Commission has
determined that a state of emergency exists which may make such payment
impractical.
HOW WILL YOU KNOW THE STATUS OF YOUR POLICY?
Each year, we will send you a report. This report will show your policy's
status. It will include the actual cash value, the face amount and the
variable death benefit as of the date of the report. It will also show the
premiums paid during the year, policy loan activity and the policy value. The
report will be sent without cost to you. The report will be as of a date within
two months of its mailing.
POLICY ADJUSTMENTS
WHAT TYPES OF ADJUSTMENTS CAN BE MADE TO THIS POLICY?
Except while the policy is on extended term, you may ask us to make any of the
four following policy adjustments:
(1) increase or decrease the current face amount;
(2) increase or decrease the premium;
(3) make a partial surrender;
(4) adjust the base premium to zero ("stop premium").
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You may request a policy adjustment by completing an application for adjustment.
Adjustments will not apply to any additional benefit agreements attached to your
policy.
ARE THERE ANY ADJUSTMENT LIMITATIONS?
Yes. An adjustment must satisfy certain limits on premiums, face amount and the
attained ages of both insureds at which an adjusted policy may provide for a
scheduled reduction in face amount. Other limitations on adjustments and on
combinations of adjustments may apply. Our approval on any adjustment is
required. The current limits on adjustments are those described here.
An adjustment may not result in more than a paid-up whole life plan for the then
current face amount. If either insured is over age 85 or older, no increases
requiring evidence of insurability will be allowed.
Any adjustment for a change of premium must result in a change of the annual
premium of at least $300.
An adjustment with an increase in premium must result in a policy which is
scheduled to become paid-up only after the payment of ten annual premiums or to
the younger insured's age 100, if less. In addition, any policy must have a
minimum annual base premium of at least $600.
Any adjustment for a change of the face amount must result in a change of the
face amount of at least $50,000, except for face amount changes which are the
result of an additional benefit agreement , or a partial surrender under the
policy, or unless a small change in face amount is required to avoid a violation
of the limitations pertaining to plans of insurance.
After adjustment, other than an adjustment to stop premium or the automatic
adjustment at the point when the face amount is scheduled to decrease, the
policy must provide a level face amount of insurance for a period of time to be
determined by us. An adjustment to stop premium or the automatic adjustment at
the point when the face amount is scheduled to decrease requires that the policy
have an actual cash value sufficient to keep the policy in force until the next
policy anniversary.
WHAT EFFECT WILL AN ADJUSTMENT HAVE ON THE POLICY'S TABULAR CASH VALUES?
After adjustment, the tabular cash value shall be equal to:
(1) the greater of the policy value, and the tabular cash value prior to
that adjustment,
(2) plus any nonrepeating premium credit,
(3) less the amount of any partial surrender made at the time of the
adjustment.
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MAY EVIDENCE OF INSURABILITY BE REQUIRED?
Yes. We will require evidence satisfactory to us of the continued insurability
of both insureds. We will need this evidence for adjustments which increase the
current face amount or for adjustments which retain the face amount while also
making a partial surrender. All other adjustments may be made without evidence
of insurability.
IS AN ADJUSTMENT ALLOWED IF PREMIUMS ARE BEING WAIVED?
No. If this policy contains a Waiver of Premium Agreement and if you are
receiving, or are entitled to receive, the waiver of premium benefit, no
adjustments under this provision will be allowed, except as provided in the
Waiver of Premium Agreement.
WHAT WILL BE THE EFFECT OF THE POLICY ADJUSTMENTS?
The effects of policy adjustments are shown below.
<TABLE>
<CAPTION>
IF YOU MAKE THIS KIND
OF ADJUSTMENT, UNDER THIS CONDITION, IT WILL DO THIS:
<S> <C> <C>
Decrease the current face while the premium remains the any scheduled decrease in the
amount... same... current face amount will take
Retain the current face while the premium increases... place at a later policy
amount... anniversary; a scheduled
decrease in the face amount will
be eliminated; or the premium
paying period will be shortened.
Increase the current face with no increase in premium... any scheduled decrease in the
amount... current face amount will take
Retain the current face while the premium decreases... place at an earlier policy
amount... anniversary; a scheduled
If you make a partial while the premium and face decrease in the face amount will
surrender... amount remain the same... occur; or the premium paying
period will be lengthened.
Stop premium... while the face amount remains any scheduled decrease in the
the same... current face amount will take
place at an earlier policy
anniversary or, a scheduled
decrease in the face amount will
occur; and no insurance will be
provided after the decrease.
</TABLE>
You may request a description of the effect of other types or combinations of
adjustments from us.
22
<PAGE>
WHEN WILL AN ADJUSTMENT BE EFFECTIVE?
Any adjustment you request will not become effective until after we approve and
record it at our home office.
When we approve your written request for an adjustment, we will send you a new
page 1. A copy of your adjustment application will be attached to that new page
1. We may require that you return your policy to our home office for attachment
of the new page 1 or we may simply mail it to you at your last known address and
ask you to attach it to your policy. In either event, the new page 1 and its
application will become part of this policy.
WHAT HAPPENS IF THE CURRENT FACE AMOUNT IS SCHEDULED TO DECREASE?
At the time when the current face amount is scheduled to decrease, we will
automatically adjust your policy, retaining both the current face amount and the
premium. This adjustment will result in a scheduled decrease in the current
face amount at a later policy anniversary, or the elimination of the scheduled
decrease in the face amount, or the shortening of the premium paying period.
This automatic adjustment will be subject to all the adjustment limitations
described in this section.
DIVIDENDS
WHAT IS A DIVIDEND?
Each year, we determine if your policy will share in our divisible surplus. We
call this a dividend.
WILL YOUR POLICY RECEIVE DIVIDENDS?
Generally, no. However, there may be times when we declare a dividend on your
policy.
HOW CAN YOUR DIVIDENDS BE APPLIED?
Dividends, if received, may be added to your actual cash value or, if you so
elect, they may be paid in cash.
MAY YOU TELL US HOW TO ALLOCATE DIVIDENDS?
Yes. A dividend will be allocated to the guaranteed principal account or to the
sub-accounts of the separate account in accordance with your instructions for
new premiums. In the absence of instruction, dividends will be allocated to the
guaranteed principal account actual cash value and separate account actual cash
value in the same proportion that those actual cash values bear to each other
and, as to the actual cash value in the separate account, to each sub-account in
the proportion that the actual cash value in such sub-account bears to your
actual cash value in all of the sub-accounts.
23
<PAGE>
PAYMENT OF PROCEEDS
WHEN WILL THE POLICY PROCEEDS BE PAYABLE?
The proceeds of this policy will be payable if the policy is surrendered while
it is in force or if we receive proof satisfactory to us of the second death.
These events must occur while the policy is in force. The proceeds will be paid
at our home office and in a single sum unless a settlement option has been
selected. We will deduct any indebtedness from the proceeds. Proof of any
claim under this policy must be submitted in writing to our home office.
We will pay interest on single sum death proceeds from the date of the second
death until the date of payment. Interest will be at an annual rate determined
by us, but never less than 3 percent.
CAN PROCEEDS BE PAID IN OTHER THAN A SINGLE SUM?
Yes. You may, before the second death, request that we pay the proceeds under
one of the following settlement options. We may also use any other method of
payment that is agreeable to you and us. A settlement option may be selected
only if the payments are to be made to a natural person in that person's own
right.
The following settlement options are all payable in fixed amounts as are
described below. These payments do not vary with the investment performance of
the separate account.
OPTION 1 -- INTEREST PAYMENTS
Payment of interest on the proceeds at such times and for a period that
is agreeable to you and us. Withdrawal of proceeds may be made in
amounts of at least $500. At the end of the period, any remaining
proceeds will be paid in either a single sum or under any other method we
approve.
OPTION 2 -- PAYMENTS FOR A SPECIFIED PERIOD
Monthly payments for a specified number of years. The amount of each
monthly payment for each $1,000 of proceeds applied under this option is
shown in the following table. The monthly payments for any period not
shown will be furnished upon request.
<TABLE>
<CAPTION>
NUMBER OF YEARS MONTHLY PAYMENTS
<S> <C>
5 $17.91
10 9.61
15 6.87
20 5.51
25 4.71
</TABLE>
OPTION 3 -- LIFE INCOME
Monthly payments for the life of the person who is to receive the income.
We will require satisfactory proof of the person's age and gender.
Payments can be guaranteed for 5, 10, or 20 years. The amount of each
monthly payment for each $1,000 of proceeds applied under
24
<PAGE>
this option is shown in the following table. The monthly payments for
any ages not shown will be furnished upon request.
<TABLE>
<CAPTION>
AGE LIFE INCOME WITH PAYMENTS
-------------- LIFE GUARANTEED FOR
MALE FEMALE INCOME 5 YEARS 10 YEARS 20 YEARS
---- ------ ------ ------- -------- --------
<S> <C> <C> <C> <C> <C>
50 55 $4.37 $4.36 $4.33 $4.18
55 60 4.87 4.85 4.79 4.51
60 65 5.56 5.52 5.39 4.85
65 70 6.51 6.41 6.13 5.16
70 75 7.86 7.64 7.03 5.38
</TABLE>
OPTION 4 -- PAYMENTS OF A SPECIFIED AMOUNT
Monthly payments of a specified amount until the proceeds and interest
are fully paid.
If you request a settlement option, we will prepare an agreement for you to
sign, which will state the terms and conditions under which the payments will be
made.
CAN A BENEFICIARY REQUEST PAYMENT UNDER A SETTLEMENT OPTION?
Yes. A beneficiary may select a settlement option only after the second death.
However, you may provide that the beneficiary will not be permitted to change
the settlement option you have selected.
ARE THE PROCEEDS EXEMPT FROM CLAIMS OF CREDITORS?
To the extent permitted by law, no payment of proceeds or interest we make will
be subject to the claims of any creditors.
Also, if you provide that the option selected cannot be changed after the
second death, the payments will not be subject to the debts or contracts of the
person receiving the payments. If garnishment or any other attachment of the
payments is attempted, we will make those payments to a trustee we name. The
trustee will apply those payments for the maintenance and support of the person
you named to receive the payments.
WHAT IS THE GUARANTEED INTEREST RATE ON SETTLEMENT OPTIONS?
The minimum amount of interest we will pay under any settlement option is 3
percent per annum. Additional interest earnings, if any, on deposits under a
settlement option will be payable as determined by us.
25
<PAGE>
BENEFICIARY
TO WHOM WILL WE PAY THE DEATH PROCEEDS?
When we receive proof satisfactory to us of the second death, we will pay the
death proceeds of this policy to the beneficiary or beneficiaries named in the
application for this policy unless you have changed the beneficiary. In that
event, we will pay the death proceeds to the beneficiary named in your last
change of beneficiary request as provided below.
WHAT HAPPENS IF ONE OR ALL OF THE BENEFICIARIES DIES BEFORE THE SECOND DEATH?
If a beneficiary dies before the second death, that beneficiary's interest in
the policy ends with that beneficiary's death. Only those beneficiaries who
are living at the second death will be eligible to share in the death proceeds.
If no beneficiary is living at the second death, we will pay the death proceeds
of this policy to you, if living, otherwise, to your estate, or to your
successor if you are a corporation no longer in existence.
WHAT IF BOTH INSUREDS DIE SIMULTANEOUSLY?
If both insureds die under circumstances which make it impossible to determine
the order of their deaths, we will assume that the older insured died first.
CAN YOU CHANGE THE BENEFICIARY?
Yes. If you have reserved the right to change the beneficiary, you can file a
written request with us to change the beneficiary. If you have not reserved the
right to change the beneficiary, the written consent of the irrevocable
beneficiary will be required.
Your written request will not be effective until we record it in our home
office. After we record it, the change will take effect as of the date you
signed the request. However, if the second death occurs before the request
has been so recorded, the request will not be effective as to those death
proceeds we have paid before your request was so recorded.
POLICY LOANS
CAN YOU BORROW MONEY ON YOUR POLICY?
Yes. You may borrow up to the maximum loan amount. This amount is determined
as of the date we receive your request for a loan. We will require your written
request for a policy loan. We will charge interest on the loan in arrears.
At your request, we will send you a loan agreement for your signature. The
policy will be the only security required for your loan.
26
<PAGE>
When the policy loan is to come from your guaranteed principal account actual
cash value, we have the right to postpone your loan for up to six months. We
cannot do so if the loan is to be used to pay premiums on any policies you have
with us.
WHAT IS THE TOTAL AMOUNT AVAILABLE FOR POLICY LOANS?
The total amount available for loans under your policy is 90 percent of the
policy value (see page 3). Your policy value will be determined as of the date
we receive your written request for a loan at our home office.
WHAT IS THE EFFECT OF A POLICY LOAN?
When you take a loan, we will reduce the actual cash value of the policy. It
will be reduced by the amount you borrow. This determination will be made as of
the end of the valuation period during which your loan agreement is received at
our home office.
HOW DOES A POLICY LOAN REDUCE ACTUAL CASH VALUE?
Unless you direct us otherwise, the policy loan will be taken from your
guaranteed principal account actual cash value and separate account actual cash
value in the same proportion that those values bear to each other and, as to the
actual cash value in the separate account, from each sub-account in the
proportion that the actual cash value in such sub-account bears to your actual
cash value in all of the sub-accounts.
Policy loans shall be transferred to the loan account. The loan account
continues to be a part of the policy in the general account.
The policy value of your policy may decrease between premium due dates. If your
policy has a policy loan and no actual cash value, the policy will lapse.
WHAT RATE OF INTEREST DO YOU HAVE TO PAY?
The interest rate on indebtedness will be the rate shown on page 1 of this
policy. Interest accrues daily at this annual interest rate.
WHEN IS POLICY LOAN INTEREST DUE AND PAYABLE?
Policy loan interest is due on the date of the second death , on a policy
adjustment, surrender, lapse, a policy loan transaction and on each policy
anniversary.
If you do not pay the interest on your loan in cash, your policy loan will be
increased by an additional policy loan in the amount of the unpaid interest. It
will then be charged the same rate of interest as your loan. Your actual cash
value will be reduced by the amount of the policy loan and unpaid policy loan
interest when it is due.
27
<PAGE>
HOW AND WHEN CAN YOU REPAY YOUR LOAN?
If your policy is in force, your loan can be repaid in part or in full at any
time before the second death. Your loan may also be repaid within 60 days
after the date of the second death if we have not paid any of the benefits
under this policy. Any loan repayment must be at least $100 unless the balance
due is less than $100.
HOW ARE LOAN REPAYMENTS ALLOCATED?
Loan repayments are allocated to the guaranteed principal account until all
loans from the guaranteed principal account have been repaid.
Thereafter, loan repayments are allocated to the guaranteed principal account or
the sub-accounts of the separate account as you direct.
In the absence of your instructions, loan repayments will be allocated to the
guaranteed principal account actual cash value and separate account actual cash
value in the same proportion that those values bear to each other and, as to the
actual cash value in the separate account, to each sub-account in the proportion
that the actual cash value in the sub-account bears to your actual cash value in
all of the sub-accounts.
