<PAGE>
File Number XXX-XXXXX
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MINNESOTA LIFE VARIABLE LIFE ACCOUNT
------------------------------------
(Name of Trust)
Minnesota Life Insurance Company
--------------------------------
(Depositor)
400 Robert Street North, St. Paul, Minnesota 55101-2098
--------------------------------------------------------
(Depositor's Principal Executive Offices)
Dennis E. Prohofsky
Senior Vice President, General Counsel and Secretary
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
-------------------------------
(Agent for Service)
Copy to:
J. Sumner Jones, Esq.
Jones & Blouch L.L.P.
1025 Thomas Jefferson Street, N.W., Suite 410 East
Washington, D.C. 20007
TITLE OF SECURITIES BEING REGISTERED:
Variable Adjustable Life Insurance Policies
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.
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.
<PAGE>
MINNESOTA LIFE
VARIABLE LIFE ACCOUNT
OF
MINNESOTA 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, Minnesota 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, Advantus Series Fund,
Inc.
12. Summary; Detailed Information About the Variable Adjustable Life
Insurance Policy; General Descriptions, Advantus 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
<PAGE>
18. Advantus Series Fund, Inc. and Class 2 of the Templeton
Developing Markets Fund
19. Voting Rights
20. Not Applicable
21. Not Applicable
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. General Descriptions, Minnesota Life Insurance Company
26. Not Applicable
27. General Descriptions, Minnesota Life Insurance Company
28. Directors and Principal Officers of Minnesota Life
29. General Descriptions, Minnesota Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. General Descriptions, Minnesota 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
<PAGE>
46. Detailed Information About the Variable Adjustable Life Insurance
Policy, Policy Loans, Surrender
47. Not Applicable
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; Advantus
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
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
Prospectus
Variable Adjustable Life
Insurance Policy
[LOGO APPEARS HERE]
This prospectus describes a Variable Adjustable Life Insurance Policy issued
by Minnesota Life Insurance Company ("Minnesota Life").
The Policy may be adjusted, within described limits, as to face amount,
premium amount and the plan of insurance.
Variable Adjustable Life policy values may be invested in our separate account
called the Variable Life Account. Policy values may also be invested in a
general account option. The actual cash value of each Policy will vary with
the investment experience of these options.
The Variable Life Account invests its assets in shares of Advantus Series
Fund, Inc. and Class 2 of the Templeton Developing Markets Fund, a series of
Templeton Variable Products Series Fund (the "Funds"). The Portfolios of the
Funds available to the Variable Life Account are:
. Growth . Value Stock
. Bond . Small Company Value
. Money Market . Global Bond
. Asset Allocation . Index 400 Mid-Cap
. Mortgage Securities . Macro-Cap Value
. Index 500 . Micro-Cap Growth
. Capital Appreciation . Real Estate Securities
. International Stock . Templeton Developing Markets Fund
. Small Company Growth
This prospectus must be accompanied by the current prospectuses of the Funds.
You should read the prospectus carefully and retain it for future reference.
The Policy has not been approved or disapproved by the SEC. Neither the SEC
nor any state has determined whether this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101-2098
Ph 651/665-3500
http://www.minnesotamutual.com
Dated:
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Summary.................................................................... 1
Condensed Financial Information............................................ 6
General Descriptions
Minnesota Life Insurance Company......................................... 8
Variable Life Account.................................................... 8
Advantus Series Fund, Inc................................................ 8
Templeton Variable Products Series Fund.................................. 9
Additions, Deletions or Substitutions.................................... 9
Selection of Sub-Accounts................................................ 10
The Guaranteed Principal Account......................................... 10
Detailed Information about the Variable Adjustable Life Insurance Policy
Adjustable Life Insurance................................................ 11
Policy Adjustments....................................................... 12
Restrictions on Adjustments.............................................. 13
Applications and Policy Issue............................................ 14
Policy Premiums.......................................................... 15
Actual Cash Value........................................................ 18
Death Benefit Options.................................................... 20
Policy Loans............................................................. 21
Surrender................................................................ 22
Free Look................................................................ 23
Policy Charges........................................................... 23
Other Policy Provisions.................................................. 25
Additional Benefits...................................................... 27
Other Matters
Federal Tax Status....................................................... 28
Directors and Principal Officers of Minnesota Life....................... 31
Voting Rights............................................................ 31
Distribution of Policies................................................. 32
Legal Matters............................................................ 33
Legal Proceedings........................................................ 33
Experts.................................................................. 33
Registration Statement................................................... 33
Special Terms.............................................................. 34
Financial Statements of Minnesota Life Variable Life Account...............
Financial Statements of Minnesota Life Insurance Company...................
Appendix A--Illustrations of Policy Values, Death Benefits and Premiums.... A-1
Appendix B--How Premium Becomes Cash Value................................. B-1
Appendix C--Illustration of Death Benefit Calculation...................... C-1
Appendix D--Example of Sales Charge and Additional Face Amount Charge
Computation............................................................... D-1
Appendix E--Average Annual Returns......................................... E-1
Appendix F--S&P 500 Performance History.................................... F-1
Appendix G--Range of Returns............................................... G-1
</TABLE>
<PAGE>
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 is not a comprehensive summary. You should review the
information contained elsewhere in this prospectus. You should also refer to
the "Special Terms" section for the definition of unfamiliar terms.
What is a Variable Adjustable Life Insurance Policy?
The Variable Adjustable Life Insurance Policy (the "Policy") described in
this prospectus combines a guaranteed plan of insurance, flexible
administrative procedures and significant and useful market sensitive
investment features. The Policy is called VAL Horizon.
What is the guaranteed plan of insurance?
For any given level of premium, face amount and death benefit option, we
guarantee a specific plan of insurance. The plan of insurance is the period
during which insurance coverage is guaranteed and the period during which you
must pay premiums to maintain that guarantee. These two periods are not always
the same. For example, the Policy could have guaranteed insurance coverage for
40 years, with premiums payable for 7 years; or insurance coverage for life,
with premiums payable for 30 years.
What makes the Policy "Adjustable"?
The Policy is termed "Adjustable" because it allows you the flexibility to
tailor the Policy to your needs at issue and thereafter to change or "adjust"
your Policy as your insurance needs change.
Within very broad limits, including those designed to assure that the Policy
qualifies as life insurance for tax purposes, you may choose the level of
premium you wish to pay, the face amount and the death benefit option that you
need. Based on these three factors, we will calculate the guaranteed plan of
insurance.
The maximum plan of insurance available is one where the Policy becomes
paid-up after the payment of five annual premiums. A Policy becomes paid-up
when its policy value is such that no further premiums are required to
guarantee the face amount and the death benefit option for the life of the
insured, provided there is no policy indebtedness.
The minimum plan of insurance that we offer at original issue is a plan that
provides guaranteed insurance coverage for ten years with premiums payable for
ten years. If the insured's age at original issue is over 45, the minimum plan
of insurance will be less than ten years, as described in the table below:
<TABLE>
<CAPTION>
Minimum Plan
Issue Age (in years)
--------- ------------
<S> <C>
46 9
47 8
48 7
49 6
50 5
51 4
52 or greater 3
</TABLE>
A protection plan of insurance guarantees insurance coverage and a scheduled
premium level, for a specified number of years, always less than for whole
life. A protection plan requires the lowest initial level of premiums and
offers the most insurance protection with the lowest investment element.
At high premium levels, the period of premium payments may be limited to
satisfy the requirements of the Internal Revenue Code to qualify as life
insurance. The result will be a protection plan that guarantees coverage beyond
the premium paying period.
A protection plan of insurance may reach the end of the period of guaranteed
insurance coverage before the Policy becomes paid up. At that time, we will
calculate a new plan of insurance, using the policy value along with the
current premium, face amount and death benefit option. If these factors are not
sufficient to guarantee coverage for a least one year, you may adjust the
Policy to ensure that coverage continues.
For any given face amount and death benefit option, you may select a premium
that results in a plan that falls anywhere between the minimum protection plan
and
1
<PAGE>
the maximum whole life plan. In general, 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.
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 needs and personal
circumstances change over the years, you may change, subject to the
limitations described herein, the premium, face amount and death benefit
option, and thus the plan of insurance.
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 12.
What makes the Policy "Variable"?
Traditional whole life and universal life contracts provide for
accumulations of contract values at fixed rates determined by the insurance
company. Variable Adjustable Life policy values may be invested at your
direction in a separate account of ours called the Minnesota Life Variable
Life Account ("Variable Life Account") or in a Minnesota Life general account
option. The sub-accounts of the Variable Life Account invest in corresponding
Portfolios of the Advantus Series Fund, Inc. or in Class 2 of the Templeton
Developing Markets Fund (the "Funds"). Such investment enables you to obtain
market rates of return.
The actual cash value of the Policy, to the extent invested in sub-accounts
of the Variable Life Account, will vary with the investment experience of the
sub-accounts you select. These have no guaranteed minimum 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 face amount)
with investment experience.
Those seeking the traditional insurance protections where the cash value is
guaranteed 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 10.
What variable investment options are available?
The Variable Life Account invests in Portfolios of the Funds. These offer
policy owners the opportunity to invest in stocks, bonds, mortgage securities
and money market instruments. The available Portfolios are:
. Growth
. Bond
. Money Market
. Asset Allocation
. Mortgage Securities
. Index 500
. Capital Appreciation
. International Stock
. Small Company Growth
. Value Stock
. Small Company Value
. Global Bond
. Index 400 Mid-Cap
. Macro-Cap Value
. Micro-Cap Growth
. Real Estate Securities Portfolios
. Templeton Developing Markets Fund, Class 2
The Portfolios have different investment objectives and different levels of
risk. 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 prospectuses for the
Funds, which are 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 we receive your request to change the allocation. You
may also request to transfer amounts from one sub-account to another.
2
<PAGE>
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 which option best fits your need.
The Cash Option provides a fixed death benefit equal to the guaranteed face
amount. Favorable non-guaranteed elements, including investment returns, will
be reflected in increased actual cash values. The death benefit will vary only
if necessary to satisfy the definition of life insurance.
The Protection Option provides a variable death benefit equal to the
guaranteed face amount plus the policy value. Favorable non-guaranteed
elements, including investment returns, will be reflected both in increased
life insurance coverage and increased actual cash values.
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 23. 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.
Charges for substandard risks and charges for additional benefits are
deducted from the premium to calculate the base premium. Charges for
substandard risks include both table ratings and cash extra charges. Charges
for substandard risks compensate us for providing the death benefit for
policies whose mortality risks exceed the standard.
Against first year base premiums we deduct a Sales Charge of up to 44
percent and an Additional Face Amount Charge of up to $5 per $1,000 of face
amount. We also deduct from each base premium a Premium Charge of 6 percent.
Non-repeating premiums are currently subject only to a Premium Charge of 3
percent.
Against the actual cash value of a Policy we deduct a Monthly Policy Charge
of $8 plus $.02 per $1,000 of face amount, a transaction charge for each Policy
adjustment and a Monthly Cost of Insurance Charge.
Against the assets held in the Variable Life Account we deduct Mortality and
Expense Risk charges at an annual rate of .50%.
Advisory fees and other fund expenses are deducted from the Funds as shown
in the chart below; the 1998 respective advisory fee and fund expense are a
percent of average daily net assets for each portfolio.
<TABLE>
<CAPTION>
Advisory Other Net Fund
Portfolio Name Fee Expenses* Total
-------------- -------- -------------- -----
<S> <C> <C> <C>
Advantus Series Fund, Inc.:
Growth 0.50% 0.03% 0.53%
Bond 0.50 0.05 0.55
Money Market 0.50 0.08 0.58
Asset Allocation 0.50 0.03 0.53
Mortgage Securities 0.50 0.07 0.57
Index 500 0.40 0.04 0.44
Capital Appreciation 0.75 0.03 0.78
International Stock 0.70 0.24 0.94
Small Company Growth 0.75 0.04 0.79
Value Stock 0.75 0.04 0.79
Small Company Value 0.75 0.15 0.90
Global Bond 0.60 0.53 1.13
Index 400 Mid-Cap 0.40 0.15 0.55
Macro-Cap Value 0.70 0.15 0.85
Micro-Cap Growth 1.10 0.15 1.25
Real Estate Securities 0.75 0.15 0.90
Templeton Variable Product Series:
Developing Markets Fund 1.25 0.66 1.91
Class 2
Average 0.67 0.15 0.82
</TABLE>
(*) Minnesota Life voluntarily absorbed certain expenses of the Small Company
Value, Index 400 Mid-Cap, Macro-Cap Value, Micro-Cap Growth, and Real
Estate Securities Portfolios for the period ended December 31, 1998. If
these Portfolios had been charged for expenses, the ratio of expenses to
average daily net assets would have been 1.83%, 1.36%, 2.53%, 2.10%, and
1.90%, respectively. For these Portfolios, it is Minnesota Life's
intention to waive fund expenses during the current fiscal year which
exceed, as a percentage of average daily net assets, .15%. Minnesota Life
also reserves the option to reduce the level of other expenses which it
will voluntarily absorb.
3
<PAGE>
Advantus Capital Management, Inc., one of our subsidiaries, acts as the
investment adviser to Advantus Series Fund. The advisory fee of the fund
manager and the other fund expenses are reflected in the value of the fund
shares held in the corresponding sub-account of the Variable Life Account. For
more information, see the prospectus of Advantus Series Fund, Inc. which is
attached to this prospectus.
The Templeton Developing Markets Fund pays the following annual fees and
expenses:
. investment adviser management fees -- 1.25 percent
. Rule 12b-1 plan fees -- .25 percent
. other fund expenses -- .41 percent
For more information, see the Templeton Fund's prospectus.
SUMMARY OF POLICY CHARGES
<TABLE>
<CAPTION>
Rate Charged Against
---- ---------------
<S> <C> <C>
Base Premium
Premium Charge 6.0% All base premiums
Sales Charge up to 44% First-year base premiums
Additional Face Amount Charge up to $5/$1000 First-year base premiums
Non-Repeating Premium
Premium Charge 3.0% All non-repeating Premiums
Actual Cash Value Charges
Monthly Policy Charge $8.00 + $0.02/$1000 Actual cash value
Cost Of Insurance Charge varies by policy Actual cash value
Transaction Charge up to $25.00 Actual cash value
Separate Account Charges
Mortality & Expense Risk Charge 0.50% annual rate Average daily net assets
Fund Charges
Advisory Fee varies by fund Average daily net assets
Other Fund Fees varies by fund Average daily net assets
</TABLE>
Are the benefits under a Policy subject to Federal income tax?
With respect to a Policy issued on the basis of a standard premium class, we
believe that it should qualify as a life insurance contract for Federal income
tax purposes. With respect to a Policy issued on a substandard basis, it is
not clear whether or not such a Policy would qualify as a life insurance
contract for Federal tax purposes. Assuming that a Policy qualifies as a life
insurance contract for Federal income tax purposes, the benefits under
Policies described in this prospectus should receive the same tax treatment
under the Internal Revenue Code of 1986 as benefits under traditional fixed
benefit life insurance policies. Thus, death proceeds payable under variable
life insurance policies should be excludable from the beneficiary's gross
income for Federal income tax purposes. We also believe that you should not be
in constructive receipt of the cash values of your Policy until actual
distribution. See the heading "Federal Tax Status" in this prospectus on page
28.
You should note, however, that the tax treatment described above relating to
distributions is available only for policies not described as "modified
endowment contracts." Policies described as modified endowment contracts are
treated as life insurance with respect to the tax treatment of death proceeds
and the tax-free inside build-up of yearly cash value increases. However, any
amounts you receive, such as loans and amounts received from partial or total
surrender of the contract will be subject to the same tax treatment as amounts
received under an annuity. Annuity tax treatment includes the ten percent
additional income tax 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, is attributable to the policy owner
becoming disabled, or is 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.
4
<PAGE>
To determine whether a policy is a modified endowment contract and subject
to this special tax treatment requires an examination of the premium paid in
relation to the death benefit of the policy. A modified endowment contract
results if the cumulative premiums during the first seven contract years exceed
the sum of the net level premiums which would be paid under a seven-pay life
policy. In addition, a policy which is subject to a material change will be
treated as a new policy on the date that such a material change takes effect.
At that time we determine whether such a policy meets the seven-pay standard by
taking into account the previously existing cash surrender value. We will
monitor your Policy to determine whether it may become a modified endowment
contract.
How do you purchase a Policy?
To be eligible to purchase a Policy the insured must be no more than age 90
and satisfy our underwriting standards. To purchase a Policy you must 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 14.
For a limited time after your Policy is delivered, you may return the Policy
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 23.
Do you have access to your policy values?
Yes. Your actual cash value is available to you during the insured's
lifetime. 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.
These alternatives may be subject to conditions described in the Policy or in
this prospectus under the heading "Actual Cash Value" on page 18 and certain
transactions may have tax consequences as described under the heading "Federal
Tax Status" on page 28.
5
<PAGE>
Condensed Financial Information
The financial statements of Minnesota Life Insurance Company and of
Minnesota Life Variable Life Account may be found elsewhere in this
prospectus.
The table below gives per unit information about the financial history of
each sub-account from the inception of each to December 31, 1998. This
information should be read in conjunction with the financial statements and
related notes of Minnesota Life Variable Life Account included in this
prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ---------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Sub-Ac-
count:
Unit value at
beginning of
year $3.43 $2.59 $2.22 $1.79 $1.79 $1.72 $1.65 $1.23 $1.24 $0.99
Unit value at
end of year $4.60 $3.43 $2.59 $2.22 $1.79 $1.79 $1.72 $1.65 $1.23 $1.24
Number of units
outstanding at
end of year 22,653,190 19,284,419 16,176,371 12,822,494 9,964,217 6,671,352 3,703,167 1,251,845 511,276 257,995
Bond Sub-Ac-
count:
Unit value at
beginning of
year $2.17 $1.99 $1.95 $1.63 $1.72 $1.57 $1.48 $1.26 $1.18 $1.06
Unit value at
end of year $2.29 $2.17 $1.99 $1.95 $1.63 $1.72 $1.57 $1.48 $1.26 $1.18
Number of units
outstanding at
end of year 13,380,650 9,679,443 7,366,222 5,340,539 3,659,230 2,240,344 1,281,711 654,954 484,684 247,525
Money Market
Sub-Account:
Unit value at
beginning of
year $1.66 $1.58 $1.52 $1.45 $1.40 $1.37 $1.34 $1.27 $1.19 $1.10
Unit value at
end of year $1.73 $1.66 $1.58 $1.52 $1.45 $1.40 $1.37 $1.34 $1.27 $1.19
Number of units
outstanding at
end of year 5,915,721 4,323,601 4,082,791 3,509,791 2,920,337 1,849,721 1,167,590 536,680 341,717 141,494
Asset Allocation
Sub-
Account:
Unit value at
beginning of
year $2.96 $2.50 $2.23 $1.79 $1.83 $1.73 $1.62 $1.26 $1.22 $1.02
Unit value at
end of year $3.64 $2.96 $2.50 $2.23 $1.79 $1.83 $1.73 $1.62 $1.26 $1.22
Number of units
outstanding at
end of year 38,273,621 34,942,517 32,104,595 27,633,273 23,769,797 18,341,417 8,943,507 2,587,520 1,202,183 408,152
Mortgage Securi-
ties
Sub-Account:
Unit value at
beginning of
year $2.31 $2.13 $2.03 $1.73 $1.80 $1.66 $1.56 $1.35 $1.24 $1.10
Unit value at
end of year $2.45 $2.31 $2.13 $2.03 $1.73 $1.80 $1.66 $1.56 $1.35 $1.24
Number of units
outstanding at
end of year 5,351,168 4,464,617 4,175,648 3,616,256 3,250,971 2,419,453 1,471,984 555,964 241,631 95,633
Index 500 Sub-
Account:
Unit value at
beginning of
year $3.86 $2.93 $2.42 $1.78 $1.77 $1.62 $1.51 $1.17 $1.23 $0.95
Unit value at
end of year $4.92 $3.86 $2.93 $2.42 $1.78 $1.77 $1.62 $1.51 $1.17 $1.23
Number of units
outstanding at
end of year 28,132,934 22,433,487 17,250,529 11,917,281 8,997,722 6,074,831 4,026,796 1,307,951 658,612 237,854
Capital Appreci-
ation
Sub-Account:
Unit value at
beginning of
year $3.82 $3.00 $2.56 $2.10 $2.06 $1.87 $1.79 $1.27 $1.30 $0.95
Unit value at
end of year $4.98 $3.82 $3.00 $2.56 $2.10 $2.06 $1.87 $1.79 $1.27 $1.30
Number of units
outstanding at
end of year 24,802,737 22,986,605 19,778,274 16,587,673 12,929,134 9,082,661 5,053,453 1,689,614 802,456 181,898
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- --------- --------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Stock Sub-
Account:
Unit value at beginning
of
year $1.99 $1.79 $1.50 $1.32 $1.33 $0.93 $1.00(a)
Unit value at end of
year $2.11 $1.99 $1.79 $1.50 $1.32 $1.33 $0.93
Number of units out-
standing at end of year 42,958,209 35,764,833 28,056,128 20,883,317 15,062,750 6,244,750 1,615,754
Small Company Growth
Sub-
Account:
Unit value at beginning
of
year $1.81 $1.69 $1.59 $1.21 $1.15 $1.00(b)
Unit value at end of
year $1.82 $1.81 $1.69 $1.59 $1.21 $1.15
Number of units out-
standing at end of year 33,912,334 27,207,371 19,918,050 13,089,758 7,074,933 1,261,521
Value Stock Sub-Account:
Unit value at beginning
of
year $2.15 $1.78 $1.37 $1.04 $1.00(c)
Unit value at end of
year $2.18 $2.15 $1.78 $1.37 $1.04
Number of units out-
standing at end of year 23,718,362 17,273,210 9,648,331 3,864,294 971,938
Small Company Value Sub-
Account:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $0.86
Number of units out-
standing at end of year 894,678
Global Bond Sub-Account:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $1.12
Number of units out-
standing at end of year 293,075
Index 400 Mid-Cap Sub-
Account:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $1.05
Number of units out-
standing at end of year 1,020,446
Macro-Cap Value Sub-Ac-
count:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $1.06
Number of units out-
standing at end of year 823,503
Micro-Cap Growth Sub-Ac-
count:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $1.03
Number of units out-
standing at end of year 733,049
Real Estate Securities
Sub-Account:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $0.87
Number of units out-
standing at end of year 284,627
Templeton Development
Markets Sub-Account:
Unit value at beginning
of
year $1.00(d)
Unit value at end of
year $0.86
Number of units out-
standing at end of year 778,238
</TABLE>
(a) The information for the sub-account is shown for the period May 1, 1992 to
December 31, 1992. May 1, 1992 was the effective date of the 1933 Act
Registration.
(b) The information for the sub-account is shown for the period May 3, 1993 to
December 31, 1993. May 3, 1993 was the effective date of the 1933 Act
Registration.
(c) The information for the sub-account is shown for the period May 2, 1994 to
December 31, 1994. May 2, 1994 was the effective date of the 1933 Act
Registration.
(d) The information for the sub-account is shown for the period May 19, 1998,
commencement of operations, to December 31, 1998.
7
<PAGE>
General Descriptions
Minnesota Life Insurance Company
We are Minnesota Life Insurance Company ("Minnesota Life"), a life insurance
company organized under the laws of Minnesota. Minnesota Life was formerly
known as The Minnesota Mutual Life Insurance Company ("Minnesota Mutual"), a
mutual life insurance company organized in 1880 under the laws of Minnesota.
On October 1, 1998, a plan of reorganization created a mutual insurance
holding company named Minnesota Mutual Companies, Inc. Minnesota Mutual
reorganized as a stock insurance company subsidiary of the new holding company
and took the new name Minnesota Life. Our home office is at 400 Robert Street
North, St. Paul, Minnesota 55101-2098, telephone: (651) 665-3500. We are
licensed to conduct life insurance business in all states of the United States
(except New York where we are an authorized reinsurer), the District of
Columbia, Canada, Puerto Rico and Guam.
Variable Life Account
On October 21, 1985, our Board of Trustees established a separate account,
called the Minnesota Life Variable Life Account, 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
("SEC") under the Investment Company Act of 1940 ("1940 Act"). Registration
under the Act does not signify that the SEC 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 Life 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 seventeen sub-accounts to which you
may allocate premiums. Each sub-account invests in shares of a corresponding
Portfolio of the Funds.
Advantus Series Fund, Inc.
The Variable Life Account currently invests in Advantus Series Fund, Inc., a
mutual fund of the series type. Prior to May 1, 1997, the name of the Fund was
"MIMLIC Series Fund, Inc." Advantus Series Fund is registered with the SEC as
a diversified, open-end management investment company. Such registration does
not signify that the SEC 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.
Advantus Series Fund's investment adviser is Advantus Capital Management,
Inc. ("Advantus Capital"). Advantus Capital is a wholly-owned subsidiary of
Minnesota Life.
While Advantus Capital acts as investment adviser to the Fund and its
Portfolios, it has obtained an order from the SEC permitting it to act as a
"manager of managers". Pursuant to the order, Advantus Capital may, for any
portfolio, select one or more sub-advisers and adopt or amend an investment
sub-advisory agreement without approval of the shareholders of the affected
portfolio. In accordance with the order, Advantus Capital has retained the
following sub-advisers:
. Winslow Capital Management, Inc. for the Capital Appreciation Portfolio,
. Templeton Investment Counsel, Inc. for the International Stock Portfolio,
8
<PAGE>
. J.P. Morgan Investment Management Inc. for the Macro-Cap Value Portfolio,
. Wall Street Associates for the Micro-Cap Growth Portfolio, and
. Julius Baer Investment Management Inc. for the Global Bond Portfolio
The Fund currently has nineteen investment Portfolios, sixteen 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 options are available?" in this prospectus and the prospectus of the
Advantus Series Fund, Inc. which is attached to this prospectus.
Templeton Variable Products Series Fund
In addition to the investments in Advantus Series Fund, the Variable Life
Account invests in the Templeton Developing Markets Fund, Class 2, a
diversified portfolio of the Templeton Variable Products Series Fund, a mutual
fund of the series type.
Class 2 of the Templeton Developing Markets Fund pays 0.25 percent of the
average daily net assets annually under a distribution plan adopted under Rule
12b-1 under the 1940 Act. Amounts paid under the 12b-1 plan to us may be used
for certain contract owner services or distribution activities.
The investment adviser of Templeton Developing Markets Fund is Templeton
Asset Management Ltd., a Singapore corporation. It is an indirect wholly-owned
subsidiary of Franklin Resources, Inc. ("Franklin"). Through its subsidiaries,
Franklin is engaged in the financial services industry. The Templeton
organization has been investing globally since 1940 and, with its affiliates,
provides investment management and advisory services to a worldwide client
base. The investment adviser and its affiliates have offices worldwide.
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 Policies of this class, 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 SEC.
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 SEC.
We also reserve the right, when permitted by law, to de-register the
Variable Life Account under the 1940 Act, 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 Funds 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 Funds
9
<PAGE>
simultaneously. Although neither we nor the Funds currently foresee any such
disadvantages either to variable life insurance policy owners or to variable
annuity contract owners, the Funds' Boards of Directors intend 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:
. changes in state insurance laws,
. changes in Federal income tax laws,
. changes in the investment management of any of the Portfolios of the Funds,
or
. differences in voting instructions between those given by policy owners and
those given by contract owners.
Selection of Sub-accounts
You must make a choice as to how your net premiums are allocated among the
various sub-accounts. In choosing, you should consider how willing you might be
to accept investment risks and the manner in which your other assets are
invested. The sub-accounts represent a broad range of investments available in
the marketplace.
The common stock sub-accounts differ depending on the types of stocks that
make up the sub-account. The focus of each sub-account varies by the size of
company, growth or value style, and U.S. versus international markets.
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 may be more desirable options for policy owners who
are willing to accept such short-term risks. These risks tend to be magnified
in the sub-accounts investing in more aggressive stocks, smaller company stocks
and international stocks. As an alternative to the actively managed sub-
accounts, index sub-accounts are available which tend to match the risks and
performance of those common stocks included in the underlying index.
Some policy owners, who desire the greatest safety of principal may prefer
the money market sub-account, recognizing that the level of short-term rates
may change rather rapidly. Some policy owners may wish to rely on Advantus
Capital's judgment for an appropriate asset mix by choosing the asset
allocation sub-account.
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 our general
account.
Because of exemptive and exclusionary provisions, interests in our 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 1940
Act. Therefore, neither the guaranteed principal account nor any interest
therein is subject to the provisions of these Acts, and we have been advised
that the staff of the SEC does not review disclosures relating to the
guaranteed principal account. 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 Variable Adjustable Life 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
Variable Adjustable Life Policy.
General Account Description Our general account consists of all assets owned by
us other than those in the Variable Life Account and any other separate
accounts which we may establish. The guaranteed principal account is that
portion of our general assets which is attributable to this Policy and policies
of this class, 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
10
<PAGE>
Detailed Information about the
Variable Adjustable Life Insurance Policy
of contracts of this class. Allocations to the guaranteed principal account
become part of our general assets and are used to support insurance and annuity
obligations. Subject to applicable law, we have 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.
You may allocate or transfer a portion or all of the net premiums to
accumulate at a fixed rate of interest in the guaranteed principal account. We
guarantee such amounts 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 We bear the full investment risk for amounts allocated to
the guaranteed principal account. We guarantee 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.
We may, at our sole discretion, credit a higher rate of interest, "excess
interest," although we are not obligated to credit interest in excess of 4
percent per year, and may 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 our sole discretion. You
assume the risk that interest credited may not exceed the guaranteed minimum
rate.
Even if excess interest is credited to your actual cash value in the
guaranteed principal account, we will not credit excess interest 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 year.
Adjustable Life Insurance
This Policy is similar to our conventional life insurance product known as
"adjustable life". This Policy, like conventional 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 the
premium, face amount and death benefit option, we will calculate the guaranteed
plan of insurance. Thus, adjustable life allows you the flexibility to
customize a Policy to meet your needs. Theoretically, each Policy can be unique
because of the different combinations of age, 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. You may adjust the face amount and premium level, and thus the plan of
insurance, subject to the limitations described herein, so long as the Policy
remains in force.
Flexibility at Issue Subject to certain minimums, maximums and our underwriting
standards, you may choose any level of premium or death benefit that you wish.
This flexibility results in a broad range of plans of insurance. Generally
speaking, a plan of insurance refers to the period during which insurance is
guaranteed and the period during which you will have to pay premiums.
Whole life insurance plans provide life insurance in an amount at least
equal to the face amount at the death of the insured whenever that occurs.
Premiums may be payable for a specified number of years or for the life of the
insured.
Protection insurance plans provide life insurance in an amount at least
equal to the face amount for a specified period, with premiums payable for a
specified period. These two periods may not be the same.
At high premium levels, the period of premium payments may be limited to
satisfy the requirements of the Internal Revenue Code to qualify as life
insurance. The result will be a protection plan that guarantees coverage beyond
the premium paying period.
The larger the premium you pay, the larger the policy values you may expect
to be available for investment in the Fund Portfolios. Under the Policy, the
highest
11
<PAGE>
premium permitted at the time of issue, for a specific death benefit, is one
which will provide a fully paid-up Policy after the payment of five annual
premium payments. A Policy becomes paid-up when its policy value is such that
no further premiums are required to provide the death benefit until the death
of the insured, provided there is no policy indebtedness.
Examples of 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 lowest annual base premium allowed for any plan of insurance is $300;
for insureds age 0 to 15, the minimum is $150. 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 death benefit for a period of ten
years from the policy date. If the insured's age at original issue is over age
45, the minimum plan of protection will be less than ten years, as described
in the table below:
<TABLE>
<CAPTION>
Minimum Plan
Issue Age (in years)
--------- ------------
<S> <C>
46 9
47 8
48 7
49 6
50 5
51 4
52 or greater 3
</TABLE>
This is the minimum plan of insurance for any given face amount. The minimum
initial face amount on a Policy is $25,000; if the insured is age 0 to 15, the
minimum face amount is $10,000.
Policy Adjustments
Adjustable life insurance policies allow you to change the premium, face
amount or the death benefit option of the Policy after it is issued. Subject
to the limitations described more fully below, you can at any time change the
face amount, the death benefit option or your scheduled premium. Any of those
changes will usually result in a change in the plan of insurance.
Depending upon the change you request, the premium paying period or the
guaranteed period of coverage may be lengthened or shortened.
Changes in premium, face amount or the death benefit option are referred to
as policy adjustments. They may be made singly or in combination with one
another.
A partial surrender of a Policy's cash value, an adjustment so that there
are no further scheduled base premiums, a change in underwriting
classification or any change requiring evidence of insurability are also
policy adjustments.
When a Policy is adjusted, we compute the new plan of insurance, face amount
or premium amount. If your Policy has the Cash Option and 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. An adjustment providing for no further scheduled base
premium, 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 17 of this prospectus. 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 a 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 "tabular
value" or 75 percent of the Policy's "policy 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 value" is the value underlying the
guaranteed plan of insurance. If 75 percent of the policy value is higher than
the tabular value, a policy adjustment will translate the excess value into an
improved plan of insurance. If 75 percent of the policy value is less than the
tabular value, using the tabular value ensures 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 value.
After adjustment, the tabular value shall be equal to the greater of 75
percent of the policy value or the tabular value prior to that adjustment,
plus any non-repeating premium
12
<PAGE>
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
your instructions, 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, we will reduce the face amount by the amount of any
partial surrender. With the Protection Option, we will not reduce the face
amount, but the death benefit will be reduced by the amount of the partial
surrender.
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, death benefit
option, scheduled premium, plan of insurance and attained age.
Adjustments can be made on any monthly anniversary of the policy date. You
may request a policy adjustment by completing an application for adjustment.
Any adjustment will be effective on the date that it is approved by us and
recorded at our home office.
Restrictions on Adjustments
An adjustment must satisfy certain limitations on premiums, face amount and
plan of insurance. Limitations are also designed to ensure that the Policy
qualifies as life insurance for federal tax purposes. 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.
(1) Any adjustment for a change of premium must result in a change of the
annual premium of at least $100. Currently, we will waive this limitation
for changes in premium which are the result of a face amount change under
the Inflation Agreement.
(2) Any Policy adjustment, other than a change to a stop premium, must result
in a Policy with an annual base premium of at least $300; if the insured is
age 0 to 15, the minimum is $150.
(3) Any adjustment for a change of the face amount must result in a change of
the face amount of at least $5,000, except for face amount changes which
are the result of an Inflation Agreement change or a partial surrender.
(4) An adjustment may not result in more than a paid-up whole life plan for the
current face amount.
(5) 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 five
years or to age 100, if less.
(6) After an adjustment involving a face amount or premium increase, the Policy
must provide insurance to the next policy anniversary at or after ten years
from the date of adjustment. If the insured's age at adjustment is over age
45, the minimum plan of protection will be less than ten years from the
date of adjustment, as described in the table below.
<TABLE>
<CAPTION>
Adjustment Age Number of Years
- -------------- ---------------
<S> <C>
46 9
47 8
48 7
49 6
50 5
51 4
52 or greater 3
</TABLE>
(7) An adjustment to stop premium requires that a Policy have an actual cash
value at the time of the adjustment sufficient to keep the Policy in force
until the next policy anniversary.
(8) After any adjustment, other than those described in (6) and (7), the Policy
must provide insurance to the next policy anniversary at or after one year
from the date of adjustment.