Loan repayments reduce your loan account by the amount of the loan repayment.
WHAT IS THE RATE OF INTEREST CREDITED TO A POLICY AS A RESULT OF A POLICY LOAN?
Interest credits shall be at a rate which is not less than your policy loan
interest rate minus 2 percent per annum.
WHEN ARE INTEREST CREDITS ON A POLICY LOAN ALLOCATED TO YOUR ACTUAL CASH VALUE?
Policy loan interest credits are allocated to your actual cash value as of the
date of the second death , on a policy adjustment, surrender, lapse, a policy
loan transaction and on each policy anniversary.
HOW ARE POLICY LOAN INTEREST CREDITS ALLOCATED?
Policy loan interest credits are allocated to the guaranteed principal account
and separate account following your instructions to us. We will use your
instructions for the allocation of net premiums. In the absence of such
instructions, this amount will be allocated to the guaranteed principal account
actual cash value and separate account actual cash value in the same proportion
that those values bear to each other and, as to the actual cash value in the
separate account, to each sub-account in the proportion that the actual cash
value in such sub-account bears to your actual cash value in all of the sub-
accounts.
28
<PAGE>
WHAT HAPPENS IF YOU DO NOT REPAY YOUR LOAN?
If your policy has indebtedness, your policy will remain in force so long as it
has actual cash value. If it does not, your policy will lapse.
In this event, to keep your policy in force, you will have to make a loan
repayment. We will give you notice of our intent to terminate the policy and
the loan repayment required to keep it in force. The time for repayment will be
within 31 days after our mailing of the notice.
CAN YOU ARRANGE FOR AUTOMATIC PREMIUM LOANS TO KEEP YOUR POLICY IN FORCE?
Yes. If you asked for this option in your application, or if you write us and
ask for this option after your policy has been issued, we will make automatic
premium loans. You can also write to us at any time and tell us you do not want
this option. If you have this option and you have not paid the premium that is
due before the end of the grace period, we will make a policy loan to pay the
premium. However, in order for this to occur, the amount available for a loan
must be enough to pay at least a quarterly premium. If the loan value is not
enough to pay at least a quarterly premium, your policy will lapse.
IS THERE A MINIMUM POLICY LOAN?
Yes. Any policy loan we pay in cash must be in an amount of at least $100. A
policy loan may be in a lesser amount if it is used to pay a premium under the
automatic premium loan provision.
ADDITIONAL INFORMATION
CAN YOU ASSIGN YOUR POLICY?
Yes. Your policy may be assigned. The assignment must be in writing and filed
with us at our home office. We assume no responsibility for the validity or
effect of any assignment of this policy or of any interest in it. Any proceeds
which become payable to the assignee will be payable in a single sum. Any claim
made by an assignee will be subject to proof of the assignee's interest and the
extent of that interest.
WHAT IF THE DATE OF BIRTH OF EITHER INSURED IS MISSTATED?
If the date of birth of either insured has been misstated, the amount of
proceeds will be adjusted to reflect the cost of insurance charges based upon
the correct date of birth.
WHEN DOES YOUR POLICY BECOME INCONTESTABLE?
After this policy has been in force during the lifetimes of both insureds for
two years from the original policy date, we cannot contest this policy, except
for fraud or the nonpayment of premiums. However, if there has been a face
amount increase or a reinstatement for which we required evidence of
insurability, that increase will be contestable for two years, during the
lifetimes of both insureds, from the effective date of the increase or the
reinstatement.
29
<PAGE>
IS THERE A SUICIDE EXCLUSION?
Yes. If either insured, whether sane or insane, dies by suicide, within two
years of the original policy date, our liability will be limited to an amount
equal to the premiums paid for this policy. If there has been a face amount
increase for which we required evidence of insurability, and if either insured
dies by suicide within two years from the effective date of the increase, our
liability with respect to that increase will be limited to an amount equal to
the premiums paid for such increase.
POLICY EXCHANGE OPTION
CAN YOU EXCHANGE THIS POLICY FOR TWO SEPARATE POLICIES?
Yes. As long as both insureds are alive, you may ask to exchange this policy for
two individual policies, insuring each of the insureds separately.
WILL EVIDENCE OF INSURABILITY BE REQUIRED?
Yes. We will ask you for evidence of insurability, satisfactory to us, on the
lives of both insureds, before we will permit a policy exchange.
WHAT POLICY FORM WILL BE AVAILABLE?
The new policies will be issued on the variable or fixed policy form we are
using on the date of exchange.
WHAT WILL BE THE DEATH BENEFIT OF THE NEW POLICIES?
The death benefit of each of the two new policies will be 50% of the death
benefit of this policy.
WHAT VALUES WILL THE NEW POLICIES HAVE?
The cash value, loan, and dividends of each new policy will be one-half of the
cash value, loan, of this policy.
WHAT WILL BE THE PREMIUM RATE FOR THE NEW POLICIES?
Premiums will be based on the age, gender and class of each insured on the date
of exchange.
WHEN WILL THE EXCHANGE BE EFFECTIVE?
The exchange will be effective when all premiums for the new policies are paid
while both insureds are still living.
30
<PAGE>
WHAT WILL BE THE POLICY DATE OF THE NEW POLICIES?
The policy date of the new policies will be the date of the exchange.
31
<PAGE>
VARIABLE ADJUSTABLE LIFE SECOND DEATH POLICY
Variable Benefits.
Premiums as stated on the Policy Information Page.
Face Amount and Premium may be adjusted by the owner.
Participating
You are a member of The Minnesota Mutual Life Insurance Company. Our annual
meetings are held in our home office on the first Tuesday in March of each year
at three o'clock in the afternoon.
Minnesota Mutual
<PAGE>
Exhibit 99-A(5)(b)
WAIVER OF PREMIUM AGREEMENT
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement provides for the waiver of premiums on this policy if the covered
insured shown on page 1 becomes totally and permanently disabled. This means
that you will not be required to pay any premium that falls due during the
period of total and permanent disability. To qualify for this benefit, you must
give us timely notice of the covered insured's disability. You must also
furnish evidence satisfactory to us that the total disability:
(1) commenced while this policy and agreement were in force; and
(2) commenced after the policy anniversary nearest the covered insured's age 5
but before the policy anniversary nearest the covered insured's age 60; and
(3) was continuous for six months or more; and
(4) did not result directly from any act of war.
WHAT IS "TOTAL" DISABILITY?
Total disability is a disability resulting from an accidental injury or a
disease that requires the care of a licensed physician and continuously prevents
the covered insured from engaging in an occupation. During the first 24 months
of total disability, "occupation" means the covered insured's regular
occupation. After 24 months, it means any occupation for which the covered
insured is reasonably fitted by education, training or experience.
Also, the covered insured's total and irrecoverable loss of:
(1) the sight of both eyes, or
(2) the use of both hands, or
(3) the use of both feet, or
(4) the use of one hand and one foot, or
(5) hearing or speech
will be considered total disability even if the covered insured engages in an
occupation.
WHAT IS "PERMANENT" DISABILITY?
Total disability will be considered permanent only after it has existed
continuously for at least six months.
95-917 Waiver of Premium Agreement Minnesota Mutual 1
<PAGE>
ON WHAT BASIS WILL PREMIUMS BE WAIVED OR REFUNDED?
We will waive or refund premiums according to the frequency of premium payment
that was in effect on this policy on the date the total disability commenced.
We will refund all scheduled premiums paid from the date total disability
commenced to the date the claim is approved. We will not refund any
nonrepeating premiums. After the claim is approved, we will waive premiums
under this agreement as if your policy were on a plan with premiums payable to
the younger insured's age 100 and no scheduled decrease in the face amount. If
your policy is not on this plan, we will automatically increase or decrease your
annual premium so that your policy is on this plan. In that event, we will
issue a new page 1 which will be subject to the Policy Adjustments provision of
your policy. In addition, we will waive the premium for any additional benefit
agreement that is attached to your policy.
WHAT IF THE COVERED INSURED RECOVERS FROM THE DISABILITY?
We will no longer waive any premiums on this policy due after the covered
insured recovers. In addition, we will, upon your request, restore your policy
to the premium level that was in effect before the disability commenced, subject
to the Policy Adjustments provision of your policy.
ARE THERE ANY LIMITATIONS?
No premium will be waived or refunded if the total disability results directly
from an act of war while the covered insured is serving in the military, naval
or air forces of any country at war, declared or undeclared.
WHEN MUST WE BE NOTIFIED?
We must receive written notice of total disability at our home office:
(1) while the covered insured is living and totally disabled, and
(2) not later than one year after the termination of this agreement, and
(3) within one year after the due date of the premium that you request us to
waive or refund.
However, the failure to give this notice within the time provided will not
invalidate the claim if it is shown that notice was given as soon as reasonably
possible.
WHAT IS THE COST?
The annual premium for this agreement is shown on page 1 of this policy. If
this agreement terminates, the total annual premium for this policy will be
reduced by the amount shown.
95-917 Waiver of Premium Agreement Minnesota Mutual 2
<PAGE>
WHAT PROOF WILL BE REQUIRED?
You must furnish proof satisfactory to us that the covered insured is totally
and permanently disabled as defined in this agreement before any premiums will
be waived or refunded. We will from time to time also require additional proof
satisfactory to us of the continuation of total and permanent disability. We
may also require the covered insured to submit to one or more physical
examinations at our expense. However, we will not require a physical
examination more frequently than once a year if the total disability has
continued for two years.
WHAT IF THIS POLICY LAPSES?
If this policy is lapsed for nonpayment of premium before notice of total
disability is received at our home office, premiums will be waived or refunded
only if the notice is received within one year after the due date of the first
unpaid premium. Also, the total disability must have commenced prior to the due
date of the unpaid premium or during the grace period allowed for the payment of
that premium.
WHEN IS THIS AGREEMENT INCONTESTABLE?
This agreement is subject to the incontestability provision in this policy.
However, the contestable period for this agreement will be measured from the
effective date of this agreement.
WILL THIS AGREEMENT INCREASE YOUR POLICY VALUES OR POLICY DIVIDENDS?
No. This agreement will not increase the policy values of this policy nor will
it increase policy dividends.
WHEN WILL THIS AGREEMENT TERMINATE?
This agreement will terminate on:
(1) the date any premium due for this policy remains unpaid at the end of the
grace period; or
(2) the date the policy becomes paid-up; or
(3) the date this policy is continued as extended term insurance; or
(4) the date this policy is surrendered or terminated; or
(5) the date we receive your written request to cancel this agreement; or
(6) the date when the covered insured dies; or
(7) the policy anniversary nearest the covered insured's 60th birthday.
95-917 Waiver of Premium Agreement Minnesota Mutual 3
<PAGE>
This agreement is effective as of the original policy date of this policy unless
a different effective date is shown here.
President
Secretary
95-917 Waiver of Premium Agreement Minnesota Mutual 4
<PAGE>
Exhibit 99-A(5)(c)
ESTATE PRESERVATION AGREEMENT
This agreement is a part of the policy to which it is attached; it is subject to
all the terms and conditions of the policy.
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement gives you the right to purchase four-year level term insurance,
without evidence of insurability, at the death of the designated insured. This
insurance is payable at the second death.
WHO ARE THE DESIGNATED INSURED AND THE OTHER INSURED?
The designated insured and the other insured are named on page 1. Neither the
designated insured nor the other insured may be changed.
WHAT WILL BE THE MAXIMUM AMOUNT OF THE ADDITIONAL TERM INSURANCE?
The maximum amount of the additional term insurance which you may purchase is
shown on page 1.
WHEN MAY THIS RIGHT BE EXERCISED?
At the death of the designated insured, you may exercise the right to purchase
additional term insurance, within ninety days immediately following the death of
the designated insured. This period ends at the earlier of 90 days after the
death of the designated insured and the date the additional term insurance is
purchased, and is called the Option Period.
HOW DO YOU EXERCISE THIS RIGHT?
You must notify us in writing that you are exercising the right to purchase
additional term insurance. You must also provide us with:
(1) proof satisfactory to us of the death of the designated insured; and
(2) the amount of additional term insurance you wish to purchase; and
(3) the increased premium due for this agreement.
WHEN WILL THE ADDITIONAL TERM INSURANCE BE EFFECTIVE?
If you exercise the right to purchase additional term insurance, that insurance
will be effective at the beginning of the Option Period. The additional term
insurance will remain in effect for four years from the policy anniversary next
following the death of the designated insured.
95-943 Estate Preservation Agreement Minnesota Mutual 1
<PAGE>
WHEN WILL THE ADDITIONAL TERM INSURANCE BE PAYABLE?
We will pay the additional term insurance at the second death, to the
beneficiary of this policy.
CAN YOU RENEW OR CONVERT THE ADDITIONAL TERM INSURANCE PROVIDED BY THIS
AGREEMENT?
No. The additional term insurance provided by this agreement may not be renewed
or converted.
WHAT WILL THE PREMIUM BE FOR THIS AGREEMENT?
The annual premium for this agreement is shown on page 1. If this agreement
terminates, the total annual premium for this policy will be reduced by the
amount shown for this agreement. If you exercise the right to purchase
additional term insurance, we will reissue the policy and send you a new page 1.
The reissued policy will have an increased premium for the term insurance
purchased under this agreement, which will be based on the age of the other
insured of this policy at the time of the exercise and the same premium class
applicable to the other insured at the time this policy was issued.
WHAT IF THE SECOND DEATH OCCURS WITHIN THE OPTION PERIOD?
If the second death occurs within the Option Period, but not simultaneously with
the death of the designated insured, we will pay the maximum amount of
additional term insurance shown on page 1 to the beneficiary of this policy.
WILL WE PAY THE ADDITIONAL TERM INSURANCE IF THE SECOND DEATH AND THE DEATH OF
THE DESIGNATED INSURED OCCUR SIMULTANEOUSLY?
No. If the second death and the death of the designated insured occur
simultaneously or under circumstances which make it impossible to determine the
order of their deaths, we will not pay the additional term insurance under this
agreement.
ARE THIS AGREEMENT AND THE ADDITIONAL TERM INSURANCE SUBJECT TO THE
INCONTESTABILITY AND SUICIDE PROVISIONS OF THE POLICY?
Yes. Those provisions apply. The contestable and suicide periods will be
measured from the date of this agreement.
WHEN WILL THIS AGREEMENT TERMINATE?
This agreement will terminate on the earliest of:
(1) the date any premium due for this policy remains unpaid at the end of the
grace period; or
(2) the date this policy is surrendered or terminates; or
(3) the date this policy is continued as extended term insurance; or
95-943 Estate Preservation Agreement Minnesota Mutual 2
<PAGE>
(4) the date we receive your written request to cancel this agreement; or
(5) the end of the Option Period, if you do not exercise your right to purchase
additional term insurance within the Option Period; or
(6) four years after the policy anniversary next following the death of the
designated insured, if you exercise your right to purchase additional term
insurance within the Option Period; or
(7) the termination date for this agreement shown on page 1; or
(8) the date of the death of the other insured.
This agreement is effective as of the policy date of this policy.
President
Secretary
95-943 Estate Preservation Agreement Minnesota Mutual 3
<PAGE>
Exhibit 99-A(5)(d)
SINGLE LIFE TERM INSURANCE AGREEMENT
This agreement is a part of the policy to which it is attached; it is subject to
all its terms and conditions.
WHAT DOES THIS AGREEMENT PROVIDE?
This agreement provides level one-year term insurance on the life of the person
insured under this agreement and named on page 1.
WHAT IS THE AMOUNT OF THE INSURANCE?
The amount of insurance is the face amount shown on page 1.
WHAT IS THE PREMIUM FOR THIS AGREEMENT?
The annual premiums for this policy are shown on page 1. The premiums for this
agreement will increase each year as described by the schedule on page 1. If
this agreement terminates, the total annual premium for this policy will be
reduced by the premium for this agreement.
There are two tables of premiums for this agreement. The first table shows
premiums based on our experience at the time this agreement was issued. As long
as our experience on insurance of this type remains the same, these are the
premiums we will bill you. If our experience changes, the premiums we bill you
may be higher or lower. However, we will never bill you for a premium higher
than those shown in the second table. Those premiums are called guaranteed
premiums.
WHEN AND TO WHOM WILL WE PAY THE DEATH BENEFIT FOR THIS AGREEMENT?
We will pay the death benefit for this agreement if we receive proof
satisfactory to us that the insured died while this agreement is in effect. We
will pay the death benefit to the beneficiary designated for this agreement, if
living at the time of the insured's death. If the designated beneficiary is not
living, the proceeds will be paid to you, if living, or to your estate.
CAN THIS AGREEMENT BE RENEWED?
Yes. You may renew this agreement for additional one-year term periods,
provided;
(1) the insured's age on the date of renewal is not greater than age 94; and
(2) we receive payment in our home office of the amount shown in the table of
Renewal Premiums on page 1 for the date of renewal. We must receive the
renewal premium in our home office within 31 days from the date the
insurance provided by this agreement terminates.
95-944 Single Life Term Insurance Agreement Minnesota Mutual 1
<PAGE>
CAN YOU CONVERT THE TERM INSURANCE PROVIDED BY THIS AGREEMENT?
The term insurance provided by this agreement may be converted to a new policy.
As long as the insured's age is not greater than age 65, and as long as we are
not waiving premiums for this policy under a Waiver of Premium Agreement, you
may convert this insurance at any time.
We will require evidence of insurability on the insured satisfactory to us only
if the new policy is to contain an additional benefit agreement.
The new policy must be a Whole Life policy on the policy form we are then
issuing and must be within the issue and amount limits for that policy form.
The face amount of the new policy cannot exceed the amount of the insurance
provided by this agreement as shown on page 1 of this policy. The new policy
will be issued as of the date of the termination of this agreement and will be
on a form and at a premium rate then used for the insured's age on that date.
If this policy contains a Waiver of Premium Agreement, a Waiver of Premium
Agreement on a form we are then issuing may be included in the new policy
without evidence of insurability. The new policy will not cover any disability
commencing before the date of conversion.
Application for the new policy and payment of the first premium must be received
at our home office within 31 days after the insurance provided by this agreement
terminates.
IS THIS AGREEMENT SUBJECT TO THE INCONTESTABILITY AND SUICIDE PROVISION OF THE
POLICY?
Yes. Those provisions apply to this agreement. The contestable and suicide
periods will be measured from the effective date of this agreement.
WILL THIS AGREEMENT INCREASE YOUR POLICY VALUES?
This agreement will not increase the policy values of this policy.
WHEN WILL THIS AGREEMENT TERMINATE?
This agreement will terminate on the earliest of:
(1) the date any premium due for this policy remains unpaid at the end of the
grace period; or
(2) the date this policy is surrendered or terminates; or
(3) the date this policy is continued as extended term insurance; or
(4) the date when this agreement can no longer be renewed; or
(5) the date all or a portion of the insurance provided by this agreement is
converted to a new policy; or
(6) the date we receive your written request to cancel this agreement, or
95-944 Single Life Term Insurance Agreement Minnesota Mutual 2
<PAGE>
(7) the policy anniversary nearest the insured's 95th birthday.
This agreement is effective as of the original policy date unless a different
effective date is shown here.
President
Secretary
95-944 Single Life Term Insurance Agreement Minnesota Mutual 3
<PAGE>
Exhibit 99-A(5)(e)
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MINNESOTA MUTUAL SHORT TERM AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT DATE APPLICABLE COVERAGE SHORT TERM PREMIUM
Entire Policy
- --------------------------------------------------------------------------------
GENERAL
In consideration of the payment of the Short Term Premium shown above, the
Company hereby agrees to pay the death benefit provided by this agreement upon
receipt of due proof that an Insured Person has died while this agreement is in
effect.
APPLICABLE COVERAGE
This short term agreement provides temporary protection preceding another
coverage which shall be known as the Applicable Coverage. If the Applicable
Coverage is a policy, it shall be identified by the words "Entire Policy" in the
space above. If the Applicable Coverage is an agreement being added to a policy
already in force, it shall be identified by its form number in the space above.
INSURED PERSON
An Insured Person shall be that person or those persons to be insured under the
Applicable Coverage.
SHORT TERM PERIOD
This agreement shall take effect at the same time and subject to the same
conditions as those stated in the application for the Applicable Coverage,
provided that wherever the words "first premium" appear therein, the words
"Short Term Premium" are substituted. This agreement shall terminate on the day
preceding the date of issue of the Applicable Coverage. However, a grace period
of 31 days will be allowed for payment of the first regular premium required
under the Applicable Coverage. This agreement shall continue in force during
the grace period. If death occurs during the grace period, the unpaid premium
shall be deducted from the amount otherwise payable.
DEATH BENEFIT
This agreement applies to the life coverage on the lives of all Insured Persons.
The death benefit provided by this agreement shall be those benefits which would
have been payable under the Applicable Coverage had death taken place on its
date of issue, except that if an infant Insured dies before attaining the age of
32 days, the amount shall be reduced to one-fourth the amount otherwise payable.
DISABILITY
Any total and permanent disability benefits provided under the Applicable
Coverage shall be included under this agreement.
CONTESTABLE AND SUICIDE PERIODS
The contestable and suicide periods for the Applicable Coverage shall be
measured from the date of this agreement.
This agreement is not in force unless countersigned by a Registrar.
/s/ John A. Clymer
President
/s/ Robert J. Hasling
Secretary
Registrar
F.E324.1 3-65
<PAGE>
Exhibit 99-A(10)(a)
<TABLE>
<CAPTION>
<S> <C>
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MINNESOTA MUTUAL APPLICATION PART 1
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The Minnesota Mutual Life Insurance Company - Individual Policy Issues - 400 Robert Street North - St. Paul, Minnesota 55101-2098
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ALL APPLICATIONS
PERSONAL INFORMATION
Proposed Insured's Name (Last, First, Middle Initial) Date of Birth (Mo., Day, Yr.)
/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / // / /-/ / /-/ / /
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/ / Check if new address and you
Street address or RFD route want our records to reflect this.
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City or Town County State Zip Code
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Sex / / M / / F Social Security Number Birthplace (State or Country)
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Driver's License Number Indicate here for special dating
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Employer's name
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/ / Check box if mail to be
Business address sent to business address
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City or Town County State Zip Code
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LIFE INSURANCE
Occupational title Years in occupation Income $
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BASE POLICY INFORMATION
Basic Face amount $ Product Total annual premium or plan
- -----------------------------------------------------------------------------------------------------------------------------------
PREMIUMS PAYABLE: / / Automatic Payment Plan PREMIUMS PAID BY:
/ / Annual / / Direct Monthly / / Proposed Insured
/ / Semi-annual / / List Bill #_______ / / Employer
/ / Quarterly / / Payroll Deduction #_______ / / Other (indicate name and address in
Additional Remarks, pg. 6.)
NON-REPEATING PREMIUM
Amount?_______________________ Include at issue?_________________________________________
($500.00 Minimum required)
If billable: Amount_____________________________ Frequency____________________________
($200.00 Minimum per billing with a $2,400.00 minimum annual base premium.)
ADDITIONAL BENEFITS AND AGREEMENTS
/ / Additional Insured Agreement (Complete F.41056)................................$________________
/ / Family Term - Children's Agreement (Complete F.41056)..........................$________________
/ / Accidental Death Benefit.......................................................$________________
/ / Face Amount Increase Agreement.................................................$________________
/ / Additional Term Protection (Automatically includes FX Dividend option).........$________________
/ / Policy Enhancement Rider (if available) ________% (Indicate a whole number between three & ten percent)
/ / Automatic Premium Loan (if available)
/ / Guaranteed Protection Waiver (if available)
/ / Waiver of Premium Agreement (if available)
/ / Accelerated Benefits Agreement (Complete Outline of Coverage F.44244)
/ / Omit COL (if available)
/ / Adjustable Survivorship, Life $_________________ Designated Insured_______________________________________________
Automatic Election Option: / / Yes / / No
/ / Other_____________________________________________________________________________________________________________
F.3198 Rev. 3-91 R 8-95
<PAGE>
DIVIDEND INFORMATION
Dividend Option____________________________________________________
Unless otherwise requested, dividends will be used to purchase: paid-up additions on permanent plans, policy or plan improvement
on Adjustable Life, and accumulations on term plans.
REPLACEMENT
Will you systematically borrow, lapse, replace or surrender any existing life insurance or annuity? / / Yes / / No
If yes, please indicate which coverage will be replaced in the box and submit replacement forms where required.
LIFE INSURANCE IN FORCE AND PENDING. LIFE INSURANCE ON PROPOSED INSURED: (IF NONE, INSERT "NONE").
- ----------------------------------------------------------------------------------------------------------------------------
YEAR POLICY BUSINESS/ PENDING? WILL IT BE
ISSUED AMOUNT TYPE OF COVERAGE FULL COMPANY NAME NUMBER PERSONAL YES NO REPLACED?
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- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
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BENEFICIARIES
BENEFICIARIES: Beneficiaries may be labeled class 1, 2 or 3; the class determines the order in which death proceeds should be
paid. If there is more than one surviving Beneficiary in the same class, they will share benefits equally, unless we are told
otherwise. The Owner may change any Beneficiary unless designated "Irrevocable" below. All of this is subject to the complete
Beneficiary provisions in the policy. If the Beneficiary is a Trust, please indicate the date it was established and give its
complete name.
- -----------------------------------------------------------------------------------------------------------------------------
PRINT GIVEN NAME, MIDDLE INITIAL AND SURNAME (IF CORPORATE RELATIONSHIP TO
CLASS BENEFICIARY, GIVE FULL NAME AND STATE OF INCORPORATION) INSURED
- -----------------------------------------------------------------------------------------------------------------------------
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ADDITIONAL REMARKS FOR POLICY ISSUES OR UNDERWRITING:
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F.3198 Rev. 3-91 R 8-95
<PAGE>
DISABILITY AND OVERHEAD EXPENSE INSURANCE
POLICY TYPE AND INFORMATION
/ / Level Disability.
/ / Annual Renewable Disability Income (ARDI).
/ / Business Overhead Expense (be certain to itemize the Overhead Expenses in the Overhead Expense section.)
- ------------------------------------------------------------------------------------------------------------------------------
COVERAGE AMOUNT BENEFIT PERIOD WAITING PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
Base $
- ------------------------------------------------------------------------------------------------------------------------------
ADMIA $
- ------------------------------------------------------------------------------------------------------------------------------
ADMIA $
- ------------------------------------------------------------------------------------------------------------------------------
Supplementary Income Benefit $ / / to 180 days / / to 365 days
- ------------------------------------------------------------------------------------------------------------------------------
Social Security Agreement $ 365 days
- ------------------------------------------------------------------------------------------------------------------------------
Business Overhead Expense $ / / 15 months / / 25 months / / 30 / / 60 / / 90
- ------------------------------------------------------------------------------------------------------------------------------
PLAN OF COVERAGE: (COMPLETE ONE SECTION - A OR B)
A. / / Disability Income B. / / Disability Income
Insurance Policy Insurance Policy Plus
(all occupation classes) (class *P,1*,*S, 1 only)
OPTIONAL AGREEMENTS
/ / Inflation Protection Agreement: / / Future Income Protection Agreement:
/ / 4% / / 6% / / 8% $__________________________of aggregate monthly benefit
/ / OMIT Guaranteed Increase Agreement / / Transitional Disability Benefit Agreement (Overhead Expense only)
/ / Guaranteed Increase Agreement Plus / / Replacement Expense Agreement (Overhead Expense only)
OCCUPATION
A. Class / / *P / / 1* / / *S / / 1 / / 2 / / 3
Specialty_____________________________________
B. Occupational Title and/or professional designation_________________________________________________________________________
Nature of business_________________________________________________________________________________________________________
C. Occupational Details (Provide description of daily job activities and percentage of time spent on each):
- ------------------------------------------------------------------------------------------------------------------------------
DUTIES % DUTIES %
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
D. How many years have you been employed by your current employer?____________________________________________________________
E. How many full-time employees report to you?________________________________________________________________________________
F. Do you have any part-time or other full-time jobs? If yes, provide details in Additional Remarks, page 6. / / Yes / / No
PREVIOUS EMPLOYMENT
Please list your other jobs within the past five years.
- ------------------------------------------------------------------------------------------------------------------------------
EMPLOYER DATES EMPLOYED
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
F.3198 Rev. 3-91 R 8-95
<PAGE>
INCOME - Fill in amounts that are (or will be) shown on the Proposed Insured's individual and/or business income tax forms and
supporting schedules. NOTE: DO NOT LIST INCOME THAT IS NOT REPORTED TO THE IRS. Explain any significant fluctuations between
years in Remarks. Ask for third party income verification on all disability applications.
(Complete Sections A - G)
CURRENT YEAR LAST CALENDAR TWO CALENDAR
A. EARNED INCOME (FILL IN ALL WHICH APPLY.) 19__ YEAR 19__ YEARS AGO 19__
1. NON-OWNER EMPLOYEE'S SALARY, BONUS, AND PROFIT
SHARING (Form W-2). --------------- ------------------ ------------------
2. a. OWNER OF REGULAR OR S CORPORATION'S SALARY
AND BONUS (Form W-2). --------------- ------------------ ------------------
b. OWNER'S SHARE OF AFTER TAX CORPORATE PROFITS
OR LOSSES (AFTER EXPENSES) provided the Proposed Insured
has significant ownership and is active in the corporation
(Form 1120 or 1120S). If losses, indicate with parentheses. --------------- ------------------- -----------------
c. PENSION PLAN OR OTHER CONTRIBUTIONS THAT
WOULD CEASE IF THE PROPOSED INSURED BECAME DISABLED. --------------- ------------------- -----------------
3. SOLE PROPRIETOR NET INCOME, AFTER EXPENSES (Form
1040 Schedule C). --------------- ------------------- -----------------
4. SHARE OF PARTNERSHIP NET INCOME, AFTER EXPENSES
(Proposed Insured's Schedule K-1 of Form 1040 Schedule E.) --------------- ------------------- -----------------
5. OTHER EARNED INCOME (describe in Remarks) --------------- ------------------- -----------------
TOTAL EARNED INCOME --------------- ------------------- -----------------
B. UNEARNED INCOME - This includes capital gains,
interest, dividends, tax exempt unearned income, income
from other investments, net rental income, pensions,
annuities, and alimony. ITEMIZE IN REMARKS IF
EXCEEDING 15% OF EARNED INCOME OR $125,000. -------------- ------------------- ----------------
C. NET WORTH - Is the Proposed Insured's net worth, exclusive of primary residence, greater
than $4,000,000? / / Yes / / No
If yes, itemize the Net Worth in the Remarks.