(9) No adjustments may be made during the first policy year.
Proof of Insurability We require proof of insurability for all adjustments
resulting in an increase in death benefit, except for increases made pursuant
to an additional benefit agreement. In addition, except for partial surrenders
to pay substandard risk premiums, we require proof of insurability 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
13
<PAGE>
insurability. We may require evidence of insurability when a non-repeating
premium is paid if the death benefit of your Policy increases as a result of
the payment of a non-repeating premium.
We may also require evidence of insurability to change underwriting
classification or to add additional agreements.
Charges in Connection with Policy Adjustments In connection with a policy
adjustment, we will make a special $25 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 $25 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 Sales Charge on any increase in premium
on adjustment. We will also assess an Additional Face Amount Charge on any
increase in face amount. See, for a further description of these charges, the
section "Policy Charges" in this prospectus on page 23. Limiting the Sales
Charge and the Additional Face Amount Charge to the increased premium or face
amount is in substance the equivalent of issuing a new Policy for the
increase.
The chart below illustrates the effect of certain policy adjustments:
Decrease the face amount
and keep premiums the same
The guaranteed period of
OR coverage will generally be
longer
Keep the face amount the
same and increase premiums
OR
OR The premium paying period
will generally be shorter
Keep the face amount and
premiums the same, and
switch from the Protection
Option to the Cash Option
- -------------------------------------------------------------------------------
Increase the face amount
and keep premiums the same
The guaranteed period of
coverage will generally be
OR shorter
Keep the face amount the OR
same and decrease premiums
The premium payment period
OR will generally be longer
Keep the face amount and
premiums the same, and
switch from the Cash Option
to the Protection Option
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
$25,000 and we require an annual base premium on each Policy of at least $300.
If the insured is age 0 to 15, the minimum face amount is $10,000 and the
minimum premium is $150. 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 insured's age at original issue is over age 45, the minimum plan of
protection will be less than ten years from the Policy date, as described on
page 12. The Policy must be issued on an insured no more than age 90. Before
issuing any Policy, we require evidence of insurability satisfactory to us,
which in some cases will require a medical examination. Persons who present a
lower mortality risk 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
14
<PAGE>
made. We will use the policy date 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. We have determined 15 days to be the normal time during which
delivery of the Policy 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, and a listing of any
additional agreements are stated on the policy information pages of the policy
form, page 1.
Policy Premiums
The Policies have a level premium payable for a specified period 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 13, you
may choose to adjust the Policy at any time and alter the amount of future
premiums.
The premium required for a Policy will depend on the Policy's initial face
amount, the death benefit option, the plan of insurance, the insured's age at
issue, gender, risk classification, tobacco use 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 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, the life of the insured
may be covered 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 under our automatic payment plan through pre-
authorized transfers from a bank checking account or such other account as your
bank approves.
Scheduled premiums on the Policy are payable for a specified period on an
annual, semi-annual or quarterly basis on the due dates set forth in the
Policy. You may also pay scheduled premiums monthly if you make arrangements
for payments through an automatic payment plan established through your bank or
if you meet the requirements to establish a payroll deduction plan through your
employer. 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 substandard risks are deducted from
premiums to calculate base premiums. From base premiums we deduct charges
assessed against premiums and non-repeating premiums to calculate net premiums.
Net 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
or by calling us at 1-800-277-9244 between the hours of 8:00 a.m. and 4:30
p.m., Central time, our regular business hours. The allocation to the
guaranteed principal account or to any sub-account of the Variable Life Account
must be in multiples of 5 percent of the net premium. We reserve the right to
delay the allocation of net premiums to named sub-accounts for a period of up
to
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30 days after Policy issue or an adjustment. In no event will any delay extend
beyond the free look period applied to the Policy in the state in which it is
issued. If we exercise this right, we will allocate net premiums 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.
Non-repeating Premiums The Policy also allows a policy owner to pay a premium
called a non-repeating premium. This payment of premium is in addition to the
scheduled premiums. The payment of a non-repeating premium will increase the
policy values you have available for investment in the Fund. The maximum non-
repeating premium we will accept is the amount sufficient to change your
Policy to a paid-up whole life policy for the face amount. The minimum non-
repeating premium is $500.
We will bill annually, semi-annually or quarterly for non-repeating premiums
if a Policy has a base annual premium of at least $2,400 and if the total
annual amount billed for non-repeating premiums is at least $600. You may also
arrange for monthly payments through an automatic payment plan established
through your bank; in this situation, your base annual premium must be at
least $2,400 and each non-repeating premium must be at least $50.
We may impose additional restrictions or refuse to permit non-repeating
premiums at our discretion.
The payment of a non-repeating premium may have Federal income tax
consequences. See the heading "Federal Tax Status" in this prospectus on page
28.
Paid-Up Policies A Policy is paid-up when no additional premiums are required
to provide the face amount of insurance for the life of the insured. We may or
may not accept additional premiums. However, the actual cash value of a paid-
up Policy 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 notice.
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
insured's life will continue to be insured during this 31-day period.
If a Policy covers an insured in a substandard risk class, you must continue
to pay the portion of the scheduled premium equal to the charge for such risk
even if the Policy is on stop premium. As with any scheduled premium, failure
to pay the premium for the substandard risk within the grace period 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
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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 we do not
receive the payment 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" below.
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, we will use it 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 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 on
the insured's life.
We determine the duration of the extended term benefit by applying the
surrender value of your Policy as of the end of the grace period as a 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
21.
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 unless the Policy
terminated because the surrender value has been paid. We will require:
(1) your written request to reinstate the Policy;
(2) that you submit to us at our home office during the insured's lifetime
evidence satisfactory to us of the insured's insurability so that we may
have time to act on the evidence during the insured's lifetime; 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 year 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 5 percent per year
compounded annually. At the present time we do not require the payment of
all overdue premiums, or the payment of interest on reinstated loans.
Avoiding Lapse If your Policy has sufficient loan value, you can avoid a lapse
due to the failure to pay a scheduled premium with 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 21 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 policy charges.
Automatic premium loans for the long term are generally not advantageous.
You may also avoid a lapse by adjusting your Policy to a zero base premium.
We call this the stop premium mode. We will determine a new plan of insurance
based on the face amount and death benefit option and the assumption that no
further premiums will be paid.
The insurance coverage resulting from an adjustment to a stop premium mode
is similar to the coverage available under the extended term option. Under
both, the coverage is provided only for a limited period of time. There are,
however, fundamental differences between the two. Extended term coverage is a
fixed benefit with fixed cash values providing a guaranteed period of coverage.
The stop premium mode provides variable insurance with an actual cash value
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and, under the Protection Option, a death benefit that will vary with the
actual cash value. Because the actual cash value continues to exist, we will
continue to assess policy charges against the actual cash value while the
Policy is on stop premium. Moreover, if a Policy covers an insured in a
substandard 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 you should consider. 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. 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 is
more complicated since the period of guaranteed coverage under the extended
term option will be different from that under the stop premium mode. When you
are making this decision you should ask us what these periods are.
Actual Cash Value
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. The actual cash value equals the value of the
guaranteed principal account and the value of the sub-accounts of the Variable
Life Account. 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
paid when required, because the separate account actual cash value varies
daily with the investment performance of the sub-accounts. Even if you
continue 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 values, the face amount and the death benefit as of
the date of the report. It will also summarize Policy transactions during the
year. The information will be current as of a date within two months of its
mailing.
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, asset credits, 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. We credit interest on the guaranteed principal account actual cash
value of your Policy 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.
We determine each portion of a Policy's separate account actual cash value
separately. The separate account actual cash value is not guaranteed. We
determine the separate account actual cash value 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 credited is determined as of the end of the valuation period
during which we receive your premium at our home office.
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Once determined, the number of units credited to your Policy will not be
affected by changes in the unit value. However, the number of units will be
increased by the allocation of subsequent net premiums, non-repeating premiums,
asset credits, loan repayments, loan interest credits and transfers to that
sub-account. The number of units 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. The number of units will decrease
to zero when the policy is surrendered or extended term insurance is purchased.
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
Funds 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 Funds are valued. The net asset value of the Funds'
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:
(1) days on which changes in the value of the Funds' portfolio securities will
not materially affect the current net asset value of the Funds' shares,
(2) days during which no Funds' shares are tendered for redemption and no
order to purchase or sell the Funds' shares is received by the Funds and
(3) customary national business holidays on which the New York Stock Exchange
is closed for trading.
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 insured's 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 and credits to your actual cash value, namely the Monthly
Policy Charge 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 A, "Illustrations of Policy
Values, Death Benefits and Premiums," found on page A-1 of this prospectus. For
additional information about the Policy's cash value, please see Appendix B,
"How Premium Becomes Cash Value," found on page B-1 of this prospectus.
Transfers 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
while the Policy remains in force or you may arrange in advance for systematic
transfers; systematic transfers are transfers of specified dollar or unit value
amounts to be made periodically among the sub-accounts and the guaranteed
principal
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account. The amount to be transferred to or from a sub-account or the
guaranteed principal account must be at least $250. If the actual cash value
in an account 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
$10, for each transfer of actual cash value among the sub-accounts and the
guaranteed principal account. Currently, there is a charge only for non-
systematic transfers in excess of four per year.
Your instructions for transfer may be made in writing or you, or your agent
if authorized by you, may make such changes by telephone. To do so, you may
call us at 1-800-277-9244 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 (651) 665-4194.
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.
With all telephone transactions, 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
we deem 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.
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. Currently we do not
impose this time restriction. Written requests for transfers which meet these
conditions will be effective after we approve and record them at our home
office.
The Funds may restrict the amounts or frequency of transfers to or from the
sub-accounts of the separate account in order to protect fund shareholders.
In the case of a transfer, the charge is assessed against the amount
transferred.
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. At no time will the death benefit be less than
the minimum death benefit required so that the Policy qualifies as a life
insurance policy under the guideline premium test of Section 7702 of the
Internal Revenue Code.
Cash Option Under the Cash Option, the death benefit will be the larger of:
(a) the face amount at the time of the insured's death; or
(b) the minimum death benefit required to qualify under Section 7702.
The death benefit will not vary unless the death benefit is the minimum
death benefit required under Section 7702.
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Protection Option Under the Protection Option, the death benefit will be the
larger of:
(a) the face amount, plus the policy value, at the time of the insured's death;
or
(b) the minimum death benefit required to qualify under Section 7702.
The death benefit provided by the Protection Option will vary depending on
the investment experience of the allocation options you select.
The Protection Option is only available until the policy anniversary nearest
the insured's age 100; at that time we will convert the death benefit option to
the Cash Option.
Choosing the Death Benefit Option The different death benefit options meet
different needs and objectives. If you are satisfied with the amount of your
insurance coverage and wish to have any favorable policy performance reflected
to the maximum extent in increasing actual cash values, you should choose the
Cash Option. The Protection Option results primarily in an increased death
benefit. In addition, there are other distinctions between the two options
which may influence your selection. Given the same face amount and premium the
Cash Option will provide guaranteed coverage for a longer period 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.
But under the Cash Option, favorable policy performance does not generally
increase the death benefit, and the beneficiary will not benefit from any
larger actual cash value which exists at the time of the insured's death
because of the favorable policy performance.
You may change the death benefit option while the Policy is in force through
a policy adjustment. We may require that you provide us with satisfactory
evidence of the insured's insurability 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
28.
For an illustration of the calculation of the death benefit under the Policy
options, please see Appendix C, "Illustration of Death Benefit Calculation," on
page C-1 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
28.
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. You may obtain
a policy loan with a written request or by calling us at 1-800-277-9244 between
the hours of 8:00 a.m. and 4:30 p.m., Central time, our regular business hours.
If you call 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. We will determine your policy value as of the date we receive
your request at our home office.
When you take a loan, we will reduce the actual cash value by the amount you
borrow and any unpaid interest. Unless you direct us otherwise, we will take
the policy loan from your guaranteed principal account actual cash value and
separate account actual cash value on a pro-rata basis and, from each sub-
account in the separate account on a pro-rata basis. The number of units to be
sold will be based upon the value of the units as of the end of the 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.
Unfavorable investment experience and the assessment of charges could cause
your separate account actual cash value to decline to zero. If your Policy has
indebtedness and no actual cash value, the Policy will lapse and there may be
adverse tax consequences; see the Federal Tax Status
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section on page 28. 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 death of the insured
.on a policy adjustment, surrender, lapse, a policy loan transaction
.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.
We will also credit interest 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 1 percent per year. We allocate policy
loan interest credits to your actual cash value as of the date of the death of
the insured, on a policy adjustment, surrender, lapse, a policy loan
transaction and on each policy anniversary. We allocate interest credits to the
guaranteed principal account and separate account following your instructions
for the allocation of net premiums.
Currently, the loan account credits interest, as described above, at a rate
which is not less than your policy loan interest rate minus 1 percent per year.
However, if the Policy has been in force for ten years or more, we will credit
your loan at a rate which is equal to the policy loan rate minus .5 percent per
year.
Policy loans may also be used as automatic premium loans to keep your Policy
in force if a premium is unpaid at the end of the grace period. We will make
automatic premium loans unless you have requested us not to. 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, you may repay your loan in
part or in full at any time before the insured's death. Your loan may also be
repaid within 60 days after the date of the insured's 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. 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.
We allocate loan repayments to the guaranteed principal account until all
loans from the guaranteed principal account have been repaid. Thereafter we
allocate loan repayments to the guaranteed principal account or the sub-
accounts of the Variable Life Account as you direct. In the absence of your
instructions, we will allocate loan repayments to the guaranteed principal
account actual cash value and separate account actual cash value on a pro-rata
basis, and to each sub-account in the separate account on a pro-rata basis.
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.
Surrender
You may request a surrender or partial surrender of your Policy at any time
while the insured is living. The surrender value of the Policy is the actual
cash value plus asset credits and minus unpaid policy charges which are
assessed against actual cash value. We determine the surrender value as
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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, alternatively, applied on a
settlement option or to provide extended term insurance on the life of the
insured.
We also permit a partial surrender of the actual cash value of the Policy in
any amount of $500 or more. The maximum partial surrender is the amount
available as a policy loan. The death benefit of the Policy will be reduced by
the amount of the partial surrender. With any partial surrender, we will adjust
the Policy to reflect the new face amount and actual cash value and, unless
otherwise instructed, the existing level of premium payments.
We are currently waiving the restriction requiring a minimum amount for a
partial surrender where a partial surrender from a Policy, which is on stop
premium, is being used to pay premiums for substandard 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 from which Variable Life Account
sub-accounts 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, we will
deduct partial surrenders from your guaranteed principal account actual cash
value and separate account actual cash value on a pro-rata basis and, from each
sub-account of the separate account on a pro-rata basis. We will tell you, on
request, what amounts are available for a partial surrender under your Policy.
We will pay a surrender or partial surrender as soon as possible, but not
later than seven days after we receive your written request for surrender.
However, if any portion of the actual cash value to be surrendered is
attributable to a premium or non-repeating 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 on
surrender may be more or less than the total premiums paid for 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 within ten days after you receive it.
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 12, 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 ten days after you receive it. 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.
Policy Charges
Premium Charges Premium charges vary depending on whether the premium is a
scheduled premium or a non-repeating premium. Generally, the word "premium"
when used in this prospectus means a scheduled premium only. Charges for
substandard risks and charges for additional benefits are deducted from the
premium to calculate the base premium. Charges for substandard risks include
both table ratings and cash extra charges.
From base premiums we deduct a Sales Charge, an Additional Face Amount
Charge and a Premium Charge.
(1) The Sales Charge consists of a deduction from each premium of up to 44
percent. The Sales Charge applies only to base premiums, scheduled to be
paid in the 12 month period following the policy date, or any policy
adjustment involving an increase in base premium or any policy adjustment
occurring during a period when a Sales Charge 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 under the Cash Option. In other
words, the amount of any base premium in excess of this amount will not be
subject to the Sales Charge.
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<PAGE>
Only adjustments that involve an increase in base premium will result in an
additional Sales Charge being assessed on that increase in premium. If any
adjustment occurs during a period when a Sales Charge is being collected and
the adjustment results in an increase in base premium, an additional Sales
Charge, not to exceed 44 percent of the increase in base premium, will be
added to the uncollected portion of the Sales Charge that was being
collected prior to the adjustment. This total amount of Sales Charge will
then be collected during the 12 month period following the adjustment.
If any adjustment occurs during the 12 month period when a Sales Charge is
being collected and the adjustment does not result in an increase in base
premium, a portion or all of the remaining Sales Charge will be collected
during the 12 month period following the adjustment.
For examples of how we compute the Sales Charge and the Additional Face
Amount Charge, see Appendix D in this prospectus on page D-1.
The Sales Charge is designed to compensate us for distribution expenses
incurred with respect to the Policies. The amount of the Sales Charge 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 Charge,
we will recover them from our other assets or surplus including profits from
the Mortality and Expense Risk Charge.
(2) The Additional Face Amount Charge is an amount not to exceed $5 per $1,000
of face amount of insurance. This amount may vary by the age of the
insured and the premium level for a given amount of insurance. This charge
is made ratably from premiums scheduled to be paid during the first policy
year and during the twelve months following certain policy adjustments.
The Additional Face Amount 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.
(3) The Premium Charge of 6 percent is deducted from each base premium. This
charge is designed to cover the expenses related to premiums, including
but not limited to administration, commissions and taxes.
Non-repeating Premiums Non-repeating premiums are currently subject to a
Premium Charge of 3 percent. We do not assess a Sales Charge or an Additional
Face Amount Charge against non-repeating premiums.
Actual Cash Value Charges In addition to deductions from premiums and non-
repeating premiums, we assess from the actual cash value of a Policy a Monthly
Policy Charge, the Cost of Insurance Charge and transaction charges. These
charges are as follows:
(1) The Monthly Policy Charge is designed to cover certain of our
administrative expenses, including those attributable to the records we
create and maintain for your Policy. The Monthly Policy Charge is $8 plus
$.02 per $1,000 of face amount. We can increase this charge, but it will
never exceed $10 plus $.03 per $1,000 of face amount.
(2) 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 varies with the insured's
age, gender, risk class, the level of scheduled premiums for a given
amount of insurance, duration of the Policy and the tobacco use of the
insured. 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.
(3) The transaction charges are for expenses associated with processing
transactions. There is a charge of $25 for each policy adjustment.
If the only policy adjustment is a partial surrender, the transaction charge
shall
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<PAGE>
be the lesser of $25 or 2 percent of the amount surrendered. 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 there is a $10 charge only
for non-systematic transfers in excess of four per year.
We may also make a charge, not to exceed $25, for each returned check.
We assess the Monthly Policy Charge and Cost of Insurance Charge against
your actual cash value on the monthly policy anniversary. In addition, we
assess such charges on the occurrence of the death of the insured, policy
surrender, lapse or a policy adjustment.
We assess transaction charges against your actual cash value at the time of
a policy adjustment, when a transfer is made, or when a check is returned. In
the case of a transfer, the charge is assessed against the amount transferred.
We assess charges against your guaranteed principal account actual cash
value and separate account actual cash value on a pro-rata basis and from each
sub-account in the separate account on a pro-rata basis.
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. We
deduct the Mortality and Expense Risk charge 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.
Other Policy Provisions
Beneficiary When we receive proof satisfactory to us of the insured's 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.
If a beneficiary dies before the insured, that beneficiary's interest in the
Policy ends with that beneficiary's death. Only beneficiaries who survive the
insured will be eligible to share in the death proceeds. If no beneficiary
survives the insured 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.
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 the date you
signed the request. However, if the insured dies 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.
Payment of Proceeds The amount payable as death proceeds upon the insured's
death will be the death benefit provided by the Policy, plus any additional
insurance on the insured's life provided by an additional benefit agreement, if
any, minus any policy charges and minus any policy loans. In addition, if the
Cash Option is in effect at the insured's 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 insured died to the date to which premiums are paid.
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 death of the insured, we will
determine the amount of payment as of the end of the valuation period during
which a request is received at our home office.
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<PAGE>
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 year 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:
(1) for any period during which the New York Stock Exchange is closed for
trading (except for normal holiday closing); or
(2) when the SEC has determined that a state of emergency exists which may
make such payment impractical.
Settlement Options The proceeds of a Policy will be payable if the Policy is
surrendered, or we receive proof satisfactory to us of the insured's death.
These events must occur while the Policy is in force. We will pay the proceeds
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
insured's 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,
during the lifetime of the insured, 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 to both 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, and if the periodic installment or interest payment is at
least $20.
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
We will pay 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
We will make payments for a specified number of years.
Option 3--Life Income
We will make payments monthly during the lifetime of the person who is to
receive the income, terminating with the last monthly payment immediately
preceding that person's death. We may require proof of the age and gender of
the annuitant.
Option 4--Payments of a Specified Amount
We will pay 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 insured's death.
The minimum amount of interest we will pay under any settlement option is 3
percent per year. Additional interest earnings, if any, on deposits under a
settlement option will be payable as we determine.
Assignment The Policy may be assigned. The assignment must be in writing and
filed at our home office. 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.
Misstatement of Age or Gender If the insured's age or gender has been
misstated, we will adjust the amount of proceeds payable under the Policy to
reflect cost of insurance charges based upon the insured's correct age or
gender.
Incontestability After a Policy has been in force during the insured's
lifetime for two years from the original policy date, we may not contest the
Policy, except for fraud or for nonpayment of premium. However, if there has
been a policy adjustment, reinstatement or any other policy change for which
we required evidence of insurability, we may
26
<PAGE>
contest that policy adjustment, reinstatement or change for two years with
respect to information provided at that time, during the lifetime of the
insured, from the effective date of the policy adjustment, reinstatement or
change.
Suicide If the 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 policy adjustment, reinstatement or any other policy change for which we
required evidence of insurability, and if the insured dies by suicide within
two years from the effective date of the policy adjustment, reinstatement or
change our liability with respect to the policy adjustment, reinstatement or
change will be limited to an amount equal to the premiums paid for the policy
adjustment, reinstatement or change.
Reports At least once each year we will send you a report. This report 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
policy year, policy loan activity and the policy value. We will send the report
to you without cost. The information in the report will be current as of a date
within two months of its mailing.
Additional Benefits
Additional Benefits You may be able to obtain additional policy benefits,
subject to underwriting approval. We will provide these benefits by a rider to
the Policy, which may require the payment of additional premium.
Waiver of Premium Agreement The Waiver of Premium Agreement requires an
additional premium and provides for the payment of policy premium in the event
of the insured's disability.
Inflation Agreement The Inflation Agreement requires an additional premium and
provides for a face amount increase equal to twice the percentage increase in
the consumer price index during the previous three years, subject to a maximum
of $100,000.
Business Continuation Agreement The Business Continuation Agreement requires an
additional premium and allows you to purchase a specified amount of additional
insurance, without evidence of insurability, at the death of another person
previously designated by you.
Family Term Rider The Family Term Rider requires an additional premium and
provides a fixed amount of term insurance on children of an insured.
Exchange of Insureds Agreement The Exchange of Insureds Agreement requires no
additional premium and allows for the transfer of existing insurance coverage
to another insured within a business setting. Because the exchange is generally
a taxable event, you should consult a tax advisor about the tax consequences
before making such an exchange.
Accelerated Benefits Agreement The Accelerated Benefits Agreement is issued
without additional premium. It allows you to receive a significant portion of
your Policy's death benefit, if the insured develops a terminal condition due
to sickness or injury.
Early Values Agreement The Early Values Agreement requires an additional
premium, payable for ten years, and waives a portion of policy charges in the
first policy year.
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<PAGE>
Other Matters
Federal Tax Status
The discussion of federal taxes is general in nature and is not intended as
tax advice. Each person concerned should consult a tax adviser. This
discussion is based on our understanding of federal income tax laws as they
are currently interpreted. We have not considered any applicable state or
other tax laws. No representation is made regarding the likelihood of
continuation of current income tax laws or the current interpretations of the
Internal Revenue Service (the "IRS").
We are taxed as a "life insurance company" under the Internal Revenue Code
(the "Code"). The operations of the Variable Life Account form a part of, and
are taxed with, our other business activities. Currently, we pay no federal
income tax 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.
Under Section 7702 of the Code, life insurance contracts such as the
Policies will be treated as life insurance if certain tests are met. There is
limited guidance on how these tests are to be applied. However, the IRS has
issued proposed regulations that would specify what will be considered
reasonable mortality charges under Section 7702. In light of these proposed
regulations and the other available guidance on the application of the tests
under Section 7702, we generally believe that a Policy issued on a standard
risk should meet the statutory definition of a life insurance contract under
Section 7702. However, it remains unclear whether a substandard risk Policy
will meet the statutory life insurance contract definition.
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 Funds, intends to comply with the diversification requirements
prescribed in Regulations Section 1.817-5, which affect how the Funds' assets
may be invested. Although the investment adviser of Advantus Series Fund is an
affiliate of Minnesota Life, we do not have control over the Funds or their
investments. Nonetheless, we believe that each Portfolio of the Funds 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 have been
considered the owners, for federal income tax purposes, of the assets of the
separate account supporting their policies due to their ability to exercise
control over those assets. Where this is the case, the contract owners have
been currently taxed on income and gains attributable to the separate account
assets. There is little guidance in this area, and some features of the
Policies, such as the flexibility to allocate premiums and policy account
values, have not been explicitly addressed in published rulings. While we
believe that the Policy does not give you investment control over the separate
account assets, we reserve the right to modify the Policy as necessary to
prevent you from being treated as the owner of the separate account assets
supporting the Policy.
In addition, the Code requires that the investments of the Variable Life
Account be "adequately diversified" in order to treat the Policy as a life
insurance contract for Federal income tax purposes. We intend that the
Variable Life Account, through the Funds and the Portfolios, will satisfy
these diversification requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
On the death of the insured, we believe that the death benefit provided by
the Policies will be excludable from the gross income of the beneficiary under
Section 101(a) of the Code. If you receive an accelerated benefit, that
benefit may be taxable and you should seek assistance from a tax adviser.
You are not currently taxed on any part of your interest until you actually
receive cash
28
<PAGE>
from the Policy. However, taxability may also be determined by your
contributions to the Policy and prior Policy activity. 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 the
face amount, or an assignment of the Policy may have federal income tax
consequences. If you are considering any such transactions, you 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 you unless your policy is a modified
endowment contract, as described below. However, whether a modified endowment
contract or not, the interest paid on policy loans will generally not be tax
deductible. There may be adverse tax consequences when a Policy with a policy
loan is lapsed or surrendered.
A surrender or partial surrender of the actual cash values of a Policy may
have tax consequences. On surrender, you 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 you 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 any policy loan 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 Code the tax treatment described
above is not available for policies characterized as modified endowment
contracts. In general, policies with a high premium in relation to the death
benefit may be considered modified endowment contracts. 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. If those cumulative premiums exceed the 7-pay life
premiums, 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 you received, such as dividends, 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. 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 date you attain age 59 1/2, or is
attributable to your becoming disabled, or as part of a series of substantially
equal periodic payments for your life or the joint lives of you and your
beneficiary.
The modified endowment contract provisions of the Code apply to all policies
entered into on or after June 21, 1988. It should be noted, in addition, that 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
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<PAGE>
endowment contract and any subsequent policy year will be taxed as
distributions from a modified endowment contract. 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 tax adviser before
purchasing a policy to determine the circumstances under which the Policy
would be a modified endowment contract. You should also contact a tax adviser
before paying any non-repeating 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.
Under the Code, 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. A life insurance policy
received in exchange for a modified endowment contract will also be treated as
a modified endowment contract.
Federal estate and state and local estate, inheritance, and other tax
consequences of ownership or receipt of Policy proceeds depend upon the
circumstances of each policy owner or beneficiary. A tax adviser should be
consulted for further information.
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 tax
adviser regarding the tax attributes of the particular arrangement. Moreover,
in recent years, Congress has adopted new rules relating to corporate owned
life insurance. Any business contemplating the purchase of a new life
insurance contract or a change in an existing contract should consult a tax
adviser.
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 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, a person contemplating the purchase of a
variable life insurance policy or exercising elections under such a policy
should consult a tax adviser.
At the present time, we make no charge to the Variable Life Account for any
Federal, state or local 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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Directors and Principal Management Officers of Minnesota Life
<TABLE>
<CAPTION>
Directors Principal Occupation
--------- --------------------
<C> <S>
Anthony L. Andersen Chair-Board of Directors, H. B. Fuller Company, St.
Paul, Minnesota (Adhesive Products) since June 1995,
prior thereto for more than five years President and
Chief Executive Officer, H. B. Fuller Company
Leslie S. Biller Vice Chairman and Chief Operating Officer, Wells
Fargo & Company, San Francisco, California (Banking)
John F. Grundhofer President, Chairman and Chief Executive Officer,
U.S. Bancorp, Minneapolis, Minnesota (Banking)
Robert E. Hunstad Executive Vice President, Minnesota Life Insurance
Company
Dennis E. Prohofsky Senior Vice President, General Counsel and
Secretary, Minnesota Life Insurance Company
Robert L. Senkler Chairman of the Board, President and Chief Executive
Officer, Minnesota Life Insurance Company since
August 1995; prior thereto for more than five years
Vice President and Actuary, Minnesota Life Insurance
Company
Michael E. Shannon Chairman, Chief Financial and Administrative
Officer, Ecolab Inc., St. Paul, Minnesota (Develops
and Markets Cleaning and Sanitizing Products)
William N. Westhoff Senior Vice President and Treasurer, Minnesota Life
Insurance Company since April 1998, prior thereto
from August 1994 to October 1997, Senior Vice
President, Global Investments, American Express
Financial Corporation, Minneapolis, Minnesota
Frederick T. Weyerhaeuser Retired since April 1998, prior thereto Chairman and
Treasurer, Clearwater Investment Trust since May
1996, prior thereto for more than five years
Chairman, Clearwater Management Company, St. Paul,
Minnesota (Financial Management)
</TABLE>
Principal Officers (other than Directors)
<TABLE>
<CAPTION>
Name Position
---- --------
<C> <S>
John F. Bruder Senior Vice President
Keith M. Campbell Senior Vice President
James E. Johnson Senior Vice President and Actuary
</TABLE>
<TABLE>
<CAPTION>
Name Position
---- --------
<C> <S>
Gregory S. Strong Senior Vice President and Chief Financial Officer
Terrence M. Sullivan Senior Vice President
Randy F. Wallake Senior Vice President
</TABLE>
All Directors who are not also officers of Minnesota Life have had the
principal occupation (or employers) shown for at least five years. All officers
of Minnesota Life have been employed by us for at least five years.
Voting Rights
We will vote the Fund shares held in the various sub-accounts of the
Variable Life Account at regular and special shareholder meetings of the Funds
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.
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<PAGE>
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 Funds for determining shareholders eligible to vote at
the meeting of the Funds. Voting instructions will be solicited in writing
prior to such meeting in accordance with procedures established by the Funds.
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 Funds.
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 Funds or
approve or disapprove an investment advisory contract of the Funds. In
addition, we may disregard voting instructions in favor of changes in the
investment policies or the investment advisers of the Funds 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 Funds or would result in the purchase of securities for
the Funds 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 Ascend Financial Services, Inc.
("Ascend Financial") or of other broker-dealers who have entered into selling
agreements with Ascend Financial. Ascend Financial acts as principal
underwriter for the Policies. Ascend Financial is a wholly-owned subsidiary of
Advantus Capital Management, Inc., which in turn is a wholly-owned subsidiary
of Minnesota Life.
Ascend Financial, 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. Ascend Financial was incorporated in 1984 under the laws of the
State of Minnesota. The Policies are sold in the states where their sale is
lawful. The insurance underwriting and the determination of a proposed
insured's risk classification and whether to accept or reject an application
for a Policy are done in accordance with our rules and standards.
Except for the Early Values Agreement, commissions to registered
representatives on the sale of Policies include: up to 50 percent of gross
premium in the first policy year; up to 6 percent of the gross premium in
policy years two through ten; up to 2 percent in policy years thereafter; and
0 percent of non-repeating premiums. These are the maximum commissions payable
under the Policy. The maximum commission will apply to the portion of the
annual base premium necessary for an original issue whole life plan of
insurance under the Cash Option. On premiums received in excess of that amount
we will pay commissions at a rate of 4 percent in the first policy year, 6
percent in policy years two through ten and 2 percent thereafter. For the
Early Values Agreement, commissions will be 60 percent of the premium for that
agreement for all years.
In addition, Ascend Financial or we will pay, based uniformly on the sales
of 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 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
32
<PAGE>
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 Variable Adjustable Life 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
Our financial statements and those of the Variable Life Account included in
this prospectus have been audited by KPMG 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 LLP and upon the authority of said firm as experts in
accounting and auditing.
Actuarial matters included in this prospectus have been examined by Robert
J. Ehren, F.S.A., Director and Actuary of Minnesota Life, 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 Life, 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.
33
<PAGE>
Special Terms
As used in this prospectus, the following terms have the indicated meanings:
Actual Cash Value: the value of your interest in the Variable Life Account
and the value of your interest in the guaranteed principal account under a
Policy. Each is valued separately. Actual cash value does not include the loan
account.
Asset Credit: a monthly amount, based on the actual cash value, credited to
your actual cash value.
Base Premium: the premium less any amount deducted from the premium for
additional benefits and for substandard risks.
Code: the Internal Revenue Code of 1986, as amended.
Funds: the mutual funds or separate investment portfolios within series
mutual funds which we have designated as an eligible investment for the
Variable Life Account, currently, Advantus Series Fund, Inc., its Portfolios
and the Templeton Developing Markets Fund, Class 2.
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 Life which is attributable to Policies of this class, 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.
Non-repeating Premium: a payment made to this Policy in addition to its
scheduled payments.
Paid-up: the status of the Policy when its policy value is such that no
further premiums are required to provide the death benefit.
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.
Unit: the measure of 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
Life Variable Life Account, composed of sub-accounts. The investment
experience of its assets is kept separate from our other assets.
We, Our, Us: Minnesota Life Insurance Company.
You, Your: the policy owner.
34
<PAGE>
Appendix A
Illustrations of Policy Values, Death Benefits and Premiums
The Appendix A illustrations beginning on page A-2, are provided for a
standard non-tobacco risk male age 40. The illustrations show the projected
actual cash values, death benefits and premiums for the various scenarios. Both
death benefit options, the Cash Option and the Protection Option, are shown.
The plan of insurance for each Cash Option illustration is a whole life plan,
with an initial face amount of $500,000. The Protection Option illustrations
use the same premium as the Cash Option illustrations. We show all
illustrations based on both guaranteed maximum and current charges, and we
include all charges.
Guaranteed maximum cost of insurance charges will vary by age, sex, risk
class, and policy form. We use the male, female and unisex smoker-distinct 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 tobacco-use habits of
the insured. Current cost of insurance charges reflect our current practices
with respect to mortality charges for this class of Policies. Similarly, we
impose a current monthly policy charge which is less than the guaranteed
contractual charge. We expect that these current charges will compensate us for
the actual costs of administration. If the actual costs change, this charge may
increase or decrease as necessary, although it may not exceed the maximum
stated in the Policy.