D. Premiums will be paid by: / / Proposed Insured
/ / Employer - Will any portion of the premium be included in your
taxable income? / / Yes / / No
If yes, provide details in Remarks.
/ / Other (Indicate name and address in Remarks)
(NOTE: Individual paid Issue and Participation limits should be used for those Proposed Insureds who are owners in a Sole
Proprietorship, Partnership, or S Corporation. Employer paid Issue and Participation Limits can be used for Owners of a Regular
Corporation when the Corporation is paying the premium and for Non-Owner Employees when the employer is paying the premium.)
E. Is the Proposed Insured self-employed, including any partial ownership? / / Yes / / No
(If yes, answer questions F and G.)
F. For tax purposes the Proposed Insured's business is set up as a/an:
/ / Sole Proprietorship / / Partnership / / Regular Corporation / / S Corporation
G. What is the Proposed Insured's ownership? ______%
REMARKS:
F.3198 Rev. 3-91 R 8-95
<PAGE>
REPLACEMENT
A. Will you drop any existing disability, overhead expense, or any other accident
and sickness insurance when this policy is issued? / / Yes / / No
B. If yes, I agree upon accepting this policy to drop the coverage indicated below. NOTE: Please submit replacement forms where
required.
DISABILITY AND OVERHEAD EXPENSE IN FORCE OR PENDING (IF NONE, INSERT "NONE"). List Disability with all Companies including Group,
Pension or Retirement Plans, Salary Continuation Plans, Association Plans, Credit Insurance Plans, Overhead Expense Plans, and
any other Disability or Health Coverage. Also include coverage for which the Proposed Insured will become eligible in the next
five years after a qualifying period of employment has been met.
- ----------------------------------------------------------------------------------------------------------------------------------
PAID TO POLICY BENEFIT ELIMINATION PENDING? WILL IT BE
DATE AMOUNT TYPE COMPANY NUMBER PERIOD PERIOD YES NO REPLACED?
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS: DIVIDENDS PAID IN CASH UNLESS OTHERWISE REQUESTED BELOW.
/ / Reduce (not available on Automatic Payment Plan) / / Accumulate
PREMIUM PAYABLE: / / Automatic Payment Plan DISCOUNTS (Choose one selection from A):
/ / Annual / / Direct Monthly A. / / Association Discount #______________________________
/ / Semi-annual / / List Bill #________ / / Employer/Employee Discount #_________(Include F.37443)
/ / Quarterly / / Payroll Deduction #_______ / / Professional Group Discount__________________________
B. / / Income Documentation Discount (Complete page 4 and submit
appropriate income documentation)
OVERHEAD EXPENSES: (COMPLETE FOR BUSINESS OVERHEAD EXPENSE.)
A. Are your expenses shared with anyone else? / / Yes / / No
B. If yes, what is your percentage share of the total business expense? _______%
C. List YOUR SHARE of the current average monthly expenses:
Rent or mortgage payment $__________________________ Accounting, billing, and
collection services $___________________
Property Taxes $__________________________ Professional and trade dues
and subscriptions $___________________
Utilities $__________________________ *Employee life, disability and
health insurance premiums $____________________
Laundry, security, janitorial and
maintenance services $__________________________ *Payroll taxes for employees $____________________
Equipment and furniture *Employee wages and
leasing costs or installment salaries $____________________
payments $__________________________ Replacement expense $____________________
(Salary paid to the
Malpractice, liability, and/or replacement person minus the
property insurance premiums $__________________________ gross business income earned
by that replacement. For
Replacement Expense
Agreement only.)
Itemization of other eligible overhead expenses (give description and amount of the expense):
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
*DO NOT INCLUDE amounts for you or for any other member of your profession working for or with you.
I understand and agree that the policy applied for covers only actual incurred expenses (as described in the policy).
F.3198 Rev. 3-91 R 8-95
<PAGE>
ALL APPLICATIONS
SPECIAL ACTIVITIES AND OTHER INSURANCE ACITIVITY: (PROVIDE DETAILS IN ADDITIONAL REMARKS.)
A. Do you plan to change jobs, travel or reside outside of the U.S.A.? / / Yes / / No
B. Have you, within the last five years, or do you plan in the next six months, to pilot a
plane? (If yes, complete Aviation Statement F. 4883.) / / Yes / / No
C. Have you, within the last five years, or do you plan in the next six months, to
engage in sky diving, organized vehicle racing, mountain climbing, hang gliding, or
underwater diving? (If yes, complete Avocation Statement F. 11393.) / / Yes / / No
D. Have you, within the last five years, been declined, modified, rated or been issued
with a rider for life or disability insurance? / / Yes / / No
E. Within the last year, have you missed any work due to illness or injury? / / Yes / / No
F. Are you in the Armed Forces, National Guard, or Reserves? (If yes, complete
Military Statement F. 4883.) / / Yes / / No
DRIVING AND CONVICTION HISTORY: (PROVIDE DETAILS IN ADDITIONAL REMARKS.)
A. In the last five years, have you been charged with a driving while intoxicated
violation, had your driver's license restricted or revoked, or been cited with a
moving violation? / / Yes / / No
B. Except for traffic violations, have you ever been convicted? / / Yes / / No
PREPAYMENT
A. Have you paid money to the agent, or has the Payroll Deduction Authorization or
Government Allotment been completed? / / Yes / / No
NOTE: MONEY SHOULD NOT be taken by the agent if there is a history of heart disease,
stroke, cancer, or diabetes or if the Proposed Insured has been rated or declined for
insurance in the past. CHECKS OR MONEY ORDERS COLLECTED FOR VARIABLE ADJUSTABLE LIFE
MUST BE ISSUED BY THE CLIENT, MADE PAYABLE TO MINNESOTA MUTUAL, AND SENT DIRECTLY TO
THE HOME OFFICE.
Amount paid for: Life Insurance $____________ Disability or Overhead Expense Insurance $_____________
B. Have you received a receipt? / / Yes / / No
ADDITIONAL REMARKS:
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OWNER
The Proposed Insured will be the Owner of any policy issued on this application, unless requested otherwise below. The
Owner has every benefit, right or privilege given the Insured by policy terms. Policy transactions between Minnesota
Mutual and the Owner do not require the Insured's notice or consent.
Name (If a Corporation, give the state in which it is incorporated) ___________________________________________________
Tax I.D. Number or
Relationship to Proposed Insured _____________________________________________ Social Security Number _________________
Owner's address Street or RFD Route ___________________________________________________________________________________
City _________________________________________________________ State _____________ Zip Code ___________
FOR HOME OFFICE USE ONLY
Home Office Corrections or Additions - Acceptance of the policy shall ratify changes entered here by Minnesota Mutual.
Not to be used in CA (for Disability only), IA, IL, KS, KY, MD, MI, MN, MO, NH, NJ, OR, PA, TX, WI, or WV for change in
age, amount, classification, plan or benefits unless agreed to in writing.
F.3198 Rev. 3-91 R 8-95
</TABLE>
<PAGE>
Exhibit 99-A(10)(b)
<TABLE>
<S><C>
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MINNESOTA MUTUAL SUPPLEMENT TO APPLICATION PART 1
VARIABLE ADJUSTABLE LIFE SECOND DEATH
- ---------------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - Individual Policy Issues - 400 Robert Street North - St. Paul, Minnesota 55101-2098
- ---------------------------------------------------------------------------------------------------------------------------------
TO BE COMPLETED ONLY IF APPLYING FOR ADDITIONAL BENEFITS AND AGREEMENTS.
Supplement to the Application Part 1 dated:
----------------------------
First Insured's Name (Last, First, Middle Initial) Date of Birth (Mo., Day, Yr.)
-- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Second Insured's Name (Last, First, Middle Initial) Date of Birth (Mo., Day, Yr.)
-- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL BENEFITS AND AGREEMENTS
/ / Estate Preservation Agreement
Designated Life...................................................................................
-----------------------
Face Amount (cannot exceed 122% of base amount).......................................................$
------------------
/ / Waiver of Premium Agreement (available on either insured or both)....................../ / First Insured / / Second Insured
/ / Single Life Term Insurance Agreement (available on either insured or both)............./ / First Insured / / Second Insured
Face Amount for First Insured.........................................................................$
------------------
Face Amount for Second Insured........................................................................$
------------------
SINGLE LIFE TERM INSURANCE AGREEMENT BENEFICIARY
Beneficiaries: Beneficiaries may be labeled Class 1, 2 or 3; the class determines the order in which death proceeds should be
paid. If there is more than one surviving Beneficiary in the same class, they will share benefits equally, unless we are told
otherwise. The Owner may change any Beneficiary unless designated "Irrevocable" below. All of this is subject to the complete
Beneficiary provisions in the policy. If the Beneficiary is a Trust, please indicate the date it was established and give its
complete name.
Beneficiary for first insured
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS PRINT GIVEN NAME, MIDDLE INITIAL AND SURNAME (IF CORPORATE RELATIONSHIP TO
BENEFICIARY, GIVE FULL NAME AND STATE OF INCORPORATION.) INSURED
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Beneficiary for second insured
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS PRINT GIVEN NAME, MIDDLE INITIAL AND SURNAME (IF CORPORATE RELATIONSHIP TO
BENEFICIARY, GIVE FULL NAME AND STATE OF INCORPORATION.) INSURED
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Correspondence should be sent to (may be different than premium payor.)
-------------------------------------------------
(Name of joint owner to receive correspondence.)
Additional information may be provided in the additional remarks section of the Application Part 1 (page 2) or in a cover memo.
F 43186V 7-95
</TABLE>
<PAGE>
Exhibit 99-A(10)(c)
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
MINNESOTA MUTUAL APPLICATION PART 3
AGREEMENTS, CERTIFICATION AND AUTHORIZATION
- ---------------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - 400 Robert Street North - St. Paul, Minnesota 55101-2098
- ---------------------------------------------------------------------------------------------------------------------------------
Proposed Insured's Name (Last, First, Middle Initial)
- ---------------------------------------------------------------------------------------------------------------------------------
AGREEMENTS/CERTIFICATION: I have read, or had read to me the statements and answers recorded on Part 1 and Part 2 of my
application. They are given to obtain this insurance and are, to the best of my knowledge and belief, true and complete and
correctly recorded. I understand that any false statement or misrepresentation on this application may result in loss of coverage
under this policy subject to the Time Limit on Certain Defenses, incontestability provision, and legal proceedings. I agree that
they will become part of this application and any policy issued on it. The insurance applied for will not take effect unless the
policy is issued and delivered and the full first premium is paid while the health of the Proposed Insured remains as stated in
Part 1 and Part 2 of the application. IF SUCH CONDITIONS ARE MET THE INSURANCE WILL TAKE EFFECT AS OF THE POLICY DATE SPECIFIED
IN THE POLICY; THE ONLY EXCEPTION TO THIS IS PROVIDED IN THE RECEIPT AND TEMPORARY LIFE INSURANCE AGREEMENT, AND THE CONDITIONAL
HEALTH RECEIPT, ISSUED IF THE PREMIUM IS PAID IN ADVANCE. No deposit has been made nor any premium paid on the policy applied for,
either in cash or by extension of credit, except as stated on this application.
VARIABLE ADJUSTABLE LIFE: I also agree that if this application is for a Variable Adjustable Life policy, that Minnesota
Mutual, if it is unable for any reason to collect funds for units which have been allocated to a sub-account under the policy
applied for, may redeem for itself the full value of such units. If such units are no longer available, it may recover that
value from any other units of equal value available under the policy.
I UNDERSTAND THAT THE AMOUNT OR THE DURATION OF THE DEATH BENEFIT (OR BOTH) OF THE POLICY APPLIED FOR MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT RESULTS OF THE SUB-ACCOUNTS OF THE SEPARATE ACCOUNT. I UNDERSTAND THAT THE ACTUAL CASH VALUE OF THE
POLICY APPLIED FOR INCREASES AND DECREASES DEPENDING ON INVESTMENT RESULTS. THERE IS NO MINIMUM ACTUAL CASH VALUE FOR POLICY
VALUES INVESTED IN THESE SUB-ACCOUNTS.
AUTHORIZATION: I authorize any physician, medical practitioner, hospital, clinic or other health care provider, insurance or
reinsuring company, consumer reporting agency, the Medical Information Bureau, Inc. (MIB), or employer which has any records or
knowledge of the physical or mental health of me or my minor children, to give all such information and any other nonmedical
information relating to such persons to Minnesota Mutual or its reinsurers. This shall include ALL INFORMATION as to any
medical history, consultations, diagnoses, prognoses, prescriptions or treatments and tests, including information regarding
alcohol or drug abuse, sickle cell disease and AIDS or AIDS-related conditions. To facilitate rapid submission of such
information, I authorize all said sources, except MIB, to give such records or knowledge to any agency employed by Minnesota
Mutual to collect and transmit such information.
I understand this information is to be used for the purpose of determining eligibility for insurance and may be used for
determining eligibility for benefits. I understand this information may be made available to Underwriting, Claims and support
staff of Minnesota Mutual. I authorize Minnesota Mutual or its reinsurers to release any such information to reinsuring
companies, the MIB, or other persons or organizations performing business or legal services in connection with my application,
claim or as may be otherwise lawfully required or as I may further authorize.
I agree this authorization shall be valid for twenty-six months from the date it is signed.
I understand that I have the right to request and receive a copy of this authorization and that a photocopy of this
authorization shall be as valid as the original.
I acknowledge that I have been given the Minnesota Mutual Consumer Privacy Notice. (Notice Regarding Consumer Reports and
Notice Regarding Medical Information Bureau, Inc.)
Proposed Insured X______________________________________ Date signed ______________ City ______________ State ______________
Signature of Applicant (if other than Proposed Insured) D.O.B. of Applicant (if other
Give title if signed on behalf of a business X __________________________________________ than Proposed Insured)______________
Witness/Registered Representative (licensed resident agent) ____________________________________________________________________
Signature of Parent, Conservator or Guardian (on juvenile applications) X ______________________________________________________
F 42663 3-91 Reformat 6-95
</TABLE>
<PAGE>
Exhibit 99-A(10)(d)
<TABLE>
<S> <C>
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MINNESOTA MUTUAL POLICY CHANGE APPLICATION PART 1
UNDERWRITING REQUIRED
- ---------------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - Individual Policyowner Services - 400 Robert Street North - St. Paul, Minnesota
55101-2098
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ALL APPLICATIONS
PERSONAL INFORMATION
- ---------------------------------------------------------------------------------------------------------------------------------
POLICY NUMBER(S) INSURED'S BIRTHPLACE (State or Country)
- ---------------------------------------------------------------------------------------------------------------------------------
INSURED'S NAME INSURED'S SOCIAL SECURITY NUMBER
- ---------------------------------------------------------------------------------------------------------------------------------
INSURED'S OCCUPATION INSURED'S INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
OWNER'S NAME OWNER'S SOCIAL SECURITY/TAX I.D. NUMBER
- ---------------------------------------------------------------------------------------------------------------------------------
OWNER'S ADDRESS (Street, City, State, Zip)
/ / Check if new address and you
want our records to reflect this.
- ---------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE DATE / / Current AMOUNT SUBMITTED POLICY SENT
OF CHANGE / / Other (Indicate month and reason) $ / / Receipt given / / Yes / / No
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LIFE INSURANCE (ALL PRODUCTS)
FACE/PREMIUM ADJUSTMENTS
/ / Change face amount to $__________________________
/ / Change annual premium amount to $________________
Premiums payable
/ / Annual / / Semi-annual
/ / Quarterly / / Direct Monthly
/ / APP/LIST BILL/PRD #__________________________
/ / Change plan of insurance to _____________________
/ / Credit a Non-Repeating Premium of $______________
/ / Increase face by Non-Repeating Premium amount
/ / Do not increase face by Non-Repeating Premium amount
/ / All or part of the Non-Repeating Premium is the result of surrendering
or borrowing the cash value of another policy(ies)
(Complete Replacement Section, page 2)
If billable: Amount $_____________________
($500.00 Minimum required)
Frequency ___________________
($200.00 Minimum per billing with a $2,400.00 minimum
annual base premium.)
/ / Cash withdrawal of $ ____________________________
(Complete Withholding Election on page 2)
/ / Maintain same face amount
/ / Reduce face amount
Send check direct to client / / Yes / / No
PRODUCT ADJUSTMENTS (POLICY REQUIRED -- IF POLICY LOST, SEE PAGE 8)
/ / Convert term insurance at attained age to:
/ / Adjustable Life / / Variable Adjustable Life
/ / Partial conversion:
/ / Retain balance / / Surrender balance
/ / Conversion of term agreement:
Name_________________________________________
/ / Rollover at attained age to:
/ / Adjustable Life / / Variable Adjustable Life
(loans will be eliminated)
Please note: Waiver will be a separate premium charge. Loan interest rate
will be 8%.
/ / Combine policies and rollover at attained age to:
/ / Adjustable Life / / Variable Adjustable Life
(loans will be eliminated)
Please note: Waiver will be a separate premium charge. Loan interest rate
will be 8%. Policies must have same beneficiary and owner.
Complete F. 17092-2a, page 16 if needed.
/ / Eliminate policy loan
(Complete Withholding Election on page 2)
/ / Maintain same face amount
/ / Reduce face amount
Please note: Dividend additions and accumulations will be surrendered first.
F.44096 2-92 Reformat 8-95
<PAGE>
LIFE INSURANCE (CONTINUED)
BENEFIT AND AGREEMENT ADJUSTMENTS
<TABLE>
<S> <C>
/ / Maintain same total annual premium / / Change total annual premium accordingly
</TABLE>
<TABLE>
<CAPTION>
CHANGE NEW
ADD REMOVE AMOUNT AMOUNT
<S> <C> <C> <C> <C>
Accidental Death Benefit ............... / / / / / / $_______
Additional Insured Rider ............... / / / / / / $_______ (Complete application
F. 41056)
Automatic Premium Loan ................ / / / /
Adjustable Survivorship Life Rider .... / / / / / / $_______ Designated Life _______
(To add, please complete
application for Designated Life)
Additional Term Protection ............. / /
Cost of Living Agreement ............... / / / /
Face Amount Increase Agreement ......... / / / / / / $_______
Family Term-Children's Rider ........... / / / / / / $_______ (Complete application
F. 41056)
Family Term-Spouse Rider ............... / / / / / / $_______ (Complete application
F. 41056)
Guaranteed Protection Waiver ........... / / / /
Waiver of Premium Agreement ............ / / / /
Policy Enhancement Rider ............... / / / / / / ______% (Indicate whole number
between 3 - 10%)
Other .................................. / / / / / / $_______
</TABLE>
OTHER ADJUSTMENTS
<TABLE>
<S> <C>
/ / Remove/reconsider rating
/ / Maintain same total annual premium / / Reduce total annual premium accordingly
/ / Change dividend option to __________
/ / REINSTATE
I understand that this application may be attached to and considered part of the policy to which it
applies. Also, I understand that this policy will be contestable, as to representations in this
application, from the date of reinstatement for the time period stated in the incontestable
provision of the policy.
WITHHOLDING FOR TAX PURPOSES - REQUIRED INFORMATION FOR ALL CASH WITHDRAWALS AND LOAN ELIMINATIONS
Social Security Number or Tax I.D. of owner: __________________________
(If a correct number is not provided, the IRS requires us to withhold 31% of any gain, irrespective
of the withholding election)
Withholding election if reissue results in a taxable gain (Withholding is automatic if no election is made):
/ / Yes, I elect withholding / / No, I do not elect withholding
REPLACEMENT
Will you systematically borrow, lapse, replace or surrender any existing life insurance or annuity? / / Yes / / No
If yes, please indicate which coverage will be replaced in the box below and submit replacement forms where required.
LIFE INSURANCE IN FORCE AND PENDING (COMPLETE FOR FACE INCREASE AND/OR REPLACEMENT REQUESTS.)
Do you have any life insurance in force or pending? / / Yes / / No
If yes, please complete below.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PENDING?
YEAR POLICY BUSINESS/ ---------- WILL IT BE
ISSUED AMOUNT TYPE OF COVERAGE COMPANY NUMBER(S) PERSONAL YES NO REPLACED?
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
F.44096 2-92 Reformat 8-95
<PAGE>
DISABILITY AND OVERHEAD EXPENSE INSURANCE
PRE-DI '90 SERIES ADJUSTMENTS
NOTE: - Any increases to pre-DI '90 policies must be done as an exchange to the
DI'90 series by completing the lower half of this page.
- GFIA and AMIO exercises must be added to an existing DI '90 series
policy or submitted as a new application.
<TABLE>
<CAPTION>
DECREASE NEW BENEFIT WAITING
RISK REMOVE ACCOUNT PERIOD PERIOD
<S> <C> <C> <C> <C> <C>
Base ............................................. / / $________ ________ ________
Additional Disability Monthly Income Agreement ... / / / / $________ ________ ________
Additional Disability Monthly Income Agreement ... / / / / $________ ________ ________
Additional Disability Monthly Income Agreement ... / / / / $________ ________ ________
Guaranteed Future Insurability Agreement ......... / / / / RETAIN
Supplementary Income Benefit ..................... / / / / $________
Social Security Agreement ........................ / / / /
Proportionate Benefit Agreement .................. / /
Additional Monthly Income Option ................. / /
Monthly Income Benefit Escalator ................. / / / / / / 4% / / 6% / / 8% / / 10%
OVERHEAD EXPENSE POLICIES ONLY: .................. Add Remove
Cost of Living Agreement ......................... / / / /
Replacement Expense Agreement .................... / / / /
Transitional Disability Benefit Agreement ........ / / / /
</TABLE>
DI '90 SERIES
PRODUCT ADJUSTMENTS (Policy required--if policy lost, see page 8)
<TABLE>
<S> <C>
/ / Exchange pre-DI '90 Level Rate policy(ies) to DI-'90 Level Rate (Indicate Plan of Coverage below)
/ / Exchange pre-DI '90 Step Rate policy(ies) to DI '90 Annual Renewable Disability Income (ARDI)
(Indicate Plan of Coverage below)
/ / Change Pre-DI '90 Step Rate or DI '90 ARDI policy(ies) to DI '90 Level Rate Policy. (Indicate Plan of Coverage below)
PREMIUMS WILL BE CALCULATED AT ATTAINED AGE.
/ / Change DI '90 Series policy Plan of Coverage (Indicate Plan of Coverage below)
PLAN OF COVERAGE (Indicate one section -- A or B)
</TABLE>
A. / / Disability Income B. / / Disability Income
Insurance Policy Insurance Policy Plus
(all occupation classes) (class *P, 1*, *S, 1 only)
BENEFIT AND AGREEMENT ADJUSTMENTS
<TABLE>
<CAPTION>
NEW BENEFIT WAITING
ADD CHANGE RENEW REMOVE AMOUNT PERIOD PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
Base ............................................. / / $________ ________ ________
Additional Disability Monthly Income Agreement* .. / / / / / / $________ ________ ________
Additional Disability Monthly Income Agreement* .. / / / / / / $________ ________ ________
Additional Disability Monthly Income Agreement* .. / / / / / / $________ ________ ________
Supplementary Income Benefit ..................... / / / / / / $________ ________ ________
Social Security Agreement ........................ / / / / / / $________ ________ ________
Inflation Protection Agreement ................... / / / / / / / / 4% / / 6% / / 8%
Guaranteed Increase Agreement .................... / / / / / /
Guaranteed Increase Agreement Plus ............... / / / / / /
Future Income Protection Agreement ............... / / / / (Increase / / $________ aggregate
only)
* / / Check here if this is a GFIA/FIPA/AMIO exercise. From policy # _________________________
</TABLE>
F.44096 2-92 Reformat 8-95
<PAGE>
DISABILITY AND OVERHEAD EXPENSE INSURANCE (CONTINUED)
ADJUSTMENTS - ALL SERIES
<TABLE>
<S> <C>
/ / Change Occupational Class to / / *P / /I* / / *S / / 1 / / 2 / / 3 Specialty __________________
/ / Remove/Reconsider
/ / Rating / / Exclusion Rider
/ / ADD DISCOUNT (choose one selection from A, and/or select B)
A. / / Association Discount # ______________ B. / / Income Documentation
Discount (For 1994 Rates only)
/ / Employer/Employee Discount # ______________ (Include F. 37443)
/ / Professional Group Discount _______________
Name of Group
/ / REINSTATE
I understand that this application may be attached to and considered part of the policy to which
it applies. Also I understand that this policy will be contestable, as to representations in this
application, from the date of reinstatement for the time period stated in the incontestable provision
of the policy.
/ / Change contract to level rate
/ / Change dividend option to: / / Reduce premiums / / Accumulate / / Cash
/ / Change premium payment frequency to:
/ / Annual / / Semi-annual / / Quarterly / / Direct Monthly (must meet requirements)
/ / Automatic Payment Plan # ______________________ / / Payroll Deduction/List Bill # ______________
</TABLE>
REPLACEMENT - COMPLETE FOR ALL INCREASES IN RISK
Will you drop any existing disability, overhead expense, or any other accident
and sickness insurance when this coverage is issued? / / Yes / / No
If yes, I agree upon accepting this policy to drop the coverage indicated below.
Note: please submit replacement forms where required.
DISABILITY AND OVERHEAD EXPENSE IN FORCE OR PENDING
Do you have any disability insurance in force or pending? / / Yes / / No
If yes, complete below.
List Disability with all Companies including Group, Pension or Retirement Plans,
Salary Continuation Plans, Association Plans, Credit Insurance Plans, Overhead
Expense Plans, and any other Disability or Health Coverage. Also include
coverage for which the Insured will become eligible in the next five years
after a qualifying period of employment has been met.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PENDING?
PAID TO POLICY BENEFIT ELIMINATION ---------- WILL IT BE
DATE AMOUNT TYPE COMPANY NUMBER(S) PERIOD PERIOD YES NO REPLACED?
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
OCCUPATION
Occupational title and/or professional designation ____________________________
Nature of business ____________________________________________________________
<TABLE>
<CAPTION>
OCCUPATIONAL DETAILS (PROVIDE DESCRIPTION OF DAILY JOB ACTIVITIES AND PERCENTAGE SPENT ON EACH)
- ----------------------------------------------------------------------------------------------
DUTIES PERCENTAGE
- ----------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Number of years employed by current employer _______ Number of employees reporting to Insured _______
Does Insured have any part-time or full-time jobs other than the above / / Yes / / No
If yes, provide full details _________________________________________________________________________
</TABLE>
F.44096 2-92 Reformat 8-95
<PAGE>
DISABILITY AND OVERHEAD EXPENSE INSURANCE (CONTINUED)
INCOME
Fill in amounts that are (or will be) shown on the insured's individual and/or
business income tax returns and supporting schedules. NOTE: DO NOT LIST INCOME
THAT IS NOT REPORTED TO THE IRS. Explain any significant fluctuations between
years. Ask for third party income verification on all disability applications.
Complete sections A-G:
<TABLE>
<CAPTION>
TWO
CURRENT LAST CALENDAR
YEAR CALENDAR YEARS
19__ YEAR 19__ AGO 19__
<S> <C> <C> <C>
A. EARNED INCOME (FILL IN ALL WHICH APPLY.)
1. NON-OWNER EMPLOYEE'S SALARY, BONUS, AND PROFIT SHARING
(Form W-2). ___________ ____________ ___________
2. a. OWNER OF REGULAR OR S CORPORATION'S SALARY AND BONUS
(Form W-2). ___________ ____________ ___________
b. OWNER'S SHARE OF AFTER TAX CORPORATE PROFITS OR LOSSES
(AFTER EXPENSES) provided the Insured has significant
ownership and is active in the corporation (Form 1120
or 1120S). If losses, indicate with parentheses. ___________ ____________ ___________
c. PENSION PLAN OR OTHER CONTRIBUTIONS THAT WOULD CEASE
IF THE INSURED BECAME DISABLED. ___________ ____________ ___________
3. SOLE PROPRIETOR NET INCOME, AFTER EXPENSES (Form 1040
Schedule C). ___________ ____________ ___________
4. SHARE OF PARTNERSHIP NET INCOME, AFTER EXPENSES
(Insured's Schedule K-1 or Form 1040 Schedule E). ___________ ____________ ___________
5. OTHER EARNED INCOME (describe in Remarks) ___________ ____________ ___________
TOTAL EARNED INCOME ___________ ____________ ___________
B. UNEARNED INCOME - This includes capital gains, interest,
dividends, tax exempt unearned income, income from other
investments, net rental income, pensions, annuities, and
alimony. ITEMIZE IN REMARKS IF EXCEEDING 15% OF EARNED
INCOME OR $125,000. ___________ ____________ ___________
C. NET WORTH is the Insured's net worth, exclusive of primary
residence, greater than $4,000,000? / / Yes / / No
If yes, itemize the Net Worth in Remarks.
D. Premiums will be paid by: / / Insured
/ / Employer - Will any portion of the premium
be included in your taxable income? / / Yes / / No
If yes, provide details in Remarks
/ / Other (indicate name and address in Remarks)
(NOTE: Individual paid Issue and Participation limits should be used for those Insureds who are owners
in a Sole Proprietorship, Partnership, or S Corporation. Employer paid Issue and Participation Limits
can be used for Owners of a Regular Corporation when the Corporation is paying the premium and for Non-
Owner Employees when the employer is paying the premium.)