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 is at an
annual rate of .50 percent. The investment management fee illustrated is .67
percent and represents an average of the annual fee charged for all portfolios
of the Funds. In addition to the deduction for the investment management fee,
the illustrations also reflect a deduction for those Fund costs and expenses
borne by the Funds. Fund expenses illustrated are .15 percent, representing an
average of the 1998 expense ratios of the portfolios of the Funds. Minnesota
Life voluntarily absorbed certain expenses for certain portfolios of the Funds,
as detailed in the footnote to the expense table on page 3. We do not
anticipate any change to the voluntary absorption of expenses policy during the
current fiscal year. Therefore, gross annual rates of return of 0 percent, 6
percent and 12 percent correspond to approximate net annual rates of return of
- -1.32 percent, 4.68 percent and 10.68 percent.
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 a
proposed insured's age, sex and risk classification, and on the face amount,
premium, death benefit option, plan of insurance and gross annual rate of
return requested. Those illustrations may be materially different from the
sample illustrations included in this prospectus, depending upon the proposed
insured's actual situation. For example, illustrations for females, tobacco
users or individuals who are rated substandard will differ materially in
premium amount and illustrated values, even though the proposed insured may be
the same age as the proposed insured in our sample illustrations.
A-1
<PAGE>
VAL HORIZON
DEATH BENEFIT OPTION--CASH OPTION
MALE ISSUE AGE 40
STANDARD NON-TOBACCO
INITIAL DEATH BENEFIT--$500,000(1)
$7,625.00 INITIAL SCHEDULED PREMIUM(2)
USING CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.32% NET) (4.68% NET) (10.68% NET)
POL ATT BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- --- ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 41 $7,625 $ 14 $500,000 $ 60 $500,000 $ 107 $ 500,000
2 42 7,625 5,685 500,000 6,127 500,000 6,576 500,000
3 43 7,625 11,229 500,000 12,429 500,000 13,691 500,000
4 44 7,625 16,635 500,000 18,966 500,000 21,512 500,000
5 45 7,625 21,907 500,000 25,754 500,000 30,124 500,000
6 46 7,625 27,030 500,000 32,791 500,000 39,602 500,000
7 47 7,625 32,273 500,000 40,347 500,000 50,283 500,000
8 48 7,625 37,645 500,000 48,841 500,000 62,366 500,000
9 49 7,625 43,038 500,000 57,114 500,000 75,894 500,000
10 50 7,625 48,396 500,000 66,214 500,000 90,972 500,000
15 55 7,625 73,844 500,000 118,802 500,000 195,734 500,000
20 60 7,625 94,899 500,000 183,795 500,000 373,649 500,000
25 65 7,625 110,402 500,000 265,049 500,000 676,839 735,708
30 70 7,625 118,088 500,000 369,006 500,000 1,184,942 1,231,319
</TABLE>
(1) The insurance is guaranteed for life with premiums to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$3,812.50 semi-annually, $1,906.25 quarterly, or $635.42 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 Life or the Funds that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
A-2
<PAGE>
VAL HORIZON
DEATH BENEFIT OPTION--CASH OPTION
MALE ISSUE AGE 40
STANDARD NON-TOBACCO
INITIAL DEATH BENEFIT--$500,000(1)
$7,625.00 INITIAL SCHEDULED PREMIUM(2)
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.32% NET) (4.68% NET) (10.68% NET)
POL ATT BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- --- ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 41 $7,625 $ 0 $500,000 $ 32 $500,000 $ 78 $ 500,000
2 42 7,625 5,621 500,000 6,046 500,000 6,490 500,000
3 43 7,625 11,094 500,000 12,266 500,000 13,512 500,000
4 44 7,625 16,408 500,000 18,691 500,000 21,199 500,000
5 45 7,625 21,567 500,000 25,334 500,000 29,627 500,000
6 46 7,625 26,555 500,000 32,190 500,000 38,862 500,000
7 47 7,625 31,368 500,000 39,262 500,000 48,989 500,000
8 48 7,625 36,000 500,000 46,557 500,000 60,103 500,000
9 49 7,625 40,447 500,000 54,082 500,000 72,311 500,000
10 50 7,625 44,694 500,000 61,834 500,000 85,726 500,000
15 55 7,625 62,362 500,000 103,916 500,000 175,952 500,000
20 60 7,625 71,659 500,000 150,790 500,000 324,364 500,000
25 65 7,625 67,802 500,000 201,472 500,000 575,440 628,237
30 70 7,625 40,182 500,000 253,871 500,000 981,870 1,026,020
</TABLE>
(1) The insurance is guaranteed for life with premiums to age 100.
(2) If premiums are paid more frequently than annually, the payments would be
$3,812.50 semi-annually, $1,906.25 quarterly, or $635.42 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 Life or the Funds that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
A-3
<PAGE>
VAL HORIZON
DEATH BENEFIT OPTION--PROTECTION OPTION
MALE ISSUE AGE 40
STANDARD NON-TOBACCO
INITIAL DEATH BENEFIT--$500,000(1)
$7,625.00 INITIAL SCHEDULED PREMIUM(2)
USING CURRENT MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.32% NET) (4.68% NET) (10.68% NET)
POL ATT BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- --- ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 41 $7,625 $ 12 $500,000 $ 58 $500,000 $ 105 $ 500,000
2 42 7,625 5,667 500,012 6,108 500,058 6,556 500,105
3 43 7,625 11,180 505,667 12,374 506,108 13,360 506,556
4 44 7,625 16,536 511,180 18,852 512,374 21,381 513,360
5 45 7,625 21,738 516,536 25,552 518,852 29,882 521,381
6 46 7,625 26,804 521,738 32,501 525,552 39,234 529,882
7 47 7,625 32,049 526,804 40,038 532,501 49,865 539,234
8 48 7,625 37,377 532,049 48,095 540,038 61,818 549,865
9 49 7,625 42,692 537,377 56,600 548,095 75,139 561,818
10 50 7,625 47,947 542,692 65,527 556,600 89,931 575,139
15 55 7,625 72,503 567,938 116,391 605,442 191,371 666,859
20 60 7,625 91,576 588,298 176,633 663,835 357,581 817,473
25 65 7,625 103,405 601,706 246,538 731,771 630,767 1,064,693
30 70 7,625 104,808 605,736 324,885 808,848 1,080,776 1,472,113
</TABLE>
(1) The insurance coverage is guaranteed to age 84 with premiums to age 84.
(2) If premiums are paid more frequently than annually, the payments would be
$3,812.50 semi-annually, $1,906.25 quarterly, or $635.42 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 Life or the Funds that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
A-4
<PAGE>
VAL HORIZON
DEATH BENEFIT OPTION--PROTECTION OPTION
MALE ISSUE AGE 40
STANDARD NON-TOBACCO
INITIAL DEATH BENEFIT--$500,000(1)
$7,625.00 INITIAL SCHEDULED PREMIUM(2)
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES
<TABLE>
<CAPTION>
-ASSUMING HYPOTHETICAL INVESTMENT RETURNS OF-
0% GROSS(3) 6.00% GROSS(3) 12.00% GROSS(3)
INITIAL (-1.32% NET) (4.68% NET) (10.68% NET)
POL ATT BASE POLICY DEATH POLICY DEATH POLICY DEATH
YR AGE PREMIUM VALUE BENEFIT VALUE BENEFIT VALUE BENEFIT
- --- --- ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 41 $7,625 $ 0 $500,000 $ 31 $500,000 $ 76 $ 500,000
2 42 7,625 5,605 500,000 6,027 500,031 6,470 500,076
3 43 7,625 11,047 505,605 12,212 500,627 13,452 506,470
4 44 7,625 16,132 511,047 18,578 512,212 21,069 513,452
5 45 7,625 21,402 516,132 25,135 518,578 29,389 521,069
6 46 7,625 26,301 521,402 31,871 525,135 38,466 529,389
7 47 7,625 31,001 526,301 38,784 531,871 48,371 538,466
8 48 7,625 35,494 531,001 45,871 538,748 59,181 548,371
9 49 7,625 39,773 535,494 53,132 545,871 70,982 559,181
10 50 7,625 43,820 539,773 60,552 553,132 83,860 570,982
15 55 7,625 59,856 557,315 99,425 591,519 167,889 648,118
20 60 7,625 65,957 565,726 138,094 630,617 295,798 765,779
25 65 7,625 56,748 560,260 169,649 664,506 488,770 943,765
30 70 7,625 22,234 531,684 179,647 680,255 775,331 1,208,691
</TABLE>
(1) The insurance coverage is guaranteed to age 84 with premiums to age 84.
(2) If premiums are paid more frequently than annually, the payments would be
$3,812.50 semi-annually, $1,906.25 quarterly, or $635.42 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 Life or the Funds that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
A-5
<PAGE>
Appendix B
[GRAPH APPEARS HERE - UNDERSTANDING HOW PREMIUM BECOMES CASH VALUE]
This appendix shows a pictorial of how the money from a premium payment is
reduced by premium charges and becomes a part of the policy value. It also
illustrates where non-premium charges are taken from the policy value.
B-1
<PAGE>
Appendix C
Illustration of Death Benefit Calculation
As an example of the calculation of the death benefit under the Policy,
assume a Policy and an insured with the following characteristics: The insured
is a male, age 60. The Policy has a face amount of $250,000 and policy value of
$85,000.
If the Cash Option is in effect, the death benefit will equal the face
amount, $250,000. If the Protection Option is in effect, the death benefit will
equal the face amount plus the policy value, $335,000.
In order for the death benefit to qualify as life insurance under the
requirements of the Internal Revenue Code, the death benefit must be at least
as large as the policy value ($85,000) multiplied by an age specified factor.
The factors by age are shown in the table below. In our example, the factor
(1.30) would require a minimum death benefit of $110,500, and would have no
affect on the death benefit provided the Policy.
<TABLE>
<CAPTION>
Age Factor Age Factor Age Factor
--- ------ --- ------ ----- ------
<S> <C> <C> <C> <C> <C>
(less than or =)40 2.50 55 1.50 70 1.15
41 2.43 56 1.46 71 1.13
42 2.36 57 1.42 72 1.11
43 2.29 58 1.38 73 1.09
44 2.22 59 1.34 74 1.07
45 2.15 60 1.30 75-90 1.05
46 2.09 61 1.28 91 1.04
47 2.03 62 1.26 92 1.03
48 1.97 63 1.24 93 1.02
49 1.91 64 1.22 94 1.01
50 1.85 65 1.20 95+ 1.00
51 1.78 66 1.19
52 1.71 67 1.18
53 1.64 68 1.17
54 1.57 69 1.16
</TABLE>
C-1
<PAGE>
Appendix D
Example of Sales Charge and Additional Face Amount Charge Computation
As an example of the method we use to compute Sales Charge and Additional
Face Amount Charge, assume a protection plan of insurance guaranteeing coverage
for 20 years. This plan results from an annual base premium of $2,000, a face
amount of $100,000 and the Cash Option. As base premiums are paid in the first
year, we assess the Sales Charge of 44 percent or $880. In addition, we assess
a Additional Face Amount Charge of $5 per thousand of face amount or $500.
Using the example above, the Sales Charge each month is $73.33. After nine
months, we have collected $660 and the uncollected Sales Charge is $220.
Suppose that there is an adjustment at this point that increases the premium
from $2,000 to $3,000. The increased premium will be assessed a Sales Charge of
44 percent, or $440. This will be added to the uncollected Sales Charge of
$220. The total Sales Charge of $660 will be collected in the 12 months
following the adjustment, at $55 per month.
Alternatively, suppose that the adjustment after nine months decreases the
premium from $2,000 to $1,000. The uncollected Sales Charge of $220 will be
reduced in the same proportion as the base premium, 50 percent, to $110, and
this Sales Charge will be collected in the 12 months following the adjustment
at $27.50 per month.
The Additional Face Amount Charge will also be recalculated if an adjustment
occurs during a period in which it is being collected. Again, using our
example, suppose there is an adjustment after nine months; the uncollected
Additional Face Amount Charge is $125. If the adjustment results in a face
amount increase of $100,000, the new Additional Face Amount Charge of $500 will
be added to the uncollected charge of $125, and the total of $625 will be
collected in the 12 months following the adjustment. If the adjustment results
in a decrease in face amount, no reduction in the uncollected portion of the
Additional Face Amount Charge is made. So the remaining $125 will be collected
in the 12 months following the adjustment at $10.42 per month.
D-1
<PAGE>
Appendix E
Average Annual Returns
Twenty-Year Holding Periods
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Type 1957 1962 1967 1972 1977 1982 1987 1992 1997 1998
- ---- ------ ------ ------ ------ ----- ----- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury 0.912 1.496 2.378 3.387 4.439 6.513 7.444 7.700 7.289 7.171
Inflation 3.454 2.978 1.866 2.350 3.984 6.010 6.314 6.214 4.886 4.527
Bonds 2.516 2.484 2.011 2.948 3.988 4.471 7.885 9.541 10.288 10.857
Stocks 12.976 15.251 14.628 11.674 8.119 8.295 9.269 11.334 16.646 17.747
</TABLE>
Ending periods from 1957-1998
Source: Stocks, Bonds, Bills and Inflation (SBBI), Analyzer Software, 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: 1938-1957, 1943-
1962, 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 54 twenty-
year periods beginning in 1926 and ending in 1998 include:
The average annual return of stocks was higher than that of bonds in 51
of the 54 periods.
The average annual return of stocks was higher than that of U.S.
Treasury bills in all of the 54 periods.
The average annual return of stocks was higher than inflation in all of
the 54 periods.
In the 44 thirty-year periods beginning in 1926 and ending in 1998, the
average annual return of stocks was higher than that of bonds, U.S. Treasury
bills and inflation in all 44 time periods.
From 1926 through 1998, the average annual return for this 73 year period
was:
11.2% for common stocks
5.80% for high grade, long-term corporate bonds
3.77% for U.S. Treasury bills
E-1
<PAGE>
Appendix F
S&P 500
PERFORMANCE HISTORY 1926-1998
[BAR GRAPH APPEARS HERE]
Yr. ANNUAL TOTAL RETURN
26 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
40 -9.8
11.6
20.3
25.9
19.8
36.4
-8.1
5.7
5.5
18.8
50 31.7
24
18.4
-0.01
52.6
31.6
6.6
-10.8
43.4
12
60 0
26.9
-8.7
22.8
16.5
12.5
-10.1
24
11.1
-8.5
70 4
14.3
19
-14.7
-26.5
37.2
23.8
-7.2
6.6
18.4
80 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
9.99
1.31
95 37.43
96 23.07
97 33.36
98 28.58
Source: Stocks, Bonds, Bills and Inflation (SBBI), Analyzer Software, 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 73 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-1
<PAGE>
Appendix G
RANGE OF RETURNS
Rolling Period Returns Using Ibbotson Asset Class Information*
(1960 through 1998)
[BAR GRAPH APPEARS HERE]
1 YEAR HIGH % LOW % MEAN %
ROLLING PERIOD RETURN RETURN RETURN
- -------------- ------ ------ ------
Small Cap 83.569 -30.904 16.476
Large Cap Stocks (S&P 500) 37.430 -26.468 13.267
Corporate Bonds 42.562 -8.090 8.176
Government Bonds 29.097 -5.144 7.545
United States T-bills 14.709 2.127 5.672
5 YEAR HIGH % LOW % MEAN %
ROLLING PERIOD RETURN RETURN RETURN
- -------------- ------ ------ ------
Small Cap 39.804 -12.252 14.504
Large Cap Stocks (S&P 500) 24.057 -2.356 10.984
Corporate Bonds 22.513 -2.222 7.445
Government Bonds 16.978 2.080 7.366
United States T-bills 11.115 2.834 5.974
10 YEAR HIGH % LOW % MEAN %
ROLLING PERIOD RETURN RETURN RETURN
- -------------- ------ ------ ------
Small Cap 30.381 3.199 13.111
Large Cap Stocks (S&P 500) 19.185 1.238 10.277
Corporate Bonds 16.319 1.677 7.470
Government Bonds 13.126 3.484 7.584
United States T-bills 9.174 3.878 6.222
15 YEAR HIGH % LOW % MEAN %
ROLLING PERIOD RETURN RETURN RETURN
- -------------- ------ ------ ------
Small Cap 23.326 5.872 14.081
Large Cap Stocks (S&P 500) 17.904 4.307 10.333
Corporate Bonds 13.659 3.077 7.601
Government Bonds 11.272 4.755 7.864
United States T-bills 8.323 4.556 6.593
20 YEAR HIGH % LOW % MEAN %
ROLLING PERIOD RETURN RETURN RETURN
- -------------- ------ ------ ------
Small Cap 20.344 11.472 14.250
Large Cap Stocks (S&P 500) 17.747 6.761 9.732
Corporate Bonds 10.857 3.028 7.006
Government Bonds 9.851 4.836 7.451
United States T-bills 7.718 5.087 6.428
30 YEAR HIGH % LOW % MEAN %
ROLLING PERIOD RETURN RETURN RETURN
- -------------- ------ ------ ------
Small Cap 15.099 12.052 12.642
Large Cap Stocks (S&P 500) 12.668 9.946 9.900
Corporate Bonds 9.142 6.801 7.086
Government Bonds 8.714 7.338 7.283
United States T-bills 6.770 6.339 6.010
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,
Government Bonds, and U.S. T-Bills for progressively longer holding periods.
The 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.
G-1
<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 45 pages.
Part II
Undertakings - Indemnification; previously filed.
Representation of Insurer Pursuant to (S)26 of the Investment
Company Act of 1940.
Minnesota Life Insurance Company ("Company") hereby represents that
the fees and charges deducted under the policies issued pursuant to
this Registration Statement, in the aggregate, are reasonable in
relation to services rendered, the expenses expected to be incurred,
and the risks assumed by the Company.
The Signatures.
Written consents of the following persons:
Donald F. Gruber, Esq.
KPMG LLP, to be supplied by subsequent amendment
Robert J. Ehren, 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.
<PAGE>
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.
(5) The form of each type of security.
(a) Variable Adjustable Life Insurance Policy, form 99-680.
(b) Family Term Agreement-Children, form 99-904.
(c) Exchange of Insureds Agreement, form 99-914.
(d) Inflation Agreement, form 99-916.
(e) Waiver of Premium Agreement, form 99-917.
(f) Business Continuation Agreement, form 99-929.
(g) Accelerated Benefit Agreement, form 99-931.
(h) Early Values Agreement, form 99-939.
(i) Short Term Agreement, form 99-324.
(6) The certificate of incorporation or other instrument of
organization and bylaws of the depositor.
(a) Restated Certificate of Incorporation of the Depositor.
(b) Bylaws of the Depositor.
(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.
<PAGE>
(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. MHC-3198 Rev. 9-1999.
(b) Application - Part 3 - Authorization New Issue; form MHC-42663
Rev. 10-1998.
(c) Policy Change Application - Part 1, form F. MHC-44096 Rev. 9-
1999.
(d) Policy Change Application - Part 3, form MHC-44098 Rev. 10-
1998.
(e) Variable Suitability Application - New Issue, form F. MHC-48653
1-2000.
(f) Variable Suitability Application - Policy Change, form F. MHC-
48654 Rev. 9-1999.
(11) Code of Ethics.
B. A Specimen or Copy of Each Security Being Registered.
See Exhibits Listed under A.(5).
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 LLP, to be supplied by subsequent amendment.
E. Opinion and Consent of Mr. Robert J. Ehren, 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).
Combined with the Exhibit listed under G above.
I. Notice of Withdrawal Right and Statement of Charges Required by Rule 6e-
2(b)(13)(viii)(c).
<PAGE>
(1) Notice of Withdrawal Right and Request for Cancellation of Policy.
(2) Notice of Withdrawal Right and Request for Cancellation of Policy
Adjustment.
J. Minnesota 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 Life 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 St. Paul, and State of Minnesota, on the 8th day of
February, 2000.
MINNESOTA LIFE VARIABLE LIFE ACCOUNT
(Registrant)
By: MINNESOTA LIFE INSURANCE COMPANY
(Depositor)
By /s/ Robert L. Senkler
------------------------------------------
Robert L. Senkler
and Chief Executive Officer
Chairman of the Board, President
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Minnesota Life 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 St. Paul, and State of Minnesota, on the 8th day of
February, 2000.
MINNESOTA 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, the Registration
Statement has been signed below by the following persons in their capacities
with the Depositor and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Robert L. Senkler Chairman, President and February 8, 2000
- -------------------------- Chief Executive Officer
Robert L. Senkler
*
- -------------------------- Director
Anthony L. Andersen
- -------------------------- Director
Leslie S. Biller
<PAGE>
Signature Title Date
--------- ----- ----
*
- -------------------------- Director
John F. Grundhofer
*
- -------------------------- Director
Robert E. Hunstad
*
- -------------------------- Director
Dennis E. Prohofsky
- -------------------------- Director
Michael E. Shannon
*
- -------------------------- Director
William N. Westhoff
*
- -------------------------- Director
Frederick T. Weyerhaeuser
/s/ Gregory S. Strong Senior Vice President February 8, 2000
- -------------------------- (chief financial officer)
Gregory S. Strong
/s/ William N. Westhoff Director and Senior February 8, 2000
- ---------------------- Vice President (treasurer)
William N. Westhoff
/s/ Dennis E. Prohofsky Director and Attorney-in-Fact February 8, 2000
- ---------------------- Director and Attorney-in-Fact
Dennis E. Prohofsky
* Pursuant to power of attorney dated December 13, 1999, filed as Exhibit J to
this Registration Statement.
<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 99-680.
A.(5)(b) Family Term Agreement-Children, form 99-904.
A.(5)(c) Exchange of Insureds Agreement, form 99-914.
A.(5)(d) Inflation Agreement, form 99-916.
A.(5)(e) Waiver of Premium Agreement, form 99-917.
A.(5)(f) Business Continuation Agreement, form 99-929.
A.(5)(g) Accelerated Benefit Agreement, form 99-931.
A.(5)(h) Early Values Agreement, form 99-939.
A.(5)(i) Short Term Agreement, form 99-324.
A.(6)(a) Restated Certificate of Incorporation of the Depositor.
A.(6)(b) Bylaws of the Depositor.
A.(10)(a) New Issue Application - Part 1, form F. MHC-3198 Rev. 9-1999.
A.(10)(b) Application - Part 3 - Authorization New Issue; form MHC-42663 Rev.
10-1998.
A.(10)(c) Policy Change Application - Part 1, form F. MHC-44096 Rev. 9-1999.
A.(10)(d) Policy Change Application - Part 3, form MHC-44098 Rev. 10-1998.
A.(10)(e) Variable Suitability Application - New Issue, form F. MHC-48653 1-
2000.
A.(10)(f) Variable Suitability Application - Policy Change, form F. MHC-48654
Rev. 9-1999.
A.(11) Code of Ethics.
<PAGE>
C. Opinion and Consent of Donald F. Gruber, Esq.
E. Opinion and Consent of Mr. Robert J. Ehren, 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. Minnesota Life Insurance Company - Power of Attorney to Sign
Registration Statements.
<PAGE>
EXHIBIT 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 3rd day of November,
1997.
----------------------------------------
Dennis E. Prohofsky
Senior Vice President, General Counsel
& Secretary
(Seal)
<PAGE>
EXHIBIT A.(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this _____ day of _________________, 198__, 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 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 Corporation,
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 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.
<PAGE>
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
(b) such other amounts as may from time to time be agreed upon by the
Distributor and Minnesota Mutual.
<PAGE>
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 and President
MIMLIC SALES CORPORATION
Witness: _________________________ By: ___________________________________
Vice President President
<PAGE>
EXHIBIT A.(3)(b)
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. The Variable Adjustable Life and any
other Variable Adjustable Life insurance policies 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 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.
Renewal Commissions. Commissions on earned renewal premiums during the second
through the tenth policy year.
<PAGE>
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 Variable Adjustable Life 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.
Kind of Policy Rate of Commission
-------------- ------------------
*Personal Variable
Adjustable Life Business 50%
Personal Variable Annuity Business
(Forms 84-9091 and 84-9092) 3%
*Target Premium Definition -- 50% 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.
First-year commissions are vested and will be credited to you as they
become due.
(2) Renewal Commissions.
<PAGE>
Renewal commissions are percentages of earned renewal premiums during the
second through tenth policy years on your personal business.
Rate of Commission
------------------
Second Policy Year
Kind of Policy Through Tenth Policy Year
-------------- -------------------------
Personal Variable Adjustable 4%
Life Business
Personal Variable Annuity Business
(Forms 84-9091 and 84-9092) 3%
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:
Aggregate Value of For Calendar Quarters
Qualifying Accumulation Values Ending In
------------------------------ ---------------------
$ 60,000 1993
70,000 1994
80,000 1995
90,000 1996
100,000 1997 and later
"Qualifying Accumulation Values" means, with respect to each
MultiOption annuity contract included in your Personal 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
Flexible Payment Contracts
--------------------------
<PAGE>
$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 Variable Adjustable Life 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 the earned renewal premiums credited to
your agency. 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.
<PAGE>
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:
Aggregate Value of For Calendar Quarters
Separate Account Accumulation Values Ending In
------------------------------------ ---------------------
$ 600,000 1993
700,000 1994
800,000 1995
900,000 1996
1,000,000 1997 and later
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.
(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 Variable Adjustable Life 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
<PAGE>
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.
(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>
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 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 Variable
Adjustable Life 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 contribution paid
on Variable Annuity business after the tenth policy year.
<PAGE>
(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.
Kind of Policy Rate of Commission
-------------- ------------------
*Variable Adjustable
Life Business 50%
Variable Annuity
Business (Forms 92-9283
and 92-9284) 3%
MultiOption Select
Variable Annuity
Business (Form 94-9307)
Contribution Amount Rate of Commissions
------------------- -------------------
$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
*Target Premium Definition -- 50% 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.
First-year commissions are vested and will be credited to you as they
become due.
<PAGE>
(2) Renewal Commissions.
Renewal commissions are percentages of earned renewal premiums and
contributions during the second through tenth policy year.
Rate of Commissions
-------------------
Second Policy Year
Kind of Policy Through Tenth Policy Year
-------------- -------------------------
Variable Adjustable 4%
Life Business
Variable Annuity
Business (Forms 92-9283
and 92-9284) 3%
MultiOption Select
Variable Annuity
Business (Form 94-9307)
Contribution Amount Rate of Commissions
------------------- -------------------
$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
"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:
Aggregate Value of For Calendar Quarters
Qualifying Accumulation Values Ending In
------------------------------ ---------------------
<PAGE>
$ 70,000 1994
80,000 1995
90,000 1996
100,000 1997 and later
"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
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
<PAGE>
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 Variable Adjustable Life 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 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:
Contribution Amount Rate of Service Fees
------------------- --------------------
$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
(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.
<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>
Schedule A
Schedule of Commission Expenses under
Variable Adjustable Life Insurance Policy
-----------------------------------------
Commissions to registered representative:
50% of gross premium in the first policy
year
6% of the gross premium in policy years two
through ten
2% in policy years thereafter
0% of nonrepeating premiums
The Schedule of Commissions shows the maximum amount of Commissions payable
under the Variable Adjustable Life Insurance Policy for plans of insurance
described as term and whole life insurance plans. The Commissions payable on
premiums received for plans described as greater than whole life plans will
differ form the percentages shown above, as a first year commission will be paid
only on such amounts as may be classified by Minnesota Mutual as a first year
premium, based upon a whole life premium per $1,000 of face amount and a Policy
face amount of $100,000. The premiums received in excess of that amount pay
commissions at a rate of 4 percent.
In addition, MIMLIC Sales Corporation or The Minnesota Mutual Life Insurance
Company will pay, based uniformly on the sales of Variable Adjustable Life
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 Minnesota Mutual or its affiliates
for the purpose of promoting the sale of insurance and/or investment products
offered by Minnesota Mutual and its affiliates. Such credits may cover the
registered representatives' transportation, hotel accommodations, meals,
registration fees and the like. Minnesota Mutual may also pay registered
representatives additional amounts based upon their production and the
persistency of life insurance and annuity business placed with Minnesota Mutual.
<PAGE>
EXHIBIT A.(5)(a)
VARIABLE ADJUSTABLE LIFE POLICY
Variable Benefits.
Premiums as stated on the Policy Information Page.
Face Amount and Premium may be adjusted by the owner.
Non-Participating
THE 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 DEATH BENEFIT OPTION ELECTED AND ON SEPARATE ACCOUNT INVESTMENT, MORTALITY
AND EXPENSE EXPERIENCE.
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
Subject to the provisions of this policy, we promise to pay to the beneficiary
the death proceeds when we receive proof satisfactory to us of the insured's
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 Minnesota 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 within 10 days after you receive it. If you return the policy, you
will receive a full refund of any premiums 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 Life
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101-2098
99-680
<PAGE>
INDEX
Actual Cash Value 9
Additional Information 13
Assignment 14
Beneficiary 4
Death Benefit 3
Definitions 1
General Information 2
Grace Period 6
Incontestability 14
Lapse (Premiums) 6
Non-repeating Premium 6
Ownership 3
Payment of Proceeds 5
Policy Adjustments 7
Policy Charges 10
Policy Loans 11
Premiums 8
Reinstatement (Premiums) 7
Separate Account 8
Settlement Options 12
Suicide Exclusion 15
Surrender 12
<PAGE>
YOUR POLICY INFORMATION
PREMIUM CLASS: SPECIAL RISK INSURED: JOHN CLIENT
NON-TOBACCO
AGE & SEX 35 - MALE
TOTAL PREMIUMS:
FACE AMOUNT: 300,000
ANNUAL $3,271.00
POLICY NUMBER: X-XXX-XXXV
SEMI-ANNUAL $1,635.50
ORIGINAL POLICY DATE: JUL 01 2000
QUARTERLY $817.75
DEATH BENEFIT OPTION ON POLICY DATE - * * * * * * * * * * * * * * * * * * * *
CASH * VARIABLE ADJUSTABLE LIFE POLICY *
* PROCEEDS PAYABLE AT DEATH *
* OR SURRENDER *
* FACE AMOUNT AND PREMIUM MAY *
* BE ADJUSTED BY THE OWNER. *
* NONPARTICIPATING *
* * * * * * * * * * * * * * * * * * * *
ANNUAL
TYPE OF COVERAGE AMOUNT PREMIUM
-------- ---------
BASIC POLICY*
LIFE INSURANCE
GUARANTEED PROTECTION TO AGE 65 $300,000 $1,800.00
PREMIUM PAYABLE TO AGE 65
$ 672.00
SPECIAL RISK
PREMIUM PAYABLE FOR LIFE OF CONTRACT $ 600.00
CASH EXTRA - MEDICAL
PREMIUM PAYABLE TO AGE 35
*BASED ON CONTINUED PAYMENT OF THE ANNUAL SCHEDULED PREMIUM AND THE
CURRENT FACE AMOUNT, WE GUARANTEE THIS COVERAGE TO YOUR AGE 65. THIS
IS GUARANTEED REGARDLESS OF THE PERFORMANCE OF THE PORTFOLIOS
SELECTED, ASSUMING NO POLICY LOANS AND THE CLAIMS-PAYING ABILITY OF
MINNESOTA LIFE INSURANCE COMPANY. WITH FAVORABLE INVESTMENT RESULTS OF
THE SELECTED PORTFOLIOS AND EXPERIENCE MORE FAVORABLE THAN GUARANTEED,
YOUR CURRENT COVERAGE CAN EXTEND BEYOND AGE 65. YOU MAY ALSO REQUEST
POLICY ADJUSTMENTS TO CHANGE THE COVERAGE GUARANTEE AT ANY TIME WHILE
THE POLICY IS IN FORCE.
CONTINUED ON PAGE 1B
XXX-XX-XXX -1A
99-680
<PAGE>
YOUR POLICY INFORMATION
INSURED: JOHN CLIENT POLICY NUMBER: X-XXX-XXXV
ADDITIONAL AGREEMENTS - CONTINUED FROM PAGE 1A
ANNUAL
TYPE OF COVERAGE AMOUNT PREMIUM
-------- --------
ADDITIONAL AGREEMENTS -
WAIVER OF PREMIUM AGREEMENT $141.00
AVAILABLE TO AGE 60
PREMIUM PAYABLE TO AGE 55
FAMILY TERM AGREEMENT
CHILDRENS LEVEL TERM
INSURANCE TO AGE 25 $ 10,000 $ 50.00
DEATH BENEFIT FOR EACH CHILD
INFLATION AGREEMENT
AVAILABLE TO AGE 60
PREMIUM PAYABLE TO AGE 55 $100,000 $ 8.00
MAXIMUM AMOUNT OF EACH INFLATION
GROWTH INCREASE
EXCHANGE OF INSUREDS AGREEMENT
THERE IS NO PREMIUM CHARGE FOR
THIS AGREEMENT
TOTAL ANNUAL PREMIUM ON POLICY DATE - - - - - - - -- - - - - - - $3,721.00
ANNUAL POLICY LOAN INTEREST RATE: 5% PAYABLE IN ARREARS
ANNUAL POLICY REINSTATEMENT INTEREST RATE: 6%
99-680
<PAGE>
YOUR POLICY INFORMATION
TABLE OF MAXIMUM COST OF INSURANCE CHARGES - POLICY NUMBER X-XXX-XXXV
THESE VALUES ARE THE ANNUALIZED CHARGE RATES PER THOUSAND OF INSURANCE. THE
ACTUAL CHARGES WILL BE TAKEN MONTHLY AND WILL NOT EXCEED THE CHARGE RATES SHOWN
HERE.
AGE RATE AGE RATE AGE RATE
35 1.69 60 12.64 85 149.20
36 1.77 61 13.94 86 162.80
37 1.88 62 15.42 87 176.79
38 2.00 63 17.11 88 190.89
39 2.14 64 19.02 89 205.29
40 2.29 65 21.13 90 220.19
41 2.47 66 23.40 91 235.84
42 2.65 67 25.86 92 252.75
43 2.86 68 28.50 93 271.63
44 3.07 69 31.38 94 295.65
45 3.32 70 34.63 95 329.96
46 3.59 71 38.91 96 384.55
47 3.88 72 42.56 97 480.20
48 4.19 73 47.44 98 657.98
49 4.54 74 52.92 99 1000.00
50 4.91 75 58.80
51 5.35 76 65.06
52 5.86 77 71.64
53 6.43 78 78.47
54 7.09 79 85.72
55 7.82 80 93.67
56 8.63 81 102.52
57 9.49 82 112.52
58 10.42 83 123.79
59 11.47 84 136.11
INSURED AGE FACE AMOUNT
JOHN CLIENT 35 300,000
XX-XXX-1X
99-680
<PAGE>
YOUR POLICY INFORMATION
SCHEDULE OF PREMIUMS TO WAIVE - POLICY NUMBER X-XXX-XXXV
THE BASE PREMIUM AMOUNT THAT WILL BE WAIVED AS PROVIDED BY THE WAIVER OF PREMIUM
AGREEMENT IS SHOWN BELOW. ANY PREMIUM FOR SPECIAL RISK OR ADDITIONAL AGREEMENTS
WILL ALSO BE WAIVED.
AGE AT BASE AGE AT BASE
DISABILITY PREMIUM DISABILITY PREMIUM
AMOUNT AMOUNT
35 3,711.00 50 7,077.00
36 3,867.00 51 7,407.00
37 4,029.00 52 7,755.00
38 4,200.00 53 8,121.00
39 4,383.00 54 8,508.00
40 4,572.00 55 8,910.00
41 4,770.00 56 9,333.00
42 4,977.00 57 9,780.00
43 5,196.00 58 10,254.00
44 5,424.00 59 10,755.00
45 5,664.00
46 5,913.00
47 6,186.00
48 6,468.00
49 6,765.00
INSURED AGE FACE AMOUNT
JOHN CLIENT 35 $300,000
XX-XXX-IX
99-680
<PAGE>
YOUR POLICY INFORMATION
BUSINESS CONTINUATION AGREEMENT SCHEDULE POLICY NUMBER X-XXX-XXXX
DESIGNATED LIFE: JOAN CLIENT
PREMIUM CLASS: B AGE: 35 FEMALE WITH TOBACCO EXPERIENCE
THE MAXIMUM FACE AMOUNT INCREASE PERMITTED AT THE DEATH OF THE DESIGNATED
INSURED DECREASES AFTER THE INSURED'S AGE 75, AS SHOWN IN THE FOLLOWING
SCHEDULE.
POLICY FACE INCREASE
ANNIVERSARY AMOUNT
AT AGE
35-75 $300,000
76 270,000
77 240,000
78 210,000
79 180,000
80 150,000
81 120,000
82 90,000
83 60,000
84 30,000
85 0
XXX-XX-XXX
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Summary of Policy Features
Death Proceeds
The amount payable to the beneficiary on the death of the insured 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 on the insured's life provided by an
additional benefit agreement (see page 1).
PLUS -- Under the Cash Option, any premium paid beyond the end of the policy
month in which the insured died (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).
Variability
If the net premiums paid for this policy are placed in the separate account,
actual cash values will reflect investment experience of the sub-accounts you
choose. Investment experience may, depending on the death benefit option
selected, increase the amount of the death benefit.
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, base premium and the death benefit option. The face amount, base premium
and death benefit option will determine the plan of insurance.
Actual Cash Value
Your policy has an actual cash value which is available to you during the
insured's lifetime. You may use the actual cash value:
-- 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).
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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.
PLUS -- Any asset credit credited.
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.
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DEFINITIONS
When we use the following words, this is what we mean:
1940 Act
The Investment Company Act of 1940, as amended, or any similar successor federal
act.
1980 CSO Tables
The 1980 Commissioners Standard Ordinary Mortality Tables, sex-distinct, smoker-
distinct, and age nearest birthday.
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.
age
The insured's age at nearest birthday.
asset credit
A monthly amount, based on the actual cash value, credited to your actual cash
value.
base premium
The premium less any amount charged for additional benefits and for substandard
risks (see page 4).
face amount
The minimum amount of insurance provided on the death of the insured, subject to
the conditions of this policy. The face amount is shown on page 1.
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.
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general account
All assets of the Minnesota Life Insurance Company other than those in the
separate account or in other separate accounts established by us.
guaranteed plan of insurance
The period during which we guarantee that the Face Amount will be in effect,
assuming payment of all scheduled premiums. We calculate the guaranteed plan of
insurance based on scheduled premiums, face amount, death benefit option and the
policy assumptions.
guaranteed principal account
The portion of the general account of Minnesota Life Insurance Company which is
attributable to this policy and policies of this class, exclusive of policy
loans. The description is for accounting purposes only. It does not represent a
separate account. It does not represent any division of the general account for
the specific benefit of policies of this class.
insured
The person whose life is insured under this policy as shown on page 1.
lapse
The insured's life is no longer insured except as may be provided in the Values
section of this policy.
loan account
The portion of the general account of Minnesota Life Insurance Company which is
attributable to policy loans under this policy and policies of this class. The
loan account balance is the sum of all outstanding loans under this policy.
loan interest credits
The amount of credit we add to the actual cash value of your policy as the
result of a policy loan.
net amount at risk
The difference between the death benefit and the policy value.
net premium
The base premium or non-repeating premium less policy charges assessed against
the premium. The net premium is the amount or amounts which are allocated to the
guaranteed principal account and the separate account.
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non-repeating premium
A payment made to this policy in addition to its scheduled payments.
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.
policy assumptions
The assumed rate of return is 4 percent and the assumed mortality rates which
are derived from, but are not greater than, those in the 1980 CSO Tables.
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 value
The actual cash value of this policy, plus any amount in the loan account.
premium
A scheduled payment required for this policy. The premium amounts are shown on
page 1.
proceeds
The amount we will pay under the terms of this policy when your policy is
surrendered or when the insured dies.
separate account
The separate investment account titled "Minnesota Life Variable Life Account."
We established this separate account for this class of policies 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.
tabular value
The value underlying the guaranteed plan of insurance. The tabular value is not
guaranteed.
terminate
The insured's life is no longer insured under any of the terms of the policy.
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unit
A measure of your interest in a sub-account of the separate account.
valuation date
Any date on which a sub-account is valued.
valuation period
The period between successive valuation dates measured from the time of one
determination to the next.
we, our, us
Minnesota Life Insurance Company.
written request
A request in writing dated and signed by you. We also may require that your
policy be sent in with your written request.
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 insured.
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 which either you or the insured make, 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
either you or the insured make 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.
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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 information in
the report will be current as of a date within two months of its mailing.
How do you exercise your rights under the policy?
You can exercise all the rights under this policy during the insured's lifetime
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.
DEATH BENEFIT
What proceeds are payable at the insured's death?
The amount payable at the insured's death shall be the death benefit provided by
this policy:
- -- plus any additional insurance on the insured's life provided by an additional
benefit agreement;
- -- plus under the Cash Option, any premium paid beyond the end of the policy
month in which the insured died;
- -- 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.
What is the Cash Option?
Under the Cash Option, the death benefit will be the larger of:
(1) the then current face amount; or
(2) the minimum death benefit required so that this policy will qualify as a
life insurance policy as defined by Section 7702 of the Internal Revenue
Code (IRC).
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When the death benefit is provided by definition (2) above, it will vary with
the value of the separate account and the value of the guaranteed principal
account.
What is the Protection Option?
Under the Protection Option, the death benefit will be the larger of:
(1) the then current face amount plus the policy value; or
(2) the minimum death benefit required so that this policy will qualify as a
life insurance policy as defined by Section 7702 of the IRC.
The death benefit will vary with the value of the separate account and the value
of the guaranteed principal account.
The Protection Option is only available until the policy anniversary nearest the
insured's age 100. At the policy anniversary nearest the insured's age 100, we
will convert the death benefit option to the Cash Option.
Does the death benefit qualify for income tax exclusion under the Internal
Revenue Code?
We intend that this policy will qualify as a life insurance policy as defined by
the guideline premium test of Section 7702 of the IRC. In order to maintain such
qualification, we reserve the right either to increase the amount of insurance
on the insured, or to return any excess actual cash value, or to limit the
amount of premium we will accept.
When is the death benefit determined?
The death benefit is determined on each monthly policy anniversary and as of the
date of the insured's death.
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. This is a policy adjustment and we may require evidence satisfactory
to us of the insured's insurability before we allow the change. The change will
take effect when we approve the policy adjustment.
What happens when the policy is paid-up?
When the policy is paid-up, we need no additional base premiums in order to
provide the death benefit for the life of the insured.
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After the policy is paid-up, we may continue to accept non-repeating premiums.
The payment of any premium after the policy is paid-up may increase the death
benefit. We may require you to provide us with evidence satisfactory to us of
the insured's insurability before accepting any premium after the policy is
paid-up.
How will you know when the policy becomes paid-up?
At each policy anniversary we will determine if your policy has become paid-up.
When your policy becomes paid-up, we will notify you.
Will policy charges continue to apply to a paid-up policy?
Yes.
BENEFICIARY
To whom will we pay the death proceeds?
When we receive proof satisfactory to us of the insured's 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 insured?
If a beneficiary dies before the insured, that beneficiary's interest in the
policy ends with that beneficiary's death. Only those beneficiaries who survive
the insured will be eligible to share in the death proceeds. If no beneficiary
survives the insured, 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.
Can you change the beneficiary?
Yes. If you have reserved the right to change the beneficiary, you can request
in writing 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 insured dies before the request has been so
recorded, the request will not be effective as to those death proceeds we have
paid before we recorded your request.
PAYMENT OF PROCEEDS
When will the policy proceeds be payable?
The proceeds of this policy will be payable if you surrender the policy while it
is in force or if we receive proof satisfactory to us of the insured's death.
These events must occur while the policy
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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.
Can proceeds be paid in other than a single sum?
Yes. You may, during the insured's lifetime, 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, and if the periodic installment or interest payment is at least $20.
The following settlement options are all payable in fixed amounts as 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. Proceeds may be withdrawn 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.
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.
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, with 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 insured's
death. However, you may provide that the beneficiary will not be permitted to
change the settlement option you have selected.
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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
insured's 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 guaranteed interest rate will we pay on policy proceeds?
We will pay interest at an annual rate which will never be less than 3 percent
per year. On single sum death proceeds, we will pay interest from the date of
the insured's death until the date of payment.
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.
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Can you stop paying base premiums?
Yes. You may adjust the policy so that no further base premium is required. You
may request a stop premium adjustment at any time if your policy has sufficient
actual cash value to keep the policy in force until your next policy
anniversary. The policy will be adjusted on the basis of no additional base
premium and, unless instructed otherwise, the death benefit in effect at the
time of the adjustment. You may be required to pay premiums for additional
benefits or substandard risks.
Can you pay a non-repeating premium?
Yes. In addition to premiums shown on page 1, you may request to pay a non-
repeating premium. However, we may at any time refuse to accept a non-repeating
premium. If the death benefit of your policy increases as a result of the
payment of a non-repeating premium, we may require evidence satisfactory to us
of the insured's insurability.
Can you pay a premium after the date it is due?
Yes. Your policy has a 31-day grace period. If a premium is not paid on or
before the due date, 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 insured's life
will continue to be insured during this 31-day period.
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 __ will be available to you.
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.
Within 62 days of the date of the first unpaid premium, you may request a single
sum payment of your surrender value at the end of the grace period. Otherwise,
we will apply it to purchase extended term insurance on the insured's life. This
insurance will be effective as of the due date of the last unpaid premium and no
further premiums will be due. You may apply to reinstate your policy as
described below.
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May automatic premium loans be used to keep the policy in force?
Yes. Please see the section on policy loans (see page 13).
What is extended term insurance?
It is term insurance that is purchased by applying the surrender value of your
policy as a premium to buy term insurance for the maximum period. Extended term
insurance has fixed benefits, not provided by the separate account. 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.
Can you reinstate your policy after it has lapsed?
Yes. At any time within three years from the date of lapse, you may ask us to
restore your policy to a premium paying status, unless the policy has terminated
because the surrender value has been paid or the period of extended insurance
has expired. We will require:
(1) your written request to reinstate this policy;
(2) that you submit to us during the insured's lifetime evidence satisfactory to
us of the insured's insurability. We must have sufficient time to act on the
evidence during the insured's lifetime; 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 5 percent per annum
compounded annually.
Is there a premium refund at the insured's death?
Yes. If the Cash Option is in effect at the insured's 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 insured died to the date to which premiums are
paid. However, if your policy 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 non-repeating premium.
POLICY ADJUSTMENTS
What types of adjustments can be made to this policy?
Except while the policy is on extended term, you may request any of the seven
following policy adjustments:
(1) increase or decrease the face amount;
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(2) increase or decrease the premium;
(3) change the Death Benefit Option;
(4) adjust the base premium to zero ("stop premium");
(5) make a partial surrender;
(6) change the underwriting classification.
(7) any change requiring evidence of insurability.
You may request a policy adjustment by completing an application for adjustment.
Are there any adjustment limitations?
Yes. An adjustment must satisfy certain limits on premiums, face amount and the
plan of insurance. Other limitations on adjustments and on combinations of
adjustments may apply. We must approve any adjustment. 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 face
amount.
Any adjustment for a change of premium must result in a change of the annual
premium of at least $100.
An adjustment with an increase in base premium must result in a policy which is
scheduled to become paid-up only after the payment of five annual premiums or to
age 100, if less. In addition, any policy must have a minimum annual base
premium of at least $300.
Any adjustment for a change of the face amount must result in a change of the
face amount of at least $5,000, except for face amount changes which are the
result of an Inflation Agreement change, or a partial surrender under the
policy.
After adjustment, other than an adjustment to stop premium, the policy must
provide a level face amount of insurance to the next policy anniversary at or
after a certain number of years from the date of adjustment, based on the table
below.
Adjustment Age Number of Years
-------------- ---------------
45 or less 10
46 9
47 8
48 7
49 6
50 5
51 4
52 3
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An adjustment to stop premium requires that the policy have sufficient actual
cash value to keep the policy in force until the next policy anniversary.
May evidence of insurability be required?
Yes. We will require evidence satisfactory to us of the insured's continued
insurability. We will need this evidence for adjustments which increase the net
amount at risk of the policy. All other adjustments may be made without
evidence of insurability.
What if the insured is disabled?
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.
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 and we will mail it to you at your last known address and ask you to attach it
to your policy. The new page 1 and its application will become part of this
policy.
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
others of its class. Assets may also be allocated for other purposes, but not
for the operation or support of policies other than variable adjustable life.
Are sub-accounts available under the separate account?
Yes. The separate account is divided into sub-accounts. We will allocate net
premiums to one or more of the sub-accounts you have chosen. We reserve the
right to add, combine or remove any sub-account of the separate account.
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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 is no longer possible or if we determine it
inappropriate for policies of this class, 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, we will file that approval process 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;
(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?
We will allocate net premiums to the guaranteed principal account and to the
separate account and its sub-accounts. Initially, you indicate your allocation
in the application. You may change your allocation for future premiums by
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 and must be in multiples of 5
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 a policy is issued
or adjusted. 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.
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May you make transfers of amounts under this policy?
Yes. Transfers may be made by your written request. Transfers out of the
separate account or among the sub-accounts of the separate account, will be made
on the basis of sub-account unit values as of the end of the valuation period
during which we receive your written request. Transfers out of the guaranteed
principal account 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 must be at least $250.
If the actual cash value in an account 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 to less than $250, we reserve 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 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. Transfers which meet these conditions
will be effective after we approve and record them at our home office.
The funds may restrict the amounts or frequency of transfers to or from the sub-
accounts of the separate account in order to protect fund shareholders.
How are units determined?
With each net premium payment allocated to a sub-account, we divide that payment
by the then current unit value for the sub-account, to determine the number of
units to credit to the sub-account. The then current unit value is the value at
the end of the valuation period during which we receive your premium. Once
determined, the number of units will not be affected by changes in the unit
value.
How are units increased or decreased?
The number of units in each sub-account will be increased by the allocation of
subsequent net premiums, loan repayments, asset credits and transfers to that
sub-account. The number of units will be decreased by policy charges to the
sub-account, policy loans and unpaid loan interest, transfers and partial
surrenders from that sub-account. The number of sub-account units will decrease
to zero if a policy is surrendered, lapsed, or terminated.
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How is a unit valued?
The value of a unit for each sub-account was originally set at $1.00 on the
first valuation date. The unit value increases or decreases on each valuation
date. For any valuation date, the unit 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
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.
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:
(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.
ACTUAL CASH VALUE
How is your actual cash value determined?
The actual cash value for your guaranteed principal account and for your
separate account are determined separately. The actual cash value of the
separate account 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, asset credits, 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 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 unit value for that sub-account. The number of units will be
increased by any asset credits, 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
99-682 17
<PAGE>
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, but we do
guarantee the actual cash value of your guaranteed principal account. The
latter cannot be reduced by any investment experience of the general account.
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.
As conditions permit, we may credit additional amounts of interest to the
guaranteed principal account actual cash value.
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, non-repeating premiums, your actual cash value and the separate
account assets.
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 those benefits
which you 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 and non-repeating premiums?
Against base premiums, we assess: (1) the Sales Charge; (2) the Additional Face
Amount Charge; and (3) the Premium Charge.
(1) The Sales Charge is for distribution expenses for this class of policies,
and 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
Sales Charge will never exceed 44 percent.
If any adjustment involving an increase in base premium occurs, a Sales
Charge will be assessed on that increase in premium.
If an adjustment occurs during a period when a Sales Charge is being
collected and the adjustment results in an increase in base premium, an
additional Sales Charge, not to exceed 44% of the increase in base premium,
will be added to the uncollected portion of the Sales
99-682 18
<PAGE>
Charge. This total amount of Sales Charge will then be collected during the
twelve-month period following the adjustment.
If an adjustment occurs during a period when a Sales Charge is being
collected and the adjustment results in either a decrease or no change in
base premium, a portion or all of the uncollected Sales Charge will be
collected during the twelve-month period following the adjustment.
(2) The Additional Face Amount Charge is for our underwriting costs and other
expenses of issuing and adjusting policies. It is charged against base
premiums, scheduled to be paid in the twelve-month period following the
policy date and following the date of any policy adjustment resulting in a
face amount increase. The Additional Face Amount Charge will never exceed
$5 per $1,000 of face amount.
If an adjustment occurs during a period when an Additional Face Amount
Charge is being collected, an Additional Face Amount Charge will be
collected over the twelve-month period following the adjustment. The new
Additional Face Amount Charge will equal the uncollected portion of the
existing Additional Face Amount Charge plus any Additional Face Amount
Charge associated with the adjustment.
(3) The Premium Charge is for expenses related to premiums, including but not
limited to administration, commissions and taxes. The charge is 6% of each
base and non-repeating premium. The Premium Charge will never exceed 6%.
What charges are assessed against your actual cash value?
Against your actual cash value, we assess: (1) the Monthly Policy Charge; (2)
the Cost of Insurance Charge; and (3) Transaction Charges.
(1) The Monthly Policy Charge is for our administrative expenses, including
those attributable to the records we create and maintain for your policy.
The Monthly Policy Charge is $8 plus $.02 per $1,000 of face amount. We can
increase this charge, but it will not exceed $10 plus $.03 per $1,000 of
face amount.
(2) 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 varies with the insured's age, gender and
risk class. The rate is guaranteed not to exceed rates shown on page 1
determined on the basis of the 1980 CSO Tables. The net amount at risk is
the death benefit less your policy value.
(3) The Transaction Charges are for expenses associated with processing
transactions. We make a charge of $25 for each policy adjustment. We may
also make a charge, not to exceed $25, for each returned check and for each
transfer of actual cash value among the guaranteed principal account and
sub-accounts of the separate account.
99-682 19
<PAGE>
When are charges assessed against your actual cash value?
Except for Transaction Charges, all of these charges are assessed monthly on the
monthly policy anniversary. In addition, these charges are assessed on the
occurrence of the death of the insured, policy surrender, lapse or a policy
adjustment.
Transaction Charges are assessed at the time of the transaction . In the case
of a transfer, the charge is assessed against the amount transferred.
Charges will be assessed against the actual cash value in the guaranteed
principal account and the actual cash value in the separate account on a pro-
rata basis. As to actual cash value in the separate account, charges will be
assessed against each sub-account on a pro-rata basis. If we agree, you may
arrange to have charges assessed on a non-pro-rata basis.
What charges are assessed against separate account assets?
We assess a Mortality and Expense Risk Charge against 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.
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 charge interest on
the loan in arrears. The policy will be the only security required.
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 maximum amount available for policy loans?
The maximum 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.
What is the effect of a policy loan?
When you take a loan, we will reduce the actual cash value of the policy by the
amount you borrow. This determination will be made as of the end of the
valuation period during which we receive your loan request.
99-682 20
<PAGE>
How does a policy loan reduce actual cash value?
Unless you direct us otherwise, we will take the policy loan from your
guaranteed principal account actual cash value and separate account actual cash
value on a pro-rata basis in and, as to the actual cash value in the separate
account, from each sub-account on a pro-rata basis
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 annual interest rate on policy loans is shown on page 1 of this policy.
Interest accrues daily.
When is policy loan interest due and payable?
Policy loan interest is due on the date of the death of the insured, 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, we will increase your
policy loan by an additional policy loan in the amount of the unpaid interest.
It will 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.
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 insured's death. Your loan may also be repaid within 60 days
after the date of the insured's 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, in the absence of your instructions, loan repayments will be
allocated to the guaranteed principal account actual cash value and the separate
account cash value on a pro-rata basis, and to each sub-account in the separate
account on a pro-rata basis.
Loan repayments reduce your loan account by the amount of the loan repayment.
99-682 21
<PAGE>
What is the rate of interest credited to a policy as a result of a policy loan?
Policy loan interest credits shall be at a rate which is not less than your
policy loan interest rate minus 1 percent per year.
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 death of the insured, on a policy adjustment, surrender, lapse, a
policy loan transaction and on each policy anniversary.
How are policy loan interest credits allocated?
We will allocate policy loan interest credits to the guaranteed principal
account and the separate account on the same basis as we allocate net premiums.
What happens if you do not repay your loan?
Your policy will remain in force so long as it has actual cash value and
scheduled premiums are paid. Otherwise, your policy will lapse.
To prevent a lapse, you will have to make a loan repayment. We will notify you
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.
Will we make an automatic policy loan to keep your policy in force?
Yes. Unless you request otherwise, we will make automatic premium loans. If
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. The minimum policy loan paid in cash is $100. We will permit a smaller
policy loan to pay a premium under the automatic premium loan provision.
SURRENDER
May the policy be surrendered?
Yes. You may request to surrender your policy at any time while the insured is
living.
What is the surrender value of your policy?
The surrender value is the actual cash value, plus any asset credit, minus
unpaid policy charges which are assessed against actual cash value.
99-682 22
<PAGE>
If your policy is being used to provide extended term insurance, your surrender
value at any time will be the reserve on that insurance. If extended term
insurance is surrendered within 30 days after a policy anniversary, the
surrender value will be at least equal to that anniversary value.
We determine the surrender value as of the end of the valuation period during
which we receive your surrender request.
How do you surrender your policy?
Send your policy and a written request for surrender to our home office.
Instead of payment in a single sum, you may request that your surrender value be
used to provide extended term insurance on the life of the insured.
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 at least $500 and it cannot exceed the amount
available as a policy loan. This is a policy adjustment as described on page 10.
With the Cash Option, a partial surrender will cause a decrease in the face
amount 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 to take the partial surrender from certain sub-accounts or
from the guaranteed principal account. If you do not specify, partial surrenders
will be deducted from your guaranteed principal account actual cash value and
separate account actual cash value on a pro-rata basis and, as to the actual
cash value in the separate account, from each sub-account on a pro-rata basis.
May surrender payments be deferred?
Yes. We reserve the right to defer surrender payments for up to six months from
the date of your written request, if surrender 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.
What if the insured dies after you request a surrender?
If the insured dies after we receive your surrender request, we will pay the
surrender value to you or your estate; we will not pay a death benefit to the
beneficiary.
99-682 23
<PAGE>
ADDITIONAL INFORMATION
Can you assign your policy?
Yes. 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 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 insured's age or gender is misstated?
If the insured's age or gender has been misstated, the amount of proceeds will
be adjusted to reflect the cost of insurance charges based upon the insured's
correct age or gender.
When does your policy become incontestable?
After this policy has been in force during the insured's lifetime 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 policy adjustment,
reinstatement or any other policy change for which we required evidence of
insurability, that adjustment, reinstatement or change will be contestable for
two years, during the lifetime of the insured, from the effective date of the
adjustment, reinstatement or change.
Is there a suicide exclusion?
Yes. If the 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 policy adjustment,
reinstatement or any other policy change for which we required evidence of
insurability, and if the insured dies by suicide within two years from the
effective date of the policy adjustment, reinstatement or change, our liability
with respect to the policy adjustment, reinstatement or change will be limited
to an amount equal to the premiums paid for the policy adjustment, reinstatement
or change.
Will we pay dividends on this policy?
This policy is not participating and we will not pay dividends.
99-682 24
<PAGE>
VARIABLE ADJUSTABLE LIFE POLICY
Variable Benefits.
Premiums as stated on the Policy Information Page.
Face Amount and Premium may be adjusted by the owner.
Non-Participating
Minnesota Life
<PAGE>
EXHIBIT A.(5)(b)
Family Term Agreement - Children
- --------------------------------------------------------------------------------
General Information
This agreement is a part of the policy to which it is attached and is subject to
all its terms and conditions.
What does this agreement provide?
We will pay the death benefit shown for this agreement on page 1 of this policy
when we receive proof satisfactory to us that an insured child died while this
agreement is in force. In this agreement, "insured" means the person insured
under the policy; "insured child" means any natural child, step-child, or
legally adopted child of the insured, who is at least 14 days old, and who:
(1) is named in the application for this agreement and on the date of that
application has not attained his or her 18th birthday; or
(2) is born to the insured after the date of that application; or
(3) is legally adopted by the insured after the date of that application but
before the child's 18th birthday.
The insurance on each insured child is level term insurance which expires on the
policy anniversary after that child's 25th birthday. The amount of life
insurance on each insured child is shown on page 1.
What is the cost for this agreement?
The additional annual premium for this agreement is shown on page 1. Premiums
for this agreement are payable until:
(1) the policy anniversary after the youngest insured child's 25th birthday;
or
(2) the death of the last surviving insured child; or
(3) the death of the insured.
If the insured dies before this agreement terminates, the insurance provided by
this agreement will continue for the remainder of its term without payment of
further premiums. Any premium payable on this policy after this agreement
terminates will be reduced by the premium for this agreement.
Who will receive the proceeds from this agreement?
We will pay the death benefit to the beneficiary designated for this agreement,
if living; otherwise to the insured, if living; otherwise to the legal spouse of
the insured, if living; otherwise to the living person or persons then insured
under this agreement, equally if more than one, or if none, the estate of the
person at whose death payment is to be made.
99-904 Family Term Agreement - Children Minnesota Life
<PAGE>
Who will control this agreement at the insured's death?
If the insured is the owner, at the death of the insured, the legal spouse of
the insured will have complete control of this agreement. At the death of the
legal spouse, or if the insured has no legal spouse, all rights will vest in
each insured child with respect to the insurance then in force under this
agreement on the life of each insured child.
Can this agreement be reinstated?
If the policy to which this agreement is attached is reinstated in accordance
with its provisions, this agreement may also be reinstated. We will require the
payment of all overdue premiums and evidence of insurability satisfactory to us
for all persons then eligible for insurance under this agreement. No benefits
will be paid for the death of an insured child occurring after the expiration of
the grace period on this policy and prior to the date of reinstatement.
Is there a suicide limitation?
If within two years from the effective date of this agreement, the insured dies
by suicide, whether sane or insane, our liability under this agreement will be
limited to the return of the additional premiums paid for this agreement, and
this agreement will then automatically terminate.
When does this agreement become incontestable?
Except for nonpayment of premium, this agreement will be incontestable after it
has been in force during an insured child's lifetime for two years from the
effective date of the agreement.
Can this insurance be converted to a new policy?
Upon termination of the insurance on an insured child, you may convert that
insurance without evidence of insurability to a new policy on that child. We
must receive the application for the new policy and payment of the first premium
at our home office before 31 days after the insurance terminates or expires. The
insured child must be living on the date of conversion.
The new policy must be on a whole life or higher premium plan which we then
offer. Also, the new policy must be within the issue and amount limits for the
plan. It will be issued as of the date of termination at the premium rate then
used for the insured child's age on that date.
If the insurance on an insured child is converted prior to the child's 25th
birthday, the amount of the new policy may not exceed the amount of that
insurance. If the insurance on an insured child is converted within 30 days of
the policy anniversary after the child's 25th birthday, the amount of the new
policy may not exceed 5 times the amount of that insurance.
We will not require evidence of insurability on the insured child satisfactory
to us unless the new policy is to contain an additional benefit agreement.
However, if this policy contains a waiver of premium agreement, a waiver of
premium agreement may be included in the new policy without evidence of
insurability. The waiver of premium agreement will not cover any disability of
the insured child commencing before the policy date of the new policy.
When does this agreement terminate?
This agreement will terminate on:
<PAGE>
(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 continued as extended term insurance; or
(3) the date this policy is surrendered or terminated; or
(4) the date we receive a written request to cancel this agreement; or
(5) the policy anniversary after the youngest insured child attains age 25; or
(6) the date of death of the last surviving insured child.
This agreement is effective as of the policy date of this policy unless a
different effective date is shown here.
/s/ Robert L. Senkler
President
/s/ Dennis E. Prohofsky
Secretary
<PAGE>
EXHIBIT A.(5)(C)
Exchange of Insureds Agreement
- --------------------------------------------------------------------------------
This agreement is a part of the policy to which it is attached and is subject to
all the terms and conditions.
What does this agreement provide?
This agreement provides for the exchange of this policy for a new policy on the
life of a substitute insured whom you designate, subject to the following
conditions:
(1) this policy and agreement must be in force;
(2) the policy owner must be a business entity;
(3) you must have an insurable interest in the life of the substitute insured;
(4) we must receive an application for the policy exchange signed by you and
the substitute insured;
(5) you must provide evidence of insurability on the substitute insured which
is satisfactory to us.
When will the new policy become effective?
Coverage under the new policy will become effective on the date of the exchange
only if the insured under this policy is then living. The coverage on the
original insured will terminate at the end of the day prior to the date of the
exchange.
Is evidence of insurability required?
Yes, the policy exchange is subject to evidence of insurability on the
substitute insured which is satisfactory to us.
What will be the face amount of the new policy?
The face amount of the new policy may not exceed the face amount of this policy
on the date of exchange.
What policy form will be available?
The new policy will be on the same policy form as this policy. If on the date of
exchange we are not issuing this policy form, the new policy will be on a
similar variable adjustable life policy form we then use. The new policy will
have the same policy number as this policy.
What will be the premium rate for the new policy?
Premiums will be based on the sex and the age of the substitute insured on his
or her birthday nearest the policy date of the new policy.
What will be the policy date of the new policy?
The policy date of the new policy will be the same as the policy date of this
policy. If the substitute insured was not born on the policy date of this
policy, the policy date of the new policy will be the policy anniversary which
follows the substitute insured's date of birth.
99-914 Exchange of Insureds Agreement Minnesota Life
<PAGE>
What if this policy has an outstanding policy loan?
The new policy will be subject to any outstanding policy loans on this policy on
the date of the exchange.
What if this policy is assigned?
The new policy will be subject to any outstanding assignment of this policy on
file at our home office on the date of the exchange.
Who will be the beneficiary?
The new policy will have the same beneficiary as this policy, unless you request
another beneficiary. If you have designated an irrevocable beneficiary on this
policy, the written consent of that beneficiary will be required for any policy
exchange and for any beneficiary change.
Can additional benefit agreements be added to the new policy?
Additional benefit agreements may be attached to the new policy, but only with
our consent.
What is the premium for this agreement?
There is no premium charge for this agreement.
Is this agreement subject to the suicide and incontestable provisions?
Yes, those provisions apply to this agreement. The suicide and contestable
periods for the reissued policy will be measured from the effective date of the
policy exchange and not from the policy date. If the substitute insured, whether
sane or insane, dies by suicide, within two years from the effective date of the
policy exchange, our liability under the reissued policy will be limited to an
amount equal to the premiums paid for the reissued policy as of the effective
date of the policy exchange. After the reissued policy has been in force during
the substitute insured's lifetime for two years from the effective date of the
policy exchange, we cannot contest the reissued policy, except for the
nonpayment of premiums. The reissued policy will show the date from which the
suicide and contestable periods will be measured.
When will this agreement terminate?
This agreement will terminate on the date:
(1) any premium due for this policy remains unpaid at the end of the grace
period; or
(2) this policy is continued as extended term insurance; or
(3) this policy is surrendered or terminated; or
(4) we receive your request to cancel this agreement; or
(5) this policy is exchanged for a new policy under the provisions of this
agreement; or
(6) of the insured's death.
This agreement is effective as of the policy date of this policy unless a
different effective date is shown here.
/s/ Robert L. Senkler /s/ Dennis E. Prohofsky
President Secretary
<PAGE>
EXHIBIT A.(5)(d)
Inflation Agreement
- --------------------------------------------------------------------------------
This Agreement is a part of the policy to which it is attached and is subject to
all of its terms and conditions.
What does this agreement provide?
Every three years while this agreement is in force, we will increase the face
amount of your policy without evidence of insurability based on increases in the
cost of living, as measured by increases in the Consumer Price Index (CPI). Your
premium will also increase as described below.
What will the amount of the increase be?
The increase in the face amount of your policy will be the lesser of:
(1) two times the increase in the CPI during the previous three years, or
(2) $100,000.
The increase will be rounded to the next higher $500 of face amount.
If we are waiving the premiums on this policy because the insured is totally
disabled, the maximum increase will be $50,000.
How is the increase in the cost of living determined?
We use the Consumer Price Index published by the United States Department of
Labor for all urban households. If the composition, base, or method of
computation of the Consumer Price Index is altered in any way which, in our
opinion, makes the Index inappropriate for this agreement, or if the publication
of the Index is discontinued or delayed, we have the right to choose what we
believe to be an appropriate standard, published or unpublished, as a substitute
for the Consumer Price Index.
How do we calculate the increase in the CPI?
We calculate the increase in the CPI using the following formula:
CPI 5
months before the date of
the cost of living increase -1.00
- ---------------------------
CPI 41
months before the date of
the cost of living increase
When may the face amount be increased?
On the third policy anniversary and every third policy anniversary thereafter
while this agreement is in force, we will determine whether your policy is
eligible for a cost of living increase. We will increase the face amount of your
policy if the following conditions are met:
99-916 Inflation Growth Agreement Minnesota Life
<PAGE>
(1) there has been an increase in the CPI, and
(2) an annual premium for the basic policy of at least $300 has been paid
during each of the three years immediately preceding the policy
anniversary.
The increase in the face amount will be effective as of the policy anniversary.
What will be the cost of the increase?
When we increase the face amount of this policy, the annual premium for this
policy will also be increased by the same percent as the face amount increases.
The change in face amount and premium will be made by adjusting your policy and
issuing a new page 1.
Are there any limitations?
Yes. Any adjustments will be subject to the Policy Adjustment provisions of your
policy. If the premium increase does not satisfy the adjustment limitations, we
will adjust the premium so that it satisfies those requirements.
Is evidence of insurability required?
No.
Do you have to accept an increase?
No, you may refuse any increase. If you refuse any increase before the insured
has attained age 21, no increase will be offered until the insured attains age
21. If you refuse any increase after the insured has attained age 21, this
agreement will terminate and no further increases will be offered under this
agreement.
What is the cost 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.
When does this agreement become incontestable?
Except for the nonpayment of premium, this agreement will be incontestable after
it has been in force during the insured's lifetime for two years from the
effective date of this agreement.
When does this agreement terminate?
This agreement will terminate on:
(1) the policy anniversary nearest the insured's 56th birthday; or
(2) the date any premium due for this policy remains unpaid at the end of the
grace period; or
(3) the date this policy is continued as extended term insurance; or
<PAGE>
(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 you refuse an increase in the face amount offered under this
agreement, except if the insured has not attained age 21 on that date; or
(7) the date of the death of the insured.
This agreement is effective as of the original policy date of this policy unless
a different effective date is shown here.
/s/ Robert L. Senkler /s/ Dennis E. Prohofsky
President Secretary
<PAGE>
EXHIBIT A.(5)(e)
Waiver of Premium Agreement
- --------------------------------------------------------------------------------
This agreement is a part of the policy to which it is attached and is subject to
all its terms and conditions.
What does this agreement provide?
This agreement provides for the waiver of premiums on this policy if the insured
becomes totally and permanently disabled. You will not be required to pay any
premium that falls due while the insured is totally and permanently disabled. To
qualify, you must give us timely notice and evidence satisfactory to us that the
insured's total disability:
(1) commenced while this policy and agreement were in force, and
(2) commenced after the policy anniversary nearest the insured's age 18 but
before the policy anniversary nearest the insured's age 60, and
(3) was continuous for six months or more, and
(4) did not result directly from any act of war, declared or undeclared.