E. Is the Insured self-employed, including any partial ownership? / / Yes / / No
(If yes, answer questions F and G.)
F. For tax purposes the Insured's business is set up as a/an:
/ / Sole Proprietorship / / Partnership / / Regular Corporation / / S Corporation
G. What is the Insured's ownership? ___%
</TABLE>
REMARKS
F.44096 2-92 Reformat 8-95
<PAGE>
ALL PRODUCTS (COMPLETE FOR ALL REQUESTS)
SPECIAL ACTIVITIES AND OTHER INSURANCE ACTIVITY (PROVIDE DETAILS TO ALL
YES ANSWERS IN ADDITIONAL INFORMATION)
<TABLE>
<S> <C>
A. Do you plan to change jobs or to reside or travel outside the U.S.A. / / Yes / / No
B. Have you, within the last five years, or do you plan in the next six
months, to pilot a plane? (If yes, complete Aviation Statement F. 4883.) / / Yes / / No
C. Have you, within the last five years, or do you plan in the next six
months, to engage in sky diving, organized vehicle racing, mountain
climbing, hang gliding, or underwater diving?
(If yes, complete Avocation Statement, F. 11393.) / / Yes / / No
D. Have you, within the last five years, been declined, modified, rated or
been issued with a rider for life or disability insurance? / / Yes / / No
E. Within the last year, have you missed any work due to illness or injury? / / Yes / / No
F. Are you in the Armed Forces, National Guard, or Reserves?
(If yes, complete Military Statement F. 4883.) / / Yes / / No
G. Have you applied elsewhere for insurance within the last six months? / / Yes / / No
DRIVING AND CONVICTION HISTORY: (PROVIDE DETAILS IN ADDITIONAL INFORMATION)
A. In the last five years, have you been charged with a driving while
intoxicated violation, had your driver's license restricted or revoked,
or been cited with a moving violation? / / Yes / / No
B. Except for traffic violations, have you ever been convicted of a felony? / / Yes / / No
NON-SMOKER STATEMENT
/ / ADD NON-SMOKER DESIGNATION
I do not currently smoke any cigarettes, nor have I smoked cigarettes for the
past 12 months. (If tobacco other than cigarettes is used, list type _______________
and frequency _______________________.) I UNDERSTAND THAT A MATERIAL MISREPRESENTATION,
INCLUDING BUT NOT LIMITED TO STATEMENTS REGARDING MY SMOKING STATUS, MAY RESULT IN
THE CANCELLATION OF INSURANCE AND NONPAYMENT OF ANY CLAIM.
LOST POLICY DECLARATION
/ / I am not able to find the policy(ies) listed on page 1. I agree that when the duplicate
policy(ies) is issued, the original policy(ies) will be void. I also agree that if the
original policy(ies) is found, it will be returned to the Company immediately.
/ / Issue duplicate policy / / Issue certificate / / Rollover/conversion/exchange - Issue new policy
If rollover/conversion/exchange or duplicate requested:
/ / Lost policy fee is attached / / See "Additional Information" for instructions on payment of
lost policy fee
</TABLE>
ADDITIONAL INFORMATION
HOME OFFICE ENDORSEMENTS
Home Office Corrections or Additions - Acceptance of the policy shall ratify
changes entered here by the Company. Not to be used in CA (for disability
insurance only), IA, IL, KS, KY, MD, MI, MN, MO, NH, NJ, OR, PA, TX, WI or WV
for changes unless agreed to in writing.
F.44096 2-92 Reformat 8-95
<PAGE>
Exhibit 99-A(10)(e)
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------------
POLICY CHANGE APPLICATION PART 3
MINNESOTA MUTUAL AGREEMENTS, CERTIFICATION AND AUTHORIZATION
- ---------------------------------------------------------------------------------------------------------------------------------
The Minnesota Mutual Life Insurance Company - Individual Policyowner Services - 400 Robert Street North - St. Paul, Minnesota
55101-2098
- ---------------------------------------------------------------------------------------------------------------------------------
Insured's Name (Last, First, Middle Initial)
- ---------------------------------------------------------------------------------------------------------------------------------
AGREEMENTS/CERTIFICATION:
I have read, or had read to me the statements and answers recorded on Part 1 and Part 2 of my application. They are given to
obtain this insurance and are, to the best of my knowledge and belief, true and complete and correctly recorded. I agree that
they will become part of this application and any coverage issued on it. I understand that the policy will be contestable, as
to representations in this application, from the date of reinstatement or reissue, for the time period stated in the
incontestable provision of the policy. The insurance applied for will not take effect unless and until the policy is reissued
and delivered and the full first premium is paid while the health of the Insured remains as stated in Part 1 and Part 2 of the
Policy Change Application, as provided in the Receipt and Temporary Life Insurance Agreement and the Conditional Health Receipt.
VARIABLE ADJUSTABLE LIFE:
I also agree that if this application is for a Variable Adjustable Life Policy, that Minnesota Mutual, if it is unable for any
reason to collect funds for units which have been allocated to a sub-account under the policy applied for, may redeem for
itself the full value of such units. If such units are no longer available, it may recover that value from any other units of
equal value available under the policy.
I UNDERSTAND THAT THE AMOUNT OR THE DURATION OF THE DEATH BENEFIT (OR BOTH) OF THE REISSUED POLICY APPLIED FOR MAY INCREASE OR
DECREASE DEPENDING ON THE INVESTMENT RESULTS OF THE SUB-ACCOUNTS OF THE SEPARATE ACCOUNT. I UNDERSTAND THAT THE ACTUAL CASH
VALUE OF THE REISSUED POLICY APPLIED FOR INCREASES AND DECREASES DEPENDING ON INVESTMENT RESULTS. THERE IS NO MINIMUM ACTUAL
CASH VALUE FOR POLICY VALUES INVESTED IN THESE SUB-ACCOUNTS.
AUTHORIZATION:
I authorize any physician, medical practitioner, hospital, clinic or other health care provider, insurance or reinsuring
company, consumer reporting agency, the Medical Information Bureau, Inc., (MIB), or employer which has any records or knowledge
of the physical or mental health of me or my minor children, to give all such information and any other nonmedical information
relating to such persons to Minnesota Mutual or its reinsurers. This shall include ALL INFORMATION as to any medical history,
consultations, diagnoses, prognoses, prescriptions or treatments and tests, including information regarding alcohol or drug
abuse, sickle cell disease, AIDS or AIDS-related conditions. To facilitate rapid submission of such information, I authorize
all said sources, except MIB, to give such records or knowledge to any agency employed by Minnesota Mutual to collect and
transmit such information.
I understand this information is to be used for the purpose of determining eligibility for insurance and may be used for
determining eligibility for benefits. I understand this information may be made available to Underwriting, Claims and support
staff of Minnesota Mutual. I authorize Minnesota Mutual or its reinsurers to release any such information to reinsuring
companies, the Medical Information Bureau, Inc., or other persons or organizations performing business or legal services in
connection with my application, claim or as may be otherwise lawfully required or as I may further authorize.
I agree this authorization shall be valid for twenty-six months from the date it is signed.
I understand that I have the right to request and receive a copy of this Authorization and that a photocopy of this
authorization shall be as valid as the original.
I acknowledge that I have been given Minnesota Mutual's Consumer Privacy Notice. (Notice Regarding Consumer Reports and Notice
Regarding Medical Information Bureau, Inc.)
- ---------------------------------------------------------------------------------------------------------------------------------
DATE SIGNED CITY STATE / / CHANGE SERVICE AGENT (Print name/code only if policy(ies) is
being reassigned)
AGENT CODE
- ---------------------------------------------------------------------------------------------------------------------------------
INSURED AGENCY CODE
X
- ---------------------------------------------------------------------------------------------------------------------------------
OWNER (if other than insured, list title if OWNER'S TELEPHONE NUMBER
signed on behalf of corporation)
X ( ) -
- ---------------------------------------------------------------------------------------------------------------------------------
ASSIGNEE (List title if signed on behalf of corporation) WITNESS/REGISTERED REPRESENTATIVE (Licensed agent CODE %
where required)
X X
- ---------------------------------------------------------------------------------------------------------------------------------
IRREVOCABLE BENEFICIARY AGENT CODE %
X X
- ---------------------------------------------------------------------------------------------------------------------------------
PARENT/CONSERVATOR/GUARDIAN AGENT CODE %
X X
- ---------------------------------------------------------------------------------------------------------------------------------
F. 44098 2-92 -13- Reformat 8-95
</TABLE>
<PAGE>
Exhibit 99-C
September 14, 1995
The Minnesota Mutual Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Gentlepersons:
In my capacity as counsel for The Minnesota Mutual Life Insurance Company (the
"Company"), I have reviewed certain legal matters relating to the Company's
Separate Account entitled Minnesota Mutual Variable Life Account (the "Account")
in connection with its Registration Statement on Form S-6. This Registration
Statement is to be filed by the Company and the Account with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, with respect
to certain variable life insurance policies.
Based upon that review, I am of the following opinion:
1. The Account is a separate account of the Company duly created and
validly existing pursuant to the laws of the State of Minnesota; and
2. The issuance and sale of the variable life insurance policies funded
by the Account have been duly authorized by the Company and such
policies, when issued in accordance with and as described in the
current Prospectus contained in the Registration Statement, and upon
compliance with applicable local and federal laws, will be legal and
binding obligations of the Company in accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Donald F. Gruber
Donald F. Gruber
Senior Counsel
<PAGE>
Exhibit 99-E
November 3, 1995
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Re: Variable Adjustable Life - Second Death Policy
Form Number 95-690
Dear Sir or Madam:
This opinion is furnished in connection with the filing of the Registration
Statement on Form S-6 ("Registration Statement"), which covers premiums expected
to be received under Variable Adjustable Life - Second Death Insurance Policies
("Policies") on the form referenced above offered by The Minnesota Mutual Life
Insurance Company. The prospectus included in the Registration Statement
describes policies which will be offered by Minnesota Mutual, after the
Registration Statement is declared effective, in each state where they have been
approved by appropriate state insurance authorities. The policy form was
prepared under my direction, and I am familiar with the Registration Statement
and Exhibits thereto. In my opinion:
(1) The illustrations of death benefits, policy values and accumulated premiums
for the Policy described under the headings "Policy Values," "Death Benefit
Options" and Variations in Death Benefit," and fully illustrated in
Appendix I of the prospectus entitled "Illustrations of Policy Values,
Death Benefits and Premiums" and in Appendix II of the prospectus entitled
"Summary of Policy Charges" and included in the Registration Statement
("Prospectus"), based upon the assumptions stated, are consistent with the
provisions of the Policies. The rate structure of the Policies has not
been designed so as to make the relationship between premiums and benefits,
as shown in Appendix I, appear to be correspondingly more favorable to the
prospective purchaser of a Policy for a male and a female, both age 40 than
to prospective purchasers of Policies for a male and a female at other
ages.
(2) The table shown under the heading "Summary," illustrating the
representative for maximum and minimum plans of insurance, is consistent
with the provisions of the Policies.
<PAGE>
The Minnesota Mutual Life Insurance Company
November 3, 1995
Page 2
(3) The description under the heading "Policy Adjustments," describing the
effects of a Policy adjustment on an illustrated standard risk Policy, and
illustrating adjustments on a hypothetical policy, is consistent with the
provisions of the Policies.
(4) The description under the subheading "Restrictions on Adjustments,"
describing the effects of restrictions on Policy adjustments in illustrated
situations, is consistent with the provisions of the Policies.
(5) The description under the heading "Policy Charges," describing sales load
computations in illustrated situations in Appendix V, is consistent with
the provisions of the Policies.
(6) The information with respect to the Policy contained in Appendix III,
entitled "Illustration of Death Benefit Calculation," based upon the
assumptions stated therein, is consistent with the provision of the
Policies.
(7) The information with respect to the Policy contained in Appendix IV,
entitled "Policy Loan Example," based upon the assumptions stated therein,
is consistent with the provisions of the Policies.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
Prospectus.
Very truly yours,
/s/ Jaymes G. Hubbell
Jaymes G. Hubbell, F.S.A.
Second Vice President
and Actuary
<PAGE>
Exhibit 99-F
Jones & Blouch L.L.P. Letterhead
November 2, 1995
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
Gentlemen:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the prospectus contained in the registration statement on Form S-6
to be filed with the Securities and Exchange Commission relating to a new form
of variable adjustable life insurance policy to be issued by the Company.
Very truly yours,
/s/ Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
<PAGE>
Exhibit 99-H
November 1995
DESCRIPTION OF THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY'S ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR POLICIES
PURSUANT TO RULE 6e-2(b)(12)(II)
This document sets forth the administrative procedures established by The
Minnesota Mutual Life Insurance Company ("Minnesota Mutual") in connection with
the issuance of its Variable Adjustable Life Second Death insurance policy
("policy"), the transfer of assets held thereunder, and the redemption by policy
owners of their interests in those policies.
I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF THE POLICIES
Persons wishing to purchase a policy must send a completed application to
Minnesota Mutual at its home office. The minimum face amount Minnesota
Mutual will issue on a policy is $200,000 and it requires an annual base
premium on each policy of at least $600. The minimum plan of insurance at
policy issue is a protection plan which has a level death benefit for a
period of ten years. If the younger insured's age at original issue is
over age 70, the minimum plan of protection will be less than ten years, as
described in the table below:
<TABLE>
<CAPTION>
Younger Insured's Minimum Plan
Issue Age (in years)
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<S> <C>
71 9
72 8
73 7
74 6
75 or greater 5
</TABLE>
Both insureds must be between age 20 and age 85 inclusive when the policy
is issued. Before issuing any policy, Minnesota Mutual will require
evidence of insurability
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satisfactory to it on both insureds, which in some cases will require a
medical examination. Persons whom we evaluate as good mortality risks are
offered the most favorable premium rates, while a higher premium is charged
to persons with a greater mortality risk. Acceptance of an application is
subject to Minnesota Mutual's underwriting rules and it reserves the right
to reject an application for any reason.
Guaranteed maximum cost of insurance charges will vary by the gender, age
and risk class and smoking habits of each insured. Minnesota Mutual uses
the male, female and unisex 1980 Commissioners Standard Ordinary Mortality
Tables ("1980 CSO"), as appropriate. The unisex tables are used in
circumstances where legal considerations require the elimination of gender-
based distinctions in the calculation of mortality costs. Maximum cost of
insurance charges are based on an assumption of mortality not greater than
the mortality rates reflected in 1980 CSO Tables.
In most cases, Minnesota Mutual intends to impose cost of insurance charges
which are substantially lower than the maximum charges determined as
described above. In addition to the factors governing maximum cost of
insurance charges, actual charges will vary depending on the plan of
insurance and any policy adjustments since issue.
When the policy is issued, the face amount, premium, tabular cash values
and a listing of any supplemental agreements are stated on the policy
information pages of the policy form, page 1.