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 insured from engaging in an occupation. During the first 24 months of total
disability "occupation" means the insured's regular occupation. After 24 months
it means any occupation for which the insured is reasonably fitted by education,
training or experience.
Also, the 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 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.
How long will we waive premiums?
As long as the insured remains disabled, we will waive premiums to the insured's
age 100. Each year on the policy anniversary we will test to make sure that the
policy continues to qualify as a life insurance policy as defined by the
guideline premium test of Section 7702 of the Internal
99-917 Waiver of Premium Agreement Minnesota Life
<PAGE>
Revenue Code. We will not waive any base premium which would cause the policy to
be disqualified under Section 7702.
What premium will be waived?
We will waive the base premium and the premium for any additional benefit
agreement attached to your policy. After we approve the claim, we will waive the
annual base premium shown in the schedule on page 1, based on the insured's age
at the time disability began. We will adjust and reissue your policy with the
new premium.
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 insured's total disability
commenced.
We will refund premiums paid from the date total disability commenced to the
date the insured's claim is approved; however, we will not refund any premium
paid more than six months before we were notified of the claim. We will not
refund any nonrepeating premiums.
What if the insured recovers from the disability?
We will no longer waive any premiums on this policy due after the insured
recovers. In addition, we will, upon your request, restore your policy to the
premium level that was in effect before the insured's disability commenced,
subject to the Policy Adjustments provisions of your policy.
Are there any limitations?
We will not waive or refund any premium if the insured's total disability
results directly from an act of war while the 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 the insured's total disability at our home
office:
(1) while the 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 proof will be required?
You must furnish proof satisfactory to us that the insured is totally and
permanently disabled as defined in this agreement before we will waive or refund
any premiums. We will from time to time also require additional proof
satisfactory to us that the insured continues to be totally and permanently
disabled. We may also require the insured to submit to one or more physical
<PAGE>
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 lapses for nonpayment of premium before we receive notice of the
insured's total disability, 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.
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.
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.
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 this policy is continued as extended term insurance; or
(3) the date this policy is surrendered or terminated; or
(4) the date we receive your written request to cancel this agreement; or
(5) the policy anniversary nearest the insured's 60th birthday.
This agreement is effective as of the original policy date of this policy unless
a different effective date is shown here.
/s/ Robert L. Senkler /s/ Dennis E. Prohofsky
President Secretary
<PAGE>
EXHIBIT A.(5)(f)
Business Continuation Agreement
- --------------------------------------------------------------------------------
This agreement is a part of the policy to which it is attached and is subject to
all its terms and conditions.
What does this agreement provide?
This agreement gives you the right to increase the face amount of this policy,
without evidence of insurability, at the death of the designated life.
Who is the designated life?
The designated life is the person named as such in the application for this
agreement. The designated life may not be changed.
When may this right be exercised?
At the death of the designated life, you may exercise the right to increase the
face amount of this policy within the ninety days immediately following the
designated life's death. This ninety day period is the Option Period.
What will be the amount of the face amount increase?
The maximum face amount increase is shown on page 1. The maximum face amount
increase will decrease each year according to the schedule on page 1.
How do you exercise this right?
You must notify us in writing that you are exercising your right to increase the
face amount of this policy. You must also send us:
(1) proof satisfactory to us of the designated life's death; and
(2) a completed application for a face amount increase; and
(3) the first premium due for the increased policy
We must receive these requirements in our home office within the Option Period.
When will an increase in the face amount be effective?
If you exercise your right to increase the face amount of this policy, the
increase will be effective at the end of the Option Period.
How will we increase the face amount?
When we receive your written request to increase the face amount, along with the
premium for the increase, we will adjust this policy and issue a new page 1.
The adjustment will be subject to all the provisions of the Policy Adjustments
Section of this policy.
99-929 Business Continuation Agreement Minnesota Life
<PAGE>
What will the premium be for the increase in the face amount?
It will be based on the age of the insured at the time of exercise, the plan of
insurance selected and the same premium classification applicable to the insured
at the time this policy is issued or at the time this agreement is added,
whichever is later.
What if the insured dies within the Option Period?
If the insured dies during the Option Period but not simultaneously with the
designated life, we will pay the maximum face amount increase to the beneficiary
of this policy.
What if the insured and the designated life die simultaneously?
If the insured and the designated life die at the same time or under
circumstances in which the order of death cannot be determined, we will pay one-
half of the maximum face amount increase to the beneficiary of this policy.
Is there a suicide limitation?
If, within two years of the effective date of this agreement, the insured or the
designated life dies by suicide, whether sane or insane, our liability under
this agreement will be limited to the return of the additional premiums paid for
this agreement, and this agreement will then automatically terminate.
When does the increase in the face amount become incontestable?
The contestable period for the increase will be measured from the effective date
of this agreement.
When is this agreement incontestable?
If this agreement is issued on the same date as this policy, it will be subject
to the incontestability provision in this policy, if this agreement is issued at
a date later than the policy, then this agreement will be contestable for two
years from the effective date of this agreement, but only as to the evidence of
insurability which we required to issue this agreement at the later date.
What if the face amount of this policy decreases before the death of the
designated life?
If the face amount of this policy decreases, we reserve the right to decrease
the maximum face amount increase and the premium for this agreement
proportionately.
What is the cost 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.
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 this policy is continued as extended term insurance; or
<PAGE>
(3) the date this policy is surrendered or terminated; or
(4) the date we receive your written request to cancel this agreement; or
(5) the date on which you exercise your right under this agreement to increase
the face amount of this policy; or
(6) the date of the death of the insured; or
(7) the end of the Option Period; or
(8) the policy anniversary when the maximum face amount increase, as shown on
page 1 decreases to zero.
This agreement is effective as of the policy date of this policy unless a
different effective date is shown here.
/s/ Robert L. Senkler /s/ Dennis E. Prohofsky
President Secretary
<PAGE>
EXHIBIT A.(5)(g)
Accelerated Benefit Agreement
- --------------------------------------------------------------------------------
This agreement is a part of the policy to which it is attached and is subject to
all its terms and conditions.
What does this agreement provide?
This agreement provides for the payment of an accelerated benefit if the insured
has a terminal condition, as described below.
The accelerated benefit will be paid as a loan. The entire amount of the loan
will be due and payable at the death of the insured.
The receipt of any accelerated benefit may be taxable to you. You should seek
assistance from your personal tax advisor.
Definitions
When we use the following words, this is what we mean:
physician
An individual licensed to practice medicine or treat illness in the state in
which treatment is received. This does not include you, the insured, or a member
of your or the insured's immediate family.
immediate family
The insured's or your spouse, child, parent, grandparent, grandchild, brothers
and sisters and their spouses.
Terminal Condition
What is a terminal condition?
A terminal condition is a condition caused by sickness or accident which
directly results in a life expectancy of 12 months or less.
What evidence do we require of the insured's terminal condition?
We must be given evidence that satisfies us that, because of sickness or
accident, the insured's life expectancy is 12 months or less. That evidence must
include certification by a licensed physician.
Do we have the right to obtain independent medical verification?
Yes. We retain the right to have the insured medically examined at our own
expense to verify the insured's medical condition. We may do this as often as
reasonably required while an accelerated benefit is being considered or paid.
99-931 Accelerated Benefit Agreement Minnesota Life
<PAGE>
Payment of an Accelerated Benefit
What are the conditions for the payment of an accelerated benefit?
We will consider the payment of an accelerated benefit, subject to all of the
following conditions:
(1) your policy must be in force other than as extended term insurance and all
premiums due must be fully paid;
(2) you must apply in writing and in a form satisfactory to us;
(3) the policy must not be assigned, except to us as security for a loan;
(4) if the policy has an irrevocable beneficiary, that beneficiary must
consent to the payment of an accelerated benefit.
Is there a minimum or maximum amount for an accelerated benefit?
Yes. The minimum accelerated benefit is $10,000. The maximum accelerated
benefit is the lesser of $1,000,000 and 75% of the death benefit.
How will we pay the accelerated benefit?
We will pay the accelerated benefit in one sum or in any other mutually
agreeable manner.
To whom will we pay accelerated benefits?
All accelerated benefits will be paid to you unless you validly assign them.
How is your policy affected when you receive an accelerated benefit?
The accelerated benefit plus any accrued interest will be considered a loan to
you of a portion of the death benefit.
If the accelerated benefit, plus interest exceeds the loan value of your policy,
you will not be able to surrender the policy, or receive any further policy
loans.
At the death of the insured, the entire amount of the loan and interest will be
due and payable. Any balance of the proceeds will be paid to the beneficiary of
your policy.
Can you repay an accelerated benefit?
Yes. The accelerated benefit may be repaid in full or in part at any time.
Is the request for an accelerated benefit voluntary?
Yes. An accelerated benefit is not intended to cause you to reduce involuntarily
the death proceeds ultimately payable to the named beneficiary. An accelerated
benefit will be made available to you on a voluntary basis only.
If you are required by law to use this option to meet the claims of creditors,
whether in bankruptcy or otherwise, you are not eligible for this benefit. If
you are required by
<PAGE>
a government agency to use this option to apply for, obtain, or keep a
government benefit or entitlement, you are not eligible for this benefit.
Interest
Will interest be charged on the amount loaned as an accelerated benefit?
Yes. The accelerated benefit interest rate will be set quarterly on the first
day of each calendar quarter. It will not exceed the greater of the "published
monthly average" for the calendar month ending two months before the beginning
of the calendar quarter, or the policy loan interest rate.
The "published monthly average" means the Moody's Composite Average of Yields on
Bonds as published by the Moody's Investors Service. In the event this average
is no longer published, we will use a substantially similar average. The
interest rate charged on the portion of the accelerated benefit equal to the
loan value of the policy at the time the accelerated benefit is paid shall not
exceed the policy loan interest rate.
We will notify you when we pay the accelerated benefit what the interest rate
charge will be. The interest rate will not be changed during the course of the
accelerated benefit loan.
Interest is charged daily on the unpaid balance of any accelerated benefit; it
is payable annually in arrears. If you do not pay the interest on the
accelerated benefit when it is due, the unpaid interest will be added to the
accelerated benefit and charged the same rate of interest as your accelerated
benefit.
Additional interest will not accrue if the accelerated benefit plus accrued
interest equals the death benefit.
Will it be necessary to continue to pay premiums after an accelerated benefit
has been paid?
Yes. Once an accelerated benefit has been paid, you must keep the policy in
force until such time as the death benefit is payable or the entire accelerated
benefit is repaid to us. You must continue to pay premiums to do this. If
premiums are not paid when due, we will pay them and add the premium amounts to
the accelerated benefit amount which must be repaid before any death benefits
are payable. However, if the policy includes a waiver of premium provision and
the insured qualifies under that provision, we will waive those premiums.
Termination of Agreement
When does 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 continued as extended term insurance; or
<PAGE>
(3) the date this policy is surrendered or terminated; or
(4) the date we receive your written request to cancel this agreement; or
(5) the date of the insured's death.
This agreement is effective as of the policy date of this policy unless a
different effective date is shown here.
/s/ Robert L. Senkler /s/ Dennis E. Prohofsky
President Secretary
<PAGE>
EXHIBIT A.(5)(h)
Early Values Agreement
This agreement is a part of the policy to which it is Attached and is subject to
all its terms and conditions.
What does this agreement provide?
We will waive certain charges which we assess against the base premium in effect
when this policy is issued. We will waive the Sales Charge and all or a portion
of the Additional Face Amount Charge so that the waived charges equal 70% of the
base premium. If the waived Sales and Additional Face Amount Charges do not
equal 70% of the base premium, we will waive a portion of the Cost of Insurance
Charge, assessed against your actual cash value, so that the total of waived
charges equals 70% of the base premium.
We will not waive any Sales Charge or Additional Face Amount Charge assessed
when you adjust the policy.
Is there a premium for this agreement?
Yes. The annual premium for this agreement is shown on page 1. This premium will
be payable for the period shown on page 1.
What effect will the waived charges have on your net premiums?
This agreement will increase the net premiums allocated to either the guaranteed
principal account or to the separate account in the first policy year.
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. ten years after the policy date; or
3. the date the policy is continued as extended term insurance; or
4. the date this policy is surrendered or terminated.
This agreement is effective as of the policy date of this policy.
99-939
<PAGE>
EXHIBIT A.(5)(i)
SHORT TERM PREMIUM AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT DATE:
- ---------------
APPLICABLE COVERAGE: ENTIRE POLICY
- --------------------
SHORT TERM PREMIUM:
- -------------------
GENERAL
This agreement applies to the life coverage on the lives of all Insured Persons.
In consideration of the payment of the Short Term Premium shown above, we agree
to pay the death benefit provided by this agreement when we receive 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. The Applicable
Coverage shall be identified by the words "Entire Policy" 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 on the agreement date noted above. It will be
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
The death benefit provided by this agreement shall be the benefit which would
have been payable under the Applicable Coverage, except that if an infant
Insured dies before attaining the age of 14 days, no death benefit is payable.
99-324 Short Term Agreement - Life
<PAGE>
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.
/s/ Dennis E. Prohofsky /s/ Robert L. Senkler
Secretary President
Registrar
99-324 Short Term Agreement - Life
<PAGE>
EXHIBIT A.(6)(a)
RESTATED CERTIFICATE OF INCORPORATION
of
MINNESOTA LIFE INSURANCE COMPANY
Robert L. Senkler and Dennis E. Prohofsky, respectively, the President and
Secretary of Minnesota Life Insurance Company, a corporation under and existing
by virtue of the laws of the State of Minnesota, do hereby certify that the
following Restated Certificate of Incorporation was duly adopted by an
affirmative vote of a majority of the stockholders at a special meeting of the
Company on December 10, 1998.
This Restated Certificate of Incorporation of Minnesota Life Insurance Company
supersedes and takes the place of the existing Certificate of Incorporation and
all amendments to it:
ARTICLE I
The name of the Company is Minnesota Life Insurance Company (the "Company").
ARTICLE II
The principal office of the Company shall be located at 400 Robert Street North,
Saint Paul, Minnesota 55101-2098.
ARTICLE III
The Company is incorporated for the purpose of transacting the business of and
making insurance upon the lives of individuals and every assurance pertaining
thereto or connected therewith, to grant, purchase and dispose of annuities and
endowments of every kind and description whatsoever, to provide an indemnity
against death and for weekly or other periodic indemnity for disability
occasioned by accident or sickness to the person of the assured and to have all
the further rights, powers and privileges granted or permitted life insurance
companies organized under the provisions of Minnesota Statutes, Chapter 300, and
all Acts amendatory thereof or additional thereto.
ARTICLE IV
The duration and continuation of the Company shall be perpetual.
ARTICLE V
The authorized capital stock of this Company shall be 5,000,000 shares initially
paid in by operation of Minnesota Statutes Section 60A.077 and subsequently paid
in cash, consisting of shares of Common Stock, with par value of $1.00 per
share. Each share of the Common Stock shall have one vote per share.
No shareholder of the Company shall have any pre-emptive or preferential right,
nor be entitled as such as a matter of right, to subscribe for or purchase any
part of any new or additional issue
<PAGE>
of stock of the Company of any class or series, whether issued for money or for
consideration other than money, or of any issue of securities convertible into
stock of the Company.
ARTICLE VI
The corporate powers of the Company shall be vested in a Board of Directors of
at least five persons and shall be exercised by the Board of Directors and by
such officers, agents, employees and committees as the Board of Directors may,
in its discretion, from time to time appoint and empower. The Board of Directors
shall have the power from time to time to make, amend or repeal such bylaws,
rules and regulations for the transaction of the business of the Company as the
Board of Directors may deem expedient and as are not inconsistent with this
Certificate of Incorporation or the constitution or other laws of the State of
Minnesota.
The directors of the Company shall be divided into three classes, as nearly
equal in number as reasonably possible: the first class, the second class and
the third class. Each such director shall serve for a term ending on the third
annual meeting of stockholders following the annual meeting at which such
director was elected, provided, that the directors first elected to the first
class shall serve for a term ending upon the election of directors at the annual
meeting in 2000, the directors first elected to the second class shall serve for
a term ending upon the election of directors at the annual meeting in 2001, and
the directors first elected to the third class shall serve for a term ending
upon the election of directors at the annual meeting in 2002.
At each annual election, commencing at the annual meeting in 2000, the
successors to the class of directors whose term expires at that time shall be
elected by stockholders to hold office for a term of three years to succeed
those directors whose term expires, so that the term of one class of directors
shall expire each year.
Notwithstanding the requirement that the three classes of directors shall be as
nearly equal in number of directors as reasonably possible, in the event of any
change in the authorized number of directors, each director then continuing to
serve as such shall nevertheless continue as a director of the class of which he
or she is a member until the expiration of his or her current term, or his or
her prior resignation, disqualification, disability or removal. There shall be
no cumulative voting in the election of the directors.
Any vacancy on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, an increase in the number of
directorships or other cause shall be filled only by the affirmative vote of a
majority of directors then in office, although less than a quorum or by the sole
remaining director. A director so chosen shall hold office for a term expiring
at the annual meeting at which the term of the class to which he or she has been
elected expires. If the number of directors is changed, any increase or decrease
shall be apportioned among the three classes by a two-thirds (2/3) vote of the
directors then in office. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
-2-
<PAGE>
ARTICLE VII
The incumbent members of the Board of Directors as of the date of the filing of
this Restated Certificate of Incorporation shall continue to be directors of the
Company until their successors are duly elected and qualified in accordance with
the bylaws. The current members of the Board of Directors who shall continue to
be directors of the Company and their respective addresses are:
Name of Director Address
Giulio Agostini 3M
3M Center - Executive 220-14W-08
St. Paul, MN 55144-1000
Anthony L. Andersen H. B. Fuller Company
2424 Territorial Road
St. Paul, MN 55114
Leslie S. Biller Norwest Corporation
Sixth and Marquette
Minneapolis, MN 55479-1052
John F. Grundhofer U.S. Bancorp
601 2nd Avenue South
Suite 2900
Minneapolis, MN 55402-4302
Harold V. Haverty 701 Fourth Avenue South, Suite 300
Minneapolis, MN 55415
David S. Kidwell The Curtis L. Carlson School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Reatha C. King General Mills Foundation
P O Box 1113
Minneapolis, MN 55440
Thomas E. Rohricht Doherty, Rumble & Butler P.A.
2800 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4999
Terry T. Saario Bravo!, LLC
900 Hennepin Avenue
Minneapolis, MN 55403
-3-
<PAGE>
Robert L. Senkler Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
Michael E. Shannon Ecolab, Inc.
370 Wabasha Street
Ecolab Center
St. Paul, MN 55102
Frederick T. Weyerhaeuser Clearwater Investment Trust
332 Minnesota Street
Suite W-2090
St. Paul, MN 55101-1308
ARTICLE VIII
A director of the Company shall not be liable to the Company or the stockholders
of the Company for monetary damages for a breach of the fiduciary duty of care
as a director, except to the extent such exemption from liability or limitation
thereof is not permitted under the Minnesota Statutes, Section 300.64, as the
same currently exists or hereafter is amended. Specifically such exemption shall
not apply to:
(a) a breach of the director's duty of loyalty to the Company or its
stockholders;
(b) acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of the law;
(c) acts prohibited under Minnesota Statutes, Section 300.60, as the same
currently exists or is hereafter amended;
(d) payment of a dividend when the Company is insolvent;
(e) intentional neglect or refusal to perform a duty imposed by law;
(f) a transaction from which the director derives an improper personal
benefit; or
(g) an act or omission occurring prior to the date when this Restated
Certificate of Incorporation became effective.
ARTICLE IX
In no event shall any funds or investments be held in the name of any individual
who is an officer or employee of the Company. The Board of Directors shall
designate those banks and financial institutions in which the Company funds
shall be deposited. The Board by separate resolution also shall designate the
persons authorized to withdraw or transfer funds held in those accounts. No
funds shall be withdrawn or transferred from those accounts except upon the
authorization of the person or persons so authorized.
-4-
<PAGE>
ARTICLE X
The annual meeting of the Company shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday.
ARTICLE XI
The Company is authorized to issue any or all of its policies with or without
participation in profits, savings or unabsorbed portions of premiums; to
classify such policies issued on a participating or nonparticipating basis; and
to determine the right to participate and the extent of participation of any
class or classes of such policies, at the discretion of the Board of Directors.
The declaration and crediting of any policy dividend shall be subject to
approval by majority vote of the Minnesota Mutual Companies, Inc. Board of
Directors.
ARTICLE XII
This Restated Certificate of Incorporation may be amended at any annual meeting
of the Company, or any special meeting of the Company called for that expressly
stated purpose, by the affirmative vote of a majority of the stockholders.
IN WITNESS WHEREOF, the undersigned have executed this Restated Certificate of
Incorporation.
________________________, 1998 _______________________________________
Robert L. Senkler
Chairman of the Board, President
and Chief Executive Officer
________________________, 1998 ________________________________________
Dennis E. Prohofsky
Senior Vice President, Secretary
and General Counsel
-5-
<PAGE>
EXHIBIT A.(6)(b)
AMENDED BYLAWS
of
MINNESOTA LIFE INSURANCE COMPANY
As adopted on April 12, 1999
<PAGE>
AMENDED BYLAWS
of
MINNESOTA LIFE INSURANCE COMPANY
TABLE OF CONTENTS
ARTICLE I STOCKHOLDERS.................................................1
Section 1.1 Annual Meeting.............................................1
Section 1.2 Special Meetings...........................................1
Section 1.3 Place and Hour of Meeting..................................1
Section 1.4 Notice of Meetings; Record Date............................1
Section 1.5 Quorum.....................................................2
Section 1.6 Voting Rights..............................................2
Section 1.7 Voting by Proxy............................................2
Section 1.8 Voting of Shares by Certain Holders........................2
ARTICLE II BOARD OF DIRECTORS..........................................3
Section 2.1 Number.....................................................3
Section 2.1 Non-overlapping Directors..................................3
Section 2.2 Filling of Vacancies.......................................3
Section 2.3 Place of Meeting, Corporate Books..........................3
Section 2.4 Regular Meetings...........................................3
Section 2.5 Special Meetings...........................................3
Section 2.6 Quorum.....................................................4
Section 2.7 Compensation of Directors..................................4
Section 2.8 Action by Unanimous Written Consent of Directors...........4
Section 2.9 Removal....................................................4
ARTICLE III COMMITTEES OF THE BOARD....................................4
Section 3.1 Creation of Committees.....................................4
Section 3.2 Appointments...............................................5
Section 3.3 Qualifications.............................................5
Section 3.4 Committee Chairs...........................................5
Section 3.5 Meetings...................................................5
Section 3.6 Quorum.....................................................5
Section 3.7 Vacancies..................................................5
Section 3.8 Minutes and Reports........................................5
Section 3.9 Audit Committee............................................6
Section 3.10 Investment Committee......................................6
Section 3.11 Committee of Non-Overlapping Directors....................7
<PAGE>
ARTICLE IV OFFICERS....................................................7
Section 4.1 Number.....................................................7
Section 4.2 Election...................................................7
Section 4.3 Term of Office.............................................7
Section 4.4 Removal....................................................7
Section 4.5 Vacancies..................................................7
Section 4.6 Duties of Officers.........................................7
Section 4.7 Absence or Disability......................................9
ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.........9
ARTICLE VI DISPOSITION OF FUNDS AND INVESTMENTS........................9
Section 6.1 Funds and Investments......................................9
Section 6.2 Deposits...................................................9
ARTICLE VII CORPORATE STOCK............................................9
Section 7.1 Certificates for Shares....................................9
Section 7.2 Transfer of Shares........................................10
Section 7.3 Transfer Books............................................10
ARTICLE VIII AMENDMENTS...............................................10
<PAGE>
AMENDED BYLAWS
of
MINNESOTA LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting.
The annual meeting of stockholders shall be held on the first Tuesday in May of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday, when members of the Board of Directors shall be elected to
succeed those whose terms are then expiring and such other business shall be
transacted as may properly be brought before the meeting.
Section 1.2 Special Meetings.
Special meetings of stockholders for the transaction of such business as may
properly come before the meeting may be called by order of the Board of
Directors or by stockholders holding together at least a majority of all the
shares of the Company entitled to vote at the meeting. Business transacted at
all special meetings of stockholders shall be confined to the purpose or
purposes stated in the notice of the meeting.
Section 1.3 Place and Hour of Meeting.
Every annual meeting of stockholders shall commence at such hour as shall be
determined by the Board of Directors. Every meeting of stockholders, whether an
annual or a special meeting, shall be held at the principal office of the
Company at 400 Robert Street North in the City of Saint Paul, in the State of
Minnesota (the "Home Office"), or at such other place as may be selected by the
Board of Directors.
Section 1.4 Notice of Meetings; Record Date.
Notice of each meeting of stockholders shall be mailed to each stockholder of
the Company not less than thirty days previous to such meeting, and every such
notice shall state the day and hour and the place at which the meeting is to be
held and, in the case of any special meeting, shall indicate briefly the purpose
or purposes thereof. The Board of Directors may fix in advance a date, not less
than twenty calendar days preceding the dates of the aforenamed occurrences, as
a record date for the determination of the shareholders entitled to notice of,
and to vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
shares. In such case, such stockholders, and only such stockholders as are
stockholders of the Company of record on the record date so fixed, are entitled
to notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Company after such record date so fixed. If the Board
of Directors shall not set a record date for the determination of the
stockholders entitled to notice of, and to vote at, a meeting of stockholders,
only the stockholders who are stockholders
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of record at the close of business on the 20th day preceding the date of the
meeting are entitled to notice of, and to vote at, the meeting and any
adjournment of the meeting.
Section 1.5 Quorum.
A majority of the outstanding shares entitled to notice of and to vote at a
meeting, present in person or by proxy conforming the requirements of Section
1.7 of these bylaws, shall constitute a quorum for the transaction of any
business coming before any regular or special meeting of stockholders duly and
properly called, except as provided by law, the Restated Certificate of
Incorporation of the Company, or these bylaws. If, however, such quorum of
stockholders shall not be present or represented at any meeting of stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a requisite number of stockholders shall be
present. At any such adjourned meeting at which the requisite number of
stockholders shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 1.6 Voting Rights.
Each outstanding share of Common Stock shall be entitled to one vote upon each
matter submitted to a vote at any annual or special meeting of stockholders.
Section 1.7 Voting by Proxy.
Any stockholder may vote by proxy at any meeting of stockholders. To be valid,
the proxy appointment must be in writing and must be filed with, and received
by, the Secretary at the Home Office of the Company at least five days before
the meeting at which it is to be used, exclusive of the day of the meeting, but
inclusive of the day of receipt and filing of the proxy. A proxy appointment may
be for a specified period of time not to exceed one year. A proxy may be revoked
by a stockholder at any time by written notice to the Secretary of the Company,
or by executing a new proxy appointment and filing it as required herein, or by
personally appearing and exercising his or her rights as a stockholder at any
meeting of the stockholders.
Section 1.8 Voting of Shares by Certain Holders.
(a) Shares of stock in the name of another corporation, foreign or
domestic, are to be voted by such officer, agent, or proxy as the bylaws of such
corporation may determine.
(b) Shares of stock in the name of a deceased person are to be voted by his
executor or administrator in person or by proxy.
(c) Shares of stock in the name of a fiduciary, such as guardian, curator,
or trustee are to be voted by such fiduciary either in person or by proxy,
provided the books of the Company show the stock to be in the name of such
fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to be voted by such
receiver, and shares held by, or in the control of, a receiver are to be voted
by such receiver without the transfer thereof into his name, if such voting
authority is contained in an appropriate order of the court by which such
receiver was appointed.
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(e) Shares of stock which have been pledged are to be voted by the pledgor
until the shares of stock have been transferred into the name of the pledgee,
and thereafter, the pledgee is entitled to vote the shares so transferred.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number.
The Board of Directors shall consist of such number of Directors, not fewer than
five or more than sixteen, as the Board shall from time to time determine.
Section 2.1 Non-overlapping Directors.
Commencing with the first annual election of directors, and unless and until
Minnesota Mutual Companies, Inc. (or any successor mutual insurance holding
company) is converted from a mutual insurance holding company to a stock
company, the Board of Directors shall at all times include at least three
directors who are not concurrently serving as directors on the board(s) of
Minnesota Mutual Companies, Inc., Securian Holding Company or Securian Financial
Group, Inc. ("Non-overlapping Directors"). The person or persons who hold(s) the
office (s) of Chief Executive Officer and /or President shall, without the
necessity of election or appointment, be Director(s) by virtue of that office.
Section 2.2 Filling of Vacancies.
If the office of any Director becomes vacant for any reason, a majority of the
remaining Directors may choose a successor. Each Director so chosen shall hold
office until the next regular annual meeting of the shareholders and until his
or her successor has been duly elected and qualified. Not more than one-third of
the maximum number of Directors may be so chosen by the Board between regular
annual meetings of the shareholders.
Section 2.3 Place of Meeting, Corporate Books.
The Board of Directors may hold its meetings and keep the books of the Company
at the Home Office of the Company, or at such other place or places as they may
from time to time by resolution determine, except as otherwise required by law.
Section 2.4 Regular Meetings.
Regular meetings of the Board shall be held at such times and places as are
fixed from time to time by resolution of the Board. Notice need not be given of
those regular meetings of the Board held at the times and places fixed by
resolution, nor need notice be given of adjourned meetings. If either or both
the time or place of a regular meeting are other than that fixed by resolution,
a telephonic or written notice shall be given to each Director not less than
twenty-four hours prior to the time of that regular meeting.
Section 2.5 Special Meetings.
Special meetings of the Board may be held at any time upon call either of the
Chair of the Board, or of the Chief Executive Officer, or upon written request
of any three or more directors. Except as otherwise provided, notice of a
special meeting shall be given to each director either in writing or by
telephone. Notice of at least seventy-two hours prior to the meeting time is
required if
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written notice is deposited in the United States mail in the City of
Saint Paul. Notice of at least twenty-four hours prior to the meeting time is
required if written notice is left at either the place of business or residence
of each director. Notice of at least six hours prior to the meeting time is
required if all directors are personally either served with a written notice or
contacted by telephone. Notice need not be given to the directors of adjourned
special meetings. Also, special meetings may be held at any time without notice
if all of the directors are present, or if, before the meeting, those not
present waive such notice in writing. Notice of a special meeting shall state
the purpose of the meeting.
Section 2.6 Quorum.
At all meetings of the Board of Directors, a majority of the directors then in
office shall be necessary and sufficient to constitute a quorum for the
transaction of business, but if, at any meeting, less than a quorum shall be
present, a majority of those present may adjourn the meeting from time to time,
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Restated Certificate of
Incorporation of the Company or by these bylaws.
Section 2.7 Compensation of Directors.
Members of the Board of Directors, who are not salaried officers of the Company,
shall receive such annual compensation as shall be fixed from time to time by
resolution of the Board of directors; and, in addition, the directors who are
not salaried officers of the Company shall receive a sum in such amount as shall
be fixed from time to time by resolution of the Board of Directors, and the
expenses of attendance, if any, for attendance at each regular or special
meeting of the Board, whether or not an adjournment be had because of the
absence of a quorum.
Section 2.8 Action by Unanimous Written Consent of Directors.
If all the directors severally or collectively consent in writing to any action
taken or to be taken by the directors, such consents have the same force and
effect as a unanimous vote of the directors at a meeting duly held, and may be
stated as such in any certificate or document filed with the Secretary of State
of Minnesota or any other state in the United States of America or other
Country. The Secretary of the Company shall file such consents with the minutes
of the meetings of the Board of Directors.
Section 2.9 Removal.
Any director or the entire Board of Directors may be removed at any time but
only for cause or pursuant to the Company's retirement policy in effect when the
director was first elected.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.1 Creation of Committees.
The following designated standing committees of the Board are hereby authorized
and created: Audit, Investment, and Non-overlapping Directors. In addition, the
Board is authorized to create any other committee or committees of the Board as
the Board from time to time deems necessary. The name, duration and duties of
each other committee and the number of members
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thereof shall be as prescribed in the action creating the committee. In the
event the Board of Directors creates an Executive Committee invested with the
full powers of the Board of Directors between meetings of the Board of
Directors, then that Committee must have at least the same proportion of
Non-overlapping Directors as does the full Board of Directors.
Section 3.2 Appointments.
The members of each standing Board committee shall consist of those Directors
appointed by the Board of Directors. Each Director appointed to a Board
committee shall continue to serve on that committee at the will and pleasure of
the Board for the period specified in his or her appointment or until his or her
earlier death, resignation or removal.
Section 3.3 Qualifications.
Each Director is qualified to be appointed and successively reappointed to one
or more committees.
Section 3.4 Committee Chairs.
The Board shall appoint one of the members of each of the Board committees to
chair that committee and, in its discretion, may also appoint one of the members
of each of the committees to serve as a vice chair of that committee. If neither
the committee chair nor the committee vice chair is present at a meeting of a
committee, the committee members present at that committee meeting shall elect
another committee member to chair that meeting.
Section 3.5 Meetings.
Each committee shall meet at such times as the chair of that committee may
designate or as a majority of that committee may determine, subject to a minimum
of not less than two meetings per calendar year.
Section 3.6 Quorum.
A majority of each Board committee shall constitute a quorum at each meeting of
that committee. At any meeting of a committee at which a quorum is present, the
committee may continue to transact business until adjournment, even though
committee member(s) may have left the meeting so that less than a quorum is
present at the meeting. If a quorum is not present for a committee meeting, the
chair of that committee may request the Board to appoint a sufficient number of
other directors to serve as members of the committee only for that meeting, so
as to obtain a quorum. If the Board makes the requested appointments, any action
so taken at the committee meeting shall be valid and binding.
Section 3.7 Vacancies.
In the case of the death, resignation or removal of a member of a committee, the
Board may appoint another Director to fill the vacancy so created on that
committee for the balance of the unexpired appointment. The appointment shall be
subject to the qualifications set forth for that committee.
Section 3.8 Minutes and Reports.
Each committee shall keep a written record of its acts and proceedings and shall
submit that record to the Board of Directors at a regular meeting of the Board
and at such other times as
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requested by the Board or when a majority of the committee deems it desirable to
do so. Failure to submit a record will not, however, invalidate any action taken
by the committee prior to the time the record of the action was, or should have
been, submitted to the Board. The minutes of each committee shall be recorded by
the person designated by the chair of that committee.
Section 3.9 Audit Committee.
The Audit Committee shall consist of not fewer than four directors that are not
officers or employees of Minnesota Mutual Companies, Inc. or any of its
subsidiaries. The committee shall have the following powers and duties:
(a) Annually recommend to the Board a firm of independent certified public
accountants to audit the Company's books, records and accounts.
(b) Approve the scope of audits to be conducted by the independent
certified public accountants, taking into account the principal risks inherent
in the Company's business and the recommendations from the independent
accountants as to scope of audit.
(c) Review all recommendations made by the independent certified public
accountants in their audit reports to the Board.
(d) Approve the scope of audits to be conducted by the Company's internal
auditors and review the reports of those audits.
(e) Review the reports which result from the examinations of the Company
conducted by state insurance authorities.
(f) Review corporate litigation involving extra-contractual damages.
(g) Periodically review the Company's plans for data security and disaster
recovery.
(h) Advise the Board of the results of the committee's reviews and
recommendations resulting therefrom.
Section 3.10 Investment Committee.
The Investment Committee shall consist of not fewer than four directors and
shall have the following powers and duties which shall be exercised not less
than once every twelve months:
(a) Review the written investment policy for the Company investments,
recommend changes thereto, and submit to the Board for its approval and adoption
the policy and procedures for the ensuing twelve months.
(b) Review all investments of Company funds, including their acquisition
and sale and report findings to the Board.
(c) Furnish the Board with summaries of investment transactions.
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(d) Review compliance with the written investment policy and valuation
procedures and submit findings to the Board.
Section 3.11 Committee of Non-Overlapping Directors.
The Committee of Non-overlapping Directors shall consist of not fewer than three
Non-overlapping Directors (as described in Section 2.1 of these bylaws) and
shall have the following powers and duties:
(a) Review all agreements and material transactions between and among the
Company, its affiliates and subsidiaries to assure that such agreements and
transactions are fair and reasonable and that they comply with Minnesota
Statutes, Section 60D, and all Acts amendatory thereof or additional thereto.
For purposes of this section, the term "material" shall have the definition set
forth in Minnesota Statutes, Section 60D.19, subd. 4, as it may be amended from
time to time.
(b) Such other powers and duties as determined by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.1 Number.
The officers of the Company shall be a Chief Executive Officer, a President, one
or more Vice Presidents, a Treasurer, an Actuary, a Controller, a Secretary, and
one or more Assistant Secretaries. In addition, there may be such other officers
as the Board of Directors from time to time may deem necessary. One individual
may hold two or more offices, except those of President and Secretary.
Section 4.2 Election.
Officers shall be elected or appointed by the Board of Directors.
Section 4.3 Term of Office.
Each officer shall serve for the term stated in his or her election or
appointment or until his or her earlier death, resignation or removal.
Section 4.4 Removal.
Any officer may be removed from office, with or without cause, at any time by
the affirmative vote of the majority of the Board of Directors then in office.
Section 4.5 Vacancies.
Any vacancy in any office from any cause may be filled by the Board of Directors
at its next meeting.
Section 4.6 Duties of Officers.
The duties of the officers shall be as follows:
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(a) Chief Executive Officer. The Chief Executive Officer shall have general
active management of the business of the Company and, in the absence of the
Chair of the Board, shall preside at all meetings of the members and the Board
of Directors, and shall see that all orders and resolutions of the Board are
carried into effect. Except where, by law, the signature of the President is
required, the Chief Executive Officer shall possess the same power as the
President to sign and execute all authorized certificates, contracts, bonds, and
other obligations of the Company.
(b) President. The President, in the absence of the Chair of the Board and
the Chief Executive Officer, shall preside at all meetings of the members and
the Board of Directors. The President shall be the chief administrative officer
of the Company and shall have the power to sign and execute all authorized
certificates, contracts, bonds, and other obligations of the Company. The
President also shall perform such other duties as are incident to the office or
are properly required of him or her by the Board or the Chief Executive Officer.
(c) Vice Presidents. Each Vice President will perform those duties as from
time to time may be assigned by the Chief Executive Officer. In the absence of
the President, a Vice President designated by the Board of Directors shall
perform the duties of the President. A Vice President shall have the power to
sign and execute all authorized certificates, contracts, bonds and other
obligations of the Company. One or more of the Vice Presidents may be entitled
Executive Vice President, Senior Vice President, Vice President, Second Vice
President, or such other variation thereof as may be designated by the Board.
(d) Secretary. The Secretary shall give notice and keep the minutes of all
meetings of the members and of the Board of Directors and shall give and serve
all notices of the Company. The Secretary or an Assistant Secretary shall have
the power to sign with the Chief Executive Officer, President, or any Vice
President in the name of the Company all authorized certificates, contracts,
bonds, or other obligations of the company and may affix the Company Seal
thereto. The Secretary shall have charge and custody of the books and papers of
the Company and in general shall perform all duties incident to the office of
Secretary, except as otherwise specifically provided in these bylaws, and such
other duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Secretaries are elected or appointed, they shall have
those powers and perform those duties as from time to time may be assigned to
them by the Chief Executive Officer and, in the absence of the Secretary, one of
them shall perform the duties of the Secretary.
(e) Treasurer. The Treasurer shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer. If Assistant Treasurers are elected or appointed, they shall have those
powers and perform those duties as from time to time may be assigned to them by
the Chief Executive Officer and, in the absence of the Treasurer, one of them
shall perform the duties of the Treasurer.
(f) Controller. The Controller shall have those powers and shall perform
those duties as from time to time may be assigned by the Chief Executive
Officer.
(g) Actuary. The Actuary shall have those powers and shall perform those
duties as from time to time may be assigned by the Chief Executive Officer.
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(h) Other Officers. Other officers elected or appointed by the Board of
Directors shall have those powers and perform those duties as from time to time
may be assigned by the Chief Executive Officer.
Section 4.7 Absence or Disability.
In the case of the absence or disability of any officer of the Company or of any
person authorized to act in his or her place during such period of absence or
disability, the Board of Directors from time to time may delegate the powers and
duties of such officer to any other officer, or any Director, or any other
person whom they may select.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS and EMPLOYEES
The Company shall, to the fullest extent permitted under Minnesota Statutes,
Section 300.083, as the same currently exists or hereafter is amended, indemnify
(and advance expenses to) the directors, officers and employees of this Company.
The provisions of this Article shall not be deemed to limit or preclude
indemnification of a director, officer or employee by the Company for any
liability which has not been eliminated by the provisions of this Article.
ARTICLE VI
DISPOSITION OF FUNDS AND INVESTMENTS
Section 6.1 Funds and Investments.
All funds and investments of the Company shall be held in the name of "Minnesota
Life Insurance Company" or its nominee or as otherwise provided in accordance
with applicable Minnesota Statutes, as amended from time to time. In no event
shall any funds or investments be held in the name of any individual who is an
officer or employee of the Company.
Section 6.2 Deposits.
The Board of Directors shall designate those banks and financial institutions in
which Company funds shall be deposited. The Board by separate resolution also
shall designate the persons authorized to withdraw or transfer funds held in
those accounts. No funds shall be withdrawn or transferred from those accounts
except upon the authorization of the person or persons so authorized.
ARTICLE VII
CORPORATE STOCK
Section 7.1 Certificates for Shares.
The Board of Directors is to prescribe the form of the certificate(s) of stock
of the Company. The certificate is to be signed by the President or Vice
President and by the Secretary, Treasurer, or Assistant Secretary or Assistant
Treasurer, is to be sealed with the seal of the Company and is to be numbered
consecutively. The name of the owner of the certificate, the number of shares of
stock represented thereby, and the date of issue are to be recorded on the books
of the Company. Certificates of stock surrendered to the Company for transfer
are to be canceled, and new certificates of stock representing the transferred
shares issued. New stock certificates may be
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issued to replace lost, destroyed or mutilated certificates upon such terms and
with such security to the Company as the Board of Directors may require.
Section 7.2 Transfer of Shares.
Shares of stock of the Company may be transferred on the books of the Company by
the delivery of the certificates representing such shares to the Company for
cancellation, and with an assignment in writing on the back of the certificate
executed by the person named in the certificates as the owner thereof, or by a
written power of attorney executed for such purpose by such person. The person
registered on the books of the Company as the owner of shares of stock of the
Company is deemed the owner thereof and is entitled to all rights of ownership
with respect to such shares.
Section 7.3 Transfer Books.
Transfer books are to be maintained under the direction of the Secretary,
showing the ownership and transfer of all certificates of stock issued by the
Company.
ARTICLE VIII
AMENDMENTS
These bylaws may be amended by the Board of Directors or by the stockholders at
a regular meeting, or at a special meeting called for that expressly-stated
purpose, by the affirmative vote of a majority of the stockholders present, in
person or by proxy, at the meeting.
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Exhibit A.(10)(a)
================================================================================
Minnesota Life APPLICATION PART 1
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
Minnesota Life Insurance Company . Individual Policy Issues . 400 Robert Street North . St. Paul, Minnesota 55101-2098
- ----------------------------------------------------------------------------------------------------------------------------
ALL APPLICATIONS - PERSONAL INFORMATION
- ----------------------------------------------------------------------------------------------------------------------------
Proposed Insured's Name (last, first, middle name.) Date of Birth (Month, Day, Year)
/ / / / / / / / / / / / / / / / / / / / -- --
- ----------------------------------------------------------------------------------------------------------------------------
Street address or RFD route Sex [ ] Male [ ] Female
- ----------------------------------------------------------------------------------------------------------------------------
City or Town County State Zip code
- ----------------------------------------------------------------------------------------------------------------------------
Social Security Number Birthplace (State or Country if outside U.S.) Driver's License Number
-- --
- ----------------------------------------------------------------------------------------------------------------------------
Home Telephone Number Business Telephone Number Indicate here for special dating
( ) -- -- ( ) -- --
- ----------------------------------------------------------------------------------------------------------------------------
Employer's name
- ----------------------------------------------------------------------------------------------------------------------------
Business address
- ----------------------------------------------------------------------------------------------------------------------------
City or Town County State Zip Code
- ----------------------------------------------------------------------------------------------------------------------------
LIFE INSURANCE
Occupational title:_____________________________Years in occupation: _________Income $____________________
BASE POLICY INFORMATION
Base Face amount $ ______________Product: _______________________Total annual premium or plan: ___________
Premiums payable: [ ] Annual [ ] Semi-annual [ ] Quarterly
[ ] Monthly Automatic Payment Plan#__________ [ ] Direct Monthly (if available)
[ ] List Bill Plan#__________ [ ] Payroll Deduction Plan #__________
Premiums paid by: [ ] Proposed Insured [ ] Employer [ ] Other (Indicate name and address in Additional Remarks, page 2.)
Non-Repeating Premium
Amount $________________($500 minimum required) Include at issue? [ ] Yes [ ] No
If billable: Annual total $_________________________
($600.00 minimum annual total with a $2,400.00 minimum annual base premium.)
Frequency: [ ] Annual [ ] Semi-annual [ ] Quarterly [ ] APP Monthly
Death Benefit Option Information
Death Benefit Option Selection: [ ] Cash [ ] Protection (Default is cash if none selected.)
</TABLE>
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.
REPLACEMENT
Will this policy replace any existing life insurance or annuity? [ ] Yes [ ] No
Has there been or will there be a lapse, surrender, loan, withdrawal or other
changes to any existing life insurance or annuity as a result of, or in
anticipation of this application? [ ] Yes [ ] No
If yes to either question, please indicate which coverage will be replaced in
the box below and submit replacement forms where required.
LIFEINSURANCE INFORCEANDPENDING:
Does the proposed insured have any life insurance in force or pending?
[ ] Yes [ ] No (If yes, indicate below.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
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Year Amount Type of Coverage Full Company Name Policy Business/ Pending Will it be
Issued Number(s) Personal Yes No Replaced?
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
F. MHC-3198 Rev. 9-1999
<PAGE>
<TABLE>
<CAPTION>
ADDITIONAL BENEFITS AND AGREEMENTS: (Select only those available for the particular product.)
<S> <C> <C>
[ ] Accelerated Benefits Agreement (Attach completed Outline of Coverage F.MHC-44244.)
[ ] Accidental Death Benefit ............................... $_________________
[ ] Additional Insured Agreement ........................... $_________________ (Attach application for Family Term Agreement.)
[ ] Additional Term Protection ............................. $_________________ (Automatically includes FX Dividend option.)
[ ] Adjustable Survivorship Life Agreement ................. $_________________ Designated Life_________________________________
Automatic Election Option: [ ] Yes [ ] No (Attach application for Designated Life.)
[ ] Business Continuation Rider ............................ $_________________ Designated Life_________________________________
Automatic Election Option: [ ] Yes [ ] No (Attach application for Designated Life.)
[ ] Early Values Agreement ................................. $_________________ Annual Premium
(Leave blank if total annual premium is indicated on previous page.)
[ ] Face Amount Increase Agreement ......................... $_________________
[ ] Family Term-Children's Agreement ....................... $_________________ (Attach application for Family Term Agreement.)
[ ] Guaranteed Protection Waiver
[ ] Policy Enhancement Rider ............................... _________________ %(Indicate a whole number between 3 and 10 persent.)
[ ] Waiver of Premium Agreement
[ ] Other______________________________________________________________________
The following benefits and agreements will be added if available for your policy, unless you choose to omit them:
[ ] Omit Automatic Premium Loan
[ ] Omit Cost of Living Agreement
[ ] Omit Inflation Growth Rider
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Class Print given name, middle initial and surname. Relationship to
(If Corporate Beneficiary, give full name and State of incorporation.) Proposed Insured
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
ADDITIONAL REMARKS FOR POLICYISSUES OR UNDERWRITING:
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
DISABILITY INSURANCE
POLICY TYPE AND INFORMATION:
[ ] Level Disability. [ ] Annual Renewable Disability Income (ARDI).
- --------------------------------------------------------------------------------
Coverage Amount Benefit Period Waiting Period
- --------------------------------------------------------------------------------
Base $
- --------------------------------------------------------------------------------
ADMIA $
- --------------------------------------------------------------------------------
ADMIA $
- --------------------------------------------------------------------------------
Supplementary Income Benefit $ [ ]to 365 days
- --------------------------------------------------------------------------------
Social Security Agreement $ 365 days
- --------------------------------------------------------------------------------
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% $_____of aggregate monthly benefit.
OCCUPATION:
A. Class [ ]*P [ ]1* [ ]*S [ ]1 [ ]2 [ ]3
B. Occupational title and/or professional designation
-----------------------
Nature of business
---------------------------------------------------------
OCCUPATIONAL DETAILS:(Provide description of daily job activities and percentage
of time spent on each.)
- --------------------------------------------------------------------------------
Duties % Duties %
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A. How many years have you been employed by your current employer?
--------------
B. How many hours do you work per week on average?
------------------------------
C. How many full-time employees report to you?
----------------------------------
D. Do you have any part-time or other full-time jobs?
---------------------------
- --------------------------------------------------------------------------------
PREVIOUS EMPLOYMENT:
Please list your other jobs within the past ten years.
- --------------------------------------------------------------------------------
Employer Dates Employed
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Current Year Last Year Two Calendar
A. EARNED INCOME (Fill in all which apply.) ________________ ________________ Years ago ______
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). ________________ ________________ ________________
6. 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 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?______%
</TABLE>
REMARKS:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE: If this application is an exercise for guaranteed coverage (such as GFIA,
AMIO or FIPA) on an existing policy, indicate policy number and type of
exercise.
----------------------------------------------------------------
--------------------------------------------------------------------------
<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:
[ ] Annual [ ] Direct Monthly
[ ] Semi-annual [ ] List Bill #_______
[ ] Quarterly [ ] Payroll Deduction #_______
[ ] Automatic Payment Plan #________________
DISCOUNTS: (Choose one selection from A.)
A. [ ] Association Discount #_____________________________________
[ ] Employer/Employee Discount #_____________(Include F. 37443)
[ ] Professional Group Discount #______________________________
B. [ ] Income Documentation Discount (Complete page 8
and submit appropriate income documentation.)
<PAGE>
ALL APPLICATIONS
Special activities and other insurance activity (Provide details for all yes
answers in space provided & Additional Information.)
A.Do you plan to change jobs within the next 12 months? [ ] Yes [ ] No
(If yes, please advise of the industry, company, and location to which you are
planning to go. If you do not know the specifics yet but are contemplating
such a change, please provide as many details as you can.)
_____________________________________________________________________________
B.Do you plan to travel or reside outside of the U.S. in the next three years?
[ ]Yes [ ]No
(If yes, please provide the country(ies) and city(ies) you will be visiting or
moving to and whether this is for business or pleasure.)__________________
How long will you be there?___________How frequently will you be visiting
if more than once?___________
C.Have you, within the last five years, or do you plan in the next six months,
to pilot a plane? [ ] Yes [ ] No
(If yes, complete the Aviation Statement form F.MHC-4883.)
D.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/rock climbing,
hang gliding, underwater diving, bungee jumping, or other activity requiring
special equipment and/or training? [ ] Yes [ ] No
(If yes, complete Avocation Statement F.MHC-11393.)
E.Have you, within the last five years, been declined, modified, rated or been
issued a rider for life or disability insurance? Details: ____________________
[ ] Yes [ ] No
F.Within the last year have you missed any work due to illness or injury?
[ ] Yes [ ] No
Details:______________________________________________________________________
G.Are you in the Armed Forces, National Guard, or Reserves? (If yes, complete
Military Statement F.MHC-4883.) [ ] Yes [ ] No
H.Have you applied elsewhere for insurance within the last six months?
Details: ______________________ [ ] Yes [ ] No
______________________________________________________________________________
DRIVING AND CONVICTION HISTORY (Provide details for all yes answers 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? [ ] Yes [ ] No
PREPAYMENT: MAKE CHECKS PAYABLE TO MINNESOTA LIFE.
A.Have you paid money to the agent, or has the Payroll Deduction Authorization
or Government [ ] Yes [ ] No
Allotment been completed?
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. If money is taken on these or
other impaired risks, it will be returned to the client, until
underwriting is completed. Checks must be issued by the Client and be made
payable to Minnesota Life. Checks collected for Variable Adjustable Life
products must be sent directly to the Home Office.
Amount paid for: Life Insurance $_______________
Disability Insurance $_______________
B.Have you received a receipt? [ ] Yes [ ] No
ADDITIONAL INFORMATION:
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 Life and the Owner do not require the Insured's notice or consent.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
POLICYOWNER NAME (last, first, middle name) DATE OFBIRTH: MONTH--DAY--YEAR
- --------------------------------------------------------------------------------
RELATIONSHIP TO PROPOSED INSURED TAX I.D. NUMBER OR SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
POLICYOWNER'S ADDRESS STREET OR RFD ROUTE
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
(If a Corporation, give the state in which it is incorporated.)
</TABLE>
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.
<PAGE>
Exhibit 10(b)
- --------------------------------------------------------------------------------
MINNESOTA LIFE APPLICATION PART 3
AGREEMENTS, CERTIFICATION AND AUTHORIZATION
- --------------------------------------------------------------------------------
Minnesota Life Insurance Company . Individual Policy Issues
. 400 Robert Street North . St. Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
Proposed Insured's Name (Last, First, Middle Name)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
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 Life, 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 Life 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 Life 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 Life. I authorize Minnesota Life 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 Life Consumer Privacy Notice.
(Notice Regarding Consumer Reports and Notice Regarding Medical Information
Bureau, Inc.)
Any person who, with intent to defraud or knowing that he or she is facilitating
a fraud against an insurer, submits an application or files a claim containing a
false or deceptive statement is guilty of insurance fraud.
- --------------------------------------------------------------------------------
PROPOSED INSURED DATE SIGNED CITY STATE
X
- --------------------------------------------------------------------------------
SIGNATURE OF APPLICANT (if other DATE SIGNED CITY STATE
than Proposed Insured) Give title
if signed on behalf of a business.
X
- --------------------------------------------------------------------------------
WITNESS/REGISTERED REPRESENTATIVE (licensed resident agent)
- --------------------------------------------------------------------------------
SIGNATURE OF PARENT, CONSERVATOR, OR GUARDIAN APPLICANTS TELEPHONE NUMBER
(on juvenile applications) (if other than Proposed Insured)
X
- --------------------------------------------------------------------------------
F. MHC-42663 10-1998
<PAGE>
Exhibit A. (10)(c)
================================================================================
MINNESOTALIFE POLICY CHANGE APPLICATION PART 1
UNDERWRITING REQUIRED
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minnesota Life Insurance Company . Individual Policyowner Services . 400 Robert Street North . St. Paul, Minnesota 55101-2098
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
ALL APPLICATIONS - PERSONAL INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
POLICY NUMBER(S) INSURED'S BIRTHPLACE (State or Country if outside U.S.)
- -----------------------------------------------------------------------------------------------------------------------------------
INSURED'S NAME INSURED'S SOCIAL SECURITY NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
INSURED'S ADDRESS (Street, City, & Zip code.) INSURED'S DRIVER'S LICENSE 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 code.) [ ] Check if new address and you want our records to reflect this.
- -----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE DATE [ ] Current AMOUNT SUBMITTED: MAKE CHECKS PAYABLE TO MINNESOTA LIFE. POLICY SENT
OF CHANGE [ ] Other (Indicate month and reason) $ [ ] Receipt given [ ] Yes [ ] No
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIFE INSURANCE (ALL PRODUCTS)
FACE/PREMIUM ADJUSTMENTS
<S> <C> <C> <C> <C>
[ ] Change face amount to: $ ___________________
[ ] Change annual premium amount to: $ ____________
Premiums payable: [ ] Annual [ ] Semi-annual [ ] Quarterly
[ ] Monthly Automatic Payment Plan #______________ [ ] Direct Monthly (if available)
[ ] List Bill Plan #_____________ [ ] Payroll Deduction Plan #____________
[ ] Change plan of insurance to: _________________________________________
[ ] Credit a Non-Repeating Premium of: $ _________________($500 minimum required)
[ ] 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).
[ ] Start a billable Non-Repeating Premium: Annual total $ ____________________
($600.00 Minimum annual total with a $2,400.00 minimum annual base premium.)
Frequency: [ ] Annual [ ] Semi-annual [ ] Quarterly [ ] APP Monthly
[ ] Partial Surrender of: $ ____________________ (Complete Withholding Election on page 2.)
[ ] Maintain same face amount. [ ] Reduce face amount.
[ ] Eliminate policy loan (if available). (Complete Withholding Election on Page 2.)
[ ] Maintain same face amount. [ ] Reduce face amount.
Please note: Dividend additions and accumulations will be surrendered first.
PRODUCT ADJUSTMENTS (Policy required - if policy is lost, complete Lost Policy Declaration.)
Automatic Premium Loan Provision (APL), is automatically added at conversion or rollover unless indicated here.
[ ] Omit APL
[ ] Convert term insurance at attained age to:
[ ] Variable Adjustable Life [ ] Adjustable Life [ ] Variable Adjustable Life Horizon [ ] Adjustable Life Horizon
Partial conversion: [ ] Retain balance [ ] Surrender balance
[ ] Conversion of term agreement: Name:_______________________________________________________________________________________
[ ] Rollover at attained age to:
[ ] Variable Adjustable Life (loans will be eliminated.) [ ] Adjustable Life
Please note: Waiver will be a separate premium charge. Loan interest rate will be 8%.
[ ] Combine policies and rollover at attained age to:
[ ] Variable Adjustable Life (loans will be eliminated.) [ ] Adjustable Life
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, Request to Change Beneficiary Name and/or Ownership, if needed.
</TABLE>
F.MHC-44096 Rev. 9-1999
<PAGE>
LIFE INSURANCE(Continued)
BENEFIT AND AGREEMENT ADJUSTMENTS (Select only those available for the
particular product.)
<TABLE>
<S> <C> <C>
[ ] Maintain same total annual premium. [ ] Change total annual premium accordingly.
<CAPTION>
Change New
Add Remove Amount Amount
<S> <C> <C> <C> <C>
Accidental Death Benefit ........................ [ ] [ ] [ ] $ _________
Additional Insured Agreement .................... [ ] [ ] [ ] $ _________ (Complete Family Term Agreement)
Additional Term Protection ...................... [ ]
Adjustable Survivorship Life Agreement .......... [ ] [ ] [ ] $ _________ Designated Life __________________________
(To add, attach application for Designated
Life.)
Automatic Premium Loan .......................... [ ] [ ]
Business Continuation Rider ..................... [ ] [ ] [ ] $ _________ Designated Life __________________________
(To add, attach application for Designated
Life.)
Cost of Living Agreement ........................ [ ] [ ]
Face Amount Increase Agreement .................. [ ] [ ] [ ] $ _________
Family Term-Children's Agreement ................ [ ] [ ] [ ] $ _________ (Complete Family Term Agreement)
Family Term-Spouse Agreement .................... [ ] [ ] [ ] $ _________ (Complete Family Term Agreement)
Guaranteed Protection Waiver .................... [ ] [ ]
Inflation Growth Rider .......................... [ ] [ ]
Policy Enhancement Rider ........................ [ ] [ ] [ ] _________% (Indicate whole number between
3 - 10%.)
Waiver of Premium Agreement ..................... [ ] [ ]
Other ___________________________________________ [ ] [ ] [ ] $ _________
<CAPTION>
OTHER ADJUSTMENTS
<S> <C> <C> <C>
[ ] Change Death Benefit Option to: [ ] Cash [ ] Protection (Default is cash if none selected.)
[ ] 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 partial surrenders and loan elimination's.
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
Has there been or will there be a lapse, surrender, loan, withdrawal or other change to an existing life insurance or annuity as a
result of, or in anticipation of this application? [ ] 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, indicate below.)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Amount Type of Coverage Full Company Name Policy Business/ Pending? Will it be
Issued Number(s) Personal Yes No Replaced?
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
DISABILITY AND OVERHEAD EXPENSE INSURANCE
PRE-DI '90 SERIES ADJUSTMENTS
NOTE: . Any increases to Pre-Dl '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>
New Benefit Waiting
Decrease Risk Remove Amount 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%
Monthly Income Benefit Escalator ..................... [ ] [ ] 4% [ ] 6% [ ] 8% [ ] 10%
OVERHEAD EXPENSE POLICIES ONLY:
Base ................................................. [ ] $______ ______ ______
Cost of Living Agreement ............................. [ ]
Replacement Expense Agreement ........................ [ ]
Transitional Disability Benefit Agreement ............ [ ]
<CAPTION>
DI '90 SERIES
PRODUCT ADJUSTMENTS (Policy required--if policy lost, complete Lost Policy Declaration)
<S> <C> <C>
[ ] Exchange Pre-Dl '90 Level Rate policy(ies) to DI-'90 Level Rate. (Indicate Plan of Coverage below.)
[ ] Exchange Pre-Dl '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.)
A.[ ] Disability Income B.[ ] Disability Income
Insurance Policy Insurance Policy Plus
(all occupation classes). (class *P, 1*, *S, 1 only).
<CAPTION>
BENEFIT AND AGREEMENT ADJUSTMENTS
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 (365) ...................... [ ] [ ] [ ] $______ ______ ______
Social Security Agreement ............................... [ ] [ ] [ ] $______ ______ ______
Inflation Protection Agreement .......................... [ ] [ ] [ ] [ ] 4% [ ] 6%
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>
<PAGE>
DISABILITY AND OVERHEAD EXPENSE INSURANCE (CONTINUED)
ADJUSTMENTS - ALL SERIES
[ ] Remove/Reconsider
[ ] Rating [ ] Exclusion Rider
<TABLE>
<S> <C> <C>
[ ] Add Discount (Choose one selection from A., and/or select B.)
A. [ ] Association Discount # ________________ B. [ ] Income Documentation
[ ] Employer/Employee Discount # __________ (Include F. 37443) Discount (For 1994 Rates only.
[ ] Professional Group Discount # _________ Complete income section
and submit appropriate
income documentation.)
[ ] 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 #_____________________________
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 (If none, insert "None.")
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.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Paid To Policy Benefit Elimination Pending? 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
A. Change Occupational Class to: [ ] *P [ ] 1* [ ] *S [ ] 1 [ ] 2
[ ] 3 _______________________________________________________________________
B.Occupational title and/or professional designation:___________________________
Nature of business:_____________________________________________________________
<TABLE>
<CAPTION>
OCCUPATIONAL DETAILS (Provide description of daily job activities and percentage spent on each.)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Duties Percentage
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A. Number of years employed by current employer?________________________________
B. How many hours does Insured work per week on an average?_____________________
C. How many full-time employees report to Insured?______________________________
D. Does Insured have any part-time or full-time jobs other than the above?
[ ] Yes [ ] No____________________________________________________________
If yes, provide full details____________________________________________________
<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 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:
<TABLE>
<CAPTION>
Current Year Last Year Two Calendar
Years ago
<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). ____________ ____________ ____________
6. 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:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
ALL PRODUCTS (Complete for all requests.)
Special activities and other insurance activity(Provide details in space
provided to all yes answers.)
<TABLE>
<S> <C> <C>
A. Do you plan to change jobs within the next 12 months? [ ] Yes [ ] No
(If yes, please advise of the industry, company, and location to which you
are planning to go. If you do not know the specifics yet but are
contemplating such a change, please provide as many details as you can.)
_____________________________________________________________________________
B. Do you plan to travel or reside outside of the U.S. in the next three years? [ ] Yes [ ] No
If yes, please provide the country(ies) and city(ies) you will be visiting or
moving to and whether this is for business or pleasure.______________________
How long will you be there? ___________How frequently will you be visiting if
more than once? _____________
C. Have you, within the last five years, or do you plan in the next six months, [ ] Yes [ ] No
to pilot a plane?
(If yes, complete the Aviation Statement F. MHC-4883.)
D. 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/rock climbing,
hang gliding, underwater diving, bungee jumping, or other activity requiring
special equipment and/or training. [ ] Yes [ ] No
(If yes, complete Avocation Statement F. MHC-11393.)
E. Have you, within the last five years, been declined, modified, rated, or been
issued a rider for life or disability insurance? [ ] Yes [ ] No
F. Within the last year have you missed any work due to illness or injury? [ ] Yes [ ] No
G. Are you in the Armed Forces, National Guard, or Reserves? [ ] Yes [ ] No
(If yes, complete Military Statement F. MHC-4883.)
H. 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
</TABLE>
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 provided to me, 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.
[ ] Provide duplicate policy. [ ] Provide certificate.
[ ] Rollover/conversion/exchange - provide duplicate policy.
[ ] Payment of fee for duplicate or new policy:
[ ] Fee is attached. [ ] Take fee from policy cash value.
[ ] See "Additional Information" for fee payment instructions.
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.
<PAGE>
Exhibit 10(d)
================================================================================
POLICY CHANGE APPLICATION PART 3
MINNESOTA LIFE AGREEMENTS, CERTIFICATION AND AUTHORIZATION
- --------------------------------------------------------------------------------
Minnesota Life Insurance Company . Individual Policyowner Services .
400 Robert Street North . St. Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
Insured's Name (Last, First, Middle Name)
- --------------------------------------------------------------------------------
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 Life, 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 Life 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 Life 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 Life. I authorize Minnesota Life 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 a valid as
the Original.
I acknowledge that I have been given Minnesota Life's Consumer Privacy Notice.
(Notice Regarding Consumer Reports and Notice Regarding Medical Information
Bureau, Inc.)
Any person who, with intent to defraud or knowing that he or she is facilitating
a fraud against an insurer, submits an application or files a claim containing a
false or deceptive statement is guilty of insurance fraud.
- --------------------------------------------------------------------------------
DATE SIGNED CITY STATE
- --------------------------------------------------------------------------------
INSURED
X
- --------------------------------------------------------------------------------
OWNER (If other than insured, list title if signed on behalf of corporation)
X
- --------------------------------------------------------------------------------
ASSIGNEE (List title if signed on behalf of corporation)
X
- --------------------------------------------------------------------------------
IRREVOCABLE BENEFICIARY
X
- --------------------------------------------------------------------------------
PARENT/CONSERVATOR/GUARDIAN
X
- --------------------------------------------------------------------------------
[_] CHANGE SERVICE AGENT (Print name/code only if policy(ies) is being
reassigned)
AGENT CODE
- --------------------------------------------------------------------------------
AGENCY CODE
- --------------------------------------------------------------------------------
OWNER'S TELEPHONE NUMBER
( ) -
- --------------------------------------------------------------------------------
WITNESS/REGISTERED REPRESENTATIVE (Licensed agent where required) CODE %
X
- --------------------------------------------------------------------------------
AGENT CODE %
X
- --------------------------------------------------------------------------------
AGENT CODE %
X
- --------------------------------------------------------------------------------
F.MHC-44098 10-1998
<PAGE>
Exhibit a.(10)(e)
MINNESOTA LIFE SUPPLEMENT TO APPLICATION PART 1
VARIABLE ADJUSTABLE LIFE
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Minnesota Life Insurance Company . Individual Policy Issues . 400 Robert Street North . St.Paul, Minnesota 55101-2098
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Policyowners Name (Please Print)
ALLOCATIONS TO SUB-ACCOUNTS AND GUARANTEED PRINCIPAL ACCOUNT
[ ] Allocate Net Premiums as indicated in Column A.
[ ] Allocate Single Non-Repeating Premium as indicated in Column B
(Note:Billable NRP's use the same allocation as Net Premium).
[ ] Allocate Monthly Charges as indicated in Column C. End date for Monthly
Charge Allocation (month/year)
(Increments of 5%,Minimum is 5%,Each column must total 100%.)
<TABLE>
<CAPTION>
A B C
Net Single Monthly
Premium NRP Charges
<S> <C> <C> <C>
% % % Growth
- ----------- ---------------------- --------------
% % % Bond
- ----------- ---------------------- --------------
% % % Money Market
- ----------- ---------------------- --------------
% % % Asset Allocations
- ----------- ---------------------- --------------
% % % Mortgage Securities
- ----------- ---------------------- --------------
% % % Index 500
- ----------- ---------------------- --------------
% % % Capital Appreciation
- ----------- ---------------------- --------------
% % % Guaranteed Principal Account
- ----------- ---------------------- --------------
% % % International Stock
- ----------- ---------------------- --------------
% % % Small Company
- ----------- ---------------------- --------------
% % % Value Stock Growth
- ----------- ---------------------- --------------
% % % Small Company Value
- ----------- ---------------------- --------------
% % % Global Bond
- ----------- ---------------------- --------------
% % % Index 400 Mid-Cap
- ----------- ---------------------- --------------
% % % Macro-Cap Value
- ----------- ---------------------- --------------
% % % Micro-Cap Growth
- ----------- ---------------------- --------------
% % % Real Estate Securities
- ----------- ---------------------- --------------
% % % Templeton Developing Markets Fund
- ----------- ---------------------- --------------
% % % Janus Aspen Series Capital Appreciation Portfolio- Srv Sh(degree)
- ----------- ---------------------- --------------
% % % Janus Aspen Series International Growth Portfolio- Srv Sh(degree)
- ----------- ---------------------- --------------
% % % Fidelity VIP Contrafund(R)Portfolio:SC2*
- ----------- ---------------------- --------------
% % % Fidelity VIP Equity-Income Portfolio:SC2*
- ----------- ---------------------- --------------
% % % Fidelity VIP Mid Cap Portfolio:SC2*
- ----------- ---------------------- --------------
% % % Other
- ----------- ---------------------- -------------- --------------------
% % % Other
- ----------- ---------------------- -------------- --------------------
% % % Other
- ----------- ---------------------- -------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Janus Footnote(degree)= Invests in Aspen Series Service Shares Fidelity Footnote* = Invests in Service Class 2 Shares
</TABLE>
F.MHC-48653 Rev.1-2000
1 of 3
<PAGE>
- --------------------------------------------------------------------------------
Policyowners Name (Please Print)
SYSTEMATIC TRANSFER (Dollar Cost Averaging)
[ ] Start a Systematic Transfer of funds (complete each the following sections).
Transfer Option (Minimum transfer lesser of $250 or the account balance).
<TABLE>
Select one of the following:
<S> <C> <C> <C>
[ ] units from the Account.(Units must be a positive whole number.)
----------------- -------------
[ ] from the Account.(Must be a positive whole number.)
----------------- -------------------
</TABLE>
Transfer Allocation (Increments of 1%,Minimum is 1%,Must total 100%.)