A. PREMIUM SCHEDULES AND UNDERWRITING STANDARDS
Premiums for the policies will not be the same for all owners.
Insurance is based on the principle of pooling and distribution of
mortality risks, which assumes that each
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owner pays a premium commensurate with the insureds' mortality risk as
actuarially determined utilizing factors such as age, gender, health
and occupation. A uniform premium for all insureds would discriminate
unfairly in favor of those insureds representing greater risk.
Although there will be no uniform premium for all insureds, there will
be a single price for all insureds in a given risk classification.
The policies will be offered and sold pursuant to established premium
schedules and underwriting schedules in accordance with state insurance
laws. The prospectus specifies premiums for specified illustrative
ages. In addition, the premiums to be paid by the owner of a policy
will be specified in the policy.
B. APPLICATION AND INITIAL PREMIUM PROCESSING
Upon receipt of a completed application from an applicant Minnesota
Mutual will follow certain insurance underwriting (risk evaluation)
procedures designed to determine whether the applicants are insurable.
This process may involve such verification procedures as medical
examinations and may require that further information be provided by
the proposed insureds before a determination can be made. A policy
cannot be issued, i.e., physically issued through Minnesota Mutual's
computerized issue system, until this underwriting procedure has been
completed.
These processing procedures are designed to provide immediate benefits
to the prospective owner in connection with payment of the initial
premium and will not dilute any benefit payable to any existing owner.
Although a policy cannot be issued until after the underwriting process
has been completed, the proposed insureds may receive immediate
insurance coverage, if they prove to be insurable and have paid the
first premium and are covered under the terms of a conditional
insurance agreement.
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In accordance with industry practice, Minnesota Mutual will establish
procedures to handle errors in initial and subsequent premium payments
to refund overpayments and collect underpayments, except for de minimis
amounts. If an application is accompanied by a check for all or at
least one-twelfth of the annual premium and the application is accepted
by Minnesota Mutual, the policy date will be the date the underwriting
decision is made. The policy date is the date used to determine
subsequent policy anniversaries and premium due dates. The issuance
will take effect as of the policy date specified in the policy, except
as altered by another agreement, e.g., the receipt and temporary life
insurance agreement. If the application is accompanied by a check for
all or at least one-twelfth of the annual premium, the insureds may be
covered under the terms of a conditional insurance agreement until the
policy date. If an application accepted by Minnesota Mutual is not
accompanied by a check for the initial premium, the policy will be
issued with a policy date which will normally be fifteen days after the
date Minnesota Mutual's underwriters approve issuance of the policy.
The initial plan premium must be received within 60 days after the
issue date. If the premium is not paid or if the application is
rejected, the policy will be cancelled and any partial premiums paid
will be returned to the applicant. In a case where there is no paid
premium, there will be no life insurance coverage provided. On
delivery of the policy within the 60 day period following issue, the
applicant may obtain a policy which has a policy date of the date when
the home office receives the initial plan premium. In that case the
applicant has to indicate to Minnesota Mutual his or her intention to
obtain such a policy. This should be done on or before the payment of
the first premium. As a result of a requested change, Policy pages
with updated policy information and a policy date that reflects the
date the first premium was received will be sent to the agent for
delivery to the applicant. Under certain circumstances a policy may be
issued where the applicant wishes to retain the original policy issue
date. In such cases all premiums due between the
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issue date and the date of delivery must be paid on delivery in order
for the original policy issue date to be retained.
The policy date, assuming the payment of the first premium, marks the
date on which benefits begin to vary in accordance with the investment
performance of any selected sub-accounts of the Minnesota Mutual
Variable Life Account. Premium payments may also be allocated to the
guaranteed principal account. The policy date is also the date as of
which the insurance ages of the proposed insureds are determined. It
represents the first day of the policy year and therefore determines
the policy anniversary and also the monthly dates. It also represents
the commencement of the suicide and contestable periods for purposes of
the policy.
The owner of the policy must pay the initial premium within 60 days of
the date of the policy. The first net premiums, namely premiums after
the deduction of the charges assessed against premiums and nonrepeating
premiums, are allocated to the guaranteed principal account or any sub-
accounts of the Variable Life Account which will, in turn, invest in
shares of the Portfolios of MIMLIC Series Fund, Inc.
Net premiums are allocated to the guaranteed principal account or any
one or more of the sub-accounts as selected by the owner on the
application for the policy. The owner may change the allocation
instructions for future premiums by giving a written request. A change
will not take effect until it is recorded in the home office of
Minnesota Mutual. The allocation to the guaranteed principal account
or any sub-account, expressed in whole percentages, must be at least 10
percent of the net premium and preferably, in increments of 5 percent.
Minnesota Mutual reserves the right to restrict the allocation of
premium. In that case, no more than 50 percent of the net premium may
be allocated to the guaranteed principal account. This
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restriction will not apply when all of the premiums are being allocated
to the guaranteed principal account as a conversion privilege.
Minnesota Mutual also reserves the right to delay the allocation of net
premiums to named sub-accounts. Such a delay will be for a period of
30 days after issuance of a policy or policy adjustment. If this right
is exercised, net premiums will be allocated to the money market sub-
account of the separate account until the end of that period.
C. PREMIUM PROCESSING
Twenty days before the premium due date, Minnesota Mutual will send a
premium notice for the premium due to the owner's address on record.
The amount of the net premium will depend upon such factors as the
initial face amount, the plan of insurance, the age at issue, gender,
risk classification and smoking status of each insured, and the
additional benefits associated with the policy.
D. REINSTATEMENT
At any time within three years from the date of lapse, the owner may
restore the policy to a premium paying status. Minnesota Mutual will
require:
(1) the owner's written request to reinstate the policy;
(2) that the owner submits to Minnesota Mutual at its home office
during the lifetime of both insureds, evidence satisfactory to it
of the insurability of both insureds so that Minnesota Mutual may
have time to act on the evidence during the lifetime of both
insureds; and
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(3) at Minnesota Mutual's option, a premium payment which is equal to
all overdue premiums with interest at a rate not to exceed 6
percent per annum compounded annually and any policy loan in effect
at the end of the grace period following the date of default with
interest at a rate not exceeding 8 percent per annum compounded
annually.
This reinstatement provision is designed to comply with the insurance
laws of a number of states.
In order to assist an owner of a lapsed policy in making a considered
judgment as to whether to reinstate, Minnesota Mutual may calculate the
amount payable upon reinstatement and "freeze" the amount for up to 15
days.
The reinstatement will take effect as of the date the required proof of
insurability and payment of the reinstatement amount has been received
by Minnesota Mutual at its home office.
Minnesota Mutual will allocate the net premiums, namely premiums after
the deduction of the charges assessed against premiums and nonrepeating
premiums, to the guaranteed principal account or the sub-accounts of
the Variable Life Account which, in turn, invest in Fund shares. The
amount submitted by the owner is required to support the reinstated
benefits.
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E. REPAYMENT OF A POLICY LOAN
If the policy is in force, a policy loan can be repaid in part or in
full at any time before the second death. The loan may also be repaid
within 60 days after the date of the second death, if Minnesota Mutual
has not paid any of the benefits under the policy. Any loan repayment
must be at least $100 unless the balance due is less than $100.
Currently, Minnesota Mutual will waive this Minimum Loan Repayment
Provision for loan repayments made under an automatic bank check plan
if the loan repayment is in an amount of at least $25.
Loan repayments are allocated to the guaranteed principal account until
all loans from the guaranteed principal account have been repaid.
Thereafter, loan repayments are allocated to the guaranteed principal
account or the sub-accounts of the separate account as the policy owner
may direct.
In the absence of instructions from the policy owner, loan repayments
will be allocated to the guaranteed principal account actual cash value
and separate account actual cash value in the same proportion that
those values bear to each other and, as to the actual cash value in the
separate account, to each sub-account in the proportion that the actual
cash value in such sub-account bears to the actual cash value in all of
the policy owner's sub-accounts.
Loan repayments reduce the loan account by the amount of the loan
repayment.
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II. TRANSFER AMONG SUB-ACCOUNTS
A separate account called the Minnesota Mutual Variable Life Account was
established on October 21, 1985, by the Board of Trustees of Minnesota
Mutual in accordance with certain provisions of the Minnesota insurance
law. The Variable Life Account currently has ten sub-accounts to which
policy owners may allocate premiums. Each sub-account invests in shares of
a corresponding Portfolio of the MIMLIC Series Fund, Inc. (the "Fund").
The amount of actual cash value to be transferred to or from a sub-account
of the separate account or the guaranteed principal account must be at
least $250. If the balance is less than $250, the entire actual cash value
attributable to that sub-account or the guaranteed principal account must
be transferred. If a transfer would reduce the actual cash value in the
sub-account from which the transfer is to be made to less than $250
Minnesota Mutual reserves the right to include that remaining sub-account
actual cash value in the amount transferred.
The maximum amount of actual cash value to be transferred out of the
guaranteed principal account to the sub-accounts of the separate account
may be limited to 20 percent of the guaranteed principal account balance.
Transfers to or from the guaranteed principal account may be limited to one
such transfer per policy year.
None of the foregoing restrictions will apply when all of the policy value
is being transferred and when all of your premiums are being allocated to
the guaranteed principal account as a conversion privilege.
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Transfers from the guaranteed principal account must be made by a written
request. It must be received by Minnesota Mutual or postmarked in the 30-
day period before or after the last day of the policy year. Written
requests for transfers which meet these conditions will be effective after
they are approved and recorded at the home office. Currently, these
restrictions are being waived.
III. "REDEMPTION" PROCEDURES:
SURRENDER AND RELATED TRANSACTIONS
A. REQUEST FOR SURRENDER VALUE
Until the second death, Minnesota Mutual will pay the surrender value
of the policy to the policy owner upon written request. On surrender,
the surrender value of the policy is the actual cash value minus unpaid
policy charges which are assessed against the actual cash value. The
determination of the surrender value is made as of the end of the
valuation period during which the surrender request is received at the
home office. The policy may be surrendered by sending the policy and a
written request for its surrender to Minnesota Mutual. The owner may
request that the surrender value be paid in cash or, as an alternative,
the owner may request that the surrender value be applied on a
settlement option as described in the policy or to provide extended
term insurance.
A partial surrender of the actual cash value of the policy is also
permitted in any amount of $500 or more. In addition, the amount of a
partial surrender may not exceed the amount available as a policy loan.
With the Cash Option death benefit, if the Policy is not paid-up, the
face amount of the policy will be reduced by the amount
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of the partial surrender. If the Policy is paid-up, the death benefit
is reduced so as to retain the same ratio between the policy value and
the death benefit of the Policy as existed prior to the partial
surrender. With the Protection Option death benefit, the face amount
of the Policy is not changed by the amount of the partial surrender.
However, if the Policy is not paid-up, the death benefit of the Policy
is reduced by the amount of the partial surrender; if the Policy is
paid-up, the death benefit of the Policy is reduced so as to retain the
ratio between the policy value and the death benefit of the Policy as
existed prior to the partial surrender.
On a partial surrender, the owner may tell Minnesota Mutual which sub-
accounts of the actual cash value of the policy should be reduced or
whether it is to be taken in whole or in part from the guaranteed
principal account. If the owner does not, partial surrenders will be
deducted from the guaranteed principal account actual cash value and
separate account actual cash value in the same proportion that those
values bear to each other and, as to the actual cash value in the
separate account, from each sub-account in the proportion that the
actual cash value in such sub-account bears to the actual cash value in
all of the sub-accounts.
Payment of a surrender or a partial surrender will be made as soon as
possible, but not later than seven days after the receipt of a
completed written request for surrender. However, if any portion of
the actual cash value to be surrendered is attributable to a premium or
nonrepeating premium payment made by non-guaranteed funds such as a
personal check, Minnesota Mutual will delay mailing that portion of the
surrender proceeds until it has reasonable assurance that the payment
has cleared and that good payment has been collected. The amount the
owner receives on the surrender may be more or less than the total of
premiums paid to the policy.
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B. DEATH CLAIMS
Minnesota Mutual will pay a death benefit to the beneficiary within
seven days after receipt at its home office of due proof of the second
death and on completion of all other requirements necessary to make
payment. In addition, payment of the death benefit is subject to the
provisions of the policy regarding suicide and incontestability.
The death benefit provided by the policy depends upon the death benefit
option chosen by the owner. The owner may choose one of two available
death benefit options -- the Cash Option or the Protection Option. If
the owner fails to make an election, the Cash Option will be in effect.
The scheduled premium for a policy is the same no matter which death
benefit option is chosen.
Under the Cash Option, the death benefit will be the current face
amount at the time of the second death. The death benefit will not
vary unless the policy value exceeds the net single premium for the
current face amount.
Under the Protection Option, the death benefit will vary and will be
the policy value, plus the larger of:
(1) the then current face amount; and
(2) the amount of insurance which could be purchased using the policy
value as a net single premium.
The Protection Option is only available until the policy anniversary
nearest the younger insured's age 70. At the policy anniversary nearest
the younger insured's
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age 70, the Protection Option death benefit is automatically converted
to the Cash Option death benefit. At that time, Minnesota Mutual will
automatically adjust the policy, and adjust the face amount to equal
the death benefit immediately preceding the adjustment.
As noted, the death benefit under the Cash Option does not vary from
the policy's face amount until the policy value exceeds the net single
premium for the current face amount. Once paid-up, the death benefit
under the Cash Option is the greater of the face amount of the policy
when it became paid-up or the amount of insurance which could be
purchased at the date of the second death by using the policy value as
a net single premium based upon the policy assumptions. The two
assumptions we use in computing the additional amount of insurance are
an interest rate assumption of 4 percent per year and an assumption of
mortality based upon the 1980 Commissioners Standard Ordinary Mortality
Tables.
A policy is paid-up when no additional premiums are required to provide
the face amount of insurance. Minnesota Mutual may or may not accept
additional premiums. When a policy becomes paid-up, the policy value
will then equal or exceed the net single premium needed to purchase an
amount of insurance equal to the face amount of the policy. However,
its actual cash value will continue to vary daily to reflect the
investment experience of the Variable Life Account and any interest
credited as a result of a policy loan. Once a policy becomes paid-up,
it will always retain its paid-up status regardless of any subsequent
decrease in its policy value. However, on a paid-up policy with
indebtedness, where the actual cash value decreases to zero, a loan
repayment may be required to keep the policy in force.
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The owner may elect to have the death benefit option changed while the
policy is in force by filing a written request at the home office.
Minnesota Mutual may require that the owner provide satisfactory
evidence of the insurability of both insureds before a change to the
Protection Option is made. The change will take effect when it is
approved and recorded in the home office.
The amount payable as death proceeds upon the second death will be the
death benefit provided by the policy, plus any additional insurance
provided by an additional benefit agreement, if any, minus any policy
charges and minus any policy loans. In addition, if the Cash Option
death benefit is in effect at the second death Minnesota Mutual will
pay to the beneficiary any part of a paid premium that covers the
period from the end of the policy month in which the second death
occurs to the date to which premiums are paid.