Note: Indicate dollar amounts only if transfer amount is indicated above as
a dollar amount. Allocate the amount transferred as follows:
<TABLE>
<CAPTION>
Dollar Amount or Percent
<S> <C> <C>
$ % Growth
-------------- -------------
$ % Bond
-------------- -------------
$ % Money Market
-------------- -------------
$ % Asset Allocations
-------------- -------------
$ % Mortgage Securities
-------------- -------------
$ % Index 500
-------------- -------------
$ % Capital Appreciation
-------------- -------------
$ % Guaranteed Principal Account
-------------- -------------
$ % International Stock
-------------- -------------
$ % Small Company
-------------- -------------
$ % Value Stock Growth
-------------- -------------
$ % Small Company Value
-------------- -------------
$ % Global Bond
-------------- -------------
$ % Index 400 Mid-Cap
-------------- -------------
$ % Macro-Cap Value
-------------- -------------
$ % Micro-Cap Growth
-------------- -------------
$ % Real Estate Securities
-------------- -------------
$ % Templeton Developing Markets Fund
-------------- -------------
$ % Janus Aspen Series Capital Appreciation Portfolio -- Srv Sh/0/
-------------- -------------
$ % Janus Aspen Series International Growth Portfolio -- Srv Sh/0/
-------------- -------------
$ % Fidelity VIP Contrafund(R)Portfolio:SC2*
-------------- -------------
$ % Fidelity VIP Equity-Income Portfolio:SC2*
-------------- -------------
$ % Fidelity VIP Mid Cap Portfolio:SC2*
-------------- -------------
$ % Other
-------------- ------------- --------------------
$ % Other
-------------- ------------- --------------------
$ % Other
-------------- ------------- --------------------
<CAPTION>
Frequency
<S> <C> <C> <C>
[ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually
Transfer Date (10th or 20th only)
[ ] 10th [ ] 20th Starting (Month & Year) Ending (Month & Year)
--------- ----------
<CAPTION>
SYSTEMATIC REBALANCING (Automatic Rebalancing)
<C> <S> <C> <C> <C>
[ ] Start Systematic Rebalancing.
Minimum total balance in affected accounts must be $500 for rebalance to occur.
Will occur on the 25th of the affected months.
Frequency: [ ] Quarterly [ ] Semi-annually [ ] Annually
<CAPTION>
Rebalance allocation:(Must select at least 2 accounts.Increments of 1%, Minimum is 0%, Must total 100%.)
<S> <C> <C> <C>
% Growth % Index 400 Mid-Cap
- ------------- --------------
% Bond % Macro-Cap Value
- ------------- --------------
% Money Market % Micro-Cap Growth
- ------------- --------------
% Asset Allocations % Real Estate Securities
- ------------- --------------
% Mortgage Securities % Templeton Developing Markets Fund
- ------------- --------------
% Index 500 % Janus Aspen Cap App -- Srv Sh/0/
- ------------- --------------
% Capital Appreciation % Janus Aspen Int Grth -- Srv Sh/0/
- ------------- --------------
% Guaranteed Principal Account % Fidelity VIP Contrafund/r/Portfolio:SC2*
- ------------- --------------
% International Stock % Fidelity VIP Equity-Income:SC2*
- ------------- --------------
% Small Company % Fidelity VIP Mid Cap Portfolio:SC2*
- ------------- --------------
% Value Stock Growth % Other
- ------------- -------------- --------------------
% Small Company Value % Other
- ------------- -------------- --------------------
% Global Bond % Other
- ------------- -------------- --------------------
Dates: Start Date (Month & Year) End Date (Month & Year)
------------- ---------
Janus Footnote/0/= Invests in Aspen Service Shares Fidelity Footnote* = Invests in Class 2 Shares
F.MHC-48653-2 Rev.1-2000
</TABLE>
2 of 3
<PAGE>
- --------------------------------------------------------------------------------
Policyowners Name (Please Print)
INVESTMENT SUITABILITY -- TO BE COMPLETED BY POLICYOWNER
NASD rules require inquiry concerning the financial condition of individuals
applying for variable policies. The proposed Policyowner must supply such
information so that an informed judgment may be made as to the suitability of
the investment for the Policyowner.
<TABLE>
<S> <C> <C> <C> <C>
1. Employer Address
---------------------------------------- --------------------------------------------------------
Occupation Years Employed
-------------------------------------- -------------------------------------------------
2. Are you an employee of Minnesota Life or a subsidiary? [ ] Yes [ ] No
3. Are you a spouse or dependent child of an employee of Minnesota Life or a subsidiary? [ ] Yes [ ] No
4. Are you an employee of a NASD firm? [ ] Yes [ ] No
5. Are you of legal age in the state of your mailing address? [ ] Yes [ ] No
6. Dependents: [ ] Spouse [ ] Children How many? Ages
-------- --------------
7. Approximate: Annual Income $ Assets $ Debt $ Tax Bracket %
-------------------- --------- --------------- ---------------
8. Who will be primarily responsible for paying the premium?
--------------------------------------------------------
9. Face amount of life insurance in force $
------------------------------
10. Asset Breakdown:
Savings $ Balanced/Total Return Funds $
--------------------- ---------------------
Insurance Cash Values $ Stock Funds $
--------------------- ---------------------
Real Estate $ Bond Funds $
--------------------- ---------------------
Business Interests $ Individual Stock $
--------------------- ---------------------
Retirement Funds $ Individual Bonds $
--------------------- ---------------------
Other $
-------------- ---------------------
11. Ranking of Investment Objectives (Rank 1-- 5, in order of importance;1 is "most important")
Capital Preservation/Conservative Income Growth
- ------------------ ------------------
Current Income Aggressive Growth
- ------------------ ------------------
Total Return/Conservative Growth
- ------------------
12. Risk Tolerance (Check one):
[ ] Low Risk [ ] Moderate Risk [ ] High Risk
13. Did you receive the current Variable Adjustable Life and the Funds Prospectuses for the
product you are applying for? [ ] Yes [ ] No
14. The Fund Prospectuses refer to a Statement of Additional Information. Please indicate below
if you would like to request the Statement of Additional Information for the following funds:
[ ] Advantus [ ] Templeton [ ] Janus [ ] Fidelity
</TABLE>
- --------------------------------------------------------------------------------
For Registered Principal Use Only
Suitability accepted by Registered Principal Date
----------------------- ---------
F.MHC-48653-3 Rev. 1-2000
3 of 3
<PAGE>
MINNESOTA LIFE SUPPLEMENT TO POLICY CHANGE APPLICATION PART 1
VARIABLE ADJUSTABLE LIFE
- --------------------------------------------------------------------------------
Minnesota Life Insurance Company . Individual Policyowner Services
. 400 Robert Street North . St.Paul, Minnesota 55101-2098
- --------------------------------------------------------------------------------
- ------------------------------------
Policyowner's Name (Please Print)
ALLOCATIONS TO SUB-ACCOUNTS AND GUARANTEED PRINCIPAL ACCOUNT
[ ] Allocate Net Premiums as indicated in Column A.
[ ] Allocate Single Non-Repeating Premium as indicated in Column B
(Note:Billable NRP's use the same allocation as Net Premium).
[ ] Allocate Partial Surrender as indicated in Column C.
[ ] Allocate Monthly Charges as indicated in Column D.
End date for Monthly Charge Allocation (month/year).
-------------------------
Increments of 5%,Minimum is 5%,Each column must total 100%.
<TABLE>
<CAPTION>
A B C D
Net Single Partial Monthly
Premium NRP Surrender Charges
<C> <C> <C> <C> <S>
% % % % Growth
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Bond
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Money Market
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Asset Allocation
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Mortgage Securities
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Index 500
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Capital Appreciation
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Guaranteed Principal Account
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % International Stock
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Small Company
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Value Stock Growth
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Small Company Value
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Global Bond
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Index 400 Mid-Cap
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Macro-Cap Value
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Micro-Cap Growth
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Real Estate Securities
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Templeton Dev.Mkt.
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Janus Aspen Cap App/0/
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Janus Aspen Int Grth/0/
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Fidelity VIP Contra*
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Fidelity VIP Eq-Inc*
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Fidelity VIP Mid Cap*
- ---------------------- ---------------------- --------------------- ---------------------------
% % % % Other
- ---------------------- ---------------------- --------------------- --------------------------- ---------------------
% % % % Other
- ---------------------- ---------------------- --------------------- --------------------------- ---------------------
% % % % Other
- ---------------------- ---------------------- --------------------- --------------------------- ---------------------
</TABLE>
<TABLE>
<CAPTION>
SUB-ACCOUNT TRANSFERS (Minimum transfer lesser of $250 or the account balance.)
<S> <C> <C> <C> <C> <C>
Growth $ to Index 400 Mid-Cap $ to
------------- -------------- ------------------ --------------
Bond $ to Macro-Cap Value $ to
------------- -------------- ------------------ --------------
Money Market $ to Micro-Cap Growth $ to
------------- -------------- ------------------ --------------
Asset Allocation $ to Real Estate Securities $ to
------------- -------------- ------------------ --------------
Mortgage Securities $ to Templeton Dev.Mkt. $ to
------------- -------------- ------------------ --------------
Index 500 $ to Janus Aspen Cap App/0/ $ to
------------- -------------- ------------------ --------------
Capital Appreciation $ to Janus Aspen Int Grth/0/ $ to
------------- -------------- ------------------ --------------
Guaranteed Principal Account $ to Fidelity VIP Contra* $ to
------------- -------------- ------------------ --------------
International Stock $ to Fidelity VIP Eq-Inc* $ to
------------- -------------- ------------------ --------------
Small Company $ to Fidelity VIP Mid Cap* $ to
------------- -------------- ------------------ --------------
Value Stock Growth $ to Other $ to
------------- -------------- ---------------- ------------------ --------------
Small Company Value $ to Other $ to
------------- -------------- ---------------- ------------------ --------------
Global Bond $ to Other $ to
------------- -------------- ---------------- ------------------ --------------
</TABLE>
Janus Footnote: /0/ = Invests in Aspen Series Service Shares
Fidelity Footnote: * = Invests in Service Class 2 Shares
F.MHC-48654 Rev.1-2000 1 of 3
<PAGE>
- --------------------------------------
Policyowner's Name (Please Print)
SYSTEMATIC TRANSFER (Dollar Cost Averaging)
[ ] Start a Systematic Transfer of funds (Complete Parts A, B, C, & D).
[ ] Change the transfer amount (Complete Parts A, B).
[ ] Change the frequency (Complete Part C).
[ ] Change the transfer date (Complete Part D).
[ ] Cancel the Systematic Transfer.
PART A: Transfer Option (Minimum transfer lesser of $250 or the account
balance). Select one of the following:
<TABLE>
<CAPTION>
<S> <C>
[ ] units from the Account.(Units must be a positive whole number.)
-------- -------
[ ] from the Account.(Must be a positive whole number.)
-------- ------------
</TABLE>
PART B: Transfer Allocation (Increments of 1%, Minimum is 1%, Must total 100%.)
Note:Indicate dollar amounts only if transferring a dollar amount from
Part A. Allocate the amount transferred as follows:
<TABLE>
<CAPTION>
Dollar Amount or Percent Dollar Amount or Percent
<S> <C> <C> <C>
$ % Growth $ % Index 400 Mid-Cap
- ------------- ------- ------------- -------
$ % Bond $ % Macro-Cap Value
- ------------- ------- ------------- -------
$ % Money Market $ % Micro-Cap Growth
- ------------- ------- ------------- -------
$ % Asset Allocation $ % Real Estate Securities
- ------------- ------- ------------- -------
$ % Mortgage Securities $ % Templeton Dev.Mkt.
- ------------- ------- ------------- -------
$ % Index 500 $ % Janus Aspen Cap App0
- ------------- ------- ------------- -------
$ % Capital Appreciation $ % Janus Aspen Int Grth0
- ------------- ------- ------------- -------
$ % Guaranteed Principal Account $ % Fidelity VIP Contra*
- ------------- ------- ------------- -------
$ % International Stock $ % Fidelity VIP Eq-Inc*
- ------------- ------- ------------- -------
$ % Small Company $ % Fidelity VIP Mid Cap*
- ------------- ------- ------------- -------
$ % Value Stock Growth $ % Other
- ------------- ------- ------------- ------- ----------------
$ % Small Company Value $ % Other
- ------------- ------- ------------- ------- ----------------
$ % Global Bond $ % Other
- ------------- ------- ------------- ------- ----------------
</TABLE>
<TABLE>
<CAPTION>
PART C: Frequency
<S> <C> <C> <C>
[ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually
PART D: Transfer Date (10th or 20th only)
[ ] 10th [ ] 20th Starting (Month and Year) Ending (Month and Year)
---------- ---------
</TABLE>
REBALANCING
Minimum total balance in affected accounts must be $500 for rebalance to occur.
[ ] Process a one-time Rebalance of funds (Complete Part B).
[ ] Start Systematic Rebalancing (Automatic Rebalancing) of funds (Complete
Parts A, B, & C).
Part A: Frequency
[ ] Quarterly [ ] Semi-annually [ ] Annually
Part B: Rebalance Allocation
(Must select at least 2 accounts.Increments of 1%, Minimum is 0%, Must
total 100%.)
<TABLE>
<CAPTION>
<S> <C>
% Growth % Index 400 Mid-Cap
- -------- --------
% Bond % Macro-Cap Value
- -------- --------
% Money Market % Micro-Cap Growth
- -------- --------
% Asset Allocation % Real Estate Securities
- -------- --------
% Mortgage Securities % Templeton Developing Markets Fund
- -------- --------
% Index 500 % Janus Aspen Cap App-Srv Sh0
- -------- --------
% Capital Appreciation % Janus Aspen Int Grth-Srv Sh0
- -------- --------
% Guaranteed Principal Account % Fidelity VIP Contrafund (R)Portfolio:SC2*
- -------- --------
% International Stock % Fidelity VIP Equity-Income:SC2*
- -------- --------
% Small Company % Fidelity VIP Mid Cap Portfolio:SC2*
- -------- --------
% Value Stock Growth % Other
- -------- -------- ------------------
% Small Company Value % Other
- -------- -------- ------------------
% Global Bond % Other
- -------- -------- ------------------
</TABLE>
Part C: Dates (Systematic Transfers will only occur on the 25th of the affected
months.)
Start Date (Month and Year) End Date (Month and Year)
---------- ----------
Janus Footnote: 0 = Invests in Aspen Series Service Shares
Fidelity Footnote: * = Invests in Service Class 2 Shares
2 of 3 F.MHC-48654-2 Rev.1-2000
<PAGE>
- -------------------------------------
Policyowner's Name (Please Print)
INVESTMENT SUITABILITY -- TO BE COMPLETED BY POLICYOWNER
NASD rules require inquiry concerning the financial condition of individuals
applying for variable policies.The Policyowner must supply such information so
that an informed judgment may be made as to the suitability of the investment
for the Policyowner.
1. Employer Address
----------------------- -----------------------------------
Occupation Years Employed
------------------------------------ ---------------
<TABLE>
<CAPTION>
<S> <C> <C>
2. Are you an employee of Minnesota Life or a subsidiary? [ ] Yes [ ] No
3. Are you a spouse or dependent child of an employee of Minnesota Life or a [ ] Yes [ ] No
subsidiary?
4. Are you an employee of a NASD firm? [ ] Yes [ ] No
5. Are you of legal age in the state of your mailing address? [ ] Yes [ ] No
6. Dependents: [ ] Spouse [ ] Children How many? Ages
--------- -----------------------------
7. Approximate: Annual Income $ Assets $ Debt $ Tax Bracket %
----------- -------- ----------- ------
Please indicate spouse's income if it should be considered in determining suitability.
$
--------------------------------------------------------------------------------------------
8. Who will be primarily responsible for paying the premium?
------------------------------------
9. Face amount of life insurance in force $
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
10. Asset Breakdown:
<S> <C> <C> <C>
Savings $ Balanced/Total Return Funds $
---------------------------------- -------------------------------
Insurance Cash Values $ Stock Funds $
---------------------------------- -------------------------------
Real Estate $ Bond Funds $
---------------------------------- -------------------------------
Business Interests $ Individual Stocks $
---------------------------------- -------------------------------
Retirement Funds $ Individual Bonds $
---------------------------------- -------------------------------
Other $
--------------- ----------------------------------
</TABLE>
<TABLE>
<CAPTION>
11. Ranking of Investment Objectives (Rank 1-5, in order of importance;1 is "most important")
<S> <C> <C> <C>
Capital Preservation/Conservative Income Growth
- ----------- -----------
Current Income Aggressive Growth
- ----------- -----------
Total Return/Conservative Growth
- -----------
</TABLE>
12. Risk Tolerance (Check one):
[ ] Low Risk [ ] Moderate Risk [ ] High Risk
13. Did you receive the current Variable Adjustable Life and the Funds
Prospectuses for the product you are applying for? [ ] Yes [ ] No
14. The Fund Prospectuses refer to a Statement of Additional Information.Please
indicate below if you would like to request the Statement of Additional
Information for the following funds:
[ ] Advantus [ ] Templeton Janus [ ] Fidelity
- --------------------------------------------------------------------------------
For Registered Principal Use Only
Suitability Accepted by Registered Principal Date
------------------- ------------
3 of 3 F.MHC-48654-3 Rev.1-2000
<PAGE>
EXHIBIT A.(11)
ADVANTUS POLICY & PROCEDURE MANUAL -
ADVANTUS CODE OF ETHICS, PERSONAL SECURITIES TRADING
________________________________________________________________________________
Procedure Name: Advantus Code of Ethics, Personal Securities Trading
Process Ref. #: Advantus 101
Contact Name: Gary Peterson
Author: Gary Peterson
Approval Date: 10/28/99
________________________________________________________________________________
- --------------------------------------------------------------------------------
PURPOSE
- --------------------------------------------------------------------------------
While affirming its confidence in the integrity and good faith of all their
employees, officers and directors, Advantus Capital Management, Inc. (Advantus)
and Ascend Financial Services, Inc. (Ascend) recognize that the knowledge of
present or future fund portfolio transactions and, in certain instances, the
power to influence fund portfolio transactions made by or for the Advantus Funds
may place such individuals, if they engage in Personal Securities Transactions
in securities which are eligible for investment by the Advantus Mutual and
Series Funds (Funds), in a position where their personal interest may conflict
with that of the Funds.
In view of the above and of the provisions of Rule 17j-1(b)(1) under the
Investment Company Act of 1940 (the "1940 Act") and other regulations and legal
considerations, Advantus, Ascend, and the Funds have determined to adopt this
Code of Ethics to specify and prohibit certain types of transactions which would
create conflicts of interest (or at least the potential for the appearance of
conflicts of interest), and to establish reporting requirements and enforcement
procedures. This Code supplements but does not supersede or contradict the
Minnesota Life Code of Ethics.
- --------------------------------------------------------------------------------
SCOPE
- --------------------------------------------------------------------------------
The attached Code of Ethics, (Appendix A), applies to all individuals defined as
access persons and certain Employees. This includes all Advantus employees
engaged in making investment decisions or supporting the investment process
regarding marketable securities and other employees of Advantus or Ascend,
(permanent, temporary and/or contractors), as defined in the Code.
1
<PAGE>
- --------------------------------------------------------------------------------
PROCEDURE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Task/Action Responsibility
- ----------------------------------------------------------------------------------------------
<S> <C>
For Newly Hired and Transferring Access Persons
Provide the Code of Ethics to new or transferred access Advantus Human Resources
persons coincident with their hire or transfer date.
Provide an initial holdings report form to be completed by
the access person.
Conduct training/orientation regarding the Code of Ethics and Advantus Compliance
related procedures in groups or in one-on-one meetings, as
appropriate. This must be done within 10 business days of
their hire or transfer.
Review the Code of Ethics and complete the attached signoff Access Personnel
form within 10 business days of receipt. Return the signoff
forms to Advantus Compliance department. Complete the
initial holdings report and return the report to the
Advantus Compliance department.
For Annual Review or Code of Ethics Revisions
Distribute the Code of Ethics, the annual signoff form, and Advantus Compliance
the annual security holdings report to all access persons
according to the annual schedule as defined by Advantus
compliance officer. Complete special distributions of the
Code of Ethics and signoff forms to all access persons when
changes in the Code of Ethics occur.
Review the Code of Ethics, or revisions to the Code, then Access Personnel
complete the signoff form and return it to Advantus
Compliance department within 10 business days of receipt.
Complete the annual security holdings report and return to
the Advantus Compliance department.
</TABLE>
2
<PAGE>
APPENDIX A
CODE OF ETHICS
FOR
ADVANTUS CAPITAL MANAGEMENT, INC.
AND AFFILIATES
I. PURPOSE AND CONSTRUCTION.
-------------------------
This Code of Ethics ("Code") is adopted by Advantus Capital Management, Inc.
(the "Adviser"), Ascend Financial Services, Inc. ("Ascend"), and the Funds to
set forth their policy with regard to conduct by their officers, directors and
employees and in an effort to comply with and prevent violations of Section 17
of the 1940 Act, Section 15(f) of the Securities Exchange Act of 1934 and
Section 204A of the Investment Advisers Act of 1940. The focus of this Code is
to set forth the standards of ethical conduct expected from employees, officers
and directors and the restriction or prevention of some investment activities by
persons with access to certain information that might be harmful to the
interests of the Funds or which might enable such persons to profit illicitly
from their relationship with the Funds.
II. STATEMENT OF GENERAL ETHICAL PRINCIPLES.
----------------------------------------
A. Individuals covered by this Code will at all times conduct themselves with
integrity and distinction, putting first the interests of the Funds.
B. The Code is based on the principle that the individuals covered by this
Code owe a fiduciary duty to the Funds, including, among others, the
shareholders of the Funds, to conduct their Personal Securities
Transactions in a manner which does not interfere with Fund portfolio
transactions and in such a manner as to avoid any actual or potential
conflict or interest or abuse of such person's position of trust and
responsibility; or otherwise take inappropriate advantage of such person's
position in relation to the Funds. Individuals covered by this Code must
adhere to this general principle as well as comply with the Code's specific
provisions. It bears emphasis that technical compliance with the Code's
procedures will not automatically insulate from scrutiny, activities which
show a pattern of abuse of the individual's fiduciary duties to the Funds.
III. RESTRICTIONS.
-------------
A. Nondisclosure of Information. An Access Person shall not divulge to any
person, contemplated or completed securities transactions of a Fund, except
in the performance of his or her duties. This prohibition shall not apply
if such information previously has become a matter of public knowledge.
B. Section 17(d) Limitations. No Affiliated Person of a Fund, or Ascend, or
any Affiliated Person of such person or Ascend, acting as principal, shall
effect any transaction in which a Fund, or a company controlled by a Fund,
is a joint or a joint and several participant with such person, Ascend or
Affiliated Person, in contravention of such rules and regulations as the
Securities and Exchange Commission may prescribe under Section 17(d) of the
1940 Act for the purpose of
3
Rev. 10-28-99
<PAGE>
limiting or preventing participation by the Funds or controlled companies
on a basis different from or less advantageous than that of such other
participant.
C. Proscribed Activities Under Rule 17j-1(b). Rule 17j-1(b) under the 1940 Act
provides:
It shall be unlawful for any affiliated person of or principal underwriter
for a Fund, or any affiliated person of an investment adviser of or
principal underwriter for a Fund, in connection with the purchase or sale,
directly, or indirectly, by such person of a Security Held or to be
Acquired, as defined in section IX, by such Fund--
1. To employ any device, scheme or artifice to defraud such Fund;
2. To make to such Fund any untrue statement of a material fact or omit to
state to such Fund a material fact necessary in order to make the
statements made, in light of the circumstances under which they were
made, not misleading;
3. To engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon any such Fund; or
4. To engage in any manipulative practice with respect to such Fund.
Any violation of Rule 17j-1(b) shall be deemed to be a violation of this
Code.
D. Covenant to Exercise Best Judgment. An Advisory Person shall act on his or
her best judgment in effecting, or failing to effect, any Fund transaction
and such Advisory Person shall not take into consideration his or her
personal financial situation in connection with decisions regarding Fund
portfolio transactions.
E. Limitations on Personal Securities Transactions.
1. No Personal Securities Transactions without Prior Approval. No Access
Person or Employee shall engage in a Personal Securities Transaction
without Pre-Clearance, as defined below.
a. Prior to effecting any Personal Securities Transaction, except as
provided in Paragraph b. below, an Access Person or Employee
shall secure Pre-Clearance utilizing the procedures set forth in
(i) or (ii) below.
i. Manual Pre-Clearance.
An Access Person shall notify the President of the Adviser, or
his or her designee, of the proposed transaction, and shall
provide the name of the issuer, the title or type of Security,
the number of shares and the price per share or the principal
amount of the transaction. The President of the Adviser, or
his or her designee, shall, after investigation, determine
that such proposed transaction would, may, or would not be
consistent with the specific limitations of Section III.E. and
with this Code generally. The conclusion of the President of
the Adviser, or his or her designee, shall be promptly
communicated to the person making such request. The President
of the Adviser, or his or her designee, shall make written
records of actions under this
4
<PAGE>
Section, which records shall be maintained and made
available in the manner required by Rule 17j-1(f).
ii. E-Mail Based Prior Clearance.
As an alternative to Manual Prior Clearance set forth above,
an Access Person or Employee may utilize the Lotus Notes
based Trade Approval System ("TAS") to pre-clear Personal
Securities Transactions. Thereafter TAS will be loaded onto
the computer of that Access Person or Employee. (An Access
Person or Employee who has undergone TAS training and has
had TAS installed on their computer is called a User).
The User will enter the proposed Personal Securities
Transaction on the TAS system. The User will enter the
security ticker symbol and other information required by
TAS. TAS searches all applicable restricted lists based on
the security ticker symbol. The User has the responsibility
for determining that the security ticker symbol is accurate.
If the proposed Personal Securities Transaction clears the
restricted lists, the User will forward the proposed trade
to the applicable trading desk for further clearance.
Approval or rejection of each proposed Personal Securities
Transaction will be made by e-mail notification to the
mailbox of the User. The User will be required to enter
information as to whether the trade is executed or not
executed and the price at which it was executed.
In utilizing the TAS system, the User is required to make
certifications with regard to the transaction as set forth
on the TAS system. For each proposed Personal Securities
Transaction the User has the responsibility to enter the
information correctly and ensure the accuracy of each of
these statements. Failure to enter the correct security
ticker symbol or to ensure that each certification is
correct may result in disciplinary action being taken
against the User in accordance with the provisions of the
Code. Records of actions under this Section, shall be
maintained and made available in the manner required by Rule
l7j-l(f).
b. Personal Securities Transactions in the following securities do
not require prior approval pursuant to this section:
i. Purchases or sales of securities issued by the Government of
the United States (transactions in securities that are
indirect obligations of the U.S. Government such as
securities of the Federal National Mortgage Association are
not exempted);
ii. Purchases or sales of shares of registered open-end
investment companies;
iii. Purchases or sales of banker's acceptances or bank
certificates of deposit; or
iv. Purchases or sales of commercial paper and high quality
short term instruments, including repurchase agreements.
2. Limitations Related to Time of Transactions.
a. No Access Person or Employee shall engage in a Personal
Securities Transaction involving any Security which, with respect
to any Fund, has been purchased or sold
5
<PAGE>
within the most recent 7 days or which has a pending "buy" or
"sell" order.
b. No Access Person or Employee who is a portfolio manager or
analyst shall engage in a Personal Securities Transaction
involving any Security which, with respect to the Funds they
manage or make recommendations for, is being considered for
purchase or sale within the next 7 days.
c. The following exceptions to Paragraphs a. and b. above will apply
if any such Security:
i. is no longer held by any Fund as a result of a sale within
the most recent 7 days, in which case such Security may be
sold the next day following the completion of such a
transaction by a Fund, or
ii. is purchased or sold solely by a Fund which tracks the
performance of an Index, in which case such Security may be
purchased or sold on any day except a day on which any Fund
is trading in such security.
d. No Access Person or Employee shall profit from the purchase and
sale, or sale and purchase, of the same (or an equivalent)
Security in a Personal Securities Transaction within sixty
calendar days.
e. The following Personal Securities Transactions are not subject to
the limitations set forth in Paragraphs a., b., and d. above:
i. Purchases or sales effected in any account over which the
person has no direct or indirect influence or control;
ii. Purchases or sales of securities which are not eligible for
purchase or sale by any Fund;
iii. Purchases which are part of an automatic dividend
reinvestment plan;
iv. Purchases effected upon the exercise or rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer,
and sales of such rights so acquired.
3. Initial Public Offering Limitations. No Access Person or Employee
shall engage in any Personal Securities Transaction that involves the
purchase of a Security which is part of an Initial Public Offering.
4. Limited Offering Limitations.
a. No Access Person or Employee shall engage in any Personal
Securities Transaction that involves a Limited Offering of
Securities without the express prior approval of the President of
the Adviser, or his or her designee in accordance with the
procedures set forth in Section III.E.6. In reviewing any such
approval request, the President of the Adviser, or his or her
designee, shall consider, among other factors, whether the
investment opportunity should be reserved for a Fund and its
shareholders, and whether
6
<PAGE>
the opportunity is being offered to the requesting individual by
virtue of his or her position with the Funds or the Adviser.
b. Access Persons and Employees who have received approval as set
forth above and who continue to hold the Security acquired in
such Limited Offering, shall disclose any such continuing
investment to the President of the Adviser, or his or her
designee, if and when they should become involved in any
subsequent consideration of an investment in the same issuer for
the portfolio of any Fund. In such case the decision to invest in
the Securities of such an issuer shall be subject to the approval
of the President of the Adviser, or his or her designee.
c. The President of the Adviser, or his or her designee, shall make
written records of actions under this Paragraph.
5. Copies of Brokerage Reports. All Access Persons that engages in a
Personal Securities Transaction are required to have the executing
broker send a duplicate copy of the confirmation of the transaction to
the President of the Adviser or his or her designee at the same time
as it is provided to such person. In such event, the Access Person
shall also direct such broker to provide duplicate copies of any
periodic statements on any account maintained by such person to the
President of the Adviser, or his or her designee.
6. Waivers. An Access Person or Employee may also request prior approval
of a Personal Securities Transaction which, on its face, would be
prohibited by the limitations of Section III.E. Such person shall
provide to the President of the Adviser, or his or her designee, a
description of the proposed transaction, including the name of the
issuer, the title or type of the Security, the number of shares and
the price per share or the principal amount of the transaction, and
shall also provide a statement why the applicable limitation should be
waived in the case of the proposed transaction. The President of the
Adviser, or his or her designee, shall, after investigation, determine
that a waiver of the limitations otherwise applicable to the proposed
transaction would, may, or would not be consistent with the purpose of
this Code. Purchases and sales consistent with the Code shall include
those which are only remotely potentially harmful to any Fund, those
which would be very unlikely to affect a highly institutional market,
and those which clearly are not related economically to the securities
to be purchased, sold or held by any Fund.
IV. REPORTING REQUIREMENTS.
-----------------------
A. Quarterly Report. Not later than ten (10) days after the end of each
calendar quarter, each Employee and each Access Person shall submit a
report (as shown in Exhibit A) which shall specify the following
information with respect to transactions during the then ended calendar
quarter in any Security in which such Employee or Access Person has, or by
reason of such transaction acquired, any direct or indirect beneficial
ownership in the Security:
1. the date of transaction, the name of the issuer, the title or type of
Security, the interest rate and maturity (if applicable), the number
of shares, and the principal amount of each Security involved;
7
<PAGE>
2. the nature of the transaction (i.e., purchase, sale, or any other type
of acquisition or disposition);
3. the price of the Security at which the transaction was effected;
4. the name of the broker, dealer, or bank with or through whom the
transaction was effected;
5. the date that the report is submitted by the Access Person or
Employee; and
6. any account established in the quarter by the Access Person in which
any securities were held during the quarter for the direct or indirect
benefit of the Access Person.
If no transactions have occurred, or no accounts have been established,
in the quarter, the report shall so indicate.
The President of the Adviser, may in his or her discretion, not require
an Access Person or Employee to make a quarterly transaction report, if
the report duplicates information contained in the broker trade
confirmation received by the Adviser, contains all required information
as described in this section IV.A, the broker trade confirmation is
received no later than 10 days after quarter end, and no accounts have
been established as described in this section IV.A.6.
B. Limitation on Reporting Requirements. Notwithstanding the provisions of
Section IV.A., no Access Person or Employee shall be required:
1. To make a report with respect to transactions effected for any account
over which such person does not have any direct or indirect influence
or control; or
2. To make a quarterly report, initial or annual holdings report, if such
person is not an "interested person" of a Fund as defined in Section
2(a)(19) of the 1940 Act, and would be required to make such a report
solely by reason of being a director of a Fund, except where such
director knew, or in the ordinary course of fulfilling his or her
official duties as a director of a Fund should have known, that during
the 15-day period immediately preceding or after the date of the
transaction in a Security by the director, such Security was being
purchased or sold by a Fund or such purchase or sale by a Fund was
being considered by a Fund or the Adviser.
C. Reports of Violations. In addition to the quarterly reports required under
this Section IV, each Employee and each Access Person promptly shall report
any transaction which is, or might appear to be, in violation of this Code.
Such report shall contain the information required in quarterly reports
filed pursuant to Section IV.A.
D. Initial and Annual Reports by Personnel. All Access Persons and Employees
shall submit to the President of the Adviser, or his or her designee, a
report of all Securities beneficially owned by them at the time that they
commence employment with the Adviser or Ascend (or any affiliated company)
or at the time they become an Access Person. This report shall be submitted
to the President of the Adviser, or his or her designee, within 10 days of
commencement of employment or within 10 days after notification of becoming
an Access Person. All Access Persons and Employees shall submit to the
President of the Adviser, or his or her designee, within 30 days of the end
of each calendar year, a report of all Securities beneficially owned by
them as
8
<PAGE>
of December 31 of each year or at such other date selected by the
President of the Adviser. The initial and annual security holdings report
must include the following information:
1. the name of the security, number of shares, and principal amount of
each Security in which the Access Person or Employee has any direct or
indirect beneficial ownership;
2. the name of the broker, dealer, or bank with whom the Access Person or
Employee maintains an account in which any securities are held for the
direct or indirect benefit of the Access Person or Employee. The
initial security holdings report should be as of the date the person
became an Access Person; and
3. the date the report is submitted by the Access Person or Employee.
E. Filing of Reports. All reports prepared pursuant to this Section IV shall
be filed with the person designated by the President of the Adviser to
review these materials.
F. Quarterly Report by Adviser. Each calendar quarter, after the receipt of
reports from reporting persons, the President of the Adviser, or his or her
designee, shall prepare a report which shall certify, to the best of his or
her knowledge, that all persons required to file a report under Section
IV.A. have complied with this Code for such prior quarter or, if unable to
make such certification, shall describe in detail incomplete reports,
violations or suspected violations of this Code.
G. Dissemination of Reports. The General Counsel of the Funds shall have
the right at any time to receive or review copies of any reports submitted
pursuant to this Section IV. Such General Counsel shall keep all reports
confidential except as disclosure thereof to the Boards of Directors of the
Funds, the Adviser, Ascend, or other appropriate persons may be reasonably
necessary to accomplish the purposes of this Code.
V. RECORDKEEPING REQUIREMENTS.
---------------------------
A. The Adviser, Ascend and the Funds must each at its principal place of
business, maintain records in the manner and extent set out in this Section
of the Code and must make available to the Securities and Exchange
Commission (SEC) or any representative of the SEC at any time and from time
to time for reasonable periodic, special or other examination:
1. A copy of each code of ethics of the Adviser, Ascend and the Funds
that is in effect, or at any time within the past five years was in
effect, must be maintained in an easily accessible place;
2. A record of any violation of the code of ethics, and of any action
taken as a result of the violation, must be maintained in an easily
accessible place for at least five years after the end of the fiscal
year in which the violation occurs;
3. A copy of each report made by an Access Person or Employee as
required, including any information provided in lieu of a quarterly
transaction report, see Section IV.A, must be maintained for at least
five years after the end of the fiscal year in which the report is
made or the information is provided, the first two years in an easily
accessible place;
9
<PAGE>
4. A record of all persons, currently or within the past five years, who
are or were required to make reports as deemed Access Persons or
Employee, or who are or were responsible for reviewing these reports,
must be maintained in an easily accessible place;
5. A copy of each report defined in Section VI.B must be maintained for
at least five years after the end of the fiscal year in which it is
made, the first two years in an easily accessible place.
B. The Adviser, Ascend, and the Funds must maintain a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
investment personnel of Limited Offering securities, for at least five
years after the end of the fiscal year in which the approval is given.
VI. FIDUCIARY DUTIES OF THE FUND BOARD OF DIRECTORS.
------------------------------------------------
A. The Fund Board of Directors, including a majority of directors who are not
interested persons, must approve the Code of Ethics adopted by the Adviser,
Ascend and the Funds and any material change to the Code. The Board must
base its approval of a code and any material changes to the code on a
determination that the code contains provisions reasonably necessary to
prevent Access Persons from engaging in any conduct prohibited by section
III.C. Before approving the Code of the Adviser, Ascend, and the Funds, the
Fund Board of Directors must receive a certification from the Adviser,
Ascend, and the Funds that each has adopted procedures reasonably necessary
to prevent Access Persons or Employees from violating its Code of Ethics.
The Fund Board of Directors must approve the Code of the Adviser, Ascend,
and the Funds before initially retaining the services of the Adviser or
Ascend. The Fund Board of Directors must approve a material change to the
Code no later than six months after adoption of the material change. The
Adviser, Ascend and the Funds must each use reasonable diligence and
institute procedures reasonably necessary to prevent violations of its Code
of Ethics.
B. No less frequently than annually, the Adviser, Ascend, and the Funds must
furnish to the Fund Board of Directors a written report that:
1. Describes any issues arising under the Code of Ethics since the last
report to the Fund Board of Directors, including, but not limited to,
information about material violations of the Code or procedures and
sanctions imposed in response to the material violations; and
2. Certifies that the Adviser, Ascend, and the Funds have adopted
procedures reasonably necessary to prevent Access Persons or Employees
from violating the Code.
VII. ENFORCEMENT AND SANCTIONS.
--------------------------
A. General. Any Affiliated Person of the Adviser or Ascend who is found to
have violated any provision of this Code may be permanently dismissed,
reduced in salary or position, temporarily suspended from employment, or
sanctioned in such other manner as may be determined by the Board of
Directors of the Adviser or Ascend in its discretion. The Board of
Directors of the Adviser or Ascend may delegate this authority to such
person or persons they deem appropriate. If an alleged violator is not
affiliated with the Adviser or Ascend, the Board of Directors of the Fund
or Funds involved shall have the responsibility for enforcing this Code and
determining appropriate sanctions. In determining sanctions to be imposed
for violations of this Code, the
10
<PAGE>
Board of Directors may consider any
factors deemed relevant, including but not limited to the following:
1. the degree of willfulness of the violation;
2. the severity of the violation;
3. the extent, if any, to which the violator profited or benefited from
the violation;
4. the adverse effect, if any, of the violation on the Fund or Funds;
5. the market value and liquidity of the class of Securities involved in
the violation;
6. the prior violations of the Code, if any, by the violator;
7. the circumstances of discovery of the violation; and
8. if the violation involved the purchase or sale of Securities in
violation of this Code, (a) the price at which the Fund purchase or
sale was made and (b) the violator's justification for making the
purchase or sale, including the violator's tax situation, the extent
of the appreciation or depreciation of the Securities involved, and
the period the Securities have been held.
B. Violations of Section III.E.
1. At its election, a Fund may choose to treat a transaction prohibited
under Section III.E. of this Code as having been made for its account.
Such an election may be made only by a majority vote of the directors
of the Fund who are not Affiliated Persons of the Adviser. Notice of
an election under this Section VII.B.1. shall not be effective unless
given to the Adviser within sixty (60) days after the Fund is notified
of such transaction. In the event of a violation involving more than
one Fund, recovery shall be allocated between the affected Funds in
proportion to the relative net asset values of the Funds as of the
date of the violation.
2. If securities purchased in violation of Section III.E. of this Code
have been sold in a bona fide sale, the Fund shall be entitled to
recover the profit made by the seller. If such securities are still
owned by the seller, or have been disposed of by such seller other
than by a bona fide sale at the time notice of election is given by
the Fund, the Fund shall be entitled to recover from the seller the
difference between the cost of such Securities to the violator and the
fair market value of such Securities on the date the Fund acquired
such Securities. If the violation consists of a sale of Securities in
violation of Section III.E. of this Code, the Fund shall be entitled
to recover from the violator the difference between the net sale price
per share received by the violator and the net sale price per share
received by the Fund, multiplied by the number of shares sold by the
violator. Each violation shall be treated individually and no
offsetting or netting of violations shall be permitted. The sums due
from a violator under this Paragraph shall include sums due a Fund as
a result of a violation by a Member of the Immediate Family of such
violator.
11
<PAGE>
3. Knowledge on the part of director or officer of a Fund who is an
Affiliated Person of the Adviser of a transaction in violation of this
Code shall not be deemed to be notice under Section VII.B.1.
4. If the Board of Directors of a Fund determines that a violation of
this Code has caused financial detriment to such Fund, upon reasonable
notice to the Adviser, the Adviser shall use its best efforts,
including such legal action as may be required, to cause a person who
has violated this Code to deliver to the Fund such Securities, or to
pay to the Fund such sums, as the Fund shall declare to be due under
this Section VII.B., provided that:
a. the Adviser shall not be required to bring legal action if the
amount reasonably recoverable would not be expected to exceed
$2,500.
b. In lieu of bringing a legal action against the violator, the
Adviser may elect to pay to the Fund such sums as the Fund shall
declare to be due under this Section VII.B.; and
c. the Adviser shall have no obligation to bring any legal action if
the violator was not an Affiliated Person or Employee of either
the Adviser or Ascend.
C. Rights of Alleged Violator. A person charged with a violation of this Code
shall be informed of the violation in writing and shall have the
opportunity to appear before the Board of Directors (or such Boards
designees) as may have authority to impose sanctions pursuant to this Code,
at which time such person shall have the opportunity, orally or in writing,
to deny any and all charges, set forth mitigating circumstances, and set
forth reasons why the sanctions for any violations should not be severe.
D. Delegation of Duties. The Board of Directors of the Adviser, Ascend or of
any Fund may delegate its enforcement duties under this Section VII to a
special committee of the Board of Directors comprised of at least three
persons; provided, however, that no director shall serve on such committee
or participate in the deliberations of the Board of Directors hereunder who
is charged with a violation of this Code. The Board of Directors of Adviser
or Ascend may delegate its enforcement duties under this Section VII to
such officers of Adviser or Ascend and with such authority as the Board
deem appropriate.
E. Non-exclusivity of Sanctions. The imposition of sanctions hereunder by the
Board of Directors of the Adviser or Ascend will not preclude the
imposition of additional sanctions by the Board of Directors of the Funds
and shall not be deemed a waiver of any rights by the Funds.
VIII. MISCELLANEOUS PROVISIONS.
-------------------------
A. Identification of Access Persons. The Adviser shall, on behalf of the Funds
and Ascend, identify all Employees and all Access Persons who are under a
duty to make reports under Section IV and shall inform such persons of such
duty.
B. Maintenance of Records. The Adviser shall, on behalf of the Funds and
Ascend, maintain and make available records as required by Rule 17j-1(d).
12
<PAGE>
C. Annual Certification of Compliance. All Access Persons and Employees shall
sign a certificate to be presented to the Adviser at the end of each
calendar year certifying that they have read and understood this Code and
acknowledging that they are subject to the terms of the Code. The
certificate shall additionally provide that such person has disclosed or
reported all Personal Securities Transactions required to be disclosed or
reported pursuant to the provisions of this Code.
D. Service as Director. An Access Person or Employee may not serve as a
director of a publicly traded company without the prior consent of the
President of the Adviser, or his or her designee. The President of the
Adviser, or his or her designee, shall not provide such authorization
unless he or she finds that such board service would be consistent with the
interests of the Funds and their shareholders. Should any person receive
such authorization, any investment by the Funds in the securities of any
such publicly traded company while such person is serving as a director
shall be previously approved by the President of the Adviser, or his or her
designee.
E. Effective Date. The effective date of this Code shall be October 28, 1999.
IX. DEFINITIONS.
------------
A. "Access Person" shall mean any director, officer, or Advisory Person of the
Adviser or of a Fund, or with respect to Ascend, any director or officer
who in the ordinary course of his or her business makes, participates in or
obtains information regarding the purchase or sale of Securities for a Fund
or whose functions or duties as part of the ordinary course of his or her
business relate to the making of any recommendation to a Fund regarding the
purchase or sale of Securities.
B. "Advisory Person" means:
1. Any employee of the Adviser or of a Fund (or of any company in a
control relationship to the Adviser or a Fund) who, in connection with
his or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of a Security by a
Fund, or whose functions or duties relate to the making of any
recommendations with respect to such purchases or sales, and
2. Any natural person in a control relationship to the Adviser or a Fund
who obtains information concerning recommendations made to a Fund with
regard to the purchase or sale of a Security.
C. "Affiliated Person" means:
1. Any person directly or indirectly owning, controlling or holding with
power to vote, five percent (5%) or more of the outstanding voting
securities of such other person;
2. Any person, five percent (5%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with
power to vote, by such other person;
3. Any person directly or indirectly controlling, controlled by, or under
common control with, such other person;
13
<PAGE>
4. Any officer, director, partner, co-partner, or employee of such other
person;
5. If such other person is an investment company, any investment adviser
thereof or any member of any advisory board thereof; and
6. If such other person is an unincorporated investment company not
having a board of directors, the depositor thereof.
D. "Security Held or to be Acquired" means any Security which, within the most
recent 15 days (i) is or has been held by the Fund, or (ii) is being
considered by the Fund or Adviser for purchase by the Fund, and (iii)
includes any option to purchase or sell, and any Security that is
exchangeable for or convertible into, any Security that is held or to be
acquired by the Fund.
E. "Beneficial Ownership" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 pursuant to Rule 16a-1
thereunder, except that the determination of direct or indirect beneficial
ownership shall apply to all Securities which the person has or acquires
Beneficial Ownership includes, but is not limited to those securities owned
by a Person who directly or indirectly through any contract, arrangement,
understanding, relationship or otherwise, has or shares a direct or
indirect pecuniary interest in the securities. Direct pecuniary interest
includes the opportunity directly or indirectly to profit or share in any
profit derived from a transaction in the securities. The term indirect
pecuniary interest includes but is not limited to securities held by
members of a person's immediate family sharing the same household. You are
generally considered to be the beneficial owner of securities owned by any
of the following:
1. your spouse/domestic partner;
2. minor children of you, your spouse/domestic partner, or both;
3. a trust of which you are a trustee or a beneficiary;
4. any of your relatives, or relatives of your spouse/domestic partner,
that share your home;
5. a partnership of which you are a partner;
6. a corporation of which you are a substantial shareholder; or
7. any other person who relies on you to make investment decisions.
F. "Compliance Officer" means the Compliance Officer of the Adviser.
G. "Control" shall have the meaning set forth in Section 2(a)(9) of the 1940
Act and shall include the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely the
result of an official position with such company. A person who directly or
indirectly owns more than 25% of the voting securities of a company is
presumed to control such company.
H. "Employee" means an employee of the Adviser, or with respect to Ascend or
any other affiliated company an employee who has been notified that he or
she is also subject to this Code.
14
<PAGE>
I. "Fund" means any investment company registered under the 1940 Act for which
the Adviser acts as the investment adviser and manager. For purposes of
this Code, such term shall also include any other account managed by the
Adviser.
J. "1940 Act" means the Investment Company Act of 1940, 15 U.S.C. 80a-1 to
80a- 52, as the same may be amended from time to time.
K. "Personal Securities Transaction" means a transaction in a Security which
an individual effects for his or her own account or for a Member of his or
her Immediate Family.
L. "President of the Adviser" shall mean the President of Advantus Capital
Management, Inc., or its successor.
M. "Purchase or sale of a Security" also includes the writing of an option to
purchase or sell a Security.
N. "Security" means any security as that term is defined in Section 2 (a)(36)
of the 1940 Act and includes, but is not limited to: notes, stock, treasury
stock, bonds debentures, evidences of indebtedness, certificates of
interest or participations in any profit-sharing agreement,
collateral-trust certificates, pre-organization certificates or
subscriptions, transferable shares, investment contracts, voting-trust
certificates, any puts, calls, straddles, options or privileges on any
security (including a certificate of deposit) or on any group or index of
securities, or, in general, any interest or instrument commonly known as a
"security". Indirect obligations of the U.S. Government such as securities
of the Federal National Mortgage association are also Securities for the
purposes of the Code. Security does not include:
1. direct obligations of the Government of the United States;
2. bankers acceptances, bank certificates of deposit, commercial paper
and high quality short-term instruments, including repurchase
agreements; and
3. shares issued by registered open-end investment companies.
O. "Initial Public Offering" means an offering of securities registered with
the Commission, the issuer of which, immediately before the registration,
was not required to file reports with the Commission.
P. "Limited Offering" means an offering that is exempt from registration under
the Securities Act of 1933 pursuant to section 4(2) or section 4(6) or
pursuant to rule 504, rule 505, or rule 506 under the Securities Act of
1933.
15
<PAGE>
EXHIBIT A
QUARTERLY SECURITIES TRANSACTION REPORT*
PURSUANT TO THE CODE OF ETHICS FOR
ADVANTUS CAPITAL MANAGEMENT, INC. AND AFFILIATES
For the Calendar Quarter Ending: March 31, 2000
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Name of Issuer and Date of Nature of Number of Shares or Price at Which Through Whom
Title or Type of Security Transaction Transaction Principal Amount Effected Transaction Effected
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Accounts Opened this Quarter**
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Broker or Bank Name Account Title Account Number
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
The reporting of any transaction hereon shall not be construed as an admission
that the reporting person has any direct or indirect beneficial ownership in
such security.
______________________ ____________________________________ ________________
Name (Please Print) Signature Date
*Transactions by the Access Person, Employee, or family members as defined in
the Code.
** Accounts opened by the Access Person, Employee, or family members as defined
in the Code.
- - Send to: 16-5354 no later than April 10, 2000
16
<PAGE>
APPENDIX B
INSIDER TRADING
SUPPLEMENT
TO THE
CODE OF ETHICS
The purpose of this Supplement to the Code of Ethics is to expand upon the
provisions of the Code of Ethics and on prior group and private discussions
regarding the topic of insider trading. If you have any further questions on
insider trading, talk with your supervisor, an Advantus attorney, or the
Compliance Officer.
The term "insider trading" refers to the use of material non-public
information to trade securities. It is also a violation of law to communicate
material non-public information to others.
The Code of Ethics of Advantus Capital Management, Inc., and Ascend
Financial Services, Inc. (together "Advantus") prohibits the use of any special
knowledge, personal contacts or access to property or equipment obtained in
connection with employment at Advantus for personal gain. The use of inside
information for personal securities transactions is clearly included in the
prohibition. In addition to personal transactions, insider trading prohibitions
apply to securities transactions made on behalf of Advantus and any of its
clients.
In recent years several highly publicized insider trading cases involved the
merger and acquisition areas of brokerage companies or had some other connection
with the underwriting of securities. Advantus is not involved in the merger and
acquisition business and does not participate in the sort of securities
underwritings that leads to the typical insider trading violations. (e.g., a
person knowingly takes secret information about a company and tries to make
money by buying or selling securities whose price will be affected by the secret
information). However, the insider trading law applies to a very broad range of
activity and should be a matter of constant consideration in all of Advantus'
security trades.
We at Advantus must be vigilant against even inadvertent violations. We
seldom come across dramatic inside information in the regular course of our
business. What inside information we do come across is so similar in nature to
the non-inside information about companies we regularly use that without a
constant awareness of inside information issues, a trade could be made which is
inadvertently based in part on items of tainted information.
Who is an insider? The concept of insider includes the officers, directors
and employees of the company whose securities are in question. It also includes
people who enter into a special confidential relationship with the company and
as a result are given access to confidential information about the company.
These can include attorneys, accountants, consultants, lenders and the employees
of such organizations. Advantus will most often be an insider due to being a
lender to a company.
What is material information? Information for which there is a substantial
likelihood that reasonable investors would consider it important to making their
investment decisions, or information that is reasonably certain to have a
substantial effect on the price of a company's securities is material
information.
What is non-public information? Information that has not yet been
communicated to the public through, for example, SEC filings, newspaper reports
or wire service reports, is non-public information.
Prevention and detection of insider trading. Advantus has a continuing
obligation to prevent and detect insider trading. An Advantus employee who
obtains information about a company which appears to be
17
<PAGE>
material non-public information should disclose that information to his superior
and the Compliance Officer. If it appears that the information is material
non-public information, two things will be done by the Compliance Officer:
(1) Instruct the appropriate Portfolio Management Assistant to put the company
on the restricted stock or bond list so that employees of Advantus know not to
trade the stock or bond in personal transactions and the identified stocks and
bonds are included in the examination of the Securities Transaction Reports
filed quarterly by employees and (2) Inform all investment division heads,
mortgage, bond and stock, that they should not trade the securities of the
identified company because Advantus possesses inside information with respect to
the company. These restrictions will be removed when the Compliance Officer
determines that the information no longer constitutes material non-public
information.
When deemed appropriate, Advantus management may also review trades made in
personal accounts and on behalf of Advantus or any of its clients for evidence
of trading in violation of these rules.
As with all matters concerning ethical conduct, Advantus rules and
procedures for insider trading are intended to promote the highest ethical
standards. It is not sufficient by itself that a course of action is legal. It
also must be the right thing to do. There are no transactions important enough
to risk the reputation of Advantus or Minnesota Life Insurance Company. All
business should be conducted with this in mind.
18
<PAGE>
APPENDIX C
GIFT AND BUSINESS ENTERTAINMENT
SUPPLEMENT TO THE CODE OF ETHICS
As an employee of Advantus Capital Management, Inc., or Ascend Financial
Services, Inc., or an employee of an affiliated company who has been notified
that he or she is also subject to the Code of Ethics, you are being paid solely
to conduct the business of the company to the best of your ability. Any special
knowledge or personal contacts you develop while working at Advantus should be
used for the benefit of the company and should not be considered supplemental
compensation or used for personal gain.
No single rule or group of rules can anticipate every circumstance a person
might encounter which has ethical implications. You must use your own judgment
as to right and wrong but be guided by the knowledge that you are being relied
upon by Advantus to preserve and promote its reputation as a trustworthy and
honorable institution. If in doubt, you are encouraged to talk with your
superiors, but ultimately you are responsible for your own actions.
Below are guidelines to assist you in exercising your own good judgment in
two areas that commonly produce questions concerning appropriate conduct.
Business Entertainment
- ----------------------
Letting someone pay for a business meal or other entertainment generally is
permissible if the primary purpose is related to company business. Avoid
situations in which such meals or entertainment may influence or appear to
influence your independence of judgment. If you could not provide your host
with a similar meal or entertainment and put it on your expense report it is
probably inappropriate to accept.
Gifts
- -----
You may accept gifts (or prizes) of nominal value, that is, gifts (or
prizes) so low in value that the gift is insignificant.
Duty to Disclose Conflicts
- --------------------------
All employees shall disclose to their superiors in a timely manner all
conflicts of interest and other matters which could reasonably be expected to
interfere with their duty to Advantus or impair their ability to render unbiased
and objective advice.
Sanctions
- ---------
Upon discovering a violation of this Code of Ethics, Advantus may impose
such sanctions as it may deem appropriate. A record will be kept of all known
violations and any sanctions imposed.
Any person charged with a violation of the Code of Ethics shall be informed
of the violation and shall have the opportunity to explain his actions prior to
the imposition of any sanction.
19
<PAGE>
EXHIBIT C
[LETTERHEAD OF MINNESOTA LIFE]
January 31, 2000
Minnesota Life Insurance Company
Minnesota Mutual Life Center
400 Robert Street North
St. Paul, Minnesota 55101
Gentlepersons:
In my capacity as counsel for Minnesota Life Insurance Company (the "Company"),
I have reviewed certain legal matters relating to the Company's Separate Account
entitled Minnesota Life Variable Life Account (the "Account") in connection with
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 of 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
Assistant General Counsel
<PAGE>
EXHIBIT E
[LETTERHEAD OF MINNESOTA LIFE]
January 31, 2000
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Re: Variable Adjustable Life Policy
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 Insurance Policy ("Policies") on
the form referenced above and offered by Minnesota Life Insurance Company. The
prospectus included in the Registration Statement describes policies which will
be offered by Minnesota Life, 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, illustrated in Appendix I of the prospectus entitled
"Illustrations of Policy Values, Death Benefits and Premiums" 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 a prospective purchaser of a Policy
for males age 40 than to prospective purchasers of Polices for a male at
other ages or for a female at other ages.
(2) 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 provisions of the
Policies.
(3) The description under the heading "Example of Sales Charge and Additional
Face Amount Charge Calculation," describing certain computations in
illustrated situations and in Appendix IV, 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/ Robert J. Ehren, F.S.A.
Robert J. Ehren, F.S.A.
Director and Actuary
RJE:pjh
<PAGE>
EXHIBIT F
JONES & BLOUCH L.L.P.
SUITE 410 EAST
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
JORDEN BURT BERENSON & JOHNSON LLP TELEPHONE (202) 223-3500
AFFILIATED COUNSEL TELECOPIER (202) 223-4593
January 31, 2000
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, MN 55101
Dear Sirs:
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 of Minnesota Life Variable Life Account, to be filed with the
Securities and Exchange Commission.
Very truly yours,
/s/ Jones & Blouch L.L.P.
Jones & Blouch L.L.P.
<PAGE>
EXHIBIT H
January, 2000
DESCRIPTION OF MINNESOTA 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 Minnesota
Life Insurance Company ("we", "our", "us") in connection with the issuance of
our Variable Adjustable Life insurance policy ("policy"), the transfer of assets
held thereunder, and the redemption by 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
us at our home office. The minimum face amount that we will issue on a
policy is $25,000 or $10,000 for insureds ages 0-15. The annual base
premium on each policy must be at least $300 or $150 for insureds ages 0-
15. The minimum plan of insurance at policy issue is a term plan which has
a level death benefit for a period of ten years. If the insured's age at
original issue is over age 45, the minimum plan of protection will be less
than ten years, as described in the table below:
-1-
<PAGE>
Minimum Plan
Issue Age (in years)
--------- ------------
46 9
47 8
48 7
49 6
50 5
51 4
52 or greater 3
The policy must be issued on an insured who is no more than age 90. Before
issuing any policy, we will require evidence of insurability satisfactory
to us, which in some cases will require a medical examination. Persons who
satisfy the underwriting requirements 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.
Guaranteed maximum cost of insurance charges will vary by age, sex and risk
class. We use the male, female and unisex and smoker distinct 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. 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 tobacco
habits of the insured.
-2-
<PAGE>
When the policy is issued, the face amount, premium, maximum cost of
insurance rates 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 owner pays a premium
commensurate with the insured's mortality risk as actuarially determined
utilizing factors such as age, sex, 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
------------------------------------------
When we receive a completed application from an applicant we will follow
certain insurance underwriting (risk evaluation) procedures designed to
determine whether the applicant is insurable. This process may involve
such verification procedures as medical examinations and may require
that further information be provided by the proposed insured before a
determination can be made. A policy cannot be issued,
-3-
<PAGE>
i.e., physically issued through our 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 insured may receive immediate insurance
coverage, if he proves to be insurable and has paid the first premium
and is covered under the terms of a conditional insurance agreement. In
accordance with industry practice, we will establish procedures to
handle errors in initial and subsequent premium payments, to refund
overpayments and to 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 we accept the application,
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 insured life may be covered under the
terms of a conditional insurance agreement until the policy date. If we
accept an application 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 our 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
-4-
<PAGE>
day period following issue, the applicant may obtain a policy which has
a policy date of the date when we receive the initial plan premium. In
that case the applicant has to indicate to us his or her intention to
obtain such a policy. This should be done with payment of the first
premium. If the applicant requests a 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 date. In such cases all
premiums due between the issue date and the date of delivery must be
paid on delivery in order for the original policy 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 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 age
of the proposed insured is 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 Advantus Series Fund, Inc. and Class 2 of
the Templeton Developing Markets fund. The variable benefits under
-5-
<PAGE>
all policies will be calculated on the basis of the allocation of that
initial net premium to the Variable Life Account.
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 us a written request. A
change will not take effect until it is recorded by us in our home
office. The allocation to the guaranteed principal account or any sub-
account, expressed in whole percentages, must be at least 5 percent of
the net premium and in increments of 5 percent. 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 also 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 policy adjustment. If we exercise this right,
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, we 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 insured's age at issue,
sex, risk classification, tobacco use, and the additional benefits
associated with the policy.
-6-
<PAGE>
D. Reinstatement
-------------
At any time within three years from the date of lapse, the owner may
restore the policy to a premium paying status, unless the policy
terminated because the surrender value has been paid. We will require:
(1) the owner's written request to reinstate the policy;
(2) that the owner submits to us at our home office during the insured's
lifetime, evidence satisfactory to us of the insured's insurability
so that we may have time to act on the evidence during the insured's
lifetime; 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 5 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, we 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 we receive the
required proof of insurability and payment of the reinstatement amount
at our home office.
-7-
<PAGE>
We 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.
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 insured's death. The loan may also be
repaid within 60 days after the date of the insured's 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. Currently,
we will waive this Minimum Loan Repayment Provision for loan repayments
made under an automatic payment plan through your bank.
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 owner may
direct.
In the absence of instructions from the owner, loan repayments will be
allocated to the guaranteed principal account actual cash value and
separate account actual cash value on a pro-rata basis and to each sub-
account in the separate account on a pro-rata basis.
Loan repayments reduce the loan account by the amount of the loan
repayment.
-8-
<PAGE>
II. Transfer Among Sub-Accounts
---------------------------
A separate account called the Minnesota Life 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 Variable Life
Account currently has seventeen sub-accounts to which owners may allocate
premiums. Each sub-account invests in shares of a corresponding Portfolio
of the Advantus Series Fund, Inc. or the Templeton Developing Markets 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 actual cash value in an account 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.
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
-9-
<PAGE>
effective after we approve and record them at our home office. Currently,
we do not impose these restrictions on transfers from the guaranteed
principal account.
III. "Redemption" Procedures:
------------------------
Surrender and Related Transactions
----------------------------------
A. Request for Surrender Value
---------------------------
If the insured is living, we will pay the surrender value of the policy
to the 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 we receive the surrender request at our home office. The policy
may be surrendered by sending us the policy and a written request for
its surrender. 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 on the life of the insured.
A partial surrender of the actual cash value of the policy is also
permitted in any amount of $500 or more. However, if there is a policy
loan, a partial surrender will not be permitted if it would reduce the
actual cash value to an amount which is less than 10 percent of the
policy value immediately after the partial surrender. With the Cash
Option, the face amount of the Policy will be reduced by the amount of
the partial surrender. With the Protection Option, the face amount of
the Policy will not change. With any partial surrender, the Policy will
be adjusted to reflect the new
-10-
<PAGE>
face amount and actual cash value and, unless otherwise instructed,
the existing level of premium payments.
On a partial surrender, the owner may tell us 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 on a pro-rata basis from each sub-account of the separate account
on a pro-rata basis.
Payment of a surrender or a partial surrender will be made as soon as
possible, but not later than seven days after we receive 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, 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 the owner receives
on the surrender may be more or less than the total of premiums paid to
the policy.
B. Death Claims
------------
We will pay a death benefit to the beneficiary within seven days after
receipt at our home office of due proof of death of the insured 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.
-11-
<PAGE>
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 greater of: (1)
the face amount at the time of the insured's death; and (2) the minimum
death benefit required under Section 7702 of the Internal Revenue Code.
The death benefit will not vary unless the death benefit is the minimum
death benefit required under Section 7702.
Under the Protection Option, the death benefit will be the greater of:
(1) the face amount at the time of the insured's death plus the policy
value; and (2) the minimum death benefit required under Section 7702.
The Protection Option is only available until the policy anniversary
nearest the insured's age 100; at that time we will convert the death
benefit option to the Cash Option.
A policy is paid-up when no additional premiums are required to provide
the face amount of insurance for the life of the insured. We may or may
not accept additional premiums. However, the actual cash value of a
paid-up policy 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
-12-
<PAGE>
the actual cash value decreases to zero, a loan repayment may be
required to keep the policy in force.
The owner may elect to change the death benefit option as a policy
adjustment while the policy is in force by filing a written request with
us at our home office. We may require that the owner provide us with
satisfactory evidence of the insured's insurability before we make a
change to the Protection Option. The change will take effect when we
approve and record it in our home office.
The amount payable as death proceeds upon the insured's death will be
the death benefit provided by the policy, plus any additional insurance
on the insured's life 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 insured's 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 insured died 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 insured's death.
We will pay interest on single sum death proceeds from the date of the
insured's death until the date of payment. Interest will be at an
annual rate determined by us, but never less than 3 percent.
Proceeds of the policy may be paid in other than a single sum. The
owner, during the lifetime of the insured, may request that we pay the
proceeds under one of the policy settlement options as described in the
policy. We may also use any other
-13-
<PAGE>
method of payment that is agreeable between the owner 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 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 our home office within the 31-day
grace period. The insured's life will continue to be insured during
this 31-day period.
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
-14-
<PAGE>
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
have been paid.
If the policy lapses because scheduled premiums have not been paid or if
a policy with a policy loan has no actual cash value, we 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, we will apply it to purchase extended term insurance on the
insured's life.
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
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
-15-
<PAGE>
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, if no premium is in default beyond
the grace period, may make a loan at anytime a loan value is available.
The owner may borrow from us 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. We will charge
interest on the loan in arrears. The policy value will be determined as
of the date we receive the owner's written request at our home office.
When a loan is taken, we will reduce the actual cash value by the amount
borrowed and any unpaid interest. Unless the owner directs us
otherwise, the policy loan will be taken from a policy's guaranteed
principal account actual cash value and separate account actual cash
value on a pro-rata basis and from each sub-account in the separate
account on a pro-rata basis.
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 we receive the
loan requests at our home office. This amount shall be transferred to
our general account. It will continue to be part of the policy in the
general account.
-16-
<PAGE>
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. We will give the owner notice of
our 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 our 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 death of the insured, 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 1 percent per annum. Policy
loan interest credits are allocated to the actual cash value as of the
date of the death of the insured, 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 owner's instructions for the
allocation of net premiums.
-17-
<PAGE>
Policy loans may also be used as automatic premium loans to keep a
policy in force. When the premium due has not been paid by the end of
the grace period, we will make automatic premium loans unless the owner
has requested us not to. 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 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 a policy loan if
premiums are duly paid. However, on settlement, the amount of any
policy loan is subtracted from the insurance amount.
-18-
<PAGE>
EXHIBIT I.(1)
Minnesota Life Letterhead
Notice of Withdrawal Right
July 1, 2000
JOHN DOE
400 ROBERT STREET NORTH
ST PAUL MN 55101
SPECIMEN
RE: 1-234-567V
JOHN DOE
MONTHLY - $817.75
ANNUALIZED - $3,271.00
Dear John Doe:
Congratulations on your purchase of the attached Variable Adjustable Life
Insurance policy. Minnesota Life wants you to understand that this is an
investment-oriented life insurance contract with customary insurance expense
charges. You have a right to examine and return the contract 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 Life 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 6 percent, and
-- In the first year a sales charge not to exceed 44 percent of premium and an
additional face amount 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 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 policy is not what you want, you must
complete the attached form and return it, along with the policy, postmarked no
later than 10 days from the date you received this notice and policy.
We are confident you'll be satisfied with this policy and look forward to a long
association. Thank you for choosing Minnesota Life.
Sincerely,
Nancy Winter
Director
Individual Policy Services
<PAGE>
EXHIBIT I.(2)
Minnesota Life Letterhead
Notice of Withdrawal Right
July 1, 2000
JOHN DOE
400 ROBERT STREET NORTH
ST PAUL MN 55101
SPECIMEN
RE: 1-234-567V
JOHN DOE
MONTHLY - $817.75
ANNUALIZED - $3,271.00
May 1, 1996
Dear John Doe:
Congratulations on your recent adjustment to your Variable Adjustable Life
Insurance policy. You already know this is an investment-oriented life
insurance contract with customary insurance expense charges. You have a right
to examine and return the contract 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 Life 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 6 percent, and
-- In the first year, a sales charge not to exceed 44 percent of the increased
premium and an additional face amount 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 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 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 10 days from the date you received this notice and adjustment.
We are confident you'll be satisfied with this adjustment and look forward to a
long association. Thank you for choosing Minnesota Life.
Sincerely,
Nancy Winter
Director
Individual Policy Services
<PAGE>
EXHIBIT J
Minnesota Life Insurance Company
Power of Attorney
To Sign Registration Statements
WHEREAS, Minnesota Life Insurance Company ("Minnesota Life") has
established certain separate accounts to fund certain variable annuity and
variable life insurance contracts, and
WHEREAS, Variable Fund D ("Fund D") is a separate account of Minnesota Life
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, Variable Annuity Account ("Variable Annuity Account") is a
separate account of Minnesota Life 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 Life Variable Life Account ("Variable Life Account") is
a separate account of Minnesota Life 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, and
WHEREAS, Group Variable Annuity Account ("Group Variable Annuity Account")
is a separate account of Minnesota Life 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, and
WHEREAS, Minnesota Life Variable Universal Life Account ("Variable
Universal Life Account") is a separate account of Minnesota Life 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 Directors and Officers of Minnesota
Life, do hereby appoint Dennis E. Prohofsky and Garold M. Felland, and each of
them individually, as attorney in fact for the purpose of signing their names
and on our behalf as Directors of Minnesota Life 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
Life 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.
Signature Title Date
--------- ----- ----
/s/ Robert L. Senkler Chairman of the Board, December 13, 1999
- ---------------------------- President and Chief
Robert L. Senkler Executive Officer
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Anthony L. Andersen Director December 13, 1999
- ----------------------------
Anthony L. Andersen
- ---------------------------- Director
Leslie S. Biller
/s/ John F. Grundhofer Director December 13, 1999
- ----------------------------
John F. Grundhofer
/s/ Robert E. Hunstad Director December 13, 1999
- ----------------------------
Robert E. Hunstad
/s/ Dennis E. Prohofsky Director December 13, 1999
- ----------------------------
Dennis E. Prohofsky
- ---------------------------- Director
Michael E. Shannon
/s/ William N. Westhoff Director December 13, 1999
- ----------------------------
William N. Westhoff
/s/ Frederick T. Weyerhaeuser Director December 13, 1999
- -----------------------------
Frederick T. Weyerhaeuser