The death benefit is determined on each monthly policy anniversary and
as of the date of the second death.
Interest on single sum death proceeds will be paid from the date of the
second death until the date of payment. Interest will be at an annual
rate determined by Minnesota Mutual, but never less than 3 percent.
Proceeds of the policy may be paid in other than a single sum. The
owner, before the second death, may request that the proceeds be paid
under one of the policy settlement options as described in the policy.
Minnesota Mutual may also use any other method of payment that is
agreeable both to the owner and it. A settlement option may be
selected only if the payments are to be made to a natural person in
that person's own right. Each settlement option is payable in fixed
amounts as described
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in the policy. The payments do not vary with the investment
performance of the Variable Life Account.
C. DEFAULT AND OPTIONS ON LAPSE
A policy may lapse in one of two ways: (1) if a scheduled premium is
not paid, or (2) if there is no actual cash value when there is a
policy loan.
As a scheduled premium policy, the policy will lapse if a premium is
not paid on or before the date it is due or within the 31-day grace
period provided by the policy. The owner may pay that premium during
the 31-day period immediately following the premium due date. The
premium payment, however, must be received in Minnesota Mutual's home
office within the 31-day grace period. The insurance will continue
during this 31-day period. If the second death occurs during the 31-
day grace period, we will deduct a premium for the 31-day grace period
from the death proceeds.
If a policy covers an insured in a sub-standard risk class, the portion
of the scheduled premium equal to the charge for such risk will
continue to be payable notwithstanding the adjustment to a stop premium
mode. As with any scheduled premium, failure to pay the premium for
the sub-standard risk within the grace period provided will cause the
policy to lapse.
If scheduled premiums are paid on or before the dates they are due or
within the grace period, absent any policy loans, the policy will
remain in force even if the investment results of the sub-accounts have
been so unfavorable that the actual cash value has decreased to zero.
However, should the actual cash value decrease to zero
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while there is an outstanding policy loan the policy will lapse, even
if the policy was paid-up and all scheduled premiums have been paid.
If the policy lapses because not all scheduled premiums have been paid
or if a policy with a policy loan has no actual cash value, Minnesota
Mutual will send the owner a notice of default that will indicate the
payment required to keep the policy in force on a premium paying basis.
If the payment is not received within 31 days after the date of mailing
the notice of default, the policy will terminate or the nonforfeiture
benefits will apply.
If at the time of any lapse a policy has a surrender value, that is, an
amount remaining after subtracting from the actual cash value all
unpaid policy charges, it will be used to purchase extended term
insurance. As an alternative to the extended term insurance, the owner
may have the surrender value paid to the owner in a single sum payment,
thereby terminating the policy. Unless the owner requests a single sum
payment of the surrender value within 62 days of the date of the first
unpaid premium, it will be applied to purchase extended term insurance
payable at the second death.
The duration of the extended term benefit is determined by applying the
surrender value of the policy as of the end of the grace period as a
net single premium to buy fixed benefit term insurance. The extended
term benefit is not provided through the Variable Life Account and the
death benefit will not vary during the extended term insurance period.
The amount of this insurance will be equal to the face amount of the
policy, less the amount of any policy loans at the date of lapse.
During the extended term period a policy has a surrender value equal to
the reserve for the insurance coverage for the remaining extended term
period. At the end of the
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extended term period all insurance provided by the policy will
terminate and the policy will have no further value.
D. LOANS
The policy provides that an owner may make a loan at anytime a loan
value is available. The owner may borrow from Minnesota Mutual using
only the policy as the security for the loan. The total amount of the
loan may not exceed 90 percent of the policy value. The policy value
is the actual cash value of the policy plus any policy loan. Any
policy loan paid to the owner in cash must be in an amount of at least
$100. Policy loans in smaller amounts are allowed under the automatic
premium loan provision. Interest will be charged on the loan in
arrears. At the owner's request Minnesota Mutual will send a loan
request form for the signature of the owner. The policy value will be
determined as of the date the owner's written request is received at
the home office.
When a loan is taken, the actual cash value will be reduced by the
amount borrowed and any unpaid interest. Unless the policy owner
directs otherwise, the policy loan will be taken from a policy's
guaranteed principal account actual cash value and separate account
actual cash value in the same proportion that those values bear to each
other and, as to the actual cash value in the separate account, from
each sub-account in the proportion that the actual cash value in such
sub-account bears to the policy's actual cash value in all of the sub-
accounts.
The number of units to be cancelled will be based upon the value of the
units as of the end of the valuation period during which Minnesota
Mutual receives the loan
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requests at its home office. This amount shall be transferred to
Minnesota Mutual's general account. It will continue to be part of the
policy in the general account.
The actual cash value of a policy may decrease between premium due
dates. If a policy has indebtedness and no actual cash value, the
policy will lapse. In this event, to keep a policy in force, the owner
will have to make a loan repayment. Minnesota Mutual will give the
owner notice of its intent to terminate the policy and notice of the
amount of the loan repayment required to keep the policy in force. The
time for repayment will be within 31 days after Minnesota Mutual's
mailing of the notice.
The interest rate on a policy loan will not be more than the rate shown
on page 1 of the policy. The interest rate charged on a policy loan
will not be more than that permitted in the state in which the policy
is delivered.
Policy loan interest is due on the date of the second death, on a
policy adjustment, surrender, lapse, a policy loan transaction and on
each policy anniversary. If the owner does not pay the interest on the
loan in cash, the policy loan will be increased and the actual cash
value will be reduced by the amount of the unpaid interest. The new
loan will be subject to the same rate of interest as the loan in
effect.
Interest is also credited to the policy when there is a policy loan.
Interest credits on a policy loan shall be at a rate which is not less
than the policy loan interest rate minus 2 percent per annum. Policy
loan interest credits are allocated to the actual cash value as of the
date of the second death, on a policy adjustment, surrender, lapse, a
policy loan transaction and on each policy anniversary. Policy loan
interest credits are allocated to the guaranteed principal account and
separate account following the policy owner's instructions. Minnesota
Mutual will use the instructions for the
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allocation of net premiums. In the absence of such instructions, this
amount will be allocated to the guaranteed principal account actual
cash value and separate account actual cash value in the same
proportion that those values bear to each other and, as to the actual
cash value in the separate account, to each sub-account in the
proportion that the actual cash value in such sub-account bears to the
policy's actual cash value in all of the sub-accounts.
Policy loans may also be used as automatic premium loans to keep a
policy in force. If the owner has asked for this service in the
application, or if the policy owner writes and asks for this service
after the policy has been issued, Minnesota Mutual will make automatic
premium loans. The policy owner can also write at any time and ask to
delete this service. If the policy owner has this service and has not
paid the premium due that is due before the end of the grace period, a
policy loan will be made to pay the premium. Interest on such a policy
loan is charged from the date the premium was due. However, in order
for an automatic premium loan to occur, the amount available for a loan
must be enough to pay at least a quarterly premium. If the loan value
is not enough to pay at least a quarterly premium, the policy will
lapse.
A policy loan has no immediate effect on policy value since at the time
of the loan the policy value is the sum of the actual cash value and
any policy loan.
A policy loan, whether or not it is repaid, will have a permanent
effect on the policy value because the investment results of the sub-
accounts of the Variable Life Account will apply only to the amount
remaining in the sub-accounts. The effect could be either positive or
negative. If net investment results of the sub-accounts of the
Variable Life Account are greater than the amount being credited on the
loan, the
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policy value will not increase as rapidly as it would have if no loan
had been made. If investment results of the sub-accounts are less than
the amount being credited on the
loan, the policy value will be greater than if no loan had been made.
The guaranteed minimum death benefit is not affected by policy debt if
premiums are duly paid. However, on settlement, the amount of any
policy debt is subtracted from the insurance amount.
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Exhibit 99-I(1)
NOTICE OF WITHDRAWAL RIGHT
Date
Specimen
400 Robert Street North
St. Paul, Minnesota 55101
Re: A VAL STD
MONTHLY -
ANNUALIZED -
Dear Specimen:
Congratulations on your purchase of the attached Variable Adjustable Life Second
Death Insurance policy. Minnesota Mutual wants you to understand that this is
an investment-oriented life insurance policy with customary insurance expense
charges. You have a right to examine and return the policy for cancellation and
a full refund of premiums paid. This letter will explain the procedure for
returning your policy if it does not meet your needs.
Your policy cash value will vary depending on the investment experience of the
portfolios (sub-accounts) you selected. The Minnesota Mutual Variable Life
Account and all sub-accounts are described in your prospectus.
Your scheduled premium is shown on Page 1A of your policy, and we encourage you
to review your ongoing ability to pay the premium. Your prospectus describes
the various deductions from your premiums before application to the Variable
Life Account. These charges are similar to those made in a whole life insurance
policy. They are:
- A premium tax charge of 2.5 percent, a 1.25 percent federal tax charge
and a 7 percent basic sales load, and
- A first year sales charge not to exceed 23 percent of premium and a
first year underwriting charge not to exceed $5 per $1,000 of face
amount of insurance.
These charges do not include any premiums for additional benefits or
deductions for administration, transaction, face amount guarantee or
insurance costs assessed against policy actual cash values.
If you have any questions, please contact your agent immediately. We want you
to understand and be satisfied with this policy. If you are satisfied, no
action on your part is required. If the
<PAGE>
policy is not what you want, you must complete the attached form and return it,
along with the policy, postmarked no later than the later of:
- 10 days from the date you received this notice and policy, or
- 45 days from the date you completed Part 1 of the application.
We are confident you'll be satisfied with this policy and look forward to a long
association. Thank you for choosing Minnesota Mutual.
Sincerely,
Nancy Winter
Director
Individual Policy Services
<PAGE>
Exhibit 99-I(2)
NOTICE OF WITHDRAWAL RIGHT
Date
Specimen
400 Robert Street North
St. Paul, Minnesota 55101
Re: POLICY NUMBER
A VAL STD
MONTHLY -
ANNUALIZED -
Dear Specimen:
Congratulations on the recent adjustment to your Variable Adjustable Life Second
Death Insurance policy. You already know this is an investment-oriented life
insurance policy with customary insurance expense charges. You have a right to
examine and return the policy for cancellation of the adjustment and a refund of
any associated premiums. This letter will explain the procedure of declining
your adjustment if it does not meet your needs.
Your policy cash value will vary depending on the investment experience of the
portfolios (sub-accounts) you selected. The Minnesota Mutual Variable Life
Account and all sub-accounts are described in your prospectus.
Your scheduled premium is shown on Page 1A of your policy, and we encourage you
to review your ongoing ability to pay the premium. Your prospectus describes
the various deductions from your premiums before application to the Variable
Life Account. These charges are similar to those made in a whole life insurance
policy. They are:
- A premium tax charge of 2.5 percent, a 1.25 percent federal tax charge
and a 7 percent basic sales load, and
- A first year sales charge not to exceed 23 percent of the increased
premium and a first year underwriting charge not to exceed $5 per $1,000
of the increased face amount of insurance.
These charges do not include any premiums for additional benefits or
deductions for administration, transaction, face amount guarantee or
insurance costs assessed against policy actual cash values.
<PAGE>
If you have any questions, please contact your agent immediately. We want you
to understand and be satisfied with this adjustment. If you are satisfied, no
action on your part is required. If the adjustment is not what you want, you
must complete the attached form and return it, along with the policy, postmarked
no later than the later of:
- 10 days from the date you received this notice and adjustment, or
- 45 days from the date you completed Part 1 of the application.
We are confident you'll be satisfied with this adjustment and look forward to a
long association. Thank you for choosing Minnesota Mutual.
Sincerely,
Nancy Winter
Director
Individual Policy Services
<PAGE>
Exhibit 99-J
The Minnesota Mutual Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, The Minnesota Mutual Life Insurance Company ("Minnesota Mutual")
has established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Minnesota Mutual Variable Fund D ("Fund D") is a separate account
of Minnesota Mutual registered as a unit investment trust under the Investment
Company Act of 1940 offering variable annuity contracts registered under the
Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Annuity Account ("Variable Annuity
Account") is a separate account of Minnesota Mutual registered as a unit
investment trust under the Investment Company Act of 1940 offering variable
annuity contracts registered under the Securities Act of 1933, and
WHEREAS, Minnesota Mutual Variable Life Account ("Variable Life Account")
is a separate account of Minnesota Mutual registered as a unit investment trust
under the Investment Company Act of 1940 offering variable adjustable life
insurance policies registered under the Securities Act of 1933,
WHEREAS, Minnesota Mutual Group Variable Annuity Account ("Group Variable
Annuity Account") is a separate account of Minnesota Mutual which has been
established for the purpose of issuing group annuity contracts on a variable
basis and which is to be registered as a unit investment trust under the
Investment Company Act of 1940 offering group variable annuity contracts and
certificates to be registered under the Securities Act of 1933;
WHEREAS, Minnesota Mutual Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Mutual which has
been established for the purpose of issuing group and individual variable
universal life insurance policies on a variable basis and which is to be
registered as a unit investment trust under the Investment Company Act of 1940
offering group and individual variable universal life insurance policies to be
registered under the Securities Act of 1933;
NOW THEREFORE, We, the undersigned Trustees of Minnesota Mutual, do hereby
appoint Dennis E. Prohofsky and Garold M. Felland, and each of them
individually, as attorney in fact for the purpose of signing in their names and
on their behalf as Trustees of Minnesota Mutual and filing with the Securities
and Exchange Commission Registration Statements, or any amendment thereto, for
the purpose of: a) registering contracts and policies of Fund D, the Variable
Annuity Account, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account for sale by those entities and Minnesota
Mutual under the Securities Act of 1933; and b) registering Fund D, the Variable
Annuity Account, the Variable Life Account, the Group Variable Annuity Account
and the Variable Universal Life Account as unit investment trusts under the
Investment Company Act of 1940.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Coleman Bloomfield Chairman of the Board February 13, 1995
- -------------------------
Coleman Bloomfield
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert L. Senkler President and Chief February 13, 1995
- ----------------------------- Executive Officer
Robert L. Senkler
/s/ Anthony L. Andersen Trustee February 13, 1995
- -----------------------------
Anthony L. Andersen
/s/ John F. Grundhofer Trustee February 13, 1995
- -----------------------------
John F. Grundhofer
/s/ Harold V. Haverty Trustee February 13, 1995
- -----------------------------
Harold V. Haverty
/s/ Lloyd P. Johnson Trustee February 13, 1995
- -----------------------------
Lloyd P. Johnson
/s/ David S. Kidwell, Ph.D. Trustee February 13, 1995
- -----------------------------
David S. Kidwell, Ph.D.
/s/ Reatha C. King, Ph.D. Trustee February 13, 1995
- -----------------------------
Reatha C. King, Ph.D.
/s/ Thomas E. Rohricht Trustee February 13, 1995
- -----------------------------
Thomas E. Rohricht
- ----------------------------- Trustee
Terry N. Saario, Ph.D.
/s/ Frederick T. Weyerhaeuser Trustee February 13, 1995
- -----------------------------
Frederick T. Weyerhaeuser
</TABLE>
